FIN 435
Class Web Page, Spring '16
Instructor:
Maggie Foley
Jacksonville University
The Syllabus
For
Reference: www.jufinance.com/fin500_15f
(FIN500 website)
Weekly SCHEDULE, LINKS, FILES and Questions
Week 
Coverage, HW, Supplements 
Required 
WSJ Papers for Discussion in following week 
Videos (optional) 

Week 1 
Daily earning announcement: http://www.zacks.com/earnings/earningscalendar IPO schedule: http://www.marketwatch.com/tools/ipocalendar Chapter 3 Financial Statement Analysis Chapter 3 Case study (first case study, due in the 4^{th} week) Q1: Why are financial statements important? Q2: What are the three major financial statements? Q3: Free cash flow: concept and equation. What is FCF?
Capital expenditure = increases in NFA +
depreciation Or, capital expenditure = increases in GFA Chapter 4 Ratio Analysis Chapter 4 case study (second case study, due in the 4^{th} week) Reference: Commonly used ratio explained HW of chapters 3, 4 (due on 1/27) 1.
Firm A's sales last year = $280,000, net income = $23,000.
What was its profit margin? (8.21%) 2. Firm
A’s total assets = $415,000 and its net income =
$32,750. What was its return on total assets
(ROA)?
(7.89%) 3.
Firm A’s total common equity
= $405,000
and its net income = $70,000.
What was its ROE? (17.28%) 4. Firm
A’s stock price at the end of last year
= $23.50
and its earnings per share for the year = $1.30. What was its P/E ratio?
(18.08) 5. Meyer
Inc's assets are $625,000, and its total debt outstanding is $185,000. The new CFO wants to establish a
debt/assets ratio of 55%. The size of
the firm does not change. How much
debt must the company add or subtract to achieve the target debt ratio?
($158,750) 6. Chang Corp. has $375,000 of assets,
and it uses only common equity capital (zero debt). Its sales for the last year were $595,000,
and its net income was $25,000.
Stockholders recently voted in a new management team that has promised
to lower costs and get the return on equity up to 15.0%. What profit margin would the firm need in
order to achieve the 15% ROE, holding everything else constant? ( 9.45%) 7. A firm has
$300 in inventory, $600 in fixed assets, $200 in accounts receivable, $100 in
accounts payable, and $50 in cash. What is the amount of the current
assets? ($550) 8. Art's
Boutique has sales of $640,000 and costs of $480,000. Interest expense is
$40,000 and depreciation is $60,000. The tax rate is 34%. What is the net
income? ( $39,600) 9. Use the following information to
prepare the cash flow statement in 2008 of Nabors, Inc. 
Useful website for stock picks www.finviz.com (stock screener) money.msn.com/investing zacks.com minyanville.com moneychimp.com navellier.investor.com/portfoliograder/ nasdaq.com marketwatch.com superstockscreener.com gurufocus.com portfoliomoney.com stockconsultant.com marketgrader.com moderngraham.com stockpickr.com stockta.com thestreet.com askstockguru.com quotes.wsj.com oldschoolvalue.com fool.com analystratings.com barchart.com stock2own.com theonlineinvestor.com seekingalpha.com 
Experts
Explain: Financial Statements
WorldCom  What Went Wrong
How Did Enron Make Their Money,
Hide Their Finances, Fail and Get Caught? Financial Reporting (2004)


Week 21 
Part I  Chapter 5 Time Value of Money Math Formula FV = PV *(1+r)^n PV = FV / ((1+r)^n) N = ln(FV/PV) / ln(1+r) Rate = (FV/PV)^{1/n} 1 Annuity: N = ln(FV/C*r+1)/(ln(1+r)) Or N = ln(1/(1(PV/C)*r)))/ (ln(1+r)) Excel Formulas To get FV, use FV
function. =abs(fv(rate, nper, pmt, pv)) To get PV, use PV
function = abs(pv(rate, nper, pmt, fv)) To get r, use rate
function =
rate(nper, pmt, pv,
fv) To get number of years, use nper function
= nper(rate, pmt, pv, fv) To get annuity
payment, use PMT function = pmt(rate, nper, pv, fv) To get Effective rate
(EAR), use Effect function
= effect(nominal_rate, npery) To get annual
percentage rate (APR), use nominal function = nominal(effective ratge, npery) Chapter 5 HW Assignments 1. You are going to deposit certain amount in the next four years. Your saving account offers 5% of annual interest rate. First
year: $800 Second
year: $900 Third
year: $1000 Fourth
year: $1200. How much you can withdraw four years later? How much is
the lump sum value as of today (NPV)? 2. Today, you are purchasing a 15year, 8 percent annuity at a cost
of $70,000. The annuity will pay annual payments. What is the amount of each
payment? ($8,178.07) 3. Mr. Jones just won a lottery prize that will pay him $5,000 a
year for thirty years. He will receive the first payment today. If Mr. Jones
can earn 5.5 percent on his money, what are his winnings worth to him
today? ($76,665.51) 4. Shannon wants to have $10,000
in an investment account three years from now. The account will pay 0.4
percent interest per month. If Shannon saves money every month, starting one
month from now, how much will she have to save each month? ($258.81)
