1.
award:
0.78 points
Cheques that have been deposited may not be immediately available for use due to:
Availability float
Payment float
Net float
Electronic transfer
2.
award:
0.78 points
ABC Corp. shows a ledger balance of $50,000 prior to writing a che

1.
award:
10.00
points
The shareholders in a sole proprietorship are represented by:
The owner of the firm.
The general partner of the firm.
The board of directors of the firm.
2.
No one; sole proprietorships have no shareholders.
award:
10.00
points
Whic

1.
award:
0.80 points
Lease obligations are included in certain leverage ratios because leases:
Require the payment of interest
Represent long-term fixed obligations
Must be financed through a bank
Are a measure of efficiency, just like debt
2.
award:
0.8

1.
award:
0.76 points
What level of management is responsible for originating capital budgeting proposals?
Senior management
Divisional management
Lower management
2.
All levels of management
award:
0.76 points
The capital budget "bottom up" perspective s

1.
award:
0.80 points
In general, what is changing as you read down the left hand side of a balance sheet?
The assets are more fully depreciated
The assets are growing in value
The assets are increasing in maturity
2.
The assets are becoming less liquid
a

1.
award:
0.78 points
Which of the following statements is true for a stock that sells now for $60, pays an annual dividend of $3.00, and experienced a 30 per
year? Its price one year ago was:
$42.00
$46.15
$48.46
$56.10
.30P = 60-P + 3.00
1.30P = 63.00
P

1.
award:
1.18 points
Corporate income statements are designed primarily to show:
cash flows during a period
Account balances at the end of a period
Performance during a period
Market values of assets and liabilities
2.
award:
1.18 points
Projects that ar

1.
award:
1.15 points
A Project's opportunity cost of capital is:
The forgone return from investing in the project
The return earned by investing in the project
Equal to the average return on all company projects
Designed to be less than the Project's IRR

1.
award:
0.81 points
Macro events only are reflected in the performance of the market portfolio because:
The market portfolio has no individual firms
Only macro events are tracked by economists
Unique risks have been diversified away
Firm-specific events

Chapter 10
Project Analysis
1
Some what if questions
This chapter extends the ideas and
techniques in Chapters 8 and 9 to a more
realistic business setting
In particular, since the future is risky, our
estimates of a projects future cash flows will
also b

Chapter 11 and
Section 7.6
Introduction to
Risk, Return, and
the Opportunity
Cost of Capital (Part I, in
1
Plan of the lecture
Measuring risk
Risk and diversification
Correlation coefficient
2
Purpose of Chapter 11
Recall in Step 2 of the NPV calculation

Chapter 13
The Weighted Average
Cost of Capital and
Company Valuation
1
Plan of the lecture
Weighted average cost of capital
(WACC)
Example of WACC
Interpreting WACC
2
Purpose of Chapter 13
Chapter 11: how to measure risk (variance and
standard deviatio

Chapters 20, 21, and 22
Working Capital
Management
1
Topics covered
Sections 20.1, 20.2, 20.6, and 20.7
Section 21.4, except Cash Management
in Large Domestic and International
Corporations on pp. 691-692
And Sections 22.1, 22.3, and 22.4
2
Purpose of

1.
award:
10.00
points
Financial markets are used for trading:
Both real assets and financial assets.
The goods and services produced by a firm.
Securities, such as shares of IBM.
The raw materials used in manufacturing.
2.
award:
10.00
points
Corporation

1.
award:
1.00 point
Which of the following terms of sale is the most restrictive?
Net 30
Seasonal dating
CBD
COD
2.
award:
1.00 point
At what point does a customer's unpaid account become delinquent when the terms of sale are 2/10, net 60?
11 days after

1.
award:
0.77 points
What is the future value of $10,000 on deposit for five years at 6 percent simple interest?
$7,472.58
$10,303.62
$13,000.00
$13,382.26
FV = PV + (PV x r x t)
(10,000) + (10,000 x .06) x 5) = $13,000.00
2.
award:
0.77 points
How much

1.
award:
0.76 points
Capital structure decisions refer to the:
Dividend yield of the firm's stock
Blend of equity and debt used by the firm
Capital gains available on the firm's stock
Maturity date for the firm's securities
2.
award:
0.76 points
What app

