Cash Flow to Stockholder
o If you buy a share of stock, you can receive cash in two ways
The company pays dividends
You sell your shares either to another investor in the market or back to the
o As with bonds,
What are at least 5 different career options related to finance
CFO, credit manager, cash manager, financial planner, stock broker, insurance agent
Primary functions assigned to treasurer
cash management, credit management, capital expenditures, financial
The value of an investment after one or more periods of time is
a. simple value.
b. present value.
c. discounted value.
d. future value.
e. interest on interest value.
The process of accumulating interest in an investment over
A) is a privilege of the affluent.
B) dates back to colonial times.
C) carries no finance charge.
D) is not a major force in our economy.
E) use has been declining in recent years.
B) Dates back to colonial times
Another name for closed-en
Working with Financial Statements
1. A statement which presents all items in percentage terms is called a(n):
a. balance sheet.
b. ratio statement.
c. common-size statement.
d. income statement.
Chapter 5 Consumer Credit: Advantages, Disadvantages, Sources, and
1. When you use credit, you satisfy needs today and pay for their satisfaction in the
Answer: True Difficulty: Easy LO: 1 Page: 118
2. Credit is an arran
Interest Rates and Bond Valuation
1. The stated interest payment made on a bond is called the:
a. face value.
b. yield to maturity.
d. maturity rate.
e. discount rate.
2. The principal amount of a
The main purpose of taxes is to
A) generate revenue for funding government programs.
B) reduce the chances of inflation.
C) create jobs.
D) discourage use of certain goods and services.
E) decrease competition from foreign companies.
A) Generate revenue f
Introduction to Valuation: The Time Value of Money I. DEFINITIONS
FUTURE VALUE d 1. The value of an investment after one or more periods of time is called the: a. simple value. b. present value. c. discounted value. d. future value. e. interest
Financial Statements, Taxes, and Cash Flow
1. A balance sheet is a financial statement that:
a. reports the cash flows of a firm as of a specified date.
b. reflects a firms accounting value on a particular date.
Discounted Cash Flow Valuation I. DEFINITIONS
ANNUITY c 1. Which one of the following best defines an annuity? a. a stream of increasing annual dividend payments over an infinite period of time b. a stream of decreasing payments occurring at reg
Study guide Midterm 3
A cost that should be ignored when evaluating a project because that cost has already been incurred and cannot be
recouped is referred to as which type of cost?
Money management refers to
A) Preparing personal financial statements
B) Day-to-day financial activities
C) Trade-offs that occur with financial decisions
D) Storing financial records for easy access
Opportunity cost refers to:
A) Current spending habit
What should you do if your identity is stolen?
A) Contact the fraud departments of each of the 3 major
B) Ignore it and hope that it will go away.
C) Throw away all records dealing with the problem
D) Keep your bank accounts and credit car
BUSINESS FINANCE 3120
FISHER COLLEGE OF BUSINESS
BUSFIN 3120: FOUNDATIONS OF FINANCE
244 Fisher Hall
[email protected] (Please allow 24 hours to respond)
CLASS TIMES AND
STUDY GUIDE MIDTERM 2
1) Which of the following statements regarding growing perpetuities is FALSE?
A) PV of a growing perpetuity = C
B) To find the value of a growing perpetuity one cash flow at a time would take forever.
C) A growing perpetuity is a
Chapter 5: PowerPoint Problems
Problem 5.1: Valuing Monthly Cash Flows
Suppose your bank account pays interest monthly with an effective annual rate of 6%. What amount of interest will
you earn each month?
If you have no money in the bank today, how much
Chapter 6: PowerPoint Problems
Example 6.1: Yields for Different Maturities
Suppose the following zero-coupon bonds are trading at the prices shown below per $100 face value.
Determine the corresponding yield to maturity for each bond.
Chapter 4: PowerPoint Practice Problems
Example 4.1: Present Value of a Stream of Cash Flows
You have just graduated and need money to buy a new car. Your rich Uncle Henry will lend you the
money as long as you agree to pay him back within four years, and
Chapter 7: PowerPoint Problems
Problem 7.1: Stock Prices and Returns
Suppose you expect Longs Drug Stores to pay an annual dividend of $0.56 per share in the coming year and to
trade $45.50 per share at the end of the year. If investments with equivalent
MIDTERM 3 STUDY GUIDE
1) Most corporations measure the value of a project in terms of which of the following?
A) future value (FV)
B) discount value
C) present value (PV)
D) discount factor
2) Tanner is choosing between two investment options. He can inve
The Cost of Capital
1. Plan: Compute the weights for the WACC.
Value of debt: $100 million
Value of preferred stock: $20 million
Market value of common equity: $50 per share 6 million shares = $300 million
Total market value of firm: $
Chapter 1: Introduction to Finance
Wednesday, January 11, 2017
Financial Institutions and Their Roles in the Financial Cycle
Study of how we allocate our assets over time in a risky world
Studies how we pay bi
Fundamentals of Capital Budgeting
4. Plan: We can compute the level of incremental sales associated with introducing the new pizza
assuming that customers will spend the same amount on either version by using the sales of the
new pizza and the l
Suggested Problems - Chapter 7
6. Plan: We can rearrange Eq. 7.1 to find the cost of capital given the current stock price of $20, the $1
expected dividend, and the expected stock price right after paying the dividend of $22. We can use Eq.
7.2 to calcula
Given a rate of return of zero, the future value of a lump sum
invested today will always:
a. remain constant, regardless of the period of time.
b. decrease as the period of time decreases.
c. decrease as the period of time increases.
d. increase as the p
Chapter 9 Health and Disability Income Insurance
1. Group health insurance will cover you but not your immediate family.
Answer: False Difficulty: Med LO: 1 Page: 240
2. Group health insurance covers all of your health insurance needs