Practice Final

Practice Final - Practice Final Exam Finance 310 Professor...

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Practice Final Exam Finance 310 Professor Keith Jacks Gamble This practice final exam was the actual exam for a previous section of FIN 310. I will not be providing written solutions, but I will be happy to discuss how to solve any of these questions in office hours, by email, or on the course discussion board under “Practice Final Questions.” This comprehensive final exam is worth a total of 40 points. You have 2 hours and 15 minutes to complete it, though the exam is designed to be completed in 1 hour and 45 minutes. If you find yourself stuck on a question, move on to ensure that you have time to attempt every question. Use of a calculator is permitted. You may also use the front and back of one 8.5”x11” sheet of notes. No other aids are allowed. 40 Questions (40 points total; 1 point each) Instructions: Please answer each of the following questions clearly and completely. Be sure to show enough work so that I know how you arrived at your answer. Showing your work is also important so that you may earn partial credit in case your final answer is incorrect. I will only award partial credit for fully-correct techniques and logic in pursuit of a final answer. Only the answers that you write in the space below each question will be graded. DO NOT START UNTIL TOLD TO DO SO
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1. Provide an example of a firm’s capital budgeting decision and an example of a firm’s capital structure decision. 2. You have come upon a fabulous business idea; however, you need money to start your business. Provide a specific example of how you could raise the money you need by issuing debt on the business and provide a specific example of how you could raise the money you need by issuing equity in the business. Which is the more costly form of financing if your business tanks? Which is the more costly form of financing if your business takes off? 3. Match the financial institution to its role in the financial system: Hedge fund _____ A. Takes deposits and makes loans Investment bank ____ B. Helps businesses and governments raise funds by issuing securities Pension fund ____ Commercial bank _____ C. a private, mostly unregulated investment pool D. invests money designated for paying out retirement benefits 4. TRUE or FALSE (circle your answer) The remaining balance on an amortized loan is paid down evenly over the life of the loan. For example, if you borrow $20,000 today on a 60-month amortized loan then your
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This note was uploaded on 05/31/2011 for the course FIN 310 taught by Professor Ryan during the Spring '08 term at DePaul.

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Practice Final - Practice Final Exam Finance 310 Professor...

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