Ch. 1 Foundations
1.
What are real assets? What are financial assets?
2.
What is a financial market?
3.
Financial management means the management and control of money and money-related
operations within a business. It also refers to the financial input th
Ch. 10 Capital Budgeting Techniques
1.
Payback Period, NPV, IRR, PI
-What are they?
-What are the advantages and drawbacks of each of them?
-What are the decision criteria for each of them?
-Which one(s) is(are) not time adjusted?
2.
The basic NPV, IRR, a
Ch. 9 Risk and Return
1.
In financial theories, we assume that investors and financial managers are risk averse.
What does the term "risk aversion" mean?
2.
What is expected return (value)?
3.
What does standard deviation measure? What does coefficient of
FIN 326
Dr. Shum
Review the following types of problems for Final Exam:
Ch. 3 ratios
Ch. 4 external funding requirement (EFR)
Ch. 6 time value of money
PV, PVA, FV, FVA, n, k, PMT
non-annual compounding
deferred annuity
Ch. 7 value of a bond
Ch. 8 value o
Chapter 9
1. a. k = cfw_D1 +(P1-P0)/P0
ke = cfw_$.50+($18-$15)/$15=23.3%
b. ke = cfw_$.25+($17-$15)/$15=15%
c. ka = cfw_$.10+($13-$15)/$15=-12.7%
6. expected return=k = (5%)(.05)+(8%)(.25)+(10%)(.40)+(12%)(.25)+(15%)(.05)=10%
standard deviation = cfw_(5%-
Bond Valuation: Intermediate Problems
Review 7
1. An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10% annual
w. Bond L matures in 15 years, while bond S matures in 1 year. What will the value of each
bond be if the
Future Value of an Annui Due
Annuity Due-Payments are made at the beginning of each period instead of the
end (an ordinary annuity).
Whats the future value of a 7%, 5-year Wthat pays $300 each year?
Ngagf
I = '72,
A! 5 5
p/VT: 5-300
i We as MS!
I) .
St
Present Value of a Lump Sum
You are planning to take a vacation in three years that you estimate will cost $5,000. If you can invest
your money in a mutual fund that has a 12% rate of return, how much would you have to invest today in
order to have $5,000
. 7 \.
Basic Bond Valuation Problems Rm a 39M 6,; pi,-\bjfm ) 39/, 5. /
ABC Corporations bonds have 10 years remaining to maturity. Interest is paid annually, they have a $1,000
par value, the cougon rate is 8%, and the yield to maturity is 9_o. What is t
Bond Review Problems
Make sure P/Y =1 before starting a bond problem.
Bond Valuation: Annual
Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon
interest payment of $65. The market requires an interest rate of 8.
Capital Asset Pricing Model (CAPM) Review
A stocks risk consists of two components:
1. Market Risk
2. Company-Specic Risk.
Company-specic risk can be eliminated by xiimaisms-gm
- mama» {ASK is caused by general movements in the stock market
due to war, re
Variable Growth Stock (Advanced!
Carbohydrates Anonymous (CA) operates a chain of weightloss centers. Its services have been in great
demand in recent years and its prots have soared. CA recently paid an annual dividend of $1.35 per
share. Investors expec
Valuing Preferred Stock
Alcoa. Inc. has preferred stock outstanding that pays a dividend of $3.75 per share each year. The stock
paid a dividend yesterday. If investors require a 5.5% return on this investment, what would you expect
the price of these sha
Variable Growth
A food company has developed a new fat free ice cream, and as the popularity of the product increases,
the rm will grow rapidly perhaps as much as 20% per year. Over time, as the market share of this new
food increases, the rms growth rate
Ch. 16
Economic Ordering Quantity
1. Diskettes Etc. Inc. (DEI) must order floppy diskettes from its supplier in lots of onedozen boxes. Given the following information, complete the table below and
determine the economic ordering quantity of floppy disket