1. Treasury bills - Discounted debt instruments issued by the U.S. government
2. Federal funds - Overnight loans from one bank to another
3. Term loan - A loan, generally obtained from a bank or insurance company, on which the
borrower agrees to make a se
The returns can be interpreted as what you would have earned if you had held portfolios of the
following:
Large-company stocks: This common stock portfolio is based on the Standard & Poors (S&P) 500 index,
which contains 500 of the largest companies (in t
44. Staci invested $950 five years ago. Her investment paid 7.2 percent interest compounded monthly.
Stacis twin sister Shelli invested $900 at the same time. But Shellis investment earned 8 percent interest
compounded quarterly. How much is each investme
64.
Lightning Electrics outstanding bond has a $1,000 maturity value and a 4.5 percent coupon rate of
interest (paid semiannually). The bond, which was issued five years ago, matures in 10 years. If investors
require a return equal to 6 percent to invest
2. Why should persons who pursue careers in business have a basic understanding of finance even if
their jobs are in areas other than finance, such as marketing or personnel?
Someone who pursues a career in business must have a basic understanding of fina
Select Ch. 14 End of Chapter Questions and Solutions:
1.
With the information given, we can find the cost of equity using the dividend growth model.
Using this model, the cost of equity is:
RE = [$2.75(1.058)/$59] + .058 = .1073, or 10.73%
2.
Here we have
Review for Exam II:
Chapters covered: Ch. 7, 8, 9, 10
50 multiple choice
The formula sheet is posted on Canvas. All course materials covered for
these chapters in class or in the book could be on the exam. Focus on the
following:
Ch 7: on Bond Valuation &
FIN 3403 Review Exam I:
The exam consists of 50 multiple choice questions (worth 2
points each).
You will be given the formula sheet that is posted on Canvas for
your review! MAKE SURE YOU BRING YOUR FINANCIAL
CALCULATOR!
The exam covers Chapters 1, 2, 3,
Frequently asked questions, FIN 3403
Connect
Q: Will the practice tests count towards my Connect grade.
A: Yes, all practice tests count towards your Connect grade, in fact, because the practice tests are
worth a lot of points they are heavily weighted in
Summary of Formulas - Exam III
Principles of Finance
I. Bond Valuation
1
1
t
F
(1 + r )
Bond value = C
+
(1 + r ) t
r
where C=coupon payment; F=face value; r = yield to maturity; t = time to maturity
II. Stock valuation
1. no growth case:
D
P=
r
2.
Summary of Formulas Exam II
Principles of Finance
Bond valuation
1
1
(1 + R) t
Bond value = C
R
+
F
(1 + R ) t
where C = coupon payment; F = face value; R = yield to maturity; t = time to maturity
Fisher Effect:
(1+ nominal Rate) = (1+ real rate) x (1
EXAM III REVIEW
1
Ch 5 Example 1
You need 40,000 in 5 years, you can
invest at 8%, how much do you need to
invest today?
2
Ch 5 Example 2
You invest $100. In 50 years your
investment is worth $4,000. What
annual return will you have earned?
3
Ch 6 Examp
Summary of Formulas - Exam One
Principles of Finance
I. FINANCIAL CASH FLOWS
The cash flow identity:
cash flow from assets = cash flow to creditors (bondholders)
+ cash flow to stockholders (owners)
cash flow from assets = operating cash flow
- net capita
FIN 3403 Final Grade Calculation Template
Exam I
Score in %
Weight
0.25
Exam II
0.25
Exam III Connect*
0.25
Final Score
0
0.25
Instructions: Enter your grades into the yellow cells in % format. For example, if you received an 80% in exam I enter 80 into t
A FEW WORDS OF ADVICE ABOUT CONNECT
We will be using McGraws online assignment system called Connect. In this class, Connect and Canvas
are linked, that means that you will have to access the Connect assignments through Canvas. To access a
Connect assignm
Markets
Wall Street Journal
SAC Agrees to Plead Guilty in InsiderTrading Settlement
U.S. Says Hedge Fund Will Pay Total $1.8 Billion in
Penalties
By
Michael Rothfeld
Updated Nov. 4, 2013 10:03 p.m. ET
U.S. prosecutors announce hedge-fund group SAC Capital