Ch. 9 Equity Securities
A) Common stock
more uniform across corporations than debt
residual claim on firms' cash flows (after all other claims have been
met)
voting rights (voting privileges on important changes):
General Shareholders Meeting
Proxy Ballot
Agency conflict: conflict between agency and principle
Agent
Principle: maximize shareholders wealth
Agency relation conflict
1.
Agency cost: solve the agency conflict incur by the
owners of the company to solve agency conflict.
2.
Must have the same obje
Bonds and their valuation
1.
Bond: borrower agrees to make payment to owner
2.
Key features of bond:
a.
b.
Coupon interest rate: Fixed par * coupon rate
c.
Maturity date: years ( to paid )
d.
Issue date: when the bond was issued
e.
3.
Par Value: face amou
1.
What is a callable bond?
a.
Callable bond : can be call back
b.
If the bond is called back then the company will
pay more than the par value ( That additional
amount is known as a premium )
b.i.
b.ii.
c.
Future value: Call Price
Par Value + Call premiu
Ch. 1 THE FIELD OF FINANCE
1*
Markets and Institutions
Regulation of Commercial and Investment Banking
Structure and Function of Markets and Trading
Determinants of Interest Rates
Foreign Exchange
2*
Investments
Portfolio Management (allocation of securit
Ch. 11 Capital Budgeting
Objectives
Knowledge:
know what is the capital budgeting
know what is the main rule of capital budgeting
know the definitions of major decision rules (NPV, PI, IRR, Payback, and
Discounted Payback) and relationships between them
k
12. Advanced Topics in Budgeting
Objectives:
know how to use the concept of incremental cash flows to find the
incremental cash flows of the project
know what are allocation, opportunity, and sunk costs
know how to value and rank projects when inflatio
FINA 3000/ Marian Turac / Additional Problems
Name_
When applicable, always show a formula, substitute numbers into the formula (how did you get the answer), and the answer to get full
credit.
Q1. (20 points, 4 each) Using the information for Illustration
Ch. 7 Corporate Security Valuation
Objectives:
know to determine prices of fixed coupon bonds, zero coupon
bonds, and consols
know to determine prices of preferred stocks
know to determine prices of common stocks with
i) constant dividends
ii) constant gr
Ch. 6 and 8 Financial Securities
Objectives:
know what is a financial security
know the properties of debt and equity securities
know to list and describe different types of debt and equity
Financial Security is a contract (signed promise) between the
len
Ch. 4 Financial Statement Analyses
Objectives:
know how management can legally manipulate F/S
know how to uncover a potential manipulation of F/S
know to prepare, interpret, and analyze Common Size I/S and B/S
know how to calculate and interpret all the
Ch. 5 The Time Value of Money:
The Basic Concepts
Objectives:
1. know why money has time value - the concept of the TVM
2. know the relationship between inflation, real and nominal interest
rates
3. know what is the required rate of return (RRR), the disc