Critical Thinking Questions
9.1
Why can the market price of a security differ from its true value?
Let us start by first defining the market equilibrium price or true value of a security as
the price that equates the demand for a security with the supply

Answers to critical thinking and concepts review questions
4.
The more capital intensive industries, such as airlines and utilities, tend to use greater
financial leverage. Also, industries with less predictable future earnings, such as
computers or drugs

Discounted cash flow valuation
Seminar 3
Readings: Parrino et al. Chapter 6
Learning objectives
1. Apply and evaluate perpetuities and analyse the
present values of perpetuities
2. Evaluate growing annuities and perpetuities, as well
as calculation of the

Learningobjectives
FINM7401
Lecture8:Riskandreturn1
Readings: Parrino etal.Chapter7topage245
1. Analyze how investors approach their investment
decision and choose between alternative
investments
2. Evaluate how investors combine assets into
portfolios

In Class exercise
Seminar 10
Network Pty Ltd is a listed company that manufactures computer systems. The
company has recently reassessed their capital budgeting procedures and has been
advised to use the weighted average cost of capital (WACC) method to d

FINM7401 Finance
Final Exam Details, Semester 2 2016
1. Students are responsible for checking the exam time and venue before attending the
exam. Please bring your student id card to the exam.
2. The exam is closed book.
3. The only permitted materials are

Equity markets and share
valuation
Seminar 5
Readings: Parrino et al. Chapter 9
Notices
The mid semester exam is next Saturday there
are no seminars next week to give you extra time
to study
We will still have workshop and consultation
times next week.

Semester Two Final Examinations (SAMPLE), 2016
This exam paper must not be removed from the venue
FINM7401 Finance
Venue
_
Seat Number
_
Student Number
|_|_|_|_|_|_|_|_|
Family Name
_
First Name
_
School of Business
EXAMINATION
Semester Two Final Examinat

Seminar 7: Frank Stone Company - an example to illustrate relevant cash flows.
Adapted from Business Finance, Peirson et.al (2012).
The Frank Stone Company is considering the introduction of a new product. Generally, the companys
products have a life of a

FINM7401
In Class Exercises
Seminar 5
Adapted from Peirson, G., Brown, R. Easton, S. and Howard, P. (2002) Business
Finance, 8th ed., McGraw-Hill Irwin, Sydney, page 98-100
a) Assume the Rankine Ltd is currently paying a dividend of $0.90 per share. If
in

Fei Xie 44027458
Part 3 a
Project 1
project name
goal
funded percentage
pledge/backer
duration
number of update
status
why
Mini Museum 2
$160,000.00
383.00%
1830
31
1
successfully funded
great social presence
clearly defined vision for the project
unique

project name
goal
funded precentage
pledge/backer
number of update
project name
goal
funded precentage
pledge/backer
number of update
successfully
why
project name
goal
funded precentage
pledge/backer
duration
number of update
successfully
why
project nam

Fei Xie 44027458
PA
Crowdfunding is a project by collecting money from larger number of people via internet
(Mollick, 2014, p.2). This is a different financial project as Goins& Little (2014) states that
crowdfunding is a capital generation tools outside

Sample Final Examinations, 2013
FINM7401 Finance
This exam paper must not be removed from the venue
Venue
_
Seat Number
_
Student Number
|_|_|_|_|_|_|_|_|
Family Name
_
First Name
_
School of Business
EXAMINATION
Sample Final Examinations, 2013
For Examin

Semester One Final Examinations, 2014
FINM7401 Finance
This exam paper must not be removed from the venue
Venue
_
Seat Number
_
Student Number
|_|_|_|_|_|_|_|_|
Family Name
_
First Name
_
School of Business
Examinations
Semester One Final Examinations, 20

VENUE:
SEAT NUMBER:
THE UNIVERSITY STUDENT I I l 1 l
he, ,4 OF QUEENSLAND UMBER:
e EUDENT NAME:
FINAL EXAMINATION
St Lucia Campus Semester One 2009
FINM 740:1 FINANCE
PERUSAL TIME 10 mins. During perusal, writing is not permitt

