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Test3A Winter2016.docxName ...
Test3A_Winter2016.docxName_______________________________________ Perm #_______________________________ Econ 134A John
Test3A Winter2016.docxName ...
Test3A_Winter2016.docxName_______________________________________ Perm #_______________________________ Econ 134A John
Page 1
Name_______________________________________
Perm #_______________________________
Econ 134A
John Hartman
Test 3, Form A
March 16, 2016
Instructions:
YOU WILL TURN IN THE ENTIRE TEST, INCLUDING THE MULTIPLECHOICE
QUESTIONS.
You have 160 minutes to complete this test, unless you arrive late.
Late arrival will lower the time available
to you, and you must finish at the same time as all other students.
Cheating will not be tolerated during any test.
Any suspected cheating will be reported to the relevant
authorities on this issue.
You are allowed to use a nonprogrammable fourfunction or scientific calculator that is
NOT
a
communication device.
You are
NOT
allowed to have a calculator that stores formulas, buttons that
automatically calculate IRR, NPV, or any other concept covered in this class. You are
NOT
allowed to have
a calculator that has the ability to produce graphs.
If you use a calculator that does not meet these
requirements, you will be assumed to be cheating.
Unless otherwise specified, you can assume the following:
Negative internal rates of return are not possible.
Equivalent annual cost problems are in real dollars.
You are allowed to turn in your test early if there are at least 10 minutes remaining.
As a courtesy to your
classmates, you will not be allowed to leave during the final 10 minutes of the test.
Your test should have 10 multiple choice questions (20 points) and 7 problems (49 points). The maximum
possible point total is 70 points.
If your test is incomplete, it is your responsibility to notify a proctor to get a
new test.
For your reference, an example of a welllabeled graph is below:
Grading:
Filling in scantron correctly, putting name and perm #
on this page, & having photo ID
___
/1
(
automatic unless something is incorrect
)
Multiple choice portion
_____/20
Problems
_____
/49
Total score
_____/70
Page 2
MULTIPLE CHOICE: Answer the following questions on your scantron. Each correct answer is worth 2
points. All incorrect or blank answers are worth 0 points.
If there is an answer that does not exactly match
the correct answer, choose the closest answer.
1. Cornelius will receive $3,000 today. He will receive 6% more each subsequent year. If his effective annual
discount rate is 17%, what is the present value of this stream of payments?
A. $27,000
B. $28,500
C. $30,000
D. $32,000
E. $34,000
2. Sunny Sunshine will borrow $60,000 on
January 1, 2017
. She will make 12 equal yearly payments, on
July 1 of years 20182029
, to completely pay back the loan. How much will each payment be if the effective
annual interest rate is 15%?
A. $10,320
B. $11,070
C. $11,510
D. $11,870
E. $12,730
3. A stock is currently valued at $50, which is the correct current value. Today, news is revealed in which the
new correct value of the stock should be 20% higher if markets were completely efficient. However, the
price of the stock increases to $55 today, and the value slowly increases over the next few days until the new
efficient value is reached. This is an example of…
A. Instant efficient market response to new information
B. Overreaction and reversion
C. Slow response
D. A random walk similar to the Halloween night example shown in class
E. None of the above
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