9. Expansion, Inc.
acquired an additional business unit for $310,000. The seller agreed to
accept annual payments of $67,000 at an interest rate of 6.5 percent. How
many years will it take Expansion, Inc. to pay for this purchase? (5.68
years)
14. What is the future value
of weekly payments of $25 for six years at 10 percent? ($10,673.90) 



Week 22 
Chapter 6 Interest rate chapter
6 case study (third case study, due in the 4^{th} week) Market data website: http://finramarkets.morningstar.com/BondCenter/Default.jsp (FINRA
bond market data) Market watch on Wall Street Journal has daily yield curve and
interest rate information. http://www.marketwatch.com/tools/pftools/ https://www.youtube.com/watch?v=yph8TRldW6k
r = r* + IP + DRP + LP + MRP r =
required return on a debt security r* =
real riskfree rate of interest IP =
inflation premium DRP = default risk premium LP =
liquidity premium MRP = maturity risk premium MRP_{t}
= 0.1% (t – 1) DRP_{t} + LP_{t} =
Corporate spread * (1.02)^{(t−1)} Homework 16 HW1 The following yields
on U.S. Treasury securities were taken from a financial publication:
HW2 You read
in The Wall Street Journal that 30day Tbills are currently
yielding 5.5%. Your brotherinlaw, a broker at Safe and Sound Securities,
has given you the following estimates of current interest rate premiums:
On the basis of these
data, what is the real riskfree rate of return? HW3 The real riskfree
rate is 3%. Inflation is expected to be 2% this year and 4% during the next 2
years. Assume that the maturity risk premium is zero. What is the yield on
2year Treasury securities? What is the yield on 3year Treasury securities? HW4 A Treasury bond
that matures in 10 years has a yield of 6%. A 10year corporate bond has a
yield of 8%. Assume that the liquidity premium on the corporate bond is 0.5%.
What is the default risk premium on the corporate bond? HW5 The real
riskfree rate is 3%, and inflation is expected to be 3% for
the next 2 years. A 2year Treasury security yields 6.2%. What is the
maturity risk premium for the 2year security? HW6 Oneyear
Treasury securities yield 5%. The market anticipates that 1 year from now,
1year Treasury securities will yield 6%. If the pure expectations theory is
correct, what is the yield today for 2year Treasury securities? 
Rattled Investors Paying a
Premium for LongerTerm Treasurys Q: What is negative term premium? Why do
investors pay more for long term treasury bonds than for short term bond? Fed Almost Certain to Keep
Interest Rates Unchanged at Next Meeting Q: Why does the market believe
that Fed will not raise interest rate in the upcoming FOMC meeting? Is the
Market Right That the Fed Is Wrong?
