COMM 221 FINAL WINTER 2025

3
A 30-year bond pays $15 of interest every month. What is the effective annual rate?
(1 Point)
A. 1.50%
B. 18.00%
C. 15.00%
D. 19.56%
E. 30.00%

_____ inefficiency is made up of _____ inefficiency and _____ inefficiency. They will cause ____
(2 Points)
A. Allocational; Informational; Operational; Reduced social welfare
B. Allocational; Informational; Market; Reduced social welfare
C. Operational; Allocational; Informational; Reduced social welfare
D. Informational; Operational, Allocational; Increased government revenue
E. Operational; Informational; Market; Increased government revenue

Demand of 100 apples at a price of $2 has now reduced to 80 after a $0.10 increase in price.
What is the price elasticity of demand?
(1 Point)
A. -4
B. -2
C. 0
D. 2
E. 4
6

Use the following table to find the marginal and average tax rate of bob if he earned $122,985
last year.
(2 Points)

A. 20.50%; 18.00%
B. 20.50%; 18.50%
C. 26.00%; 18.00%
D. 26.00%; 18.50%
E. 29.00%; 29.12%
COMM 221 FINAL WINTER 2025

An equal weights portfolio has two stocks, ABC & XYZ. ABC will return 15.5% with a 12.2%
standard deviation while XYZ will return 3.5% less with 5% less standard deviation. If they move
perfectly together, what is the return and standard deviation of the portfolio?
(2 Points)
A. 13.00%; 9.70%
B. 13.00%; 10.56%
C. 13.75%; 8.71%
D. 13.75%; 9.70%
E. 13.75%; 10.56%

At the end of each year, you get a salary bonus of $5,000. You decide to invest 75% of it into a
7% semi-annually compounding mutual fund. How much money will you have after 14 years?
(1 Point)
A. $85,302.14
B. $84,564.33
C. $112,752.44
D. $173,589.85
E. $231,453.14

What was the consequence of the Glass-Steagall act?

Which of the following correlation coefficients will result in the lowest standard deviation
between 2 stocks?
(1 Point)
A. -2
B. -1
C. 0
D. 1
E. 2
COMM 221 FINAL WINTER 2025

Using CAPM, you know the beta is 1.4 while the return of the market is 12.3%. If the expected
return of the stock is 15.8%, what is the risk free rate?
(1 Point)
A. -4.30%
B. -3.55%
C. 2.55%
D. 3.55%
E. 4.30%
1

The ____ is tax deferred and used for retirement while the ____ is tax exempt.
(1 Point)
A. RESP; TFSA
B. TFSA; RRSP
C. RRSP; TFSA
D. TFSA; FHSA
E. FHSA; TFSA
13

You can buy a lottery ticket which can double your wealth of $100,000. Given you have a 1%
chance of winning and are risk averse, how much will you be willing to pay for the ticket?
(1 Point)
A. 𝑈=(𝑤)0.7U=(w)0.7
B. 𝑃 = $802.10P = $802.10
C. 𝑃 = $893.34P = $893.34
D. 𝑃 = $971.34P = $971.34
E. 𝑃 = $1,046.58P = $1,046.58
F. 𝑃 = $1,684.00P = $1,684.00
G. 14

The price of goods supplied is given by the function Ps = 2+2S while for demand it is Pd = 30-
2D. At equilibrium, what is the price, quantity, and dead weight loss?
(1 Point)
A. $5; 12Q
B. $16; 7Q
C. $20; 3Q
D. $25; 2.5Q
E. $30; 0Q

15
COMM 221 FINAL WINTER 2025

ABC Inc has returned 13% last year while CAPM predicted an 11% return. The stock is ____ and
will be ____ by investors.
(1 Point)
A. Undervalued; Sold
B. Undervalued; Held
C. Undervalued; Bought
D. Overvalued; Sold
E. Overvalued; Bought
16

You are in a high risk flooding area. How high should your wall be to make sure the house will
only be flooded 10% of the time?
(1 Point)

A. 1 meter
B. 2 meters
C. 3 meters
D. 4 meters
E. 5 meters
F.
G.
H.
I. 17
John needs to have enough money in 10 years for the 15% down payment of a $450,000 home.
How much money should he invest every month in an 8% APR mutual fund?
(1 Point)
A. $374.74
B. $526.73
C. $2,459.74
D. $5,421.72
E. $8,325.40
18
Which of the following will not result in dead weight loss given the equilibrium price is $20 at a
quantity of 50?
(1 Point)
A. Price ceiling of $18
B. Price floor of $22
C. Tax of 20%
D. Quota of 20
E. Quota of 50
19
COMM 221 FINAL WINTER 2025

A stock has just paid out a $7.00 dividend which will grow forever at 2% annually. How much will
an investor have paid just before and just after the dividend if their required rate of return is
10%?
(2 Points)
A. $96.25; $89.25
B. $89.25; $96.25
C. $78.40; $71.40
D. $71.40; $78.40
E. $89.25; $78.40
20

Lucas opens a bakery and can chose between plan A or B. His net profit under plan A is $10,000
but will decrease every year at a rate of 3%. If he chose plan B, his first year's net profit will
$11,000 but subsequent profits will decrease at a rate of 5%. What plan should he chose given he
can invest money at a 7% mutual fund?
(1 Point)
A. Chose option A
B. Chose option B
C. Both plans are worth the same
D. Unable to determine
E. Chose plan A only and only if the first year's net profit is $11,000
F.
G.
H.
I. 21
A 30-year 6% bond is currently selling on the market for $856.12, what is the yield to maturity?
(1 Point)
A. 1.17%
B. 3.59%
C. 4.12%
D. 5.86%
E. 7.18%

22
What government regulation was enacted to reduced sulfur dioxide emissions from the 1990s to
the 2000s?
(1 Point)
A. Market tradeable emmissions
B. Cap on emissions
C. Tax on emmissions
D. Fines for poluters
E. Reforestation programs
23
COMM 221 FINAL WINTER 2025

Last Year, you bought a 5-year 6% annual coupon bond for $800 (Face value is $1,000). How
much do you sell the bond for today if interest rates are now 9%?
(1 Point)
A. $800.00
B. $883.31
C. $904.31
D. $902.81
E. $920.30
24

Considering the return of a portfolio is 25% but there is a 3% annual assets under management
fee and a 50% performance fee for returns above the benchmark which returned 10%. What is
the net return to investors?
(1 Point)
A. 10%
B. 14.5%
C. 17.5%
D. 22%
E. 25%
25

Patrick invests 15% of his gross income into his RRSP and $5,000 annually into his TFSA. His
income does not change for 15 years and his returns are consistent at 10% compounded weekly.
Given he has a net income of $100,000 and was taxed at an average of 20%. How much money is
in both of his investment accounts after 15 years?
(1 Point)
A. $754,596.44
B. $785,580.98
C. $830,056.08
D. $868,117.88
E. $1,004,943.02