Exam2Reviewspring2010

Exam2Reviewspring2010 - Exam 2 Review The exam consists of...

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Exam 2 Review The exam consists of about 50 questions of which 25 questions tests you on financial management concepts from chapters 6,7,8,13 and, and class slides. The questions are true/false multiple choice. The other 25 questions (chapters 6,7,8,13, and class slides) are multiple choice, which require calculations. You obviously need a calculator for your exam. Understand the following knowledge areas for the concepts part of your exam 1. Understand the components of kE( required rate of return). Ke, Rf and Risk Premium. . kE = Rf +Risk Premium Rf, risk-free rate of return. The rate of return that the owner could obtain on a riskless investment Risk Premium, over and above the price of time, that the owner requires because a hospitality investment is risky. 2. Understand Nominal rate of return. It is the going rate . in the marketplace. 3. What is expected value? It measures the central tendency of the distribution, that is, the average outcome if you were to repeat the investment over and over. For return distributions, the expected value is sometimes called the ROE or
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Exam2Reviewspring2010 - Exam 2 Review The exam consists of...

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