First Exam
Study Guide
In the exam you will answer to 4-7 questions selected from the questions bellow:
Chapter 1
Define agency costs (page 13) and describe the methods to reduce agency costs in a
corporation.
Chapter 2
Please, please, make sure that you
CHAPTER 4 DISCOUNTED CASH FLOW VALUATION
Answers to Concepts Review and Critical Thinking Questions 1. Assuming positive cash
flows and interest rates, the future value increases and the present value decreases.
2. Assuming positive cash flows and interes
Final Exam
Study Guide
Chapter 1
Define agency costs (page 13) and describe the methods to reduce agency costs in a
corporation.
Chapter 5
Example in page 139-140 (Consider the stock of Elixir Drug.).
Chapter 6
Problem 6.20, page 193
Chapter 9
Please, ple
Chapter 8 Bond Valuation
premium bond = bond price > par value
discount bond = bond price < par value
Current Yield = Annual coupon payment/current bond price (P 0)
o current yield < coupon rate for premium bonds
o current yield > coupon rate for disco
CHAPTER 13 THE COST OF CAPITAL
target capital structure optimal proportions of debt,
preferred stock, equity used by firm to raise money
cost of capital = minimum rate of return a firm must earn
on its fixed assets
capital asset pricing model (CAPM):
RS =
Answers to Concepts Review and Critical Thinking Questions
1.
Dividend policy deals with the timing of dividend payments, not the amounts
ultimately paid. Dividend policy is irrelevant when the timing of dividend payments
doesnt affect the present value o
16. The value of areturn is an firms equity marketratio ofof its debt plus the market of itsvalue of the firms
Sexpected levered firm equals the is thevalue is equal toearnings to the market outstanding So,
ince Unlevered on a all-equity firm, its value a
Second Exam _ March 26 _
Study Guide
Chapter 12
1. Formula of the CAPM (12.1).
2. Examples 12.1 and 12.21 (pages 343 and 344)
3. Explain the concept of beta.
4. Explain the steps that you will undertake to compute a firms beta in Excel (as you
did in your
Quiz 4
Study Guide
Chapter 15
1. Enumerate the assumptions (provided in class) in Miller and Modigliani (M&M)
(1958)
2. Define the M&M Propositions I and II with and without corporate taxes. You should
be able to use Figures 15.3 and 15.6 in your explanat
Quiz 2 Study Guide Chapter 12 1. Formula of the CAPM (12.1). 2. Examples 12.1 and 12.21 (pages 343 and 344) 3. Explain the concept of beta. 4. Explain the steps that you will undertake to compute a firm's beta in Excel (as you did in your homework) 5. WAC
Quiz 1
Study Guide
In Quiz 1 you will answer to 1 question selected from the questions bellow:
In the exam you will answer to 4-7 questions selected from the questions bellow:
Chapter 1
Define agency costs (page 13) and describe the methods to reduce agen
CHAPTERS 16 & 17 CAPITAL STRUCTURE
Objective
to search for an optimal capital structure (debt/equity ratio) that will
maximize a firms value
Financial Leverage and Firms Value
E( EPS )=ProbofRecession( EPSof Recession)+ ProbofExpected (EPSofExpected )+ Pr