CHAPTER 6 PROBLEMS
THE MEANING AND MEASUREMENT OF RISK AND RETURN
PROBLEM 61
EXPECTED RETURN AND RISK
DATA
Probability
Return
0.1
10%
0.2
5%
0.3
10%
0.4
25%
Solution
Investment A:
Expected return
Variance
Standard deviation
Prob X Return Prob x Dev Sq

Olayinka Sonuga
EIS 3302
Syed Ali
25TH October, 2012
Information technology in The World Today (EXTRA CREDIT)
The role of IT is constantly evolving and has changed significantly from the days when
the IT organization was often referred to as data processi
CHAPTER 7 PROBLEMS
THE VALUATION AND CHARACTERISTICS OF BONDS
PROBLEM 71
BOND VALUATION
DATA
Years
Face value
Interest
ROR
Present Value =
PROBLEM 72
BOND VALUATION
DATA
Years
Face value
Interest
ROR
Present Value =
20
1,000
8.0%
7.0%
80
847.52
258.42
1
CHAPTER 9 PROBLEMS
THE COST OF CAPITAL
PROBLEM 91
COST OF CAPITAL
Terms
Opportunity cost
Financial policy
Cost of capital
Transaction costs
Definitions
The target mix of sources of funds that the firm uses when raising new money to
invest in the firm.
A
Problem 21 (LG 26)
A particular securitys equilibrium rate of return is 8 percent. For all securities, the inflation risk premium is 1.75
percent and the real interest rate is 3.5 percent. The securitys liquidity risk premium is .25 percent and maturity
CHAPTER 3 NEW PROBLEMS
UNDERSTANDING FINANCIAL STATEMENTS
AND CASH FLOW
31.
WORKING WITH INCOME STATEMENT
DATA
Net income
Shares outstanding
$280,000
80,000
Solution
Earnings per share
$3.50
32.
WORKING WITH INCOME STATEMENT
DATA
Sales
Cost of goods sol
Problem 31 (LG 31)
You bought a bond five years ago for $935 per bond. The bond is now selling for $980. It also paid $75 in interest
per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bond.
Explanation:
935
Problem 51 (LG 51)
What is the discount yield, bond equivalent yield, and effective annual return on a $1 million Treasury bill that
currently sells at 97 3/8 percent of its face value and is 65 days from maturity?
Explanation:
Some values below may sho
Question 1
1 out of 1 points
The research
strategy used at
Novartis
International is
to concentrate on
cures for highly
visible diseases.
Answer
Selected
Answer:
b.
False
Question 2
1 out of 1 points
Which of the
following
descriptions is
most valid, as
Question 1
1 out of 1 points
The goal of
behavioral
questions asked
during an
interview is to
challenge you to
provide real
evidence of your
skills.
Answer
Selected
Answer:
b.
True
Question 2
1 out of 1 points
Evan is
preparing a
vsum for
posting to
YouT
Question 1
0 out of 1 points
In a sales
message, the last
paragraph should
Answer
Selected Answer:
Question 2
1 out of 1 points
Rhamel writes a
sales message in
the AIDA
approach. He
gets the
receivers
Attention,
creates an
Inference,
creates a
Decision
Problem 43 (LG 43)
Bank Three currently has $600 million in transaction deposits on its balance sheet. The Federal Reserve has
currently set the reserve requirement at 10 percent of transaction deposits.
a. If the Federal Reserve decreases the reserve r
Problem 65 (LG 62)
Consider an investor who, on January 1, 2014, purchases a TIPS bond with an original principal of $100,000, an 8
percent annual (or 4 percent semiannual) coupon rate, and 10 years to maturity.
a. If the semiannual inflation rate durin
Quan Nguyen
11/8/2016
Homework 3  Ethics
My friend, Willy Thai, was working in a foreign office of a U.S based firm. He has lived in
Vietnam for a long time before he became the U.S citizens so he has had a lot of network in
financial industry. As a resu
Quan Nguyen
Homework #2  Chapter 6
1What is the definition of the efficient market hypothesis?
The efficient market hypothesis is a theory that states at any given time and in a liquid market, the
prices of securities fully reflect all available informa
Chapter 4 Problems
1A company believes the following probability distribution exists for its stock. Calculate the
expected return, standard deviation and the coefficient of variation on the company's stock?