Q: Do
you think that Fed is responsible for the recent volatile market? Hedge Fund Challenges Peru on Land
Bonds Q: What
is the issue here? Why does it sound like it is so difficult for bondholders to
get their investment back? Outsider Is Tapped to Lead Adidas Q: Who is the new CEO of Adidas? Can he
turn the company around as expected? Q: What
is the problem that bitcoin is facing in this
developer’s view? Why is it hard to fix this problem? China Trying to Allay Global
Concerns About Its Currency Regime Q:
China has $4 trillion foreign exchange reserve. So can China manipulate its
currency? Dollar Rises
Against Euro, European Currencies After ECB Move Q: Why?
ECB is still pushing for easy monetary policy. US starts to raise interest
rate. Do the differences in monetary policy have any impact in currency
value? Europe Bank Recovery Hit
By Market Tumult Q: Why
are the European banks in a state of delayed recovery, as compared with their
US peers? Europe’s LowerRated Debt Moves
Higher on Amundi’s List Q: Why
does Amundi buy lower rated debt in European market
but buy investment grade bond in the US market? PrivateEquity Portfolios
Become Hot Spots to Shop for Acquisitions Q: What
are the pros and cons in buying companies from private equity firms?’ Why Winning the Powerball Jackpot Is
Harder Than Ever Q: Why? Fears of Venezuela Default Grow
Amid Drop in Oil Prices Q: What does Venezuela’s economy reply on?
Oil. Right? So why can the fall in oil prices cause default of this
country? Boards Get More Independent,
but Ties Endure Q: Why? Three, Four, Five? How Many Board Seats
Are Too Many? Q: What
is the concern here is a person sits in more than four seats? 
What is interest rates https://www.youtube.com/watch?v=Pod73wrvdSQ Gerald Celente: Low Interest Rates are Building the Biggest
Bubble in Modern History  9/21/14
https://www.youtube.com/watch?v=pTpK6Te6tYI How interest rates are set https://www.youtube.com/watch?v=Oz5hNemSdWc What happens if Fed raise interest rates https://www.youtube.com/watch?v=4OP3Ui6K1s 

Week4 
Mid Term (due of cases, and the your
answers of all WSJ Questions in the mid column) Mid Term Exam Part I – Conceptual Study Guide (close book section) Multiple Choice Questions (15*2=30 and the last
two are bonus questions)
6. Default risk premium, maturity
risk premium and liquidity risk premium question 7. Interest rate question (interest rate
break down) 8. Interest rate break down. 9. Yield curve question
11. Default risk premium, maturity
risk premium and liquidity risk premium question 12. Interest rate question (interest
rate break down) 13. Interest rate break down. 14. Yield curve question 15. Comparison of interest rates 16. Comparison of interest rates 17. Expectation theory Mid Term Exam
Part II – Calculation – Study Guide 1.
Interest
rate calculation: given real rate, inflation, market risk premium. 2.
Calculate
default risk premium: given t bond rate, corp bond
rate, liquidity premium, market risk premium. 3.
Calculate
default risk premium, given t bond rate, corp bond
rate, liquidity premium, market risk premium. 4.
Maturity risk premium, given corp bond rate, t bond rate, real rate, default premium,
liquidity premium and inflation. 5.
Expectation
theory to figure out future rate. 6.
Expectation
theory to figure out future rate. 7.
Expectation
theory to figure out future rate. 8.
Time value of money question 9.
Time
value of money question 10.
Time
value of money question 11.
Time
value of money question 12.
FCF
calculation 13.
FCF
calculation 14.
Operating
cash flow calculation 15.
Investment
cash flow calculation 16.
Financing
cash flow calculation 17.
Ratio
analysis calculation 18.
Ratio
analysis calculation 19.
Ratio
analysis calculation 20.
Yield
curve questions 21.
Yield
curve questions (optional) 22.
