Belief systems all around the world, shape culture and society to a point where it can become divisive.
On one side, certain belief systems can contribute to the unification of different groups which follow the
same belief. But, not every society group ha
Review Sheet for Exam 1: The structure of the exam will be the same as
the old exams. There will be 2 numerical and 2 descriptive questions.
The numerical questions will come from chapters 2, 7 and 9 and other
numerical exercises done in class.
Please rev
Financial Statement Analysis
Episode 5
Financial Statements
Tong Lu
1
Reformulated Statement of Stockholders Equity
Common Shareholders Equity, beginning of period
Comprehensive Income
Net Dividends
Common Shareholders Equity, end of period
Statement of S
Alternatives to NPV
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
Theoretical motivation for the NPV rule
Fisher Separation Theorem
Evaluating investment projects- competitors to the NPV
rule
1.
2.
3.
4.
Payback period
Average accounting return
Discounted Cash Flow (DCF) Model
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
1. DCF Technique
A. Terminal value
B. Examples
DCF Technique
MARKET VALUE BALANCE
SHEET
Remember- FCF determine the enterprise value
Market Value Balance Sheet
Excess c
Free Cash Flows
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
1. Free cash flows
Cash vs. earnings
Net operating profit less adjusted taxes
Non-cash operating expenses (e.g. depreciation)
Capital Expenditures
Changes in net working capital (NW
Bonds & Stocks
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
Bonds as application of time-value of money
Goal seek in Excel to find yield-to-maturity (YTM)
Review expected values
Explain the difference between the discount rate
and the YTM
Sto
Balance Sheet & Enterprise Value
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
1. Review of accounting statements, market
value vs. book value
2. Overview of next few weeks with a simple
example calculating value of asset(s).
A. Infer from market v
Present Value
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
Discounting cash flows
Excel examples
Enter cash flows and discount rate in Excel,
compute present value
Useful trick: fill down CNTRL+D
Discounting cash flows
DISCOUNTING CASH FLOWS
Risk & Return
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
Risk and return
Capital asset pricing model (CAPM)
Definition and examples
Using Excel to plot returns, estimate beta
Company vs. project cost-of-capital
Risk and return
RISK AND RETU
Introduction and Overview
Professor Kevin Roshak
kroshak@bauer.uh.edu
CONTENTS
Introduction
Syllabus and administration
Course overview
WHO AM I?
PhD at Kellogg School of Management,
Northwestern University
BSBA at Fisher College of Business, The Ohi
117.
Explain the conditions that would need to exist for the Treasury yield curve to be downward
sloping.
A downward sloping Treasury yield curve exists when current inflation rates are high but are
expected to decline in the future. The decline in the in
109.
The outstanding bonds of Frank's Welding provide a real rate of return of 2.87 percent. The
current rate of inflation is 4.64 percent. What is the nominal rate of return on these bonds?
A. 7.33 percent
B. 7.46 percent
C. 7.51 percent
D. 7.64 percent
88.
Your credit card company charges you 1.45 percent per month. What is the annual percentage
rate on your account?
A. 16.67 percent
B. 16.79 percent
C. 17.40 percent
D. 18.00 percent
E. 18.86 percent
APR = .0145
12 = .174 = 17.4 percent
AACSB TOPIC: ANA
30. A Treasury yield curve is defined as the plotting of the yields on Treasury securities relative to:
A. market interest rates.
B. comparable corporate bond yields.
C. the risk-free rate.
D. inflation.
E. maturity.
31. The _ premium is that portion of a
TOPIC: SINKING FUND
TYPE: DEFINITIONS
13.
An agreement giving the bond issuer the option to repurchase the bond at a specified price
prior to maturity is the _ provision.
A. sinking fund
B. call
C. seniority
D. collateral
E. debenture
Ross - Chapter 007 #
76. Today, February 21, you want to buy a bond with a quoted price of 100.42. The bond pays interest
on September 1 and March 1. The price you will pay to purchase this bond is equal to the:
A. clean price.
B. muddy price.
C. dirty price.
D. par value pri
72. The common stock of Flo's Flowers pays an annual dividend that is expected to increase by 3.6
percent per year. The stock commands a market rate of return of 11.6 percent and sells for $37.80
a share. What is the expected amount of the next dividend?
80.
Stevenson Interiors has a $67,500 liability they must pay four years from today. The company
is opening a savings account so that the entire amount will be available when this debt needs to
be paid. The plan is to make an initial deposit today and the
70.
You are considering two insurance settlement offers. The first offer includes annual payments
of $15,000, $22,500, and $25,000 over the next three years, respectively. The other offer is the
payment of one lump sum amount today. You are trying to deci
45. As the time to maturity increases, interest rate risk:
A. increases at an increasing rate.
B. increases at a decreasing rate.
C. increases at a constant rate.
D. decreases at an increasing rate.
E. decreases at a decreasing rate.
46. You own a bond th
SECTION: 7.1 AND 7.4
TOPIC: PRICE OF ZERO COUPON BOND
TYPE: PROBLEMS
93.
The zero coupon bonds of Cold Pak Transport have a market price of $460.23, a face value of
$1,000, and a yield to maturity of 8.42 percent. How many years is it until these bonds ma
SECTION: 7.4
TOPIC: TREASURY BONDS
TYPE: CONCEPTS
58.
Treasury bonds are:
A. issued by any governmental agency in the U.S.
B. issued only on the first day of each fiscal year by the U.S. Department of Treasury.
C. offer the best tax benefits of any bonds
16.
A member of the NYSE acting as a dealer in one or more securities on the exchange floor is
called a:
A. floor trader.
B. floor post.
C. specialist.
D. floor broker.
E. commission broker.
Ross - Chapter 008 #16
SECTION: 8.3
TOPIC: SPECIALIST
TYPE: DEFI
47.
You expect interest rates to decline and wish to capitalize on the anticipated changes in bond
prices. To realize your maximum gain, all else constant, you should purchase _ bonds.
A. short-term; low coupon
B. short-term; high coupon
C. long-term; zer
85. Gloria's Boutique recently paid $1.65 as an annual dividend. Future dividends are projected at
$1.68, $1.72, $1.76, and $1.80 over the next four years, respectively. Beginning five years from
now, the dividend is expected to increase by 2.5 percent an
107.
On March 1, you borrow $239,000 to buy a house. The mortgage rate is 7.75 percent. The loan
is to be repaid in equal monthly payments over 20 years. The first payment is due on April 1.
How much of the third payment applies to the principle balance?
59. Municipal bonds:
A. have no risk of default.
B. generally pay a higher rate of return than corporate bonds.
C. are those bonds issued only by local municipalities, such as a city or a borough.
D. are generally callable.
E. pay interest that is automat
91. You are purchasing a 30-year, zero coupon bond. The yield to maturity is 9.1 percent and the face
value is $1,000. What is the current market price?
A. $2.20
B. $69.27
C. $73.33
D. $263.20
E. $270.79
92. Today, you want to sell a zero coupon bond you