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# Review problems Exam 2

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Review Problems Exam 2 BADM 115 Fall 2008 Professor Isabelle Bajeux-Besnainou Expected dividend yield i . If D1 = \$2.00, g (which is constant) = 6%, and P0 = \$40, what is the stocks expected dividend yield for the coming year? a. 5.0% b. 6.0% c. 7.0% d. 8.0% e. 9.0% Constant growth valuation ii . A stock is expected to pay a dividend of \$1 at the end of the year. The required rate of return is rs = 11%,...

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Exam 2 - ANSWERS BADM 115 Fall 2008 Professor Isabelle Bajeux-Besnainou 1. Constant cash flows; 3 years WACC: 10.00% 0 1 Cash flows -\$1,000 \$500Answer: NPV = \$243.432 \$500 WACC: Year 0:3 \$500 10.0% -\$1,0002.Coupon rate Periods/year Maturity (yr) Bond
Review session #1 - Solutions Fall 2008 Prof. Isabelle Bajeux-Besnainou Chapter 2FV of a lump sum . FV of a lump sumi. Interest rate on a simple lump sum investmentii. Number of periodsiii iv . PV of an ordinary annuity. Payments on an ordinary ann
Review session #1 Fall 2008 Prof. Isabelle Bajeux-Besnainou Chapter 1Firm organization Which of the following statements is CORRECT? a. One of the disadvantages of incorporating your business is that you become subject to liabilities in the event of bank
Exam 1 (Tuesday) - ANSWERS BADM 115 Fall 2008 Professor Isabelle Bajeux-Besnainou 1.Coupon rate PMT N I/YR PV FV 6% \$60 calculated 15 8% \$828.81 \$1,000.002.Real risk-free rate Expected inflation Market risk premium Beta Risk-free rate Required return o
Exam 1 (Thursday) - ANSWERS BADM 115 Fall 2008 Professor Isabelle Bajeux-Besnainou 1. The bond has semiannual coupons, so enter the following data into your financial calculator: N = 12 2 = 24; I/YR = 8 2 = 4; PMT = 90 2 = 45; FV = 1000; and then solve fo
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#91. (2 points) Carter Corporations sales are expected to increase from \$36 million in 2007 to \$48.6 million in 2008, or by 35 percent. Its assets totaled \$40 million at the end of 2007. C
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#91. (5 points) Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt. Each has \$68 million in assets, \$12.5 million of EBIT, and is in the
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#8You must evaluate a proposal to buy a new milling machine. The base price is \$211,000, and shipping and installation costs would add another \$18,500. The machine falls into the MACRS 3ye
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#71. (3 points) A project has annual cash flows of \$9,000 for the next 6 years and then \$3,500 each year for the following 16 years. The IRR of this 22year project is 15 percent. If the fi
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#71. (3 points) Kennedy air Services is now in the final year of a project. The equipment originally cost \$33 million, of which 65 percent has been depreciated. Kennedy can sell the used e
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#61. (3 points) What will be the nominal rate of return on a perpetual preferred stock with a \$100 par value,astateddividendof9.5percentofpar,andacurrentmarketpriceof a. \$55 b. \$90 c. \$150
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#61. (3 points) The Patrick Companys cost of common equity is 19 percent, its beforetax cost of debt is 14percent,anditsmarginaltaxrateis45percent.Thestocksellsatbookvalue.Usingthefollowin
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#51. (3 points) Last year, Joan purchase a \$1,000 face value corporate bond with an 14 percent annual couponrateanda15yearmaturity.Attimeofthepurchase,ithadanexpectedyieldtomaturityof 10.9
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#51. (3 points) A semiannual coupon bond that matures in 9 years sells for \$1,060. It has a face value of \$1,000andayieldtomaturityof9.2375percent.Whatisthecurrentyield? ANSWER: Theproblem
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#41. (2 points) An investor in Treasury securities expects inflation to be 3.58% in Year 1, 4.36% in Year 2, and 5.22% each year thereafter. Assume that the real riskfree rate is 2.20%, an
