Time Value of Money
1. The concept of future value and present value.
2. The future value and the present value of both
an ordinary annuity and an annuity due, and
the present value of a perpetuity.
3. The future value and the present value
1. The key components of a firms credit terms.
2. The effects of stretching accounts payable on their cost
and the use of accruals.
3. The interest rates and basic types of unsecured bank
sources of short-term
If you are fascinated by films that observe a character who is behaving precisely, with no
apparent motivation, then you should like this movie that I about to tell you. The movie
started as the main character agonisingly phoning the emergency services. H
Capital Budgeting Cash Flow
1. The motives for key capital budgeting expenditures and the
steps in the capital budgeting process.
2. The major components of relevant cash flows, expansion
versus replacement cash flows, sunk costs and opport
Cost of Capital
1. The key assumptions that underlie cost of capital and the
basic concept of cost of capital.
2. The cost of long-term debt and the cost of preferred stock.
3. The cost of common stock equity, the cost of retained
Capital Budgeting Techniques
1. Understand the role of capital budgeting techniques in the
capital budgeting process.
2. Calculate and evaluate the payback period.
3. Calculate and evaluate the net present value. (NPV).
4. Calculate and eva
Cash Flow and
1. The effect of depreciation on the firms cash
flows, the depreciable value of an asset, its
depreciable life, and tax depreciation methods.
2. The firms statement of cash flows, operating
cash flow, and fr
And Bond Valuation
1. Interest rate fundamentals, the term structure
of interest rates, and risk premiums.
2. The basic model used in the valuation process.
3. The basic valuation model to bonds and
describe the impact of req
Risks and Return
1. The fundamentals of risk, return, and risk aversion.
2. The procedures for assessing and measuring the risk.
3. The measurement of return and standard deviation for a
4. The risk and return characteristics of
1. Debt and equity.
2. The rights, characteristics, and features of both common and
3. The concept of market efficiency and basic common stock
valuation under the zero growth, constant growth, and
Introduction to Corporate
1. Define finance, and the various forms of business
2. The relationship to economics and accounting.
3. Explain why wealth maximization, rather than profit
maximization, is the firms goal and
Chapter 17 Mutual Funds and Hedge Funds
Answers to Chapter 17
1. Dollar Return = $4.00, Rate of Return = 8%
NAV for open-end, A = $6.375
NAV for open-end, B = $6.375
NAV for open-end, A = $6.375, % change = 0%
NAC for open-end, A
1. The residual theory of dividends and the key arguments with regard
to dividend irrelevance and relevance.
2. The key factors involved in formulating a dividend policy.
3. Review and evaluate the three basic types of divid
What is meant by the agency problem in the context of a public limited company? How is it
possible for the agency problem to be reduced in a company?
Agency relationship is Owner employ agent i.e. manager to run the company on his/her beha
Working Capital and Current Asset
1. Short-term financial management, net working capital, and the
related trade-off between profitability and risk.
2. The cash conversion cycle, its funding requirements, and the
key strategies f
Leverage and Capital Structure
1. The basic types of capital and capital structure theory.
2. The optimal capital structure using a graphical view of
the firms cost of capital functions and a zero-growth valuation
3. The EBIT-EPS app
Chapter 12 - Commercial Banks Financial Statements and Analysis
Answers to Chapter 12
1. The treasury security offers 7% before tax and 4.9% after tax. This is less than the 5% offered
by the municipal. Alternatively, the municipal offers a 7.14
Chapter 10 - Derivative Securities Markets
Answers to Chapter 10
1. a. The settlement price is 99.155 percent of the face value of the contract ($1 million).
b. A total of 680,499 5-year Treasury note futures contracts traded on August 31, 2010.
Chapter 4 The Federal Reserve System, Monetary Policy, and Interest
1. Federal Reserve interest rate decisions can be vetoed by the U.S. President or the
Answer: False Page: 90 Level: Easy
2. The FOMC is responsible fo
TUTORIAL week 6 (Foreign Currency Derivatives)
Samuel Samosir trades currencies for Peregrine Funds in Jakarta. He focuses nearly all of his
time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is
Tutorial Week 14
American Airlines is trying to decide how to go about hedging SFr70 million in ticket sales receivable
in 180 days. Suppose it faces the following exchange and interest rates.
Forward rate (180 days):
TUTORIAL Week 12 (Foreign Direct Investment)
Problem 1-5 illustrate an example of trade induced by comparative advantage. They
assume that China and France each have 1,000 production units. With one unit of
production (a mix of land, labor, capital, and t
Tutorial Week 11
a) You entered in to a 36 forward rate agreement that obliged you to borrow $10,000,000 at 3%.
Suppose at the maturity of the FRA, the correct interest rate is 3%. Clearly you are better off since you
have the ability to borrow