...Mathematics of finance 1- Prove which of the following options is the most interesting one: a) To invest 5,000€ in a bank account that offers an annual simple interest rate of 6%, for 10 months b) To invest 5,000€ in a bank account that offers an annual compound interest rate of 6%, for 10 months The bank pays interests once per month a) b) So, option b) is the best. 2- Prove which of the following options is the most interesting one: a) To invest 5,000€ in a bank account that offers an annual simple interest rate of 6%, for 1 year b) To invest 5,000€ in a bank account that offers an annual compound interest rate of 6%, for 1 year The bank pays interests once per month a) b) So, option b) is the best. 3- Prove which of the following options is the most interesting one: a) To invest 5,000€ in a bank account that offers an annual simple interest rate of 6%, for 10 months b) To invest 5,000€ in a bank account that offers an annual compound interest rate of 6%, for 10 months The bank pays interests once per year a) b) So, option a) is the best. 4- What do you prefer a) To receive 1,000€ today? b) To receive 1,030,3€ in 3 months? c) To receive 1,062.8€ in 5 months? The annual interest rate is 12%, and interests are paid once per month Let’s find its value in 5 months: a) b) c) 0 So, option c) is the best. 5- What do you prefer a) To invest 5,000€ for 12 months, in a bank account that offers a simple interest rate of 10% b) To invest...
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...Portland State University School of Business Administration FIN 565: Cases in Corporate Finance Case Descriptions and Suggestions Fall 2010 As you review the case descriptions and read the cases, develop a plan for your analysis. The case report and presentation should include, but not be limited to, the suggested questions I have provided. Do not submit or present the case a simply a numbered series of answers to the questions. The case analysis must be a narrative report that includes the information needed to answer the questions. Financial Statement Analysis Identify the Industry – 2007 Substantive Issues This case provides financial statement data for 10 companies from 10 different industries from Thomson Banker One – Analytics. Using knowledge of the industries’ financial characteristics and financial rations, you are asked to match each of the 10 financial statement data sets to an appropriate industry. You are provided with common-sized income statements (all items scaled by revenues), common-sized balance sheets (all items scaled by total assets) and selected financial ratios. All data are averaged over three years – 2004 – 2006 – to smooth out one-time items. Pedagogical Objectives This case illustrates the difficulty of identifying a company in an industry since do few companies operate in a single homogeneous industry. It also serves to get each class member engaged with team members in an effort to determine the strengths of each member...
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...FIN3000 Assignment 2 -Topic 5: Risk and Return HPU Due on: March 14, 2013 CLASS TIME (Solutions without necessary derivation cannot receive credit) 1. Please calculate the expected value and the standard deviation of returns for asset A (See below.) Asset A Possible Outcomes | Probability | Returns (%) | Weighted Value | Pessimistic | 0.25 | 10 | 2.5% | Most Likely | 0.45 | 12 | 5.4% | Optimistic | 0.30 | 16 | 4.8% | TOTAL | 1.00 | EXPECTED RETURN | 12.7% | j | rⱼ | rᵪ | rⱼ- rᵪ | (rⱼ- rᵪ)² | Prⱼ | (rⱼ- rᵪ)² x Prⱼ | 1 | 10% | 12.7% | -2.7% | 7.29% | 0.25 | 1.8225% | 2 | 12% | 12.7% | -0.7% | 0.49% | 0.45 | 0.2205% | 3 | 16% | 12.7% | 3.3% | 10.89% | 0.30 | 3.267% | j=1n(rⱼ- rᵪ)² x Prⱼ=5.31% σ=j=1nrⱼ- rᵪ2 x Prⱼ=5.31%≈2.304% 2. Tom Skinner has $45,000 invested in a stock with a beta of 0.8 and another $55,000 invested in a stock with a beta of 1.4. These are the only two investments in his portfolio. What is his portfolio’s beta? ASSET | ASSET WORTH | PORTFOLIO BETA | BETA | TOTALS | 1 | $45,000 | 45,000/(45,000+55,000) | .8 | 0.36 | 2 | $55,000 | 55,000/(45,000+55,000) | 1.4 | 0.77 | TOTALS | | | | 1.13 | 3. Kamath Manufacturing Company has a beta of 1.45, while Gehr Industries has a beta of 0.85. The required return on the stock market is 12.00%, and the risk-free rate is 5.00%. What is the difference between Kamath's and Gehr's required rates of return? Market Risk Premium= (.12-...
