MATH 246 Midterm: Exam 1 No Solutions Fall 1998
14 Mar 2019
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The answers on this exam are entirely my own work. I neither gave nor received any aid while taking this exam. You have 75 minutes to take this exam. Please remember to write your name legibly on every page. This exam will be graded out of 88 points. The number in parentheses for each question is the amount of points assigned to the question. The exam has seven questions and 11 pages, including this page and a page of scratch paper at the end. Explain whether the npv rule should be used by the specified company: (4 points) a small company owned by two friends. The company"s risky project has only idiosyncratic risk. The company has enough cash on hand to pay for the initial investment: (4 points) a large non-financial firm with publicly-traded stock. The risky project has both idiosyncratic risk and systematic risk. The firm does not have sufficient cash to pay for the project"s initial investment.