State of
the Economy
Boom
Normal
Recession
Prob
Quan Nguyen
BA3301
Intellectual Property Assignment.
Oct 3 2016
The problem that I've run into can be defined as trademark infringement. I am concerned
about this drink menu item because this is a serious issues damaging our reputation, profits and
the qu
Chapter 5 Lecture Problems
1Assuming that the expectations theory is the correct theory of the term structure, calculate the interest
rates in the term structure for maturities of one to five years, and plot the resulting yield curves for the
following s
Chapter 3 Lecture Problems
All bonds are assumed to be annually paying bonds.
1Calculate the present value of a $1,000 zerocoupon bond with 5 years to maturity if the
required annual interest rate is 6%.
2A lottery claims its grand prize is $10 million
CHAPTER 14 PROBLEMS
SHORTTERM FINANCIAL PLANNING
PROBLEM 141
FINANCIAL FORECASTING
DATA
Sales
Net profit
12/31/2013
12,000,000
1,200,000
Balance sheet
Asset
Current assets
Net fixed assets
Total
Liabilities and Owner's Equity
Accounts payable
Longterm
WEB CHAPTER 17 PROBLEMS
CASH, RECEIVAVBLES, AND INVENTORY MANAGEMENT
PROBLEM 171
COST OF SERVICES
DATA
Receives
No. of checks
Unit cost
Yield
Days in yr
24,000,000
10,000
0.25
8%
365
A)
Avg check size =
Opportunity cost =
Reduction in days =
2,400
0.0002
A
B
C
D
1
CHAPTER 16 PROBLEMS
INTERNATIONAL BUSINESS FINANCE
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Selling Quotes for Foreign Currencies in New York
Contract
Country
per day
Canada  dollar
Spot
30
90
Japan  yen
Spot
30
90
Switzerland  franc
Spot
30
90
1
CHAPTER 13 PROBLEMS
DIVIDEND POLICY AND INTERNAL FINANCING
PROBLEM 131
DIVIDEND PAYOUT RATIO
DATA
Net Income
Dividend/Share
No of Shareholders
Total Dividends paid
Dividend Payout Ratio =
2,400,000
0.02
10,000,000
200000
8.33%
PROBLEM 132
DIVIDEND POLIC
CHAPTER 12 PROBLEMS
DETERMINING THE FINANCING MIX
PROBLEM 121
BUSINESS AND FINANCIAL RISK
No Calculations
PROBLEM 122
LEVERAGE ANALYSIS
DATA
Sales
Variable Costs
Revenue before fixed costs
Fixed Costs
EBIT
Interest expense
EBT
Taxes
Net Income
50,439,37
CHAPTER 10 PROBLEMS
CAPITALBUDGETING TECHNIQUES AND PRACTICE
PROBLEM 101
IRR CALCULATIONS
A)
Initial outlay
FV
Years
IRR =
B)
Initial outlay
FV
Years
IRR =
C)
Initial outlay
FV
Years
IRR =
D)
Initial outlay
FV
Years
IRR =
10,000
17,182
8
7%
10,000
48,07
CHAPTER 11 PROBLEMS
CASH FLOWS AND OTHER TOPICS IN CAPITAL BUDGETING
PROBLEM 111
RELEVANT CASH FLOWS
DATA
New Sales
Former customers % of sales
25,000,000
20%
Relevant Sales Level
20,000,000
PROBLEM 112
CONSIDERATION OF SUNK AND OPPORTUNITY COSTS
See IM
CHAPTER 8 PROBLEMS
THE VALUATION AND CHARACTERISTICS OF STOCK
PROBLEM 81
PREFERRED STOCK VALUATION
DATA
Dividend rate
Par value
Discount rate
16.0%
$100.00
12.0%
Present Value =
$133.33
16
PROBLEM 82
PREFERRED STOCK VALUATION
DATA
Dividend rate
Par valu
CHAPTER 5 PROBLEMS
THE TIME VALUE OF MONEY
PROBLEM 51
COMPOUND INTEREST
A)
Invest
Years
Percent
FV =
B)
Invest
Years
Percent
FV =
C)
Invest
Years
Percent
FV =
D)
Invest
Years
Percent
FV =
5,000
10
10%
12,969
8,000
7
8%
13,711
775
12
12%
3,019
21,000
5
5%