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...Problem Set #2 4. (a) Assuming that all the bonds make only annual payments, what spot rates are imbedded in these prices? First, we need to find the Discount Factors: Bond A: 〖DF〗_1*$100=$93.46 Bond B: 〖DF〗_1*$4+〖DF〗_2*$104=$94.92 Bond C: 〖DF〗_1*$8+〖DF〗_2*$8+〖DF〗_3*$108=$103.64 〖DF〗_1=93.46/100=0.9346 〖DF〗_2=((94.92-(0.9346*4)))/104=0.8767 〖DF〗_3=((103.64-(0.9346*8)-(0.8767*8)))/108=0.8255 Since 〖 DF〗_t=1/〖(1+r_t)〗^t , we have r_t=(1/〖DF〗_t )^(1⁄t)-1. Then solving for r1, r2 and r3 we get: r_1=0.069976≅0.070 r_2=0.068008≅0.068 r_3=0.066009≅0.066 So the spot rates are: Bond A = 7%, Bond B = 6.8% and Bond C = 6.6%. (b) What forward rates are embedded in these prices? The formula for forward rates is: f_t=〖(1+r_t)〗^t/〖(1+r_(t-1))〗^(t-1) -1=〖DF〗_(t-1)/〖DF〗_t -1 Plugging in the discount factors from (a) we get the forward rates: f_1=1/〖DF〗_1 -1=1/0.9346-1=0.069976≅7.00% f_2=〖DF〗_1/〖DF〗_2 -1=0.9346/0.8767-1=0.066043≅6.60% f_3=〖DF〗_2/〖DF〗_3 -1=0.8767/0.8255-1=0.062023≅6.20% (c) What should the price of a 3-year bond with a face value of $100 and a 6% annual coupon be? We calculate the bond price by discounting the annual cash flows by the discount factors from (a): P=〖DF〗_1*〖CF〗_1+〖DF〗_2*〖CF〗_2+〖DF〗_3*〖CF〗_3 P=0.9346*$6+0.8767*$6+0.8255*106 P=$98.37 (d) A 3-year bond with a face value of $100 and a 4% annual coupon is trading at $95.00. Show that this bond is mispriced by showing how you would take advantage of its price. In...
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...a. Why is corporate finance important to all managers? Corporate finance is very important for managers because it is a primary factor on how businesses are ran. Managers need to stay informed on how money flows through their business in order to maintain business and build a profit. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. The organizational forms a company might have as it evolves from a start-up to a major corporation are sole proprietorships, partnerships, and corporations. Most companies start as a proprietorship which is a business owned by one person. According to our book, the advantages are it is easy and inexpensive to start, there are not very many government regulations, and its income tax is not taxed on the corporate level. The disadvantages are it may be difficult to build capital which may make it hard for the business to grow, there are also unlimited personal liabilities to business debts, and the life of the business is limited to the life of the proprietor. The advantage of a partnership is it’s easy and inexpensive to start, and taxes are set on a personal level instead of a corporate level. The disadvantages are unlimited persona liability, limited life of the organization, difficulty of transferring ownership, and its difficult raising a lot of capital. Proprietorship and partnerships advantages and disadvantages are...
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...Foundations of Finance Homework 3 Prof. Johannes Stroebel Due at the start of class 9 Topic 5: The Capital Asset Pricing Model 1. Assume the risk free rate equals Rf = 4%, and the return on the market portfolio has expectation E [RM ] = 12% and standard deviation σM = 15%. (a) What is the equilibrium risk premium (that is, the excess return on the market portfolio)? (b) If a certain stock has a realized return of 14%, what can we say about the beta of this stock? (c) If a certain stock has an expected return of 14%, what can we say about the beta of this stock? 2. You are given the following two equations: E(Ri ) = Rf + (E(RM ) − Rf )βi E(RM ) − Rf σp E(Rp ) = Rf + σM (1) (2) You also have the following information: E(RM ) = .15, Rf = .06, σM = .15. Answer the following questions, assuming that the capital asset pricing model is correct: (a) Which equation would you use to determine the expected return on an individual security with a standard deviation of returns =.5 and a β = 2? Given the parameters above, what is the expected return for that security? (b) Which equation would you use to determine the expected return on a portfolio knowing that it is an efficient portfolio (consisting of the market portfolio M combined with the 1 risk-free rate)? If you were told that the standard deviation of returns on that portfolio is equal to σM and you were given the above parameters, what is the expected return on that portfolio? (c) Can you determine the β of the portfolio...
