CHAPTER 6/COMMON SHARE: CHARACTERISTICS AND VALUATION
CHAPTER 6
COMMON SHARE: CHARACTERISTICS
AND VALUATION
ANSWERS TO QUESTIONS:
1. a. Nonvoting stock - common shares that are issued when the firm wishes to raise additional
equity capital but does not w

CHAPTER 9/CAPITAL BUDGETING AND CASH FLOW ANALYSIS
CHAPTER 9
CAPITAL BUDGETING AND CASH FLOW
ANALYSIS
ANSWERS TO QUESTIONS:
1. a. Personnel managers - the value of insurance programs and pension plans can be evaluated
using discounted cash flow technique

Assignment 3
a.According to the decision tree constructed in part a,:
EV(node 6) = 0.20(-100) + 0.30(50) + 0.50(150) = 70
EV(node 7) = 0.20(100) + 0.30(100) + 0.5(100) = 100
The recommended decision should be to sell to competitor if the agency opinion is

CHAPTER 11/CAPITAL BUDGETING AND RISK
CHAPTER 11
CAPITAL BUDGETING AND RISK
ANSWERS TO QUESTIONS:
1. The net present value model handles risk by discounting expected cash flows from a project
by the firm's cost of capital. This discount rate is based upo

`Capital Budgeting and WACC Problem Practice for the Final Exam
Cascade Water Company (CWC) currently has 30 million shares of common stock outstanding
that trade at a price of $42 per share. CWC also has 500,000 bonds outstanding that currently
trade at

Assignment 5
Table 2
Decision
D1
D2
D3
D4
Regret
225
150
100
150
According to the table above, D3 has the minimum regret of all the values. So, we
should choose it.
(e)
According to the payoff table, the payoff of each decision for each and every state of

Assignment 1
1.
Model: Winning VS. All Other Factors VS. All Other Factors
Model: Winning
SUMMARY OUTPUT
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.975864
Regression Statistics
R Square 0.952311
Multiple R
0.975864
Adjusted R Square
0.937137
R
0.95

Assignment 2
(a)
Decision
D1
D2
D3
D4
Average Payoff
-240/4 = -60
-64/4 = -16.25
-15/4 = -3.75
-90/4 = -22.5
Because D3 has the largest average payoff, we should choose it.
(b)
Decision
D1
D2
D3
D4
Maximum Payoff
0
35
70
105
Because D4 has the largest sin

Assignment 4
(i)
Average
Standard Deviation
Maximum
Minimum
Range
48,794,290
22406268
91,990,955
14,650,000
77,340,955
(ii)
Team
Anaheim
Baltimore
Boston
Chicago White Sox
Cleveland
Detroit
Kansas City
Minnesota
New York Yankees
Oakland
Seattle
Tampa Bay

Capital Budgeting and Decision Criteria
(Chapters 9 and 10)
I. Net Present Value
- Decision Rule
- Mutually Exclusive Projects
- Capital Rationing
II. Other Investment Criteria
- IRR
- Payback Period
- Book Rate of Return
III. Pitfalls of the IRR, Payback

Question 1 (each correct answer is worth 3 marks; 30 marks total for this section)
741 @Fr 5/008“
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Circle the correct answer for each of the following questions.
A.
Which one of the following is a correct deﬁnition?
(a) A perpetuity is an in

Lecture 9: The Cost of Capital, Capital
Budgeting and Risk (chapters 8 and 11)
Weighted Average Cost of Capital
(WACC)
Measuring Capital Structure
After-tax WACC
Interpreting WACC
Capital Budgeting and Risk
Project Analysis
Cost of Capital - Example
Imagi

Risk and Return (Chapter 7)
Rates of Return
Historical Returns
Measuring Risk
Risk & Diversification
CAPM and Expected Return
LO1
Example Calculating
Returns
You bought a stock for $35 and you received
dividends of $1.25. The stock is now selling
for $40.

