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
Due October 8, 2016
The stock of a company sells for $40 a share. Its likely dividend payout and end-of-year price depend on
the state of the economy by the end of year. Use the following year end data.
Economy
Dvnd
Share Price
Boom
$2.00
$50
Normal
$1.00
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
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
Kai Chen
Student ID#1001002876
Personal Perspective about EMH, Technical Analysis & Fundamental Analysis, and Active Vs
Passive Portfolio Management
The efficient market hypothesis (EMH) is the hypothesis that price of securities fully
reflects all availa
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
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
- 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
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
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
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
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
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
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
Solution to Q.4 , Ch. 13, Page 437 This is one of the CFA problems.
Same steps as in GE problem from Value Line
a) Calculate the required rate of return for Smile White
December 2013 data
= 1.15 , Market Price = $30 , Intrinsic Value = ?
rf = 4.5%
E(rM)
I discussed on Thursday Municipal Bonds (munis). These are issued by state and
local governments. These are exempt from fed tax and generally exempt from
state and local taxes in the state, these were issued. So let us assume, you have a
choice to buy a t
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
The market model is both a priori and empriical
Which of the following is most correct?
behavioral effects are predictive and can be quantified
Which of these is not consistent with
the conclusions of behavioral finance researchers?
negatively correlated
Sample Test 1 Fall 2012
Student: _
1. Real assets in the economy include all but which one of the following?
A. Land
B. Buildings
C. Consumer durables
D. Common stock
2. _ is not a derivative security.
A. A share of common stock
B. A call option
C. A futu
Summary of Chapter 5 Concepts
1.Rates of Return for the Holding Period called HPR
Arithmetic Average, Geometric Average (also called time-weighted average) and Dollar-weighted
Return
2, Effective Annual Rate (EAR) = (1 + APR/n)n , where APR = Annual Perce