Chad Capraro
Finance Quizzes
Chapter 1
1. The primary goal of financial management is to:
A: Maximize the current value per share of the existing stock
2. Which of the following help convince managers to work in the best
interest of the stockholders?
B: C
Stock Valuation
The basic model of stock valuation recognizes the importance of income that the owner
of the stock will receive. That is,
Value =
Incomet
1 r
t
t 1
But there are some obvious problems with applying this model to stock prices:
1) Unlike b
The Weighted Average Cost of Capital
Cost of Capital the cost that a firm must pay for the capital it uses to finance new
investments and investment projects.
Capital comes from:
1) Debt
2) Preferred stock
3) Retained earnings
4) Common stock
Alternativel
CAPITAL BUDGETING
The process of developing and evaluating long term investment projects of the firm.
How to evaluate the alternative projects?
1. Calculate NPV of the cash flows derived from the project and then subtract the initial
cash outlay.
2. If PV
The Time Value of Money and Discounted Cash Flows
Calculator Setup (HP 10BII)
1)
Change 12 P_Yr to 1 P_Yr.
2)
Next, change the decimals shown on the screen to 6 or 8.
Time Value keys:
N:
I/YR:
PV:
PMT:
FV:
Other Useful Keys:
RCL
button
STO
Back Arrow Key
A Japanese company has a bond outstanding that sells for 94 percent of its 100,000 par value. The
bond has a coupon rate of 5.3 percent paid annually and matures in 15 years.
What is the yield to maturity of this bond? (Do not round intermediate calculati
SDJ, Inc., has net working capital of $3,190, current liabilities of $4,210, and inventory of $3,980.
What is the current ratio? (Do not round intermediate calculations. Round your answer to 2 decimal
places, e.g., 32.16.)
Current ratio
1.76
times
What is
7/18/2016
Bill Miller and Value Trust
Case Analysis 3
William Bill Miller III worked at Legg Mason, Inc., and was the fund manager of Value
Trust, an $11.2 billion mutual fund. He is noted for his outstanding performance of the trust
where he had outperfo
Final Exam FIN 3403
1. salvage value problem
2. salvage value problem
3. IRR vs NPV
4. mutually exclusive projects
5. NPV zero
6. NPV rule
7. payback period
8. discounted payback period
8. average accounting return
9. independent projects
10. IRR, NPV
11-
Break Even Analysis (in Class Exercise)
In class, we first calculated the break-even occupancy rate and respective RevPAR for Windstar
Resort. Then we created 2 scenarios: 1) ADR drops to $450 and 2) VC drops to $220.
Scenario 1
In Scenario 1 the ADR has
Risk and Return
Rates of Return
Holding Period Return
Assume you buy a stock in year t-1 and hold it until year t, and it pays a
dividend, dt.
Then the one-period holding return can be figured as follows:
Rt
_
or
= _
if dt = 0.
This is for 1 year. What i
Hull: Fundamentals of Futures and Options Markets, Eighth Edition
Chapter 4: Interest Rates
Multiple Choice Test Bank: Questions with Answers
1. The compounding frequency for an interest rate defines
A. The frequency with which interest is paid
B. A unit
Hull: Options, Futures, and Other Derivatives, Ninth Edition
Chapter 7: Swaps
Multiple Choice Test Bank: Questions with Answers
1. A company can invest funds for five years at LIBOR minus 30 basis points. The five-year swap rate
is 3%. What fixed rate of
Hull: Fundamentals of Futures and Options Markets, Eighth Edition
Chapter 6: Interest Rate Futures
Multiple Choice Test Bank: Questions and Answers
1. Which of following is applicable to corporate bonds in the United States?
A. Actual/360
B. Actual/Actual
Ch 8 HW
1.
Award: 10 out of 10.00 points
The next dividend payment by Halestorm, Inc., will be $1.92 per share. The dividends are anticipated to
maintain a growth rate of 6 percent forever. If the stock currently sells for $38 per share, what is the
requi
Ch 7 HW
1.