Yield
curve questions (optional) 



Week5 
Final
is noncumulative and starts from here J Chapter 7 Bond Evaluation Market data website: 1. FINRA http://finramarkets.morningstar.com/BondCenter/Default.jsp (FINRA
bond market data) 2. WSJ Market watch on Wall Street
Journal has daily yield curve and bond yield information. http://www.marketwatch.com/tools/pftools/ https://www.youtube.com/watch?v=yph8TRldW6k 3. Bond Online http://www.bondsonline.com/Todays_Market/ No other Homework for chapter 7. Just finish the case study and
review for the following. 1. Can calculate price and YTM. 2. Understand relation between price and YTM. 3. Understand why bond price is changing daily. 4. Can figure out YTC. 5. Can draw graph of price and YTM. 6. Understand why investing in bond is risky as
well. Understand the resources of risk in bond market. 7. Can calculate current yield, capital gain
yield. 8. Can find bond information on FINRA. To calculate bond
price in EXCEL (annual coupon bond): Price=abs(pv(yield to maturity, years left to maturity, coupon
rate*1000, 1000) To calculate yield to maturity
(annual coupon bond):: Yield to maturity =
rate(years left to maturity, coupon rate *1000, price, 1000) To calculate bond
price (semiannual coupon bond): Price=abs(pv(yield to maturity/2, years left to maturity*2,
coupon rate*1000/2, 1000) To calculate yield to
maturity (semiannual coupon bond): Yield to maturity =
rate(years left to maturity*2, coupon rate *1000/2, price,
1000)*2 Math Equations (FYI) C: Coupon, M: Par, $1,000; i: Yield to maturity; n: years left to maturity For Semiannual, F=2 for semiannual
coupon HOMEWORK 1.
AAA firm’ bonds will mature in eight years, and coupon
is $65. YTM is 8.2%. Bond’s market value? ($903.04) 2.
AAA firm’s bonds’ market value is $1,120, with 15
years maturity and coupon of $85. What is YTM? (7.17%) 3. AAA
firm’ bonds market value is $1,050, with six years to maturity and coupon of $75.
Current yield? (7.14%) 4. AAA
firm’s semiannual bond has 12 years maturity and coupon rate of 8.75%
semiannually. The firm also sells annual bonds with all the same condition
except the coupon is paid annually (means ytm is
the same). What is the price of this annual coupon bond?(hint: the two bonds
should offer the same annual effective rate, not semirate * 2) (986.25) 5. Sadik
Inc.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105 annual coupon and have a 15year maturity, but they can be
called in 5 years at $1,100. What is
their yield to call (YTC)? (7.74%) 6. Malko Enterprises’ bonds currently sell for $1,050. They have a 6year maturity, an annual
coupon of $75, and a par value of $1,000.
What is their current yield? (7.14%) 7. Assume that you are considering the
purchase of a 20year, noncallable bond with an
annual coupon rate of 9.5%. The bond
has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.4% nominal yield to maturity
on this investment, what is the maximum price you should be willing to pay
for the bond? ($1,105.69) 8. Grossnickle Corporation issued 20year, noncallable, 7.5% annual coupon bonds at their par value
of $1,000 one year ago. Today, the market
interest rate on these bonds is 5.5%.
What is the current price of the bonds, given that they now have 19
years to maturity? ($1,232.15) 9. McCue
Inc.'s bonds currently sell for $1,250.
They pay a $90 annual coupon, have a 25year maturity, and a $1,000
par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call
premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates
expected to remain at current levels on into the future. What is the difference between this bond's
YTM and its YTC? (Subtract the YTC
from the YTM; it is possible to get a negative answer.) (2.62%) 10. Taussig
Corp.'s bonds currently sell for $1,150.
They have a 6.35% annual coupon rate and a 20year maturity, but they
can be called in 5 years at $1,067.50.
Assume that no costs other than the call premium would be incurred to
call and refund the bonds, and also assume that the yield curve is horizontal,
with rates expected to remain at current levels on into the future. Under these conditions, what rate of return
should an investor expect to earn if he or she purchases these bonds? (4.2%) 11. A 25year, $1,000 par value bond has an
8.5% annual payment coupon. The bond
currently sells for $925. If the yield
to maturity remains at its current rate, what will the price be 5 years from
now? ($930.11) 
Wells To Pay $1.2 Billion In
Mortgage Accord Q:
The government is suing Wells Fargo for what? Shall Wells Fargo be fully
responsible for what had happened in the mortgage market? Recession alarm may not ring this time
(Paper not available in wsj yet. Hard copy is
available) Q1: In
this paper, the author summarizes the anticipation of the economy in
association with different types of yield curve. Please list each yield curve
and its predication of the economy. Q2:
“Long term interest rate fell below short term interest rates, producing a
yield curve inversion” – This is an indicator of upcoming recession. A bond
star, buried by junk, looks for daylight Q1: Why
does Mr. Fuss believe that the current market stress differs from those in
the past? Q2: In
Mr. Fuss’ view, junk bonds are worth buying now. Why? Q: Not
raising interest rate is the only strategy that Fed can do to save the
market. But it might not work this time. What is your opinion? U.S. Debt Burden: It’s Gotten a Bit Less
Bad Q: What
is debt burden? Where does it come from? Why is it getting less bad? Negative Interest Rates Are a
Dead End Q: Now
it is a interest rate war. Where can investors invest when interest rate is
actually negative? Money will flow out to other countries. Not a concern?
