Finance 1
Week 5, Introduction to Markets
Jordan Neyland JD, PhD
Recap
Banks take low interest deposits
Banks make high interest (home) loans
Mortgage backed securities
Get assets off banks balance sheets
use trusts
Investors buy securities, not loa
Chapter 09 - Risk and the Cost of Capital
CHAPTER 9
Risk and the Cost of Capital
Answers to Problem Sets
1. Overestimate. High-risk projects will have a higher cost of capital than the
companys existing securities. Therefore, the value of a high-risk proj
Chapter 12 - Agency Problems, Compensation, and Performance Measurement
CHAPTER 12
Agency Problems, Compensation,
and Performance Measurement
Answers to Problem Sets
1.
a.
True
b.
True
c.
False. Stock options give managers the right (but not the obligatio
Chapter 14 - An Overview of Corporate Financing
CHAPTER 14
An Overview of Corporate Financing
Answers to Problem Sets
1.
a.
False. Net equity issues have been negative, meaning that share
repurchases have been larger than share issues.
b.
True
c.
True
Est
Chapter 21 - Valuing Options
CHAPTER 21
Valuing Options
Answers to Problem Sets
1.
a.
First it is necessary to find the probabilities of a rise and a fall. Using the
risk-neutral method, (p x 20) + (1 p)(16.7) = 1, p = .48.
Now that we have solved for p,
Chapter 08 - Portfolio Theory and the Capital Asset Pricing Model
CHAPTER 8
Portfolio Theory and the Capital Asset Pricing Model
Answers to Problem Sets
1.
a.
(.5 x 0%) + (.5 x 14%) = 7%.
b.
With Perfect Positive Correlation:
Portfolio variance =
[(.5)2 x
Chapter 07 - Introduction to Risk and Return
CHAPTER 7
Introduction to Risk and Return
Answers to Problem Sets
1.
Expected payoff can be calculated by taking the sum of the probabilities times
their payoffs: (.1 x $500) + (.5 x $100) + (.4 x 0) = $100. Th
Chapter 24 - The Many Different Kinds of Debt
CHAPTER 24
The Many Different Kinds of Debt
Answers to Problem Sets
1.
a.
b.
c.
d.
e.
High-grade utility bonds
Industrial holding companies
Industrial bonds
Railroads
Asset-backed security
Est. Time: 01 05
2.
Chapter 05 - Net Present Value and Other Investment Criteria
CHAPTER 5
Net Present Value and Other Investment Criteria
Answers to Problem Sets
1.
a.
A = 3 years, B = 2 years, C = 3 years.
b.
B
c.
A, B, and C
d.
B and C (NPVB = $3,378; NPVC = $2,405)
e.
Tr
Chapter 29 - Financial Planning
CHAPTER 29
Financial Planning
Answers to Problem Sets
1.
i.
ii.
iii.
iv.
v.
vi.
Cash declines and working capital declines.
Cash increases and working capital is unchanged; one current asset is
exchanged for another.
Cash d
Chapter 25 - Leasing
CHAPTER 25
Leasing
Answers to Problem Sets
1.
A, c; B, d, or i; C, b, or e; D, f; E, a; F, h; G, g.
Est. Time: 06 10
2.
a, b, d, f, and h (though there may be other ways to reduce AMT)
Est. Time: 06 10
3.
a.
The lessor must charge eno
Chapter 28 - Financial Analysis
CHAPTER 28
Financial Analysis
Answers to Problem Sets
1.
Cash
Accounts receivable
Inventories
Total current assets
Net plant & equipment
Total assets
$ thousands
25
35
30
90
140
230
Accounts payable
Total current liabilitie
Chapter 17 - Does Debt Policy Matter?
CHAPTER 17
Does Debt Policy Matter?
Answers to Problem Sets
1.
Note the market value of Copperhead is far in excess of its book value:
Ms. Kraft owns .625% of the firm, which proposes to increase common stock to
$17 m
Chapter 18 - How Much Should a Corporation Borrow?