Award: 10 out of 10.00 points
DMA Corporation has bonds on the market with 10.5 years to maturity, a YTM of 7.1 percent, and a
current price of $1,051. The bonds make semiannual payments and have a par value of $1,000.
What must the coupon rate
Chapter 8 Quiz
Question 1
Shares of common stock of the Windy Farms offer an expected total return of 13.8
percent. The dividend is increasing at a constant 4.2 percent per year. What is the
dividend yield?
9.60
percent
Question 2
The Good Life offers a c
Chapter 3 Quiz
Question 1
A firm has total debt of $1,850 and a debt-equity ratio of .64. What is the value of the
total assets?
Selected Answer: $4,740.63
Question 2
Monika's Gift Barn has cash of $316, accounts receivable of $687, accounts payable of
$7
Chapter 2 Quiz
Question 1
A firm has $680 in inventory, $2,320 in fixed assets, $280 in accounts receivables, $490 in accounts payable,
and $130 in cash. What is the amount of the current assets?
Correct Answer: $1,090
Question 2
Which term relates to the
Chapter 7 Quiz
Question 1
Wesley-Townsend bonds have an 8.25 percent coupon and pay interest annually. The
face value is $1,000 and the current market price is $1,004.60 per bond. The bonds
mature in 17.5 years. What is the yield to maturity?
8.20
percent
The Time Value of Money and Discounted Cash Flows
Calculator Setup (HP 10BII)
1)
Change 12 P_Yr to 1 P_Yr.
2)
Next, change the decimals shown on the screen to 6 or 8.
Time Value keys:
N:
I/YR:
PV:
PMT:
FV:
Other Useful Keys:
RCL
button
STO
Back Arrow Key
.1 Corporate Finance and
the Financial Manager
In this section. we discuss where the ﬁnancial manager ﬁts in the corporation. We start by
deﬁning corporate ﬁnance and the ﬁnancial manager‘s job.
WHAT [5 CORPORATE FINANCE?
Imagine that you were to start yo
1.
Award: 10 out of 10.00 points
Show my answer
For each of the following, compute the future value: (Do not round intermediate calculations and round your answers to 2
places, e.g., 32.16.)
Present Value
Years
Interest Rate
Future Value
$
$
2,200
12
8,65
1.
Award: 10 out of 10.00 points
Show my answer
Huggins Co. has identified an investment project with the following cash flows.
Year
1
2
3
4
Cash Flow
$ 920
1,330
1,590
1,775
If the discount rate is 10 percent, what is the present value of these cash flow
Chapter 1
Introduction to Corporate Finance
1
Chapter 5
The Time Value of Money
2
2. Calculating Future Values. For each of the following, compute the future value:
Present Value
Years
Interest Rate
Future Value
$2,250
16
10%
$8,752
13
8
$76,355
4
17
$183
Chapter 1
Introduction to Corporate Finance
1
Chapter 5
The Time Value of Money
2
2. Calculating Future Values. For each of the following, compute the future value:
Present Value
Years
Interest Rate
Future Value
$2,250
11
13%
$8,630.69
$8,752
7
9
$15,999
The Weighted Average Cost of Capital
Cost of Capital the cost that a firm must pay for the capital it uses to finance new
investments and investment projects.
Capital comes from:
1) Debt
2) Preferred stock
3) Retained earnings
4) Common stock
Alternativel
CAPITAL BUDGETING
The process of developing and evaluating long term investment projects of the firm.
How to evaluate the alternative projects?
1. Calculate NPV of the cash flows derived from the project and then subtract the initial
cash outlay.
2. If PV
SELECTION CRITERIA FOR INVESTMENT PROJECTS
The following criteria are tools to evaluate the cash flows from projects in order for
firms to decide if they want to undertake a project or not.
I.
Average Accounting Return:
Note: N1 may not equal N2 because t