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...Chapter 1 Questions Question [pic] Answer 1-1 a. Proprietorship: A business structure in which an individual and his/her company are considered a single entity for tax and liability purposes. A proprietorship is a company which is not registered with the state as a limited liability company or corporation. The owner does not pay income tax separately for the company, but he/she reports business income or losses on his/her individual income tax return. The owner is inseparable from the proprietorship, so he/she is liable for any business debts. Partnership: a relationship of two or more entities conducting business for mutual benefit. Corporation: The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. b. limited partnership: A business organization with one or more general partners, who manage the business and assume legal debts and obligations, and one or more limited partners, who are liable only to the extent of their investments. Limited partners also enjoy rights to the partnership's cash flow, but are not liable for company obligations. Limited Liability Partnership: (LLP) Another name for a Limited Liability Company, often used by professional associations. The partner or investor's liability is...
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...PRINCIPLES OF FINANCE COMPLETE COURSE NEW To purchase this visit following link: http://www.activitymode.com/product/fin-100-principles-of-finance-complete-course-new/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 100 PRINCIPLES OF FINANCE COMPLETE COURSE NEW FIN 100 Principles Of Finance Complete Course New FIN 100 WK 4 Assignment 1 – Complexities of the U.S. Financials FIN 100 WK 8 Assignment 2 – Business Financing and the Capital Structure Fin 100 assignment 1 Fin 100 Assignment 2 FIN 100 HW Assignment 3 FIN 100 HW Assignment 4 FIN 100 HW Assignment 5 FIN 100 HW Assignment 6 FIN 100 HW Assignment 7 FIN 100 HW Assignment 8 FIN 100 Homework Assisgnment Week One FIN 100 Week 3 homework Homework Week 5 Homework Week 7 FIN 100 Week 3 – Lab Assignment 3 – Chapters 5 and 6 FIN 100 Week 5 – Lab Assignment 4 – Chapters 9 and 10 FIN 100 Week 6 – Lab Assignment 5 – Chapters 11 and 12 FIN 100 Week 7 – Lab Assignment 6 – Chapters 13 and 14 Week 8 DQ Week 9 DQs FIN 100 QUIZ 1 FIN 100 QUIZ 2 CHAPTER 1,4,5 FIN 100 QUIZ 3 CHAPTER 6,7,8,10 FIN 100 Quiz 4 FIN 100 Week 3 – Quiz 2 Chapters 3, 4, and 5 FIN 100 Week 5 – Quiz 3 Chapters 7 and 8 FIN 100 WEEK 9 QUIZ 6 FIN 100 Week 10 – Quiz 7 – Chapters 17 and 18 FIN 100 Quiz 5 FIN 100 Quiz 6 FIN 100 Quiz 7 FIN 100 Quiz 8 Activity mode aims to provide quality study notes and tutorials to the students of FIN 100 Principles Of Finance Complete Course New in order to ace their studies. FIN 100 PRINCIPLES OF FINANCE COMPLETE...
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...Lisandra Rodriguez Acc.410 HW#1 Chapter 1 Q1-5 Funds are separate fiscal and accounting entities and include both cash and non cash resources. There are two types of fund accounting entities expendable and nonexpendable funds. Like that on business accounting is expenses – the cost of assets consumed during the period. In contrast, the cost of measurement focus of expendable fund accounting is expenditures – the amount of financial resources expended during the period for. Q1-6 The GASB is responsible for establishing accounting and financial reporting standards for activities and transactions of state and local governments including government non-profit organizations. Meanwhile FASB is for all other organizations including nongovernment nonprofit organizations. Then we have AICPA that evaluates the pronouncements of the various G&NP accounting standards bodies in depth in the course of preparing a series audit guidelines. Q1-7 Because significant revenues from sales of services are not available to finance governmental type activities, the government must raise financial resources from other sources such as Taxation and intergovernmental revenues. These are the two primary examples of these revenues. Q1-8 Because the day to day accounting and interim reporting by G&NP organizations is often based on cash receipts, disbursements, and balances or assuring compliance with the organization’s budget. But their annual financial statements must meet uniform national...
