# UMUC FIn610 Final Exam 2015/ UMUC FIn610 Final Exam 2015/ - 95743

Solution Posted by

## anjis_devis

Rating : (20)B
Solution Detail
Price: \$24.00
• From: Business, Finance
• Posted on: Wed 02 Mar, 2016
• Request id: None
• Purchased: 0 time(s)
• Average Rating: No rating
Request Description
Solution Description

Question

Top of Form

1. Which of the following is true?

A random walk for stock price changes is inconsistent with observed patterns in price changes.

If the stock market follows a random walk, price changes should be highly correlated.

If the stock market is weak form efficient, then stock prices follow a random walk.

All of these.

Both If the stock market follows a random walk, price changes should be highly correlated; and If the stock market is weak form efficient, then stock prices follow a random walk.

2. You are planning a trip to Australia. Your hotel will cost you A\$150 per night for five nights. You expect to spend another A\$2,000 for meals, tours, souvenirs, and so forth. How much will this trip cost you in U.S. dollars given the following exchange rates?
\$1,926

\$2,007

\$2,782

\$2,856

\$3,926

3. A 12-year, 5% coupon bond pays interest annually. The bond has a face value of \$1,000. What is the change in the price of this bond if the market yield rises to 6% from the current yield of 4.5%?

11.11% decrease

12.38% decrease

12.38% increase

14.13% decrease

14.13% increase

4. Kali's Ski Resort, Inc. stock is quite cyclical. In a boom economy, the stock is expected to return. Kali's Ski Resort, Inc. stock is quite cyclical. In a boom economy, the stock is expected to return 30% in comparison to 12% in a normal economy and a negative 20% in a recessionary period. The probability of a recession is 15%. There is a 30% chance of a boom economy. The remainder of the time, the economy will be at normal levels. What is the s