Fundamentals of Finance

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# Fundamentals of Finance - PowerPoint PPT Presentation

Fundamentals of Finance. Exam #2 Preview. Oct 29, 2012. What to Study. Power Point Slides Self test questions Past quizzes Homework problems Review questions. Review questions. Ch 7, p. 186 1, 2, 3, 8, 9, 10 Ch 8, p. 228 1, 3, 4, 5, 6, 8, 9 Ch 9, p. 261 2, 3, 4, 7, 8 .

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### Fundamentals of Finance

Exam #2 Preview

Oct 29, 2012

What to Study
• Power Point Slides
• Self test questions
• Past quizzes
• Homework problems
• Review questions
Review questions
• Ch 7, p. 186 1, 2, 3, 8, 9, 10
• Ch 8, p. 228 1, 3, 4, 5, 6, 8, 9
• Ch 9, p. 261 2, 3, 4, 7, 8
Self-Test problems
• Ch 7, p. 185 1, 2, 3, 6, 7
• Ch 8, p. 227 All
• Ch 9, p. 261 All
Formulas – Chapter 7
• Expected value (Mean) = u = E(VxP)
• Standard Deviation = square root of sum of P(V-u)2
• Coefficient of variation

(Standard Deviation / Mean)

• CAPM = K = Krf + B(Km – Krf)
Formulas – Ch 8, TVM
• FV = n, i/y, pv, pmt=0,
• PV = n, i/y, pmt=0, fv
• FVa = n, i/y, pv=0, pmt
• PVa = n, i/y, pmt, fv=0
• FVad = n, i/y, pv=0, pmt, (1 + k)
• PVad = n, i/y, pmt, fv=0, (1 + k)
• PVp = Div/K
Formulas – Ch 9, Cost of Capital
• ATKd = Kd(1 – T)
• Kps = Div/Net Price
• Kre = (D1/Price) + g (growth rate)

D1 = Do x (1 + g)

• Kcs(new) = (D1/Price – Float.) + g
• WACC = WTd x ATKd + WTp x Kps + WTcs x Kcs
• Breakpoint = Available debt or equity before cost of capital increases / Percent of debt or equity to total capital
What to Bring
• Scantron #882 – E
• Number 2 pencil (no pens)
• Financial Calculator
• No cell phones, lap tops
• Chapter 9 homework
• More tranquilizers/No roids
I will provide
• List of formulas from the 3 chapters,

plus the math formulas

(see formula slides)

• Space on the exam for your calculations (no scratch paper allowed)
Logistics/Format
• Multiple choice – 21 (1.25 points each)
• Problems – 4 (4 parts each, 1.5 points each part)
• Multiple choice will include many calculations
Special Office Hours
• Fri 10/26 9:00 – 11:00
• Mon 10/29 9:00 – 11:00