11 10 30 Review Session Mid Term

# 11 10 30 Review Session Mid Term - Review Session before...

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Review Session before Mid Term Finance for non MBAs October 30th, 2011 TA: Pablo Villanueva (using previous TA’s notes)

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2 Agenda for Today 1. Details of the Exam 2. Some test taking tips. 3. Some Concept Review Weakest Sections so Far CAPM (including cost of capital) Firm Valuation Porfolio Choice Financial Statements and Free Cash Flow 4. Practice Questions My Finance Lab Study Plan. Chapter 12. Question 23. Firm Valuation & Cost of Capital. Practice Exam 1. Question 2. CAPM. Practice Exam 3. Question 7. Financial Statements and FCF. Practice Exam 2. Question 3. Bond Valuation.
Details of the Exam 3 Exam is Wednesday, November 2nd in rooms C102, C105, and C106 from 3:15 pm to 4:45 pm (same time of class!). Please get to the rooms before 3:10 pm. Open book (Berk and De Marzo). Open notes. Calculator is requiered. No computer or any other electronic device. Tested skills: ability to solve problems Do not memorize formulas! List of concepts might come handy Read the Honor Code! Specially if you are in your first quarter at Stanford. There will be no proctors. Stanford uses honor code which prohibits you from cheating and us from watching you while you take the test. The TA will be in the GSB Cafeteria during the exam

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Some Test-Taking Tips 4 Show your work! Make a quick-reference formula sheet. In addition to being useful during the exam, the creation process helps you learn and prepare. Attend last minute Office Hours if you have doubts. These will be on Tuesday, November 1st from 9:00 am to 11:00 am in room G104.
5 Concept Review 5. Financial Statements and Free Cash Flow Average understanding: 3.04 1. Net Present Value Average understanding: 4.32 2. Internal Rate of Return Average understanding: 3.57 4. EAR and APR Average understanding: 3.29 3. Bond Valuation Average understanding: 3.36 7. Firm Valuation Average understanding: 2.71 6. Portfolio Choice Average understanding: 2.89 8. CAPM Average understanding: 2.57 Decision Making Analysis of Information Valuation Porfolio Optimization

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My Finance Lab Study Plan. Chapter 12. Question 23. Firm Valuation & Cost of Capital. Harrison Holdings, Inc. ( HHI ) is publicly traded, with a current share price of \$31 per share. HHI has 20 million shares outstanding , as well as \$70 million in debt. The founder of HHI , Harry Harrison, made his fortune in the fast food business. He sold off part of his fast food empire, and purchased a professional hockey team. HHI’s only assets are the hockey team, together with 50% of the outstanding shares of Harry’s Hotdogs (HDG) restaurant chain. HDG
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11 10 30 Review Session Mid Term - Review Session before...

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