California State University, Dominguez Hills College of
Business Administration and Public Policy
Midterm Examination
Fall 2016
Foreign Direct Investment and Cooperate Strategy, The Institutional Context of Multinational
Management, What Forms do Company
End of Chapter Problem 5-4
5 4 Suppose a preferred stock pays a quarterly dividend of $2 per share. The
next dividend comes in exactly one-fourth of a year. If the price of the stock is
$80, what is the effective annual rate of return that the stock offer
End of Chapter Problem 5-17
5-17 Stephenson Technologies (ST) produces the worlds greatest single-lensreflex (SLR) camera. The camera has been a favorite of professional
photographers and serious amateurs for several years. Unfortunately, the
camera uses
End of Chapter Problem 7-20
7-20 The expected return on the market portfolio equals 12%. The current riskfree rate is 6%. What is the expected return on a stock with a beta of 0.66?
For this problem we need to use Eq 7.2 the Capital Asset Pricing Model.
E
End of Chapter Problem 7-19
7-19 The risk-free rate is currently 5%, and the expected risk premium on the
market portfolio is 7%. What is the expected return on a stock with a beta of
1.2?
For this problem we need to use Eq 7.2 the Capital Asset Pricing M
End of Chapter Problem 2-2
2 2 Given the balance sheets and selected data from the income statement of
SMG Industries that follow, answer parts (a)(c).
a.Calculate the firms operating cash flow (OCF) for the year ended December 31,
2012, using Equation 2.
End of Chapter Problem 7-8
7-8 Wendi Deng recently inherited $1 million and has decided to invest it. Her
portfolio consists of the following positions in several stocks. Calculate the
portfolio weights to fill in the bottom row of the table.
Intel
Shares
End of Chapter Problem 5-19
5 19 Dean and Estevez, Inc. (D&E) is a firm that provides temporary employees to
businesses. D&Es client base has grown rapidly in recent years, and the firm has been
quite profitable. The firms co-founders, Mr. Dean and Mr. Es
End of Chapter Problem 7-11
7-11 You analyze the prospects of several companies and come to the following
conclusions about the expected return on each:
Stock
Starbucks
Sears
Microsoft
Limited Brands
Expected Return
18%
8%
16%
12%
You decide to invest $4,
End of Chapter Problem 2-4
Manufacturers Bank is evaluating Aluminum
Industries, Inc., which has requested a $3 million
loan, to assess the firms financial leverage and risk.
On the basis of the debt ratios for Aluminum, along
with the industry averages a
End of Chapter Problem 2-5
2 5 Income Statements
Heavy Metal
Manufacturing
(HMM)
Sales
Operatingexpenses
Metallic Stamping
Inc. (MS)
High-Tech Software
Co. (HTS)
$75,000,000
65,000,000
$50,000,000
40,000,000
$100,000,000
60,000,000
Operatingprofit
$10,000
End of Chapter Problem 5-10
5 10 Carbohydrates Anonymous (CA) operates a chain of weight-loss centers
for carb lovers. Its services have been in great demand in recent years and its
profits have soared. CA recently paid an annual dividend of $1.35 per sha
End of Chapter Problem 3-4
PVn = FV / (1 + r)n
OR
PVn = FV * (1 + r)-n
The negative sign makes it easier to input into the calculator
when using the formula to solve.
When using the functions on the Financial calculator, enter N as a positive number
when
End of Chapter Problem 4-23
4-14 What is the price of a zero-coupon bond that has a par value of $1,000?
The bond matures in thirty years and offers a yield to maturity of 4.5 %.
Calculate the price one year later when the bond has twenty-nine years left
BA 2 Plus Calculator
for Finance 360
Intro
This is a brief introduction to the
BA2 Plus Calculator. I will briefly go
over a couple of the functions we
intend to use in class. For more
assistance see the calculator user
manual and/or the textbook.
In addi
End of Chapter Problem 3-10
The key to answering finance questions is key in the known and unknown variables.
In this question Liliana just started with the company, so her two-month sabbatical is
7 years in the FUTURE. So we will attempting to solve for
End of Chapter Problem 6-3
6-3 D. S. Trucking Company stock pays a $1.50 dividend every year. A year ago
the stock sold for $25 per share, and its total return during the past year was
20%. What does the stock sell for today?
Using Eq 6.2
Total Percentage
End of Chapter Problem 5-2
5 -2 Artivel Mining Corp.s preferred stock pays a dividend of $5 each year. If the
stock sells for $40 and the next dividend will be paid in one year, what return do
investors require on Artivel preferred stock?
Another simple p
End of Chapter Problem 8-6
8 6 Using a 14% cost of capital, calculate the NPV for each of the projects
shown in the following table and indicate whether or not each is acceptable.
Project A
Project B
Year
Project C
Project D
Project E
Cash Flows
0
-$20,00
End of Chapter Problem 8-12
8 6 Contract Manufacturing, Inc. is considering two alternative investment
proposals. The first proposal calls for a major renovation of the companys
manufacturing facility. The second involves replacing just a few obsolete pie
End of Chapter Problem 8-2 A,B,C Only
8 2 Cash flows associated with three different projects are as follows:
Cash Flows
Initial Outflow
Year 1
Year 2
Year 3
Year 4
Year 5
Alpha
($ in millions)
Beta
($ in millions)
Gamma
($ in millions)
- 1.5
0.3
0.5
0.5
End of Chapter Problem 12 - 19
12 19 Magnum Enterprises has net operating income of $5 million; there is $50
million of debt outstanding with a required rate of return of 6 percent; the required
rate of return on the industry is 12 percent; and the corpor
End of Chapter Problem 12 - 1
12 1 As Chief Financial Officer of the Magnificent Electronics Corporation
(MEC), you are considering a recapitalization plan that would convert MEC from
its current all-equity capital structure to one including substantial f
End of Chapter Problem 12 - 5
12 5 Assume that capital markets are perfect. A firm finances its operations
with $50 million in stock, with a required return of 15 percent, and $40 million in
bonds with a required return of 9 percent. Assume the firm could
End of Chapter Problem 7-8
7-8 Wendi Deng recently inherited $1 million and has decided to invest it. Her
portfolio consists of the following positions in several stocks. Calculate the
portfolio weights to fill in the bottom row of the table.
Intel
Shares
End of Chapter Problem 7-2
7-2 The table below shows the difference in returns between stocks and
Treasury bills and the difference between stocks and Treasury bonds at 10-year
intervals.
Stocks vs. Bonds
Stocks vs. Bills
1964-73
3.7%
8.3%
1974-83
0.2%
8.
End of Chapter Problem 7-11
7-11 You analyze the prospects of several companies and come to the following
conclusions about the expected return on each:
Stock
Starbucks
Sears
Microsoft
Limited Brands
Expected Return
18%
8%
16%
12%
You decide to invest $4,
End of Chapter Problem 7-20
7-20 The expected return on the market portfolio equals 12%. The current riskfree rate is 6%. What is the expected return on a stock with a beta of 0.66?
For this problem we need to use Eq 7.2 the Capital Asset Pricing Model.
E
End of Chapter Problem 7-24
7-24 A particular stock sells for $30. The stocks beta is 1.25, the risk-free rate is
4%, and the expected return on the market portfolio is 10%. If you forecast that the
stock will be worth $33 next year (assume no dividends),