Reference no: EM13221797

Section 1: Definitions: 
Do not define the work with the word. Do not give examples (points deducted for examples). Limit response to no more than 2 sentences.
1. Sole Proprietorship
2. Ethics
3. Finance (if you wiki you will be wrong; use our in class definition it is more functional)
4. Balance sheet
5. Income statement
6. Cashflow statement
7. Asset (be careful!)
8. Liability
9. Intangible asset
10. Name three advantages and three disadvantages for each of the three company legal structures.
11. Convertible bonds
12. Stock dilution
13. ROE and P/E ratio(what is it, do not just interpret the initials)
14. Enterprise Value
15. Price
16. Interest rate
17. Risk
18. NPV (what is it, do not just interpret the initials)
19. IRR(what is it, do not just interpret the initials)
20. Bond

Section 2: Concepts and Theories
1. What are the 3 rules of the time value of money
2. Describe the difference between banks and investment banks.
3. What is the difference between capital and Money Markets?
4. What is the difference between the primary market and secondary market?
5. What are the 5 key financial ratios metric by which we benchmark companies?
6. Name 3 strengths and weaknesses of Net Present Value
7. What is the basic theory of financial value?
8. Why do zero coupon bonds tend to sell at a discount (please be precise in your explanation).
9. When does the YTC equal the YTM?
10. Can a bond duration and maturity be the same? Explain your answer.
Section 3: Problem Solving.











A. What can you conclude about the company's financial condition from it statement of cash flows? (Write 1 or 2 paragraphs only)

B. Compute the following ratios for 2010 from data above.
1. Current Ratio
2. Quick Ratio
3. Inventory turn
4. Total asset turn over
5. Return on assets
6. Debt ratio
7. Profit ratios: Gross Profit Margin, Operating Profit margin, and Net Income profit margin
8. Return on Assets
9. Return on Equity
10. P/E ratio
11. M/B ratio
12. The annual "g" (growth rate)






BELOW SHOW YOUR WORK FOR CREDIT (if you use excel or a calculator just show your inputs (or variables) with their associated values).

1. What is the future value of 
A. $600 after 19 years that is invested at 4.3% annual interest?
B. $128 after 13 years that is invested at 5.8% annual interest?
C. $713 after 21 years that is invested at 2.3% annual interest?


2.Your company has a budget investment decision to make. Use the following data below to help them to decide on the correct investment? Find for all projects:

A. NPV
B. IRR
C. MIRR
D. Which project is best to select and why?






3 5% of the total $10,000 bonds pay an annual rate of 6.1% with a yield of 3.9%. These bonds sell for $7,000. What is the coupon payment they will provide you?

4. Corporate bonds that pay quarterly offer 3.78% selling for $9,000 with a par value of $5,500 and yield of 13%. What type of coupon payment would you expect from these bonds?


5.An annual paying $50,000 bond is paying 5.8% with a return of 11.3% for 8 years, what is the price for this Bond?


6.Today you can buy a 20 year $10,000 Bond offering 4.9% with the estimated future value of $14,800. What would be the yield you would receive on this Bond?

7.What is the value of a $10,000, 10-year, 10% City of San Francisco coupon bond, with a yield of 13%?

8. IBM is expected to pay $0.50 per share dividend at the end of the year (that is, D1 = $0.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock is 15%. What is the stock's value per share?


9. Target's stock currently sells for $20 a share. It just paid a dividend of $1.00 a share (that is, Do = $1.00). The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? What is the required rate of return?


10.IBM stock is expected to pay a fifty-cent per share dividend at the end of the year. The dividend is expected to show a constant growth rate of 7% each year. If the required rate of return of the IBM stock is 15%, then what is its current market price?


12.You paid $189 for Ford Motor Corporation stock which is paying an annual $19 dividend. If the stock price rises to $260 you plan to sell the stock by the end of the year. Calculate your:
a. Dividend Yield?
b. Capital Gains?
c. Total Returns?


13.Sometimes a stock of a company has declining growth. This was the case with NewFlix. As customers started to move to more online streaming NewFlix saw its sales falling while cost continued to increase. Because of these events, the company's earnings and dividends also are declining at a constant rate of 4.5% per year. If D0=$5 and expected return for the stock is =15%, what is the value of the NewFlix stock?