301 final material

301 final material - 2. Reinvestment rate vs. Interest rate...

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Finance 301, Spring, 2011 Pat Schaeff Material Review for Final Exam Chapter 1: 1. What is financial goal of the firm, and why is it not maximizing income or EPS? 2. What is meant by the agency conflict, and who is the agent and who is the principle? Chapter 2 1. What is the difference between a money market and a capital market? 2. What is the difference between a primary market and a secondary market? 3. What is the difference between? 4. What is the EMH? Chapter 8 1. What is meant by (an asset’s) total risk, and how is it measured? (don’t have to compute, just know what it is) 2. What is meant by diversification, and how/when does it occur? 3. What is meant by (as asset’s) market risk, and how is it measured? (no computations) Chapter 6 1. What are the major components of all (quoted, stated, nominal) interest rates? Chapter 5 1. TVM calculations for FV of lump sum, annuity, mixed stream 2. TVM calculations for PV of lump sum, annuity, mixed stream, perpetuity 3. Basic assumptions of compounding Chapter 7 1. What are the defining characteristics of a bond, and what do they define?
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Unformatted text preview: 2. Reinvestment rate vs. Interest rate risk what each are and how maturity of the bond effects each Chapter 8 1. Major characteristics of preferred stock 2. Major characteristics of common stock Chapter 14 1. What is the preference of investors for dividends vs. capital gains? What do they value most? 2. What are the most important factors a firm has to consider when making the dividend decision? Chapter 10 1. What is a firms WACC? What does the number represent? 2. What is meant by saying that WACC is the link between the assets and the liability and equity side of the balance sheet? 3. Why is the cost in common equity the most difficult to measure? Chapter 13 1. What is the trade off between in a firms capital structure decision? 2. What is the benefit of using debt? 3. What is the cost of using debt? 4. What is leverage (operating and financial) and what causes?...
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301 final material - 2. Reinvestment rate vs. Interest rate...

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