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Study Guide for Exam 2

Study Guide for Exam 2 - Know how to o Calculate the price...

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Study Guide for Exam 2 BUSI 105: Financial Management Spring 2007 Be able to describe or identify: o Soft rationing versus hard rationing o The different forms of the efficient market theory o The difference between technical and fundamental analysis o Debt ratings and their relationship to default premiums o The relationship between interest rates and bond prices o Stock prices and random walk theory o Payback method o NPV, IRR and Profitability Index decision rules o Bond terminology (par value, face value, coupon rate, etc.) o Different types of bonds (zero-coupon, investment grade, convertible, etc.)
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Unformatted text preview: Know how to: o Calculate the price, current yield, yield to maturity, total return on a bond o Estimate a stock price, return or growth rate using the dividend discount model o Calculate P/E ratio, EPS o Calculate a sustainable growth rate o Calculate NPV, IRR, Profitability Index and Payback o Make a buy versus lease decision using the equivalent annuity approach o Calculate incremental cash flow for use in a discounted cash flow...
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