Finance Mid TermFall2008

Finance Mid TermFall2008 - Finance Mid Term- Fall 08 1....

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Finance Mid Term- Fall 08 1. “Proper Perspective”- understand the tax laws 2. In his public letter after 9/11 Peter Lynch (Fidelity Inv) makes the following key points: I do not know what stock markets are going to do next month and 1-2 years 3. Why are they chartered in Delaware?- The Delaware Chancery Court 4. Penalizes working married couples- no longer exists 5. In Business week, “How Efficient is that company”- decreases net working capital 6. Problem with PE ratio- Determining E (Earnings) and Forecasting E 7. Problems with ratio analysis- seasonal factors, “peer groups”, “window dressing”, doesn’t recognize qualitative factors 8. “The End of Easy Money”- Chpt 6 handout following investment strategies offered: Interest rates are low (falling) borrow money short term and invest long term, and adjustable rate mortgages are best when interest rates are low/ falling 9. Bankruptcy liquidation of a corporation, priority goes to- secured creditors 10. Zero coupon bonds – cannot sell for more than par 11. Most correct?- one advantage of forming a corporation is limited liability 12. Primary goal of a publicly owned firm interested in serving its stockholders should be to – maximize stock price per share 13. Most likely to encourage a firms managers to make decisions that are best interest of shareholders? – Executive compensation comes primarily in stock options and Institutional investors such as mutual funds and pension funds hold large amounts of firms stock 14. Most correct?- A good example of agency relationship is one between stockholders and managers
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Finance Mid TermFall2008 - Finance Mid Term- Fall 08 1....

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