Valuing Common Stocks (Chapter 6)
I.
Book value, liquidation value, and market
value of equity
II.
Valuing common stocks
III.
The dividend discount model
IV.
Growth stocks versus income stocks
1
Stocks & Stock Market
Common Stock - Ownership shares in a p

Fixed-Income Securities (Chapter 5)
I. Bond Terminology
II. Pricing of Bonds
- Zero coupon
- Coupon
III. Bond yields
- Current yield
- Yield to maturity
- Rate of return
IV. Risks
-Interest rate risk
-Default risk
Bond Terminology
Bond Security that oblig

Time Value of Money
(Chapter 4)
The Time Value of Money Concept
Future Value and Present Value
Simple Interest vs. Compound Interest
Effective Interest Rate vs. APR
Different Patterns of Cash Flows
Inflation and Interest Rates
Time Value of Money
If you h

Lecture Outline
Forms of Business Organization
Corporate Finance and the Financial Manager
The Goal of Financial Management
The Agency Problem and Control of the Corporation
Financial Markets and the Corporation
Financial Institutions
Trends in Financial

GOODMAN SCHOOL OF BUSINESS
BROCK UNIVERSITY
Department of Finance, Operations, and Information Systems (FOIS)
MBAB 5P08, Financial Management
Fall 2014
Quiz #1
Name:
Student Number:
Answer all questions on the quiz paper and hand it in at the completion o

GOODMAN SCHOOL OF BUSINESS
BROCK UNIVERSITY
Department of Finance, Operations, and Information Systems (FOIS)
MBAB 5P08, Financial Management
Fall 2014, Quiz #2
Name:
Student Number:
Answer all questions on the quiz paper and hand it in at the completion

CHAPTER 5/FIXED-INCOME SECURITIES:
CHAPTER 5
FIXED-INCOME SECURITIES:
CHARACTERISTICS AND VALUATION
ANSWERS TO QUESTIONS:
1. a
b.
c.
d.
e.
f.
g.
h.
i.
Indenture - the contract between the issuing firm and the lenders in a debt obligation,
specifying the

MBAB 5P08
Fall 2015
Midterm Exam: October 26, in class, 2-4 pm (we will have a lecture afterwards, 4-5 pm).
Review for the Midterm Exam: Mid-term Exam will cover lectures 1-4 and corresponding
chapters (chapters 1, 4, 5, 6).
Questions will include numeric

Mid-Term Exam NAME
Fall 2013
MBAB 51’08
Instructions:
Answer all questions on the examination paper and hand it in at the completion of the
examination. No examination aids other than calculators are permitted. Use or possession of
unauthorized materials

MBABSP08 I / Name
Fall 2013 ,
Quiz 1 =
Multiple choice questions (3 points each question)
Circle the correct answer for each of the following questions.
U 1. All else constant, a coupon bond that is selling at apremium, must have: /"
s "A. a coupon rate

ijm [j o a 2 3 _
/-i ~# 0
g ' /S03) flow 00-? r 0'00
Quizz 9? i
BIBAJ35P08 a, gown, a
Fan2013
, 7 if /
'/3 . 2 Mr
I ~ W4
Problem (18 pointtotal) , New BOO g 51.93
A company is considering Project A and Project B, which are mutually exclusive and both l

CHAPTER 4/THE TIME VALUE OF MONEY
CHAPTER 4
THE TIME VALUE OF MONEY
ANSWERS TO QUESTIONS:
1. The investment paying five percent compound interest is more attractive because you will receive
interest not only on the principal amount each year, but interes

CHAPTER 5/FIXED-INCOME SECURITIES:
CHAPTER 5
FIXED-INCOME SECURITIES:
CHARACTERISTICS AND VALUATION
ANSWERS TO QUESTIONS:
1. a
b.
c.
d.
e.
f.
g.
h.
i.
Indenture - the contract between the issuing firm and the lenders in a debt obligation,
specifying the

CHAPTER 7/ANALYSIS OF RISK AND RETURN
CHAPTER 7
ANALYSIS OF RISK AND RETURN
a. The expected value is simply the statistical measure of the mean or average value of the
possible outcomes of a random variable. It is the weighted average of possible outcome