1.
award:
0.71 points
The time interval between paying for raw materials and collecting on sales of finished goods is known as the:
Inventory cycle
Matching cycle
Cash conversion cycle
Accounts receivable cycle
2.
award:
0.71 points
As a firm's cash conve

Chapter 10 (part 2) and chapter 11
Total Risk
Measured by standard deviation or variance. Two components:
1. Unique Risk company-specific risk, or unsystematic risk:
- Risk that can be eliminated by diversification
- Caused by micro factors inherent wit

Chapter 11
The Cost of Capital
The discount rate r has several different names:
Cost of Capital
Market Interest rate
Opportunity cost of funds
For bonds, it is also called the Yield to Maturity
If NPV is set to = 0, then r is also called the Internal

The Half-Year Rule and the CCA tax shield
There is a half-year rule feature of Canadian tax law that you must
consider when computing the CCA tax shield. Specifically, in the year of
purchase of a depreciable asset, only half of the assets value can be us

Growing Annuity and Financial Calculator
Nabil Tahani, York University, 2005
Mathematical formulas for a growing annuity
Let g be the periodical payment (PMT) growth rate, r be the periodic interest rate and n
be the number of payments. The PV of this gro

Supplementary Lecture Notes Ch.4 TVM
ANNUITIES
Ordinary (regular) Annuity Cash flows start at end of first time period
Annuity Due Cash Flows start immediately
You can either use your calculator so solve annuity due problems by using the BGN
button (See y

CHAPTER 10
RISK RETURN TRADEOFF
T-bills have the lowest average return and the lowest volatility
Stocks have the highest average return and the highest volatility
Government bonds are in the middle, offering a mid-level return with a mid-level risk
RISK P

Ch. 11 CAPM
BETA
Unique risk can be diversified completely, market risk cannot be
Market risk is of most concern to investor
To measure market risk: use Beta- sensitivity of stocks return to the return on the
market portfolio (portfolio of all assets i

Comments about CCA and depreciation, for the final exam
You do not need to know all of the accounting details from Chapter 9. For the
final exam, we will always assume that there are other assets remaining in the
asset class. Therefore you can ignore "Ter

Ch.9 Project Analysis
Applying what-if questions to your cash flow estimates.
Managers often have ranges or levels for their estimates.
1. Sensitivity Analysis - one variable at a time is changed (which variables have
the greatest affect on NPV).
2. Scena

APR versus EAR: Some Hints for Problem-Solving
Suppose you have a credit card which charges an interest rate of 1.5% per
month. This would be reported as an 18% annual rate, computed as 1.5% 12.
Yet, if you owed $100 on this account, and did not make any

Chapter 7 NPV and other Investment Criteria
Opportunity cost of capital - expected rate of return given by investing in a project
( what you are giving up by not investing in comparable securities)
1. Payback period
- How long will it take to recover my i

Chapter 12
Risk, Return, and
Capital Budgeting
(Part I, in class)
1
Plan of the lecture
Measuring market risk ()
Capital Asset Pricing Model (CAPM)
and Security Market Line (SML)
2
Purpose of this
chapter
We develop a measure of the market risk
of an ind

Final Exam Review
Winter 2016
1
Before the midterm
Chapter 5 (the time value of money, TVM) is
the most important chapter
Chapters 6 and 7 are just applications of the
TVM to price bonds and stocks, respectively
The fair price of any asset or security is

Chapter 11 and
Section 7.6
Introduction to
Risk, Return, and
the Opportunity
Cost of Capital (Part II,
1
Canadian capital market
history (1925 - 2010)
In this chapter, we will look at the historical
performance of the following three
portfolios:
A portfol

Chapter 12
Risk, Return, and
Capital Budgeting
(Part II, self-study)
1
Measuring market risk
Recall from your statistics class,
covariance is a measure of how one
variable moves in comparison to another
variable, similar to the correlation coefficient
We

ADMS 3530 3.0
Midterm Exam - X - F15
Name
Section
ID #
AP/ADMS 3530 3.00 Finance
Midterm Exam Fall 2015
Sunday, October 25th., 2015
Version X - SOLUTIONS
Instructors and Sections
Kwok Ho
Orlando Lopez
Dale Domian
Samuel Alagurajah
Lois King
Section A, Fri