Junjie Liu Econ 282
Practice Multiple Choice
Introduction
1. Present value of $121,000 expected to be received one year from today at an interest rate
(discount rate) of 10% per year is:
a. $121,000
b
Practice Questions for Finance 3000, Exam II, Fall 2009
Chapter 3
1. Ratios are used to compare different firms in the same industry.
TRUE
2. Financial ratios are used to weigh and evaluate the operat
Chapter 8 Risk and return
1. Conceptual
a. Risk
b. Standard deviation as a measure of stand-alone risk
c. Risk-return tradeoff
d. Historical risk and return
e. Portfolio risk
i. Correlation of assets
Chapter 9 review
1. Stock valuation
1) Dividend growth model
a. When can constant dividend growth model (P0= D1/(r-g) be used? g<0? g
is not constant? g>r? intend to hold the stock for a year (Questio
Chapter 7 review
1. Calculation
a. Bond price
b. YTM
c. Current yield
2. Conceptual
a. Bond terminology: coupon rate, YTM, current yield.
b. Par bond, discount bond, premium bond
c. Bond price and int
Chapter 5 practice problems
Calculation problems
1. Suppose you have $1,000 and plan to purchase a 3-year certificate of deposit (CD) that
pays 5% interest, compounded annually. How much will you have
CHAPTER 9
Stocks and Their Valuation
Characteristics of common stocks (Section 91, skipping the preemptive right)
Common stock valuation (Section 9-3:mainly
a review of Chapter 1; Section 9-4)
Constan
CHAPTER 7
Bonds and Their Valuation
Issuers of bonds (Section 7.1)
Key characteristics of bonds (Section 7.2,
skipping sinking funds, other features)
Bond valuation (Section 7.3)
Bond yields (Section
CHAPTER 8
Risk and Rates of Return
The risk-return tradeoff (Section 8-1)
Investment return and risk-stand-alone (Section 82)
Risk in a portfolio context (Section 8-3a, b)
CAPM and SML (Section 8-3c t
CHAPTER 5 (part 2)
Time Value of Money
Time lines (Section 5-1)
Single sum (Section 5-2, 5-3, 5-4, 5-5)
Semiannual and other compounding period (Section 5-15)
Effective interest rates (Section 5-16)
A
CHAPTER 5 (part 1)
Time Value of Money
Time lines (Section 5-1)
Single sum (Section 5-2, 5-3, 5-4, 5-5)
Semiannual and other compounding period (Section 515)
Effective interest rates (Section 5-16)
An
39) Terrel Manufacturing expects stable sales through the summer months of
June, July, and August of $500,000 per month. The firm will make purchases
of $350,000 per month during these months. Wages a
Chapter 7
Risk and Return
Learning Objectives
1. Explain the relation between risk and return.
2. Describe the two components of a total holding period return, and calculate this return for
an asset.
FRED Graph Observations
Federal Reserve Economic Data
Link: http:/research.stlouisfed.org/fred2
Help: http:/research.stlouisfed.org/fred2/help-faq
Economic Research Division
Federal Reserve Bank of St
Data Source
World Development Indicators
Country Name
Country Code
Aruba
ABW
Andorra
AND
Afghanistan
AFG
Angola
AGO
Albania
ALB
Arab World
ARB
United Arab Emirates
ARE
Argentina
ARG
Armenia
ARM
Americ
Annual Interest Rate (%)
Figure 3 Graph Extended
Whe looking at the two additional years of data it shows a similar trend that happened from mid year 2010
to 2011. So looking at the conclusions made b
Ace Manufacturing, Inc., is preparing pro forma financial statements for
2006. The firm utilized the percent of sales method to estimate costs for the
next year. Sales in 2005 were $2 million and are
Chapter 33 Corporate Restructuring
Multiple Choice Questions 1. The following are some of the ways by which changes in company structure are effected: (I) LBOs (II) Privatizations (III) Spin-offs and