TOTAL POINTS: 22 (1 for each question + 2 additional based on overall effort). BASE POINTS 7.
ANSWER SECTION
LINK YOUR ANSWERS HERE AND FOLLOW THE FORMAT SHOWN IN THE EXAMPLE
Example ques (1) :
2
Ques (3a) :
4.64% muni
Q3 wrong - see book and lecture note
Sample test for 3315
Student: _
1. The geometric average of -12%, 20%, and 25% is _.
A. 8.42%
B. 11%
C. 9.7%
D. 18.88%
2. The market risk premium is defined as _.
A. the difference between the return on an index fund and the return on Treasury bills
B. th
Sample test 3 for 3315
Student: _
1. Semitool Corp has an expected excess return of 6% for next year. However for every unexpected 1% change
in the market, Semitool's return responds by a factor of 1.2. Suppose it turns out the economy and the stock
marke
FINA 3315 Chapter 6: Handout 1
1. You put half of your money in a stock portfolio that has an expected return of 14% and a
standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an
expected return of 6% and a standard
Chapter 20
5. Calculating Flotation Costs The St. Anger Corporation needs to raise $45 million to finance its
expansion into new markets. The company will sell new shares of equity via general cash offering
to raise the needed funds. If the offer price is
11-8
Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to
maturity of 6%. What is the duration if the yield to maturity is 10%?
18-7
Consider the following information regarding the perfor
Research Study Recruitment Fact Sheet
Purpose and Who We Are:
We are researchers from the University of Texas at Arlington, Abilene Christian University,
and James Madison University colleges of business conducting research that explores the
effect of wor
FINA 3315 Handout (Chapter 4)
1. You are considering investing in a no-load mutual fund with an annual expense ratio
of .6% and an annual 12b-1 fee of .75%. You could also invest in a bank CD paying
6.5% per year. What minimum annual rate of return must t
FINA 3315 Handout 3 (Chapter 5)
1. Treasury bills are paying a 4% rate of return. A risk-averse investor with a risk aversion of A = 3
should invest entirely in a risky portfolio with a standard deviation of 24% only if the risky
portfolio's expected retu
FINA 3315 Chapter 5 & 6: Handout 2
1. A stock has a correlation with the market of .45. The standard deviation of the market is 21%,
and the standard deviation of the stock is 35%. What is the stock's beta?
2. Stock A has a beta of 1.2, and stock B has a
FINA 3315 Handout 2 (Chapter 5)
1. You have the following rates of return for a risky portfolio for several recent years:
If you invested $1,000 at the beginning of 2008, your investment at the end of 2011 would be
worth _.
a.
b.
c.
d.
$2,176.60
$1,785.56
FINA 3315 Handout 12 (Chapter 7)
1. Consider the CAPM. The riskfree rate is 6%, and the expected return on the market is 18%.
What is the expected return on a stock with a beta of 1.3?
AM: . = m r
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2. Cons
NEW YORKER 110725 the largest fund
WSJ 110420 - total market size
NEW YORKER 110725 the largest fund
http:/www.newyorker.com/reporting/2011/07/25/110725fa_fact_cassidy#ixzz1ST7vrd1N
The World of Business
Mastering the Machine
How Ray Dalio built the world
CURRENCY RISK AND HEDGES
Greg Feigel, 2009 et. seq.
INTEREST RATES
CONVERSIONS
3.0% Country 1 interest rate, over some time period, = R 1
8.0% Country 2 interest rate, over some time period, = R 2
TIME 0:
FORWARD:
IN OTHER WORDS, in the future it takes M
You gather data that shows the money supply ($T,MZM) is
$11.1, and money velocity is 1.4. The FED is discussing an
increase to the money supply (and related money velocity
of 7.3%. The consensus forecasts anticipate a 2% real GDP
increase from the current
LUMP SUMS, VALUE RELATIVE, ARITHMETIC AND GEOMETRIC EXPRESSION OF RETURNS
LUMP SUMS
MOVING LUMP SUMS THROUGH TIME INVOLVE THE SIMPLEST CALCULATIONS
LET
PV = the Present Value, or the value right now
FV = the Future Value
r = the rate of return, assumed to
A SIMPLE MODEL OF INTEREST RATES AND FOREIGN EXCHANGE (ignores default risk)
COUNTRY 1
5.000% growth
6.000% inflation
1.500 value of currency, Country 1
11.30% = expected nominal rate = (1 + 0.05) x (1 + 0.06) - 1
COUNTRY 2
7.200% growth
4.000% inflation
COMPOUND INTEREST AND TIME VALUE OF MONEY
OVERVIEW
THE FOCUS OF INTEREST RATE COMPOUNDING IS IDENTIFYING HOW MONEY (AND WEALTH) MOVES TH
- in all cases, the correct answer reduces to mathematical growth rates.
CHALLENGES
There are two challenges to the pr
FINA 3315 Test 2 Review Sheet
Chapter 5 Risk & Return: Past and Prologue
Holding-period return (HPR) Rate of return over a
given investment period
Arithmetic average the sum of returns in each period
divided by the number of periods
Geometric average the
- the key quotation methods and definitions are:
> Nominal annual interest quotations, or quoted interest rates
- are subject to 'arithmetic' v. 'geometric' adjustments: the markets and quotation methods arose prior to an understanding of compounding
(geo
Bond Duration
by Ima Dummy
Bond: C.HEQ
Citigroup, Inc.
n
Payment (annually)
Payment (semiannually)
Face Value
Coupon
Price
Maturity
Yield (YTM)
Semiannually
6
$
56.50
$
28.25
$ 1,008.58
5.650%
108.58 NOTE: The price of the bond is a percentage of par.
5/1
Handout 2 Chapter 10 (FINA 3315)
1. A convertible bond has a par value of $1,000, but its current market price is $975. The current price of
the issuing company's stock is $26, and the conversion ratio is 34 shares. The bond's market conversion
value is _
Handout - Chapter 7, FINA 3315
1. Consider the CAPM. The risk-free rate is 6%, and the expected return on the market is 18%.
What is the expected return on a stock with a beta of 1.3?
2. Consider the CAPM. The risk-free rate is 5%, and the expected return
FINA 3315 Handout 1 (Chapter 5)
1. You put up $50 at the beginning of the year for an investment. The value of the investment
grows 4% and you earn a dividend of $3.50. Your HPR was _.
2. The arithmetic average of -11%, 15%, and 20% is _.
3. The geometric
TOTAL POINTS: 15 (12 POINTS GRADE BASIS - 1 point for each unique answer below, regardless of question # or sub #,11.75 3 extra)
plus
The format for 2b was not according to instructions.
ANSWER SECTION
LINK YOUR ANSWERS HERE AND FOLLOW THE FORMAT SHOWN IN
Solutions to Chapter 1 The Corporation and the Financial Manager
1.
Investment decisions: Should a new computer be purchased? Should the firm develop a new drug? Should the firm shut down an unprofitable factory? Financing decisions: Should the fir