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#41. (2 points) Investors expect a company to announce a 16% increase in earnings, but instead the companyannouncesa2%increase.Ifthemarketissemistrongfromefficient,whichofthefollowing woul
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#31. (4 points) Central City Construction (CCC) needs \$1.5 million of assets to get started, and it expects to have a basic earning power ratio of 30%. CCC will own no securities, so all o
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#31. (4 points) A company has an EPS of \$12.00, a cash flow per share of \$9.00, and a price/cash flow ratioof10.0x.WhatisitsP/E?EPS= CFPS = P/CF = P = P/E = \$12.00 \$9.00 10.0 \$ 90.00 7.5x
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#21. (4 points) You want to buy a car, and a local bank will lend you \$18,000. The loan would be fully amortized over 6 years (72 months), and the nominal interest rate would be 9%, with i
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#21. (4 points) You want to buy a car, and a local bank will lend you \$15,000. The loan would be fully amortizedover8years(96months),andthenominalinterestratewouldbe15%,withinterestpaid mo
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormBQUIZ#11. List3disadvantagesofacorporation Double taxation of earnings, less easy and more expensive to form, cost of report filing, more governmentregulations 2. Ifyoudepositmoneytodayinanacco
BADM115Section11 Prof.IsabelleBajeuxBesnainou Fall2008 FormAQUIZ#11. List3advantagesofacorporation Limitedliability,indefinitelife,easeofownershiptransfer,andaccesstocapitalmarkets. 2. If you deposit money today in an account that pays 7 percent annual
CHAPTER2 TimeValueofMoney Futurevalue Presentvalue Annuities Ratesofreturn Amortization21Timelines0I%1 CF12 CF23 CF3CF0 Showthetimingofcashflows. Tickmarksoccurattheendofperiods,so Time0istoday;Time1istheendofthe firstperiod(year,month,etc.)or
CHAPTER1 IntroductiontoFinancial Management FormsofBusinesses GoalsoftheCorporation StockPricesandIntrinsicValue SomeRecentTrends ConflictsBetweenManagersand Shareholders11AlternativeFormsofBusiness Organization Proprietorship Partnership Corporatio
GWU - APSC - 116
Special Discrete Random Variables Examples How can I tell which variable to use? Define the variable and its range What are the variables smallest and largest values? Note that Binomial x= 0, , n Neg Binomial x = 0, 1, . (no upper limit) Poisson x = 0, 1
GWU - APSC - 116
Transformations of Continuous Random Variables I. Univariate case. If \ is a continuous random variable with pdf 0 and 1 is a continuous, invertible function, then the pdf for ] 1\ is given by 0] C l .B l 0 1&quot; C .C Example 1. Let \ have pdf 0 given by 0 B
GWU - APSC - 116
1Lecture 1. Transformation of Random VariablesSuppose we are given a random variable X with density fX (x). We apply a function g to produce a random variable Y = g (X ). We can think of X as the input to a black box, and Y the output. We wish to nd the
GWU - APSC - 116
Transformations and Expectations of random variablesX FX (x): a random variable X distributed with CDF FX . Any function Y = g (X ) is also a random variable. If both X , and Y are continuous random variables, can we nd a simple way to characterize FY an
GWU - APSC - 116
Midterm Exam Solutions Ap.Sc. 116Problem 1. Suppose that a box contains ve coins, and that for each coin there is a dierent probability that a head will be obtained when the coin is tossed. Let pi denote the probability of a head when the ith coin is tos
GWU - APSC - 116
Functions of Random VariablesLecture 4Spring 2002Function of a Random VariableLet U be an random variable and V = g (U ). Then V is also a rv since, for any outcome e, V (e) = g (U (e). There are many applications in which we know FU (u) and we wish t
GWU - APSC - 116
Homework # 3 SolutionsThe George Washington UniversityApSc 1161 / 10Problem (Page 102, # 3)Suppose that two balanced dice are rolled, and let X denote the absolute value of the dierence between the two numbers that appear. Determine and sketch the p.
