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