Towson University
Department of Finance
Fin331
Dr. M. Rhee
2010 Spring
NAME:
ID#:
1.
If APR = 10%, what is the EAR (effective annual rate) for quarterly compounding?
a. 10.00%
b. 10.38%
c. 12.36%
d. 13.36%
e. 15.52%
Answer: b
APR = Nominal rate
Periods/yr
Chapter 13 The Cost of Capital
Critical Thinking Questions
13.1 Explain why the required rate of return on a firms assets must be equal to the weighted average cost of capital associated with its liabilities and equity.
Solution: In order to conceptualize
Chapter 21
International Financial Management
Learning Objectives
1.
Discuss how the basic principles of finance apply to international financial
transactions.
2.
Differentiate among the spot rate, the forward rate, and the cross rate in the foreign
excha
Chapter 20
Options and Corporate Finance
Learning Objectives
1. Define a call option and a put option, and describe the payoff function for each of these
options.
2. List and describe the factors that affect the value of an option
3. Name some of the real
Chapter 7
Risk and Return
Learning Objectives
1.
Explain the relation between risk and return.
Investors require greater returns for taking greater risk. They prefer the investment with
the highest possible return for a given level of risk or the investme
Chapter 4
Analyzing Financial Statements
Critical Thinking Questions
4.1
What does it mean when a companys return on assets (ROA) is equal to its return on
equity (ROE)?
When ROA equals ROE, it means that the firm does not use any leverage. For firms that
Chapter 6
Discounted Cash Flows and Valuation
Learning Objectives
1. Explain why cash flows occurring at different times must be discounted to a common
date before they can be compared, and be able to compute the present value and future
value for multipl
Ch ap t e r 5 - T h e ti me val u e of mo n ey
Tr ue /F alse
1. T ime va lue o f m one y is ba se d on the be lief t ha t pe ople ha ve a po s itive t ime pre fe re nce f or
c on sum ption.
*a. T rue
b. Fa lse
2. I ndiv idua ls p refe r to co ns ume goods
Chapter 6
Discounted Cash Flows and Valuation
Learning Objectives
1. Explain why cash flows occurring at different times must be discounted to a
common date before they can be compared, and be able to compute the present
value and future value for multipl
Chapter 19
Financial Planning and Forecasting
Learning Objectives
1.
Explain what a financial plan is and why financial planning is important.
2.
Discuss how management uses financial planning models in the planning process,
and explain the importance of
Student Consultation Times
Tuesday:
10.00 to 10.50 a.m.
3.00 to 3.50 p.m.
Wednesday: 10.00 to 10.50 a.m.
4.00 to 4.50 p.m.
Or by appointment (tel. 6226 8527,
[email protected])
Other enquiries should be directed to the School of Accounting
and Corp
1
CHAPTER 18
Business Formation, Growth, and Valuation
Learning Objectives
1.
Explain why the choice of organizational form is important, and describe two
financial considerations that are especially important in starting a business.
2.
Describe the key c
Chapter 17
Dividends and Dividend Policy
Learning Objectives
1. Explain what a dividend is and describe the different types of dividends and the dividend
payment process.
2. Explain what a stock repurchase is and how companies repurchase their stock.
3. D
CHAPTER 14
Working Capital Management
Learning Objectives
1.
Define net working capital, discuss the importance of working capital management,
and be able to compute a firms net working capital.
2.
Define the operating and cash cycles, explain how they ar
1
CHAPTER 15
How Firms Raise Capital
Learning Objectives
1.
Explain what is meant by bootstrapping and why it is important.
2.
Explain the role of venture capital firms in the economy, and discuss how they
reduce their risk when investing in start-up busi
Chapter 13
The Cost of Capital
Learning Objectives
1.
Explain what the weighted average cost of capital for a firm is and why it is often
used as a discount rate to evaluate projects.
2.
Calculate the cost of debt for a firm.
3.
Calculate the cost of comm
Chapter 12
Evaluating Project Economics and Capital Rationing
Learning Objectives
1. Explain and be able to demonstrate how variable costs and fixed costs affect the
volatility of pretax operating cash flows and accounting operating profits.
2. Calculate
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.
3. Explain what an expected return is, and calculate th
Chapter 9 Stock Valuation
Critical Thinking Questions
9.1 Why does the market price of a security vary from the true equilibrium price? Let us start by first defining the market equilibrium price of a security as the price that equates the demand for a se
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.
3. Explain what an expected return is, and calculate th
Chapter 2
The Financial Environment and the Level of Interest
Rates
Learning Objectives
1. Discuss the primary role of the financial system in the economy, and describe the two
basic ways in which fund transfers take place.
2. Discuss direct financing and