final exam guideline - j)= R rf β j(R m – R rf feasible...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Final Exam Guideline The basic format of the exam will be the same as Exam 1. You will have 25 multiple choices and 5 problem solving/essay questions for 2 hour exam. You can use 1 page index card (front and back) for formula. Ch 7. Bond . Vb = ∑ CF / (1+ r) t = ∑ $C / (1+ r) t + $M / (1+ r) t . maturity, coupon, yield to maturity, par value, price . YTM = CY + CGY . interest rate risk vs. reinvestment risk . bond rating – default risk . yield to call . semi annual coupon bond Ch 12. 13. Risk and Return . Market efficiency . Expected rate of return . Standard deviation (σ) = √ ( ∑ (r i – r) 2 P i ) . Portfolio, Correlation coefficient . portfolio return, portfolio risk . Total risk = systematic risk + unsystematic risk . beta, market portfolio. . βportfolio = ∑ (percentage invested in stock j ) * β of stock j . Capital Asset Pricing Model (CAPM) : Security Market Line (SML) equation . Required rate of return = E(R
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: j )= R rf + β j (R m – R rf ) . feasible set, efficient frontier, capital market line Ch 8. Stock . Value of preferred stock . V ps = D / R ps or R ps = D / V ps . Constant growth model Vcs = D1 / (R-g) or R = (D1 / P ) + g . Non constant model . Reward to risk ratio . Ch 14. Cost of Capital . Tax effect . Cost of Debt Rd = Rd before tax * (1-Tax) . Cost of Preferred stock R ps = Div / price . Cost of Common equity-internal equity-external equity CAPM Rs = Rrf + b (Rm – Rrf) DDM Rs = (D1 / price) + g . WACC = wd * Rd (1-T) + wps* Rps + ws* Rs Ch 9. Capital Budgeting . Basic concepts and the benefits/costs of each method 1. Payback period 2. Discounted payback period 3. NPV = PV of CF – IO = [∑ FCF / (1+ R) t ] – Initial Outlay. 4. IRR : NPV=0 5. MIRR, PI . Reinvestment assumption of NPV and IRR GOOD LUCK!!!...
View Full Document

Page1 / 2

final exam guideline - j)= R rf β j(R m – R rf feasible...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online