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...Solutions to Class 24 Manual HW Manual HW Day 24 1. A firm has estimated the following cash flows for a project: Year 0 -$100,000 Year 1 45,000 Year 2 52,000 Year 3 43,000 If the firm has a required rate of return of 20%, should this project be accepted? a. Calculate NPV b. Calculate IRR Cfo 100000 Enter ↓ C01 45000 Enter ↓ F01 1 Enter ↓ C02 52000 Enter ↓ F02 1 Enter ↓ C03 43000 Enter ↓ F03 1 Enter ↓ NPV 20 Enter ↓ CPT NPV -1,504.63 reject NPV<0 IRR CPT 19.03% reject IRR< RROR 2. For the project above, if the firm has a required payback of 3 years, should this project be accepted? Calculate the Payback Period Year Year 1 45,000 Year 2 45,000+ 52,000 = 97,000 Year 3 3,000/43,000 = 0.0698 Payback period = 2 + 0.0698 = 2.0698 accept, since payback period < 3 years 3.Two projects are mutually exclusive. Management has asked you to decide between them. Recommend which project should be accepted and why. Project A has a cost of $400,000 and has expected cash inflows of $75,000 for 10 years. Project B has a cost of $400,000 and has expected cash inflows of $90,000 for 7 years. The discount rate for both projects is 11%. Project A CF 2nd CLR WORK CF0 = 400,000 +/-enter ↓ C01=75,000 enter ↓ F01 = 10 enter ↓ NPV I = 11 enter ↓ CPT 41,692.40 Project B CF 2nd CLR Work CFo 4000000+/- Enter ↓ C01 90000 Enter ↓ F01 7 Enter ↓ NPV I = 11 Enter ↓ CPT 24,097.66 Select A higher NPV ...
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...HW #3: For Tuesday, Feb 8th … If you encounter financial terms with which you are not familiar, the Glossary provided on the Yahoo! Finance website at http://biz.yahoo.com/f/g/ may be of help. 1. Read Sections 5.6 through 5.10 in Chapter 5 – Evaluating a Single Project and Sections 13.1 through 13.4 in Chapter 13 – The Capital Budgeting Process from the course textbook. Note, as mentioned in class, the error in the definition of “EBIT” on page 552 in Chapter 13 which should read “Earnings Before Interest and Taxes.” Also, in Example 13-3 at the bottom of page 556, leverage, λ, is erroneously called the “debt-equity ratio” whereas it should be called the “debt fraction” or the “debt-to-capital” ratio. 2. Answer Questions 5-12, 5-14, 5-16, 5-17, 5-46, 5-47 and 5-54 found at the end of Chapter 5. Write up your answers, showing all work, neatly and concisely on 8.5 x 11 inch paper. Be sure your name appears at the top of each page and staple multiple pages together. Submit your answers at the beginning of class. Late submittals will not be accepted. All work is to be your own, consistent with the University Honor Council’s Guide to Academic Integrity. 3. Read “Assessing a Company’s Future Financial Health” (HBS 9-911-412) handed out in class and then complete the financial analysis of SciTronics by filling in the blanks on pages 6 through 10. Then complete The Case of the Unidentified Industries on pages 10 and 11. Explain your choices in The Case of the Unidentified Industries in...
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...Spring 2015 FNAN 401 - HW #1 (Due Feb 12) 1. You are saving for retirement. You have decided that one year from today you will begin investing 10 percent of your annual salary in a mutual fund which is expected to earn a return of 12 percent per year (compounded quarterly). Your present salary is $30,000, and you expect that it will grow by 4 percent per annum throughout your career (consequently, your investment at time 1 will be $3,000, your investment at time 2 will be $3,120, etc.). You will retire 40 years from today. a) How much money will you have in your investment account at retirement (assume you make your last investment deposit 40 years from now on the day you retire)? b) At retirement, you shift your investment portfolio balance into a money market account earning 6% per year, compounded monthly. You would like to make an equal monthly withdrawal from this money market account over the next 20 years (first withdrawal beginning one month into retirement at time 40 + one month). What equal, monthly amount can you withdraw from the account so that at time 60 (20 years into retirement) your money market account balance is reduced to $0? 2. a) What is the value today of receiving $1,000 every other year, forever? The first payment is received one year from today, and the appropriate discount rate is 7% per year, compounded semi-annually. b) What is the value today if the first payment is received two years from...
