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FIN335 SP2012 Phase 3 Review

FIN335 SP2012 Phase 3 Review. 40 Questions 30 M/C, 10 Problems. Capital Market History [Ch. 10]. How do we compute? dollar returns, percentage returns (P) How do average returns differ from geometric returns? (P) What are risk premiums ? How do they affect expected returns?

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FIN335 SP2012 Phase 3 Review

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  1. FIN335 SP2012 Phase 3 Review 40 Questions 30 M/C, 10 Problems

  2. Capital Market History [Ch. 10] • How do we compute? dollar returns, percentage returns (P) • How do average returns differ from geometric returns? (P) • What are risk premiums? How do they affect expected returns? • How do we measure expected returns using the CAPM? (P)

  3. Risk and Return [Ch. 11] • How do we measure expected returns for portfolios? (P) • How do we measure portfolio beta? (P) • Why should investors hold a portfolio of assets?

  4. Cost of Capital [Ch. 12] • Why are taxes important in determining the cost of capital? • How do we measure the weighted average cost of capital? (P) • How does risk impact the firm’s cost of capital? • How are weights determined when computing the weighted average cost of capital? (P)

  5. Leverage and Capital Structure [Ch. 13] • What is the essence of Modigliani & Miller Proposition 1? • How do taxes affect the cost of debt? • What is financial risk? Operating Risk? • What is business risk? • How does risk affect the cost of capital?

  6. Dividends and Dividend Policy [Ch. 14] • What are the 4 important dates regarding the payment of dividends? • What does it mean when a stock goes ex-dividend? (P) • How do stock splits affect shareholder wealth? (P) • How do dividends relate to stock prices? • What are dividend clienteles?

  7. Raising Capital [Ch. 15] • What functions do venture capital firms perform? • How is the registration statement and preliminary prospectus related? • What are the two types of underwriting agreements and how do they differ? • What are green shoe provisions? • What are lockup agreements?

  8. International Financial Management [Ch. 18] • How does a direct exchange differ from an indirect exchange? (P) • How can we compute a cross rate for a third given two cross rates? (P) • How does a spot trade differ from a forward? • What is a swap? • What is an ADR? How does an ADR come into being? • How do we recognize when a currency is appreciating? Devaluing?

  9. Supplementary Material • Bankruptcy and Reorganization (Supplementary Notes) • What does it mean to reorganize a firm in bankruptcy? • What is the Rule of Absolute Priority? • How does Chapter 11 differ from Chapter 7?

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