B.S. Mock 1 Exam Questions? following, discount, morning, choice

MonkeyBusiness

For the morning Mock 1 I have the following questions:
#21 uses the real risk free rate to get the discount rate using CAPM, it doesn’t add the inflation premium of 3% to get the nominal rate (which answer would have been choice A  $113,000), yet #82 uses the nominal rate, what gives?
Additionally, unless I’m confused # 33 gives you the information for calculating elasticity of Demand, not Supply, and the answer even is showing how to solve for Elasticity of Supply, at least I think so.
Could anyone help me out with this?
God these tests sucked, i thought i was good on FSA and got completely raped.
Thanks

MonkeyBusiness

#21
There is no indication that the REAL risk free rate is 4%. It is just risk free rate =4%.
In CAPM the risk free rate used is nominal risk free rate. You should take Rf = 4% and not Rf = 3 + 4 = 7%.
The 4% given in the question is Risk Free Rate. Not REAL Risk Free Rate.

orang3eph

…bump. I’m with you on #33. I’m almost positive the question is defective. They give you know information about how the supply of hotel rooms changes…an essential part of calculating price elasticity of supply.

suyash1989

cmon, someone has got to know the answer to this.