What benefit can negative interest rate bring? Argentina Debt Deal Faces
Hurdles Despite Bond Offer Q: The
offer represented 75% of the amount bondholders say they are owed. Why did
Argentina default on debt in 2001? Do you think that this resolution
is reasonable? Why or why not? 
Treasury Bond Auction
Website What is duration? (not required but useful) Duration is defined as
the weighted average of the present value of the cash flows and is used as a
measure of a bond price's response to changes in yield. If duration = 10
years, then for 1% increase in interest rate, the bond price will drop by 10
times of 1%, which is 10%. You can calculate
duration in excel. Syntax DURATION(settlement,
maturity, coupon, yld, frequency, [basis]) https://www.youtube.com/watch?v=9HFLGNaEWl8 How to calculate bond
prices using exact date? (not
required but useful) Use price function in
Excel. Returns the price per $100
face value of a security that pays periodic interest. Syntax PRICE(settlement,
maturity, rate, yld, redemption, frequency,
[basis]) Excel
How to use the PRICE formula video https://www.youtube.com/watch?v=4UzFPKv2Tnw Calculate bond yield
using exact date?(not required but useful) Use YIELD to calculate bond yield. Syntax YIELD(settlement,maturity,rate,pr, redemption, frequency, basis) Excel yield function video https://www.youtube.com/watch?v=vi27yLPgwZc Risk of Bonds Bond risk (video) Bond risk – credit risk (video) Bond risk – interest rate risk (video)


Week6 
Chapter 8 Risk and Return Summary of the steps in the case study: 1^{st}, calculate
expected return based on probabilities and corresponding returns 2^{nd}, calculate
standard deviation based on probabilities and corresponding
returns 3^{rd}, calculate
expected return and standard deviation based on probabilities historical
returns 4^{th}, Use corr function to calculate correlation based on two
stocks’ historical returns. 5^{th}, Understand the
concept of correlation and can pick stocks based on correlations 6^{th},understand what
is beta and can calculate beta using slope function 7^{th}, can use CAMP
to calculate stock returns. Chapter 9 Stock Return Evaluation Stock screening tools ·
Reuters stock screener to help select stocks http://stockscreener.us.reuters.com/Stock/US/ ·
FINVIZ.com http://finviz.com/screener.ashx ·
WSJ stock screen http://online.wsj.com/public/quotes/stock_screener.html ·
Simply the Web's Best Financial Charts You can find analyst rating from MSN money For instance, ANALYSTS RATINGS Zacks average brokerage recommendation is Moderate Buy
How to pick stocks Capital Asset Pricing Model (CAPM)Explained https://www.youtube.com/watch?v=JApBhv3VLTo Ranking stocks using PEG ratio https://www.youtube.com/watch?v=bekW_hTehNU Summary of stock screening
rules from class discussion PEG<1 PE<15 (? FB’s
PE>100?) Growth
rate<20 ROE>10% Analyst
ranking: strong buy only Zacks average =1 (from Ranking stocks using
PEG ratio) current
price>5 Useful website (recommended by David and Phil. Thanks, David
and Phil) FYI (Based on lecture by David and Phil’ Video here) money.msn.com/investing zacks.com minyanville.com moneychimp.com navellier.investor.com/portfoliograder/ nasdaq.com marketwatch.com superstockscreener.com gurufocus.com portfoliomoney.com stockconsultant.com marketgrader.com moderngraham.com stockpickr.com stockta.com thestreet.com askstockguru.com quotes.wsj.com oldschoolvalue.com fool.com analystratings.com barchart.com stock2own.com theonlineinvestor.com seekingalpha.com Homework:
Pick a couple of
stocks using the techniques learned today. And explain why you pick those
stocks. How diversified is your portfolio? 
