Topic3:Riskvs.Return
1. Return vs. risk
and historical
experience
2. Portfolio return
and risk, and
correlation
3. Diversification
4. Efficient set with
risk free security
5. Capital asset
pricing model
6. Intuition,
evidence and
alternatives
and efficien

Chapter 6: Corporate Finance and
Capital Budgeting
1.
2.
3.
4.
5.
1
Common decision-making criteria
C
d ii
ki
it i
Interdependence and mutually exclusive
projects
Abandonment and other forms of
optionality
Other practicalities
Risk management
Commerce 2FA

Chapter 6: Corporate Finance and
Capital Budgeting
1.
2.
3.
4.
5.
1
Common decision-making criteria
C
d ii
ki
it i
Interdependence and mutually exclusive
projects
Abandonment and other forms of
optionality
Other practicalities
Risk management
Commerce 2FA

Chapter 6: Corporate Finance and
Capital Budgeting
1.
2.
3.
4.
5.
1
Common decision-making criteria
C
d ii
ki
it i
Interdependence and mutually exclusive
projects
Abandonment and other forms of
optionality
Other practicalities
Risk management
Commerce 2FA

MULIPLE CHOICE and TRUE/FALSE QUESTIONS for Chapters 3b-5a
Chapter 3b
True/False
1. The security market line and the capital market line both relate expected returns
to appropriate measures of risk. T
Multiple Choice
1. At the beginning of this year, Regi

MULIPLE CHOICE and T RUE/FALSE QUESTIONS for Chapters 1-3a
Chapter 1
True/False
1. Real interest rates tend to be high when a country has a saving mentality. F
2. Heuristics are decision-making shortcuts. I
3. Newly-issued securities are sold in secondary

MULIPLE CHOICE. and TRUE/FALSE QUESTIONS for Chapters 5b-7
Chapter 51:)
True/False
1. If the coupon rate of a bond is less than its yield to maturity, the bond must have
a price greater than its face value. F"
2. If the Unbiased Expectations Theory is tru

Chapter2(2ndtutorial)
1.
Whatisthefuturevalueof $500 receivedinthreeyearsasofintenyearsfromnow
givenadiscountrateof4%?
Futurevaluefromt=3untilt=10,usingequation(2.5)andsubstitutingvalues,weget,
2. What is the present value of a $900/month annuity lasting

Version 1
Page 1
Name
Student Numb er
Section
COMIVIERCE 2FA3
Introduction to Finance
DR. RICHARD DEAVES
DURATION OF EXAMINATION: 3 hours
MCMASTER UNIVERSITY FINAL EXAMINATION
April 20, 2012
THIS EXAMINATION PAPER INCLUDES 12 PAGES AND 45 QUESTIONS (WORTH

SOLUTIONS to 2FA3 TUTORIAL PROBLEMS FOR 2013
2nd HALF
Chapter 5 PART A, Questions 1-6 (6th tutorial)
1. You believe that a $2.25 dividend will be paid next year on a stock with a required
return of 10%. If you expect the price to be $28 at that time what

Chapter 7: Personal Finance
p
and Saving for Retirement
1. Saving
2.
2 Asset allocation
3. Investing approaches
1
Commerce 2FA3
Winter 2012
Saving sources
Government-administered programs
Government administered programs.
Company pensions.
Defined cont

Chapter 7: Personal Finance
p
and Saving for Retirement
1. Saving
2.
2 Asset allocation
3. Investing approaches
1
Commerce 2FA3
Winter 2012
Saving sources
Government-administered programs
Government administered programs.
Company pensions.
Defined cont

Chapter 7: Personal Finance
p
and Saving for Retirement
1. Saving
2.
2 Asset allocation
3. Investing approaches
1
Commerce 2FA3
Winter 2012
Saving sources
Government-administered programs
Government administered programs.
Company pensions.
Defined cont

Topic3:Riskvs.Return
1. Return vs. risk
and historical
experience
2. Portfolio return
and risk, and
correlation
3. Diversification
4. Efficient set with
risk free security
5. Capital asset
pricing model
6. Intuition,
evidence and
alternatives
and efficien

Chapter 4: Arbitrage,
Efficiency
and Hedging
1. Arbitrage
2. Efficiency
3. Hedging
Commerce 2FA3
1
Winter 2013
Arbitrage example
All pants/jackets are identical (same style,
color, quality, size, and so on).
Pair of pants costs $50.
Jacket costs $100.
Put

Chapter 4: Arbitrage,
Efficiency
and Hedging
1. Arbitrage
2. Efficiency
3. Hedging
Commerce 2FA3
1
Winter 2013
Arbitrage example
All pants/jackets are identical (same style,
color, quality, size, and so on).
Pair of pants costs $50.
Jacket costs $100.
Put

Chapter 4: Arbitrage,
Efficiency
and Hedging
1. Arbitrage
2. Efficiency
3. Hedging
Commerce 2FA3
1
Winter 2013
Arbitrage example
All pants/jackets are identical (same style,
color, quality, size, and so on).
Pair of pants costs $50.
Jacket costs $100.
Put