GWU - APSC - 116
Homework # 2 SolutionsThe George Washington UniversityApSc 1161/8Problem (Page 55 # 9)Suppose that a box contains one blue card and four red cards, which are labeled A, B, C, and D. Suppose also that two of these ve cards are selected at random, with
GWU - APSC - 116
Homework # 1 SolutionsApSc 116Problem Page 18 # 7We know Pr (AB ) = Pr (A) + Pr (B ) Pr (A B ) = 0.4 + 0.7 Pr (A B ) = 1.1 Pr (A B ) Since 0.7 Pr (A B ) 1 (the latter is true if A B ), we can conclude 0.1 Pr (AB ) 0.4.Problem Page 27 # 8There are 75
GWU - APSC - 116
Homework # 6 SolutionsEnrique Campos-Nnez aThe George Washington UniversityApSc 1161/9Problem (Page 175 # 1, Section 3.9)Suppose that X1 and X2 are i.i.d. random variables and that each of them has a uniform distribution on the interval [0, 1]. Find
GWU - APSC - 116
Homework # 5 SolutionsThe George Washington UniversityApSc 1161 / 11Problem (Page 157 # 1, Section 3.7)Suppose that three random variables X1 , X2 , and X3 have a continuous joint distribution with the following joint p.d.f.: ( c (x1 + 2x2 + 3x3 ) 0
GWU - APSC - 116
Homework # 4 SolutionsThe George Washington UniversityApSc 1161 / 11Problem (Page 136, # 7)Suppose that the joint p.d.f. of X and Y is as follows: f (x , y ) = 2xe y 0 for 0 x 1 and 0 &lt; y &lt; , otherwise.Are X and Y independent? Solution: Since f (x ,
GWU - APSC - 116
Discrete DistributionsEnrique Campos-Nnez aThe George Washington UniversityApSc 116Campos-Nnez (GWU) aDiscrete DistributionsApSc 1161 / 32Table of Contents1Bernoulli Binomial Hypergeometric Distribution Poisson Distribution Negative Binomial The
GWU - APSC - 116
ExpectationsEnrique Campos-Nnez aThe George Washington UniversityApSc 1161 / 41Table of ContentsThe Expectation of a Random Variable Expectations and Joint Distributions Properties of the Expectations Expectation of Non-negative r.v.s Variance Momen
GWU - APSC - 116
Functions of Random VariablesEnrique Campos-Nnez aThe George Washington UniversityApSc 1161 / 32Table of ContentsFunctions of a Single Random VariableFunctions of Several Random VariablesSum of Random Variables2 / 32Functions of a Single Random
GWU - APSC - 116
Multivariate DistributionsEnrique Campos-Nnez aThe George Washington UniversityApSc 116Multivariate Data: Height, Weight, and FatMotivating multivariate distributionsTable of ContentsBivariate DistributionsConditional DistributionsMultivariate Di
GWU - APSC - 116
Random Variables and Probability DistributionsEnrique Campos-Nnez aThe George Washington UniversityApSc 116Table of ContentsRandom VariablesCommon Discrete DistributionsContinuous Random Variables and DistributionsThe Distribution FunctionRandom
GWU - APSC - 116
Conditional ProbabilityEnrique Campos-Nnez aThe George Washington UniversityApSc 116Table of ContentsConditional ProbabilityEvent IndependenceIndependence and Conditional ProbabilitiesBayes TheoremThe Denition of Conditional ProbabilityThe quant
GWU - APSC - 116
Introduction to ProbabilityEnrique Campos-Nnez aThe George Washington UniversityApSc 116Table of ContentsInterpretations of ProbabilityProbability and Set TheoryThe Denition of ProbabilityCounting MethodsInterpretations of ProbabilityInterpretat
GWU - EMSE - 271
Student NameTotal Points Question 1 a b c d 5 5 10 20 40 Total Points 10 5 5 3 3 3 6 35 Total Points 5 5 5 5 10 30Subtracted 0 0 0 0Reason 5 5 10 20 40 Reason 0 0 0 0 0 0 0 10 5 5 3 3 3 6 35 Reason 0 0 0 0 0 5 5 5 5 10 30Question 2 a b c d e f g Quest
GWU - EMSE - 271
Syllabus: EMSE 171/271Department of Engineering Management and Systems Engineering School of Engineering and Applied Science Semester: Fall 2008EMSE 171/271 Data Analysis for Engineers and ScientistsInstructor Information: Dr. J. Ren van Dorp - Profess
GWU - EMSE - 271
ONE-WAY ANOVAHomework Set 8Question 1: Six samples of each of four types of cereal grain grown in a certain region were analyzed to determine thiamin content, resulting in the following data (.gg): Wheat Barley Maize Oats &amp;# '&amp; &amp;) )\$ %\$ )! %( '&quot; '! '&quot; '
GWU - EMSE - 271
X1 -1.52 -0.88 0.11 -0.59 -0.6 -0.44 -0.62 -0.31 1.27 -1.92 -0.69 0.65 -0.7 -0.77 0.05 -0.16 -1.08 0.86 0.33 0.39 -1.21 1.52 1.14 0.9 -0.29 1.09 0.49 -0.02 1.89 0.55 -0.5 0.09 -0.37 0.7 0.45 -1.22 -0.05 -0.24 -0.72 -0.96 1.27 2.29 -2.31 -1.33 -1.84 -1.14
GWU - EMSE - 271
Original Variables X1 X2 -1.52 -1.29 -0.88 -0.22 0.11 -1.47 -0.59 -0.1 -0.6 -0.08 -0.44 -0.73 -0.62 0 -0.31 -0.49 1.27 2.39 -1.92 -1.4 -0.69 0.47 0.65 1.2 -0.7 -1.12 -0.77 -2.8 0.05 0.01 -0.16 -0.35 -1.08 -0.62 0.86 1.5 0.33 0.07 0.39 -0.18 -1.21 -0.27 1.