FINM 7401 Seminar 2
The time value of money
Readings: Parrino et al. Chapter 5 and 6.1
to 6.3
1
Reminder
Workshops start this week.
2
Learning Objectives
1. Apply and evaluate the concept of the time value of money
2. Understand and apply the concepts of

FINM7401
Review Seminar
What is this seminar about
Exam format and instruction
Course review
2
Exam format
Students information
Your surname is your FAMILY NAME ONLY
Student number is your EIGHT digit student number NOT
s+seven digits
5 questions -

Answers to critical thinking and concepts review questions
10. a.
If the market is not weak-form efficient, then this information could be acted on and a profit
earned from following the price trend. Under (2), (3), and (4), this information is fully
impo

Answers to critical thinking and concepts review questions
1.
Some of the risk in holding any asset is unique to the asset in question. By investing in a
variety of assets, this unsystematic portion of the total risk can be eliminated at little
cost. On t

3.
Project A has cash flows of:
Cash flows = $19 000 + 27 000
Cash flows = $46 000
during the first two years. The cash flows are still short by $9000 of recapturing the
initial investment, so the payback for Project A is:
Payback = 2 + ($9000 / $24 000)

25. This is an in-depth capital budgeting problem. We will use the bottom up approach, so
we will need to construct an income statement for each year. Beginning with the initial
cash flow at Time 0, the project will require an investment in equipment. The

31. We are asked to find the dividend yield and capital gains yield for each of the shares. All
of the shares have a required return of 16%, which is the sum of the dividend yield and
the capital gains yield. To find the components of the total return, we

18. Here, we are finding the price of annual coupon bonds for various maturity lengths. The
bond price equation is:
P = C(PVIFAR%,t) + $1000(PVIFR%,t)
X:
Y:
P0
P1
P3
P8
P12
P13
P0
P1
P3
P8
P12
P13
= $90(PVIFA7%,13) + $1000(PVIF7%,13)
= $90(PVIFA7%,12) + $

60. The time line is:
0
1
2
3
4
5
6
$800
$800
$900
$900
$1000
$1000
We need to find the FV of the premiums to compare with the cash payment promised at
age 65. We
have to find the value of the premiums at year 6 first since the interest rate changes at
th

Tutorial Solutions: Week 2
QuestionsandProblems:Chapter4
9.
The time line is:
0
t
$35 000
$150 000
Toanswerthisquestion,wecanuseeithertheFVorthePVformula.Bothwillgivethe
sameanswersincetheyaretheinverseofeachother.WewillusetheFVformula,that
is:
FV=PV(1+r)

Tutorial Solutions: Week 1
5.
To maximise the current market value (share price) of the equity of the firm (whether its
publicly traded or not).
6.
In the corporate form of ownership, the shareholders are the owners of the firm. The
shareholders elect the

FINM7401
Seminar 9: Risk and return II
Readings: Parrino et al. Chapter 7
Learning objectives
Understand and apply the concept of
diversification
Evaluate which type of risk matters to
investors and why
Analyse and apply the Capital Asset Pricing
Model

Welcome to FINM7401
Finance
1
Agenda
Welcome to the course and UQ
Information about the course
(for some of you this is your first course so we
will go through some detail)
Seminar 1
Introduction to financial management & ethics
Case study
2
Welcome

FINM 7401 workshop 3 solutions: Interest rates, bill and bond valuation
Question 1
Years to maturity = 8 therefore n=16
Coupon rate = C = 6.5% therefore semi-annual coupon = $1,000 x (0.065/2) = $32.50
Yield is an APR, therefore i = 8%/2 = 4%
The price of

FINM 7401 Workshop 5 solutions: risk and return
Question 1
This statement is false. It is possible to put two assets with the same expected return and
variance in a portfolio and to achieve diversification benefits. The extent of any diversification
benef

FINM7401 workshop 2 solutions: time value of money
Answer 1
Simple interest = 10000*0.0575*2=1150
FV of the 10000 = 10000(1+(0.0575/365)2*365=11218.63 deduct the principal to get
1218.63 interest
Therefore interest on the interest is: 1218.63-1150=68.63
A