ACC 356 Final Questions And Answers 2024 Updated Study Tests
2 keer bekeken 0 keer verkocht
Vak
ACC 356
Instelling
ACC 356
ACC 356 Final Questions And Answers 2024 Updated Study Tests
Jennifer Jones wants to accumulate wealth, but she has told you, her new financial planner, that she is risk averse. What should you do with her money? ANS Determine Jennifer's true risk tolerance.
Because she is interested in accumu...
acc 356 final questions and answers 2024 updated s
acc 356 final questions and answers
Geschreven voor
ACC 356
ACC 356
Verkoper
Volgen
Nipsey
Ontvangen beoordelingen
Voorbeeld van de inhoud
ACC 356 Final Questions And Answers 2024 Updated
Study Tests
Jennifer Jones wants to accumulate wealth, but she has told you, her new financial planner, that she is risk averse.
What should you do with her money? ANS Determine Jennifer's true risk tolerance.
Because she is interested in accumulating wealth, she must be educated and fully assessed.
Which of the following best describes the investment characteristics of a high-quality long-term municipal bond?
ANS High inflation risk; low default risk.
The rate of the high-quality municipal bond will be low, thus exposing it to potentially higher levels of inflation risk.
These same instruments are very safe and represent low default risk.
Sydney has a portfolio with 50 shares of AAA with a current value of $20 per share, a return of 12%, and a beta of
1.30. She also has 25 shares of BBB with a return of 10%, a 0.80 beta, and currently priced at $60 per share. Finally
she owns 75 shares of CCC priced at $50 per share, with a 1.1 beta and a 14% return. What is the weighted average
portfolio return of Sydney's portfolio? ANS 12.72%
The weighted average return is calculated with a total portfolio value of $6,250 and each stock as a percent ofthat
total, times its individual return, all added together to provide the weighted average portfolio return.
Stock Amount Return Weighting
AAA 50 x $20 = $1,000 12% (1,000 ÷ 6,250) x 0.12 = 0.0192
BBB 25 x $60 = $1,500 10% (1,500 ÷ 6,250) x 0.10 = 0.0240
CCC 75 x $50 = $3,750 14% (3,750 ÷ 6,250) x 0.14 = 0.0840
Total $6,250 Return = 0.1272
Your client Holly Lynne has a 15% required rate of return. She is considering investing in XYZ, Inc., which paid an
annual dividend of $0.75 this year and is projected to increase its earnings and dividends by 10% annually. The
current market price is $15.40.
Which of the following recommendations would you make to the client? ANS The intrinsic value of the stock is
$16.50, so the client should purchase this stock since the company is currently undervalued.
, Use the intrinsic value formula to determine the correct dollar amount of this stock currently. V = D1 / (r - g) = (0.75
x 1.10) ÷ (0.15 - 0.10) = $16.50. Since the stock is trading for less than the intrinsic value, the planner should
recommend that the client purchase the security.
Unsystematic risk can be reduced by buying: ANS Stocks in numerous unrelated industries.
Unsystematic risk is also known as diversifiable risk. It can easily be eliminated through adequate and strategic
diversification.
Which of the following statements regarding close-end investment companies, if any, is correct?
Close-end funds continually create new shares as new monies are obtained.
Close-end funds offer price guarantees. ANS Neither 1 nor 2.
Close-end funds offer a limited number of shares; and they do not offer price guarantees.
If the risk/return performance of a stock lies below the Security Market Line, the stock is said to have a: ANS
negative alpha
Performance of a stock below the SML will under perform because it is overvalued and therefore has a negative
alpha. The Jensen formula can be used to prove this relationship such that Alpha = Return of the stock - (Risk free
rate + Beta x Market risk premium). If the return of the stock is less than expected, alpha will be negative.
Which of the following reveals the relationship of a given security's movement relative to that of the market? ANS
Beta
Treynor is a risk adjusted performance measure. Covariance measures two stocks movements relative to one
another. Standard deviation measures a security's volatility.
Reese has two assets in her portfolio, asset A and asset B. Asset A has a standard deviation of 40% and asset B has a
standard deviation of 20%. 50% of her portfolio is invested in asset A and 50% is invested in asset B. The
correlation for asset A and asset B is 0.90. What is the standard deviation of her portfolio? ANS It's not
necessary to use the standard deviation of a two asset portfolio formula to answer this question. Since there's a 50/50
weighting for each asset, simply take a simple average of the standard deviations (0.40 + 0.20) ÷ 2 = 0.30. Since the
correlation is less than 1, the standard deviation for the portfolio will be less than the simple average. If correlation
was equal to 1, then the standard deviation would be equal to 30%.
All of the following are treated as assets of the parent for financial aid, except? ANS UGMA
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper Nipsey. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €12,02. Je zit daarna nergens aan vast.