FIN 645 midterm exam questions

FIN 645 midterm exam questions

INSTRUCTIONS- Follow ALL instructions; otherwise you may lose points ranging from just a few percentage points to 100% of the grade for this test:  

1. Answer all the following two (2) questions.

2. Where and when DETAILED CALCULATIONS are involved, you must use one EXCEL file. Note: your Excel worksheet must be built and populated in such a way that I can follow and trace all your formulas and calculations. Do NOT use Excel for essay-type, non-quantitative questions; otherwise significant points could be lost.

3. For any other question you must use WORD ONLY. No other formats like PDF will be accepted. To repeat, do not use Excel for essay-type (qualitative) questions; unless such questions have significant quantitative components in which case you can use Excel just for the quantitative part(s).

 4. As a General Rule in grading, I am very much interested in seeing in your exam responses the extent to which you have utilized your assigned textbooks and/or any other assigned materials. This means including materials obtained from non-class sources like the Internet or outside sources will receive distant secondary consideration in grading your work; if any at all. So all be careful.

5. To further elaborate and emphasize, at submission time: a. You can ONLY submit a maximum of two (2) files for the entire exam; one Excel file used ONLY for quantitative questions and one Word file for the rest of the exam. I will ignore extra files if you have more than the two files allowed for this test. All other formats like PDF, etc. will also be totally ignored. b. No emailed exams will be accepted or graded; except in case of verifiable natural emergencies and power/Internet outages. If you face any problem at the time of upload, you must call UMUC’s 24- hour Tech Support right away for any and all such problems.

 6. There is a maximum of 250 points for this test. Scores for each question are shown at the end of each question. For qualitative questions, maximum allowed pages are also given at the end of each question.

7. As stated in the syllabus, you will have until 11:59 PM EST on Saturdayday, 6/27, to submit your answers via the related Midterm icon that you see under the Assignments tab in your class. To submit, after clicking on the Assignments tab and then the Midterm icon, click on “Add a File” and follow instructions. If any tech issues call the 24-hour Tech Support using the contact info given in your class. Anyway, the deadline gives you ample time for the exam even if you have more than one exam to attend to.

8. Finally, given questions regarding the exam bring even more questions; and this would confuse some other students, treat and handle this exam “as is”. This means:

 a. You should trust the info/data given for each question and then come up with the best possible answers for the test. In improbable cases when there are general problems with some questions, like typos, etc, I can always account for them- and if legitimate, give due credit to all at the time of grading.

b. I must, and I will, ignore any emails or posts in the classroom from you seeking clarifications on any part of the exam. I must be fair to ALL of my students and that is why I have this “as is” policy as stated in above. Hope you understand.

QUESTION 1. Important Note: This question asks more or less a similar question that had already been asked and discussed in one of the home works. However, given this is an exam question I expect from you a very in depth analysis of the question and utilizing practically whatever you have learned so far in this class about the topic on hand; including and especially all the conceptual and quantitative materials covered in chapters 2 and 5 of Shefrin. Now to the question. According to Yahoo Finance Applied Materials, Inc.’s stock (AMAT) closed at $19.96 on June 23, 2015: http://finance.yahoo.com/q?&.

 Discuss whether the above stock was efficiently priced at the time of closing on the stated date. For consistency in your analysis, use ONLY Yahoo Finance’s data and other given information for the said company available at the above URL. You can use any and all pieces of information and data from the above URL to build your case. Make sure your responses to this question include both quantitative as well as qualitative analysis.

 Note: Points will be taken off for responses that lack organization and order. Maximum pages: 3 pages, double-space, size 12. No page limit on your Excel calculations. Grade: 100

QUESTION 2. As you know by now, traditional finance theory defines and operationalizes risk in terms of standard deviation and beta. In this class, you have also learned that Asset Pricing models like CAPM which were built on concepts like beta along with Market Efficiency assumptions have not done well in the real world either. Answer the two following questions based on what you have learned in this class:

A. Have behavioral economists been able to improve upon the notion of risk and or pricing models like beta and CAPM? Explain your response in needed details.

 B. Do we now have a better understanding or risk in the real world? Explain your response in needed details. Note: Points will be taken off for responses that lack organization and order. Maximum pages: 2 pages, double-space, size 12. Not page limit on any supporting reference page, table, graph, or exhibit. Grade: 50