Chapter 5: Capital Markets and
Security Valuation
1.
1
2.
3.
3
4.
5.
5
Common stock valuation
Options and other derivatives
Regulation
Bond yields and returns
Term structure of interest rates
Commerce 2FA3
1
Winter 2012
Pure discount bonds
Information ne

Chapter 5: Capital Markets and
Security Valuation
1. Common stock valuation
2. Options and other derivatives
3. Bond yields and returns
4. Term structure of interest rates
Commerce 2FA3
1
Winter 2013
Common stock valuation
using dividends
Information need

Chapter 5: Capital Markets and
Security Valuation
1. Common stock valuation
2. Options and other derivatives
3. Bond yields and returns
4. Term structure of interest rates
Commerce 2FA3
1
Winter 2013
Common stock valuation
using dividends
Information need

Chapter 5: Capital Markets and
Security Valuation
1. Common stock valuation
2. Options and other derivatives
3. Bond yields and returns
4. Term structure of interest rates
Commerce 2FA3
1
Winter 2013
Common stock valuation
using dividends
Information need

VERSION 1
NAME:
SECTION _
STUDENT NUMBER:
TEST-LOCATION: _
COMMERCE 2FA3 Mid-term Test 1: February 03, 2012
Dr. Richard Deaves
Duration: 2 hours
INSTRUCTIONS:
1.
This paper comprises 8 pages (including this page). There are 10 TRUE/FALSE
questions each wo

SOLUTIONS to 2FA3 TUTORIAL PROBLEMS FOR 2013
2nd HALF
Chapter 5 PART A, Questions 1-6 (6th tutorial)
1. You believe that a $2.25 dividend will be paid next year on a stock with a required
return of 10%. If you expect the price to be $28 at that time what

Chapter 2: Time Value
1. Present values and future values
2. Multiple cash flows
3. Annuities and perpetuities
4. Amortized loans
Fibonacci and his friend Marco
Fibonacci was an Italian mathematician who lived in the Middle Ages in Pisa.
His friend Marc

Chapter 5: Capital Markets and Security Valuation
5.1. Introduction
Financial markets facilitate the transfer of funds from surplus units to deficit units.
The transfer is made more efficient by the existence of tradable contractual claims:
securities.

Chapter 3 Canadian Finance
3.1. Introduction
Means (or historical averages) belong to samples, and expected values belong to
distributions.
Risk is measured using variance and standard deviation.
It is not wise to put all your eggs in one basket. By di

2FA3 - Winter 2014 - 1 of 7
Commerce 2FA3
Introduction to Finance
Winter 2014 Syllabus
Finance and Business Economics Area
DeGroote School of Business
McMaster University
COURSE OBJECTIVE
This is the first course in finance. The objective is to introduce

Canadian Finance
Chapter 1
1.1. Introduction
The basic activity occurring in financial markets includes efficiently transferring funds
from those with an excess to those with insufficient.
Capital market claims, or financial assets, smooth this transfer

Chapter 1: The Financial Landscape
1.
2.
3.
4.
5.
6.
Why do we need financial markets?
Capital markets and securities?
Where do corporations fit in?
Regulation (Ch. 5 Sect. 5.4)
Where do individuals fit in?
Three key assumptions of modern academic finance

NAME:
SECTION:_
_ _
STUDENT NUMBER:
TEST-LOCATION:_ _
_
COMMERCE 2FA3 Mid-term Test 2: March 13, 2009
Professor: Dr. Richard Deaves
Duration: 2 hours
INSTRUCTIONS:
1.
This paper comprises 11 pages (including this page).
There are 14
TRUE/FALSE questions e

Chapter 5, Questions 7-11 (8th tutorial)
1. What is the price of a $1,000 face value bond with 20 years till maturity, a coupon
rate of 6% and a yield to maturity of 4.7%? How much is it worth if the bond pays
interest twice per year and the yield is base

Chapter 1, Questions 1-3 (1st tutorial)
1. Below is a table of month-end closing prices for 2011 for Canaco Resources, a
Canadian junior gold explorer trading on the TSX Venture Exchange. The
company did not pay any dividends.
DATE
12/31/2010
01/31/2011
0

Page 1
COMMERCE 2FA3
DR. RICHARD DEAVES and PROFESSOR ANDREW CARROTHERS
DURATION OF EXAMINATION: 3 hours
MCMASTER UNIVERSITY FINAL EXAMINATION
April 30, 2013
Name _
Student Number _
Section _
THIS EXAMINATION PAPER INCLUDES xx PAGES AND 45 QUESTIONS
(CORR

Chapter 6 (10th tutorial)
1. An investment opportunity requires an initial investment of $75,000. It is forecast
to generate cashflows of $20,000 in each of the next seven years. Calculate
payback period and IRR. Would you recommend accepting this project