UMUC FIN610 Final Exam (already graded)/UMUC FIN610 Final Exam (already graded)

UMUC FIN610 Final Exam

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Question

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

[(A$1505) + A$2,000]($1A$1.4278) = $1,926

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%?