Chapter 1 Investments work with
stocks that trade on an organized market, financial statements? Internal uses:
financial assets such as stocks and bonds.
firms must meet certain minimum criteria.
performance evaluation compensation and
Value of financial
1-1
Sample Review Questions
for Final Exam
1-2
1. A.B. Winston has a company policy of increasing its
dividend by 2.5 percent annually. What will the annual
dividend for this firm be 3 years from now if the last
dividend paid was $2.80 a share?
A.
B.
C.
D
Score: 120
1.
out of 120 points (100%)
award:
10 out of
10.00
points
Just Dew It Corporation reports the following balance sheet information for 2011 and 2012.
JUST DEW IT CORPORATION
2011 and 2012 Balance Sheets
Assets
2011
Current assets
Cash
Accounts r
Score: 96.67
1.
out of 100 points (96.67%)
award:
10 out of
10.00
points
Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes):
Income Statement
Sales
$46,100
Costs
39,630
Net income
$ 6,470
Assets
Tota
Score: 96.67
1.
out of 100 points (96.67%)
award:
10 out of
10.00
points
You bought one of Great White Shark Repellant Co.s 5.2 percent coupon bonds one year ago for $1,055.
These bonds make annual payments and mature 14 years from now. Suppose you decide
2. Which one of the following statements is correct?
A. The future value of an annuity is unaffected by the amount of each annuity payment.
B. The present value of an annuity is unaffected by the number of the annuity payments.
C. The present value of an
Score: 71.67
1.
out of 90 points (79.63%)
award:
6.67 out of
10.00
points
The YTM on a bond is the interest rate you earn on your investment if interest rates dont change. If you
actually sell the bond before it matures, your realized return is known as t
Score: 120
1.
out of 120 points (100%)
award:
10 out of
10.00
points
Toadies, Inc., has identified an investment project with the following cash flows.
Year
1
2
3
4
Cash Flow
$ 1,425
1,545
1,630
1,680
If the discount rate is 7 percent, what is the future
Score: 110
1.
out of 110 points (100%)
award:
10 out of
10.00
points
Staal Corporation will pay a $3.14 per share dividend next year. The company pledges to increase its
dividend by 5 percent per year indefinitely. If you require a return of 12 percent on
Score: 80
out of 80 points (100%)
1.
award:
10 out of
10.00
points
First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank
pays 7 percent interest compounded annually.
If you made a $73,000 deposit in each
Score: 100
1.
out of 100 points (100%)
award:
10 out of
10.00
points
What are the portfolio weights for a portfolio that has 144 shares of Stock A that sell for $40 per share and
100 shares of Stock B that sell for $20 per share? (Round your answers to 4
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Please do NOT write on this document which needs to be returned to instructor. Please do not photograph this
document either.
BUS341 Exam 2 Version A Solution
This exam includes 22 multiple choice questions. 6 points/each question. Totally 132 points.
One
Financial Statements and Cash Flow
1
The Importance of This Topic
JP Morgan interview question: Staples
buys some pencils, and how should Staples
input this transaction into financial
statements (B/S, I/S, CF/S)?
2
Outline
Balance Sheet
Income Statement
Time Value of Money
- Single Cash Flows
1
Why is time value of money important?
Time Value of Money, or TVM, is a concept that is
used in all aspects of finance including:
Bond valuation
Stock valuation
Accept/reject decisions for project management
Fina
Time Value of Money
Professor Girma
PartI:DiscountedCashFlow
ValuationofSingleCash
Flow
Time Value of Money (TVM)
BasicConcepts
CashFlowTimeLine
FutureValueandCompounding
PresentValueandDiscounting
NumberofPeriods&RateofReturn
Basic Concepts
Beabletocompu
Appendix. Formulas with example questions
Note: These formulas are either from formula sheet or lecture slides. This table does not add
anything new beyond class materials, so do not consider it as "extra work". Rather, students can
use this table as a su
Analysis of Financial
Statements & Taxes
Part IA: Analysis of
Financial Statement:
Financial Statement,
Cash Flow & Taxes
Key Concepts and Skills
Know the difference between book value
and market value
Know the difference between accounting
income and c
Analysis of Financial
Statements & Taxes
Part IA: Analysis of
Financial Statement:
Financial Statement,
Cash Flow & Taxes
Key Concepts and Skills
Know the difference between book value
and market value
Know the difference between accounting
income and c
You are planning to save for retirement over the next 35 years. To do this, you will invest $710 per month
in a stock account and $310 per month in a bond account. The return of the stock account is expected
to be 9.1 percent, and the bond account will pa
Please do NOT write on this document which needs to be returned to instructor. Please do not photograph this
document either.
BUS341 Exam 3 Solution Version A
This exam includes 22 multiple choice questions. 6 points/each question. Totally 132 points.
One
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Chapter 5 Discounted cash flow valuation
5.1 Future and present values of multiple cash flows
Calculate future values for multiple cash flow:
1. Compound the accumulated balance forward one year at a time
2. Calculate the future value of each cash flow fi
Chapter 6 Bond valuation
6.1 Bonds and bond valuation
Bond = corporation/ government borrows money from the public on long-term basis
Interest only loan
None of the principal will be repaid until the end
Coupon = regular interest payments, stated on the
Chapter 9 Making Capital investment decisions
9.1 Project cash flows; a first look
Incremental cash flow = the difference between a firms future cash flows with a project and those
without that project.
The incremental cash flows for a project evaluation
Chapter 10 Project analysis and evaluation
10.1 Evaluating NPV estimates
Two circumstances leading to a positive NPV:
There is a positive NPV
Investment appears to have a positive NPV because our estimate is inaccurate
Forecasting risk = the possibility
Chapter 11 Some lessons from recent capital market history
11.1 Returns
Return on investment: gain/loss from investments.
Income component: cash you receive directly while you own the investment.
Capital gain/loss of investment:
Total cash return = divid
Bond
1
Outline
Bond terminology
Bond return: coupon rate, current yield, YTM
Bond risk
Bond valuation
Fisher function
2
Outline
Bond terminology
3
Bond terminology
Maturity date years until the bond must be repaid.
Issue date when the bond was issued.
Diversification
1
Why is this topic important?
A typical interview question for an analyst
position (Marketing Analyst, Financial
Analyst, Quality Assurance Engineer, Data
Science, Clinical Trial):
Can you explain standard deviation to a person
who does
Introduction to
Corporate Finance
(UG)
Key Concepts and Skills
Know the basic types of financial
management decisions and the role of
the financial manager
Know the financial implications of the
different forms of business organization
Know the goal of
Long-term Financial
Planning
(UG)
Professor Girma
Key Concepts and Skills
Understand the financial planning process
and how decisions are interrelated
Be able to develop a financial plan using the
percentage of sales approach
Understand the four major