CHAPTER 18
How Much Should a Corporation Borrow?
Answers to Problem Sets
1.
The calculation assumes that the tax rate is fixed, that debt is fixed and
perpetual, and that investors personal tax rates on i
Chapter 16 - Payout Policy
CHAPTER 16
Payout Policy
Answers to Problem Sets
1.
a. The declaration date precedes the last with-dividend date which precedes the
ex-dividend date which precedes the record date which precedes the payment
date. Matching we get
Chapter 03 - Valuing Bonds
CHAPTER 3
Valuing Bonds
Answers to Problem Sets
1.
a.
Does not change. The coupon rate is set at time of issuance.
b.
Price falls. Market yields and prices are inversely related.
c.
Yield rises. Market yields and prices are inve
Department of Computing and Information Systems
COMP10002 Foundations of Algorithms
Semester 2, 2016
Assignment 2
Learning Outcomes
In this project you will demonstrate your understanding of dynamic memory and linked data structures,
and extend your skill
FNCE 10001
Semester 2, 2016
Seat No:
Student No:
(Do NOT write your name anywhere on this exam booklet)
THE UNIVERSITY OF MELBOURNE
FACULTY OF BUSINESS AND ECONOMICS
SEMESTER 2, 2016
SUBJECT NUMBER: FNCE10001
SUBJECT NAME: FINANCE I
COMMON CONTENT: NONE
E
Finance 1
Week 3, Introduction to
Financial Mathematics Part 3
Jordan Neyland JD, PhD
Recap
Holding period yield
Discount/Money Market securities
Annuities
Copyright 2016 The University of Melbourne (Department of Finance)
Learning Objectives
Derive t
Finance 1
Week 7, The Bond Market
Dr. Jordan Neyland
Recap
RBA
Repurchase agreements
Monetary policy
Copyright 2016 The University of Melbourne (Department of Finance)
Learning objectives
Explain the roles performed by the bond market.
Describe the Aus
Finance 1
Week 2, Introduction to
Financial Mathematics
Jordan Neyland JD, PhD
Recap
Functions of the Financial System
Surplus and Deficit Units
Preferences
Intermediation
Contracts
Securities
Debt vs. Equity
Primary vs. Secondary Market
Risk and
Finance 1
Week 1, Course Introduction
Jordan Neyland JD, PhD
WELCOME TO
FINANCE 1!
Copyright 2016 The University of Melbourne (Department of Finance)
Lecturers
Dr. Jordan Neyland JD, PhD
All 12 weeks!
Subject coordinator
Consultations: Tuesdays 10:00a
Chapter 06 - Making Investment Decisions with the Net Present Value Rule
CHAPTER 6
Making Investment Decisions with
the Net Present Value Rule
Answers to Problem Sets
1. a, b, d, g, h; c is a sunk cost. e is an overhead cost. f is not an incremental cash
Chapter 04 - The Value of Common Stocks
CHAPTER 4
The Value of Common Stocks
Answers to Problem Sets
1. a.
True. This is a condition for equilibrium in well-functioning capital markets.
All stocks in a particular risk class must offer the same rate of ret
Chapter 02 - How to Calculate Present Values
CHAPTER 2
How to Calculate Present Values
Answers to Problem Sets
1. If the discount factor is .507, then .507 x 1.12 6 = $1.
Est time: 01-05
2. DF x 139 = 125. Therefore, DF =125/139 = .899.
Est time: 01-05
3.
Chapter 10 - Project Analysis
CHAPTER 10
Project Analysis
Answers to Problem Sets
1.
a.
False. The capital budget is not the final sign-off for specific projects. Most
companies require for each project appropriation requests, which include more
detailed
Chapter 30 - Working Capital Management
CHAPTER 30
Working Capital Management
Answers to Problem Sets
1.
Cash conversion cycle = (inventory period + receivables period) accounts
payable period.
Inventory period = [(9,587 + 14,544)/2]/[40,831/365] = 107.86