FIN 413 Corporate Finance Midterm Exam
1
Discuss the three (3) elements of the decision process. (10 points)
ANS: There are three elements of the decision process, which are the first necessary condition,
second necessary condition and also the valuation
Chapter 9 Problem
1(a)There are three stages involved with this project.
Stage 1The seismic survey. There is a 50% chance that this will reveal that the geology
indicates the possibility of oil. If it does, we proceed to the next stage. But there is also
FIN 413 Corporate Finance Midterm Exam
1
Discuss the three (3) elements of the decision process. (15 points)
The decision process involve three element, a series perceived alternatives, an expectation that
these alternatives are not all equally desirable
Quiz Week 4 Chap 7 and 8
Quiz chapter 8
1. Hard and soft capital rationing.
2. The company cannot base on the standard NPV decision rule like choose only positive NPV
project and abandon all negative NPV project. In the theory, capital rationing should no
PROBLEM 1
(a) The conflict arises from the differing assumptions that the NPV and IRR methods make about
the opportunity cost (or reinvestment rate) of generated cash flows. Given a perfect capital
market, the NPVs assumption that their opportunity cost i
Chapter 2 : Quiz Questions
1.) What is the principal-agent problem?
The principal-agent problem is when a principal creates an
environment in which an agents incentives dont align with its own.
The principal usually is to create incentives for the agent t
QUIZ WEEK 5
CHAPTER 9
1. Success: -1000+ 500(1-(1+0.1)-3)/0.1)=+ 243NPV
Failure: -1000+ 350(1-(1+0.1)-3)/0.1)=- 73 NPV
State probability
NPV
I
0.45
x 243 = 109
II
0.55
x -130 = -72
= 37 ENPV
2. Survey indicates
State I
State II
Action
Accept
Reject
Probab
ALIBABA
Alibaba (NYSE: BABA) is the world's leading small business e-commerce company and
the flagship of Alibaba Group. Alibaba was established in 1999 in Hangzhou, China, through its
three markets to help millions of buyers around the world and supplier
2.
Capital cost is the measure of the results of business operations, refers to the enterprises to raise
and use funds to pay the price, mainly refers to the issuance of bonds, the cost of the stock, nonbank financial institutions to borrow the cost; the
Country global Culture
Each country has a different cultural tradition, often derived from different
ritual habits, so each country to show friendly rituals are also different. For
example, in China, the first meeting will usually shake hands, and then gr
In recent years, with the popularity of global discourse, more and more foreign
countries scholars join the discussion of cultural globalization. However, as
people cannot reach a unified view on the concept of "globalization", they are
also disagreeable
Sheng Tang
Professor J. Goddard
ENG Comp II
Mar 8 2017
Mars
Since humans began to explore space, find another habitable planet can be the biggest
mission. Mars, as the planet with the highest degree of Earth similarity, was given a
lot of attention. In TE
Daily life for using international products
For me, yesterday, I drove my car to Fort Wayne for watching the newest movie:
Power Rangers. My car is Mercedes-Benz E350, made by Germany. I do believe that
can be an international product. The car's engine co
Chapter-6
3. a. The graph of the probability density function for flight time
b. The probability that the flight will be no more than 5 minutes late is
P(X130) = 130-120/140-120 = 10/20 =0.5
c. The probability that the flight will be more than 10 minutes
Chapter-5
13. f(x) = x/6 for x=1,2,3
a. The required condition for a discrete probability functions is:
f(x) 0
f(x) = 1
f(x) 0, x/6 for x=1,2,3 is bigger than 0
f(x) = 1 then 1/6+2/6+3/6 = 1
Because, these two conditions satisfy, this probability function
17. a. The probability that a domestic airfare is $550 or more
standard deviation () = 110$
= 385, = 110, (z = x-/)
P(x550) = P(Z 550-385/110)
= P(Z 1.5)
= 1- P (Z 1.5)
= 1- 0.93319
= 0.6681
b. The probability that a domestic airfare is $250 or less is
P
31. a.The probability that at least 70 use their phone at least once per hour is
P(x 70)
Z= (x-)/
= np
= np(1-p)
P(x 70) = p(x-np/np (1-p) > 70 (150*0.51)/150*0.51*0.49)
= p( z -1.1433)
= 1-p (z -1.1433)
= 1- 0.1265
= 0.8735
b. The probability that at l
Chapter-4
19.
a) The probability that a respondent 1829 years of age thinks that global warming will not pose a
serious threat during his/her lifetime is:
P = number of respondents of age 18-29 who said NO / total number of 18-29 age respondents
= 131/ 26
Chapter-3, p-55
a)
70
60
50
40
y
30
20
10
0
2
4
6
8
10
12
14
16
18
b) The scatter diagram developed in the part (a) indicates that there is a negative relationship between the
two variables.
c) Sample Covariance
x-bar = 4+6+11+3+16/5
= 8
y-bar = 50+50+40+
25) P(A) = 0.39
P(B) = 0.27
P(AB) = 0.12
a) The probability that a randomly selected person will feel guilty for either wasting food or leaving
lights on when not in a room is
P(AUB) = P(A)+P(B)-P(AB)
= 0.39+0.27-0.12
= 0.54
b)
The probability that a rand
Chapter-3, p-29
a) Range = largest value smallest value
= 60 28
= 32
Interquartile range (IQR) = third quartile (Q3)-first quartile (Q1)
Third quartile (Q3) = Lp = (p/100) (n + 1)
= (75/100) (9+1)
= 7.5
7th value plus .5 times the difference between the 8
Chapter 1, p- 11
a. The responses for this question provide categorical data because here we are considering
people responses like how many positive responses, how many negative responses and how
many do not have any opinion. We are not dealing with any n
Chapter -1, p 5
Refer to the data set in Table 1.7.
a. What is the average price for the cordless telephones?
b. What is the average talk time for the cordless telephones?
c. What percentage of the cordless telephones have a voice quality of excellent?
d.
CHAPTER 7:
PROBABILITY
DISTRIBUTION
PREPARED BY: C.F.TAN (MSC)
Random Variable
Example 1:
Example 2:
Discrete Random Variable
Example 3:
Example 4:
Example 5:
Example 6:
EXERCISES 7.1:
Mathematical Expectation
Experimental Method
Theoretical Method
Exampl
CHAPTER 8:
SAMPLING
DISTRIBUTION
PREPARED BY: C.F.TAN (MSC)
Example 1:
Distribution of the Sample Means for
an Infinite Population (or Finite
Population with Replacement)
Example 2:
Example 3:
Distribution of the Sample Means for a
Finite Population witho
CHAPTER 6:
PROBABILITY
PREPARED BY: C.F.TAN (MSC)
Introduction to Probability
For a situation in which several different outcomes are possible,
probability is defined as a fraction or a proportion of all possible outcomes.
If the possible outcomes are ide
CHAPTER 3:
FREQUENCY
DISTRIBUTION
PREPARED BY: C.F.TAN (MSc)
Frequency Distribution
A
frequency
distribution
is
an
_
_ . A
frequency distribution can be structured either as a table or a
graph to presents a picture how the individual scores are
distribute
CHAPTER 2 :
STATISTICAL
NOTATION
PREPARED BY: C.F.TAN (MSc)
Scores
Measuring a variable in research study typically yields a value
or a score for each individual. Raw scores are the _,
_ unchanged score obtained in the study. Normally,
scores of a particu