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...National Cheng-Chi University 研究所MBA: Tuesdays 6:10-9 Commerce Building 260306 Yee-Tien (Ted) Fu Undergraduate: Tuesdays 9:10:noon Commerce 260508 Autumn 2009 (3 units) Course Objective This course examines important issues in the rapidly evolving area of international financial markets. It focuses on various aspects of international portfolio management and open-economy macroeconomics, and is a natural extension to the theories and practical issues explored in Investments and/or Finance. This course is aimed at students wishing to acquire a sound understanding of the main opportunities in international investments. For example, the relevance of hedging in the management of currency risk will be studied in light of theoretical results and empirical evidence. We will also briefly cover foreign direct investment (FDI), since in general, the revenue generated from FDI by U.S. firms is about three times as large as the revenue generated from the exporting of U.S. goods by U.S. firms. Due to the ever increasing importance of international corporate governance, there is a corresponding need to decipher and use information in financial reports. At least one class meeting and one case study will touch on some key issues in international financial reporting and analysis, such as financial disclosure/transparency, incentives for off-balance sheet liabilities, hedge accounting, lease accounting, footnote disclosures, and intercorporate equity investments, and international...
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...Devry FIN 515 (Managerial Finance Course Work) Entire Course Week 1-7 and Final IF You Want To Purcahse A+ Work then Click The Link Below For Instant Down Load http://acehomework.com/Devry-FIN-515-Managerial-Finance-Course-Work-Week-1-7-and-Final-332323232323.htm IF You Face Any Problem Then E Mail Us At JOHNMATE1122@GMAIL.COM FIN 515 Managerial Finance Week 1 FIN 515 Week 1 Homework; Problems and Mini Case Week 2 FIN 515 Week 2 Homework Assignment; Problems Prob 3-1 - Prob 3-2 – Prob3-3 –Prob 3-4 – Prob 3.5 – Prob 3.5 – ROE – Prob 3-6 – Prob 3-7 Equity Multiplier Prob 4-1 –Prob 4-2 –Prob 4-6 Prob 4-13a –Prob 4-14 Week 3 FI515 Week 3 Homework Assignment; Problems Prob 5-1 – Prob 5-2 – Prob 5-6 – Prob 5-7 – Prob 5-13 – Prob 6-6 – Prob 6-1 – Prob 6-2 – Prob 6-7 Week 4 Fin 515 Week 4 Weekly Problems and Midterm Exam Prob 7-2 – Prob 7-4 – Prob 7-5 –Prob 9-2 –Prob 9-4 – Prob 9-4 – Prob 9-5 – Prob 9-6 – Prob 9-7 FIN 515 Week 4 : Business Valuation and Stock Valuation - Exam 1. (TCO A) Which of the following statements is CORRECT? (Points : 10) 2. (TCO G) Which of the following statements is CORRECT? (Points : 10) 3. (TCO G) LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620,000, and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and get the...
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...Devry FIN 515 (Managerial Finance Course Work) Entire Course Week 1-7 and Final - IF You Want To Purcahse A+ Work then Click The Link Below For Instant Down Load http://acehomework.com/Devry-FIN-515-Managerial-Finance-Course-Work-Week-1-7-and-Final-332323232323.htm IF You Face Any Problem Then E Mail Us At JOHNMATE1122@GMAIL.COM FIN 515 Managerial Finance Week 1 FIN 515 Week 1 Homework; Problems and Mini Case Week 2 FIN 515 Week 2 Homework Assignment; Problems Prob 3-1 - Prob 3-2 – Prob3-3 –Prob 3-4 – Prob 3.5 – Prob 3.5 – ROE – Prob 3-6 – Prob 3-7 Equity Multiplier Prob 4-1 –Prob 4-2 –Prob 4-6 Prob 4-13a –Prob 4-14 Week 3 FI515 Week 3 Homework Assignment; Problems Prob 5-1 – Prob 5-2 – Prob 5-6 – Prob 5-7 – Prob 5-13 – Prob 6-6 – Prob 6-1 – Prob 6-2 – Prob 6-7 Week 4 Fin 515 Week 4 Weekly Problems and Midterm Exam Prob 7-2 – Prob 7-4 – Prob 7-5 –Prob 9-2 –Prob 9-4 – Prob 9-4 – Prob 9-5 – Prob 9-6 – Prob 9-7 FIN 515 Week 4 : Business Valuation and Stock Valuation - Exam 1. (TCO A) Which of the following statements is CORRECT? (Points : 10) 2. (TCO G) Which of the following statements is CORRECT? (Points : 10) 3. (TCO G) LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620,000, and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and get...
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