FIN 300 Exam 2 Homestretch Study Checklist - FIN 300 \u2013 Exam 2 \u2013 \u201cHomestretch\u201d Study Checklist Here is a list of problem types and issues

FIN 300 Exam 2 Homestretch Study Checklist - FIN 300...

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FIN 300 – Exam 2 – “Homestretch” Study Checklist Here is a list of problem types and issues that you might see: Bonds – Ch. 8 o Qualitative and conceptual issues to know What it means for a bond to trade at a “premium,” “at par,” or at a “discount” What do those 3 situations mean with regard to the relationship of price to the face value? What do those 3 situations mean with regard to the relationship of yield-to-maturity (YTM) to the coupon rate? The relationship of price vs. yield The relationship of price volatility (when interest rates change) to the maturity of a bond Are longer or shorter maturity bonds more or less volatile? What happens to the price of a bond as the bond matures? Inflation – small portion of Ch. 2 o Quantitative problems – all would center on using the “inflation” (Fisher) equation on the formula sheet Given two of the variables – solve for the missing one o Qualitative – Nothing specifically Stocks – Ch. 9 o Quantitative problems Using the constant growth equation (given on the formula sheet) There are a number of variations on the constant growth problems – a wide range of examples are provided via lecture slides, Wiley Plus, and old HW/quiz problems Know these concepts to help with calculations o R = total return = dividend yield + capital gains yield o Dividend yield = ending dividend(DIV 1 )/Beginning Price(P ) o g = dividend growth rate = price growth rate = capital gains yield Preferred shares of stock Assume all preferred shares are perpetuities Understand how to solve for either the price, rate of return (discount rate), or dividend for the following 2 scenarios o Annual dividends o Quarterly dividends o Qualitative Problems – Nothing specifically qualitative/conceptual

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