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Fundamentals of Finance Exam #2 Preview - What to Study

Get ready for your finance exam with this detailed preview outlining what to study, including Power Point slides, self-test questions, past quizzes, homework problems, and review questions from Chapters 7, 8, and 9. Memorize key formulas such as expected value, standard deviation, TVM, and cost of capital to ace the test. Don't forget your essentials on exam day and check the logistics/format for the exam structure.

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Fundamentals of Finance Exam #2 Preview - What to Study

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  1. Fundamentals of Finance Exam #2 Preview Oct 29, 2012

  2. What to Study • Power Point Slides • Self test questions • Past quizzes • Homework problems • Review questions

  3. 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

  4. Self-Test problems • Ch 7, p. 185 1, 2, 3, 6, 7 • Ch 8, p. 227 All • Ch 9, p. 261 All

  5. 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)

  6. 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

  7. 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

  8. 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

  9. 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)

  10. 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

  11. Special Office Hours • Fri 10/26 9:00 – 11:00 • Mon 10/29 9:00 – 11:00

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