GWU - EMSE - 271
EMSE 171/271: DATA ANALYSIS For Engineers and ScientistsSession 11: Principal Component Analysis (PCA), Introduction, How it works, MechanicsLecture Notes by: J. Ren van Dorp1www.seas.gwu.edu/~dorpjr1Department of Engineering Management and Systems E
GWU - EMSE - 271
EMSE 171/271: DATA ANALYSIS For Engineers and ScientistsSession 10: Multiple Regression, Residual Diagnostics, Outlier Detection, Comparing Imbedded Models, ForecastingLecture Notes by: J. Ren van Dorp1www.seas.gwu.edu/~dorpjr1Department of Engineeri
GWU - EMSE - 271
Question 1 a b c d e f gTotal Points 4 5 4 5 10 9 7 44 Total Points 8 8 8 8 32 Total PointsSubtracted 0 0 0 0 0 0 0Reason 4 5 4 5 10 9 7 44 Reason 0 0 0 0 8 8 8 8 32 Reason 0 0 0 8 8 8 24Total Points 44 32 24 100Question 2 a b c dSubtractedSubtract
GWU - EMSE - 271
Original Individual 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Average St. Dev.X1 Sweat Rate 3.7 5.7 3.8 3.2 3.1 4.6 2.4 7.2 6.7 5.4 3.9 4.5 3.5 4.5 1.5 8.5 4.5 6.5 4.1 5.5X2 Sodium 48.5 65.1 47.2 53.2 55.5 36.1 24.8 33.1 47.4 54.1 36.9 58.8 27.
GWU - EMSE - 271
EMSE 171/271: DATA ANALYSIS For Engineers and ScientistsSession 5: Vectors and Matrices, Matrix Algebra, Linear Combinations, Coordinate Systems, Geometric InterpretationLecture Notes by: J. Ren van Dorp1www.seas.gwu.edu/~dorpjr1Department of Enginee
GWU - EMSE - 271
STATISTICAL REVIEWHomework Set 4_2Question 3: Low-Back Pain (LBP) is a serious health problem in many industrial settings. The article &quot;Isodynamic Evaluation of Trunk Muscles and low-Back Pain Among Workers in a Steel Factory&quot; (Ergonomics, 1995, 2107-21
GWU - EMSE - 271
STATISTICAL REVIEWQuestion 1:Homework Set 4_1Let \ denote the proportion of allotted time that a randomly selected student spends working on a certain aptitude test. Suppose the pdf of \ is ) &quot;B) 0 Bl) oe oe ! !YBY&quot; otherwisewhere ) &quot;. A random sample
GWU - EMSE - 271
EMSE 171/271: DATA ANALYSIS For Engineers and ScientistsSession 2: Distribution Theory, Calculating Probabilities, Sums of Random Variables, Point-Estimation, Estimator DistributionsLecture Notes by: J. Ren van Dorp1www.seas.gwu.edu/~dorpjr1Departmen
GWU - EMSE - 271
STATISTICAL REVIEWHomework Set 1Question 1: Recreate the exploratory analysis graphs in the lecture notes using MINITAB by appropriately organizing each dataset in columns, copying the data from EXCEL into MINITAB and using the graphical exploratory ana
Cal Poly - ME - ME 211
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Cal Poly - ME - ME212
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