What’s Going On in the Markets? 5 Theories to Explain the ChaosQ: What is going on in
the market? And why? Negative rate nod as
yields decline Q: Sorry the paper is
not available on WSJ.com. Tell us your
understanding of negative interest rate, please. Morgan Stanley Trader Offers Grim View Q: What is “stress
test” mentioned in the paper? After the release of the stress test results,
in your view, the market’s view for banks will be more pessimistic or more
optimistic? A
look at Deutsche Bank’s Bond buyback Q: In your view, is that harder to buy
back its own stocks than its own bond? Which way is more effective?
Definitely, stocks (my personal opinion). So why does DB buy back bond
instead? US
European Regulator Reach Deal on Derivatives Q: Goldman Sachs once helped Greek to use
swap to hide its borrowing. So reaching an agreement on derivatives is very important.
Summarize the purpose of this agreement. Q: “Italian clients found
themselves with basically nowhere to go”. What is your opinion on this remark.
Is that impossible to evade tax in US as that said in Italy? 
The Importance of
Diversification
https://www.youtube.com/watch?v=RoqAcdTFVFY
Understanding Diversification in Stock Trading to Avoid
Losses
https://www.youtube.com/watch?v=FrmoXog9zig
How to
Build a Portfolio  by Wall Street Survivor
https://www.youtube.com/watch?v=V48NECmT3Ns


Week7 
Stock trading will be ended by
2/24. Chapter 10 WACC Chapter 10 Review Discount
rate to figure out the value of projects is called WACC (weighted average cost
of capital) WACC =
weight of debt * cost of debt *(1tax rate) + weight of equity *( cost of
equity) Cost of
debt = rate(nper, coupon, price – flotation costs, 1000) Cost of
Equity = D1/(Po –
Flotation Cost) + g 
Sorry, should take out flotation costs D1:
Next period dividend; Po: Current stock price; g: dividend growth rate Discussion: Cheaper
to raise capital from debt market. Why? Why not 100% financing via borrowing? In Class Exercise: IBM
financed 10m via debt coupon 5%, 10 year, price is $950 and flotation is 7%
of the price, tax 40%. IBM
financed 20m via equity. D1=$5. Po=50, g is 5%. Flotation cost =0. So WACC? Wd=1/3.
We=2/3. Kd
= rate(10, 5%*1000, 950950*7%, 1000)*(140%) Ke
= 5/(50 – 0) + 5% WACC =
Wd*Kd +We*Ke = HOMEWORK
of Chapter 10
1.
Firm AAA sold a noncallable bond now has 20 years
to maturity. 9.25% annual coupon rate,
paid semiannually, sells at a price = $1,075, par = $1,000. Tax rate = 40%, calculate after tax cost of
debt (5.08%) 2. Firm AAA’s equity condition is as follows.
D_{1} = $1.25; P_{0} = $27.50; g = 5.00%; and Flotation =
6.00% of price. Calculate cost of
equity (9.84%) 3. Firm
AAA raised 10m from the capital market. In it, 3m is from the debt market and
the rest from the equity market. Calculate WACC. Chapter 11: Capital Budgeting Case study questions (as home
work) Npv, irr, mirr,
payback, template (my contribution, simple excel command) NPV Excel syntax Syntax NPV(rate,value1,value2, ...) Rate is the rate of discount over
the length of one period. Value1, value2, ...
are 1 to 29 arguments representing the payments and income. · Value1, value2, ... must
be equally spaced in time and occur at the end of
each period. NPV uses the order of value1, value2, ... to interpret the order of cash flows. Be
sure to enter your payment and income values in the correct sequence. IRR Excel syntax Syntax IRR(values, guess) Values is an array or a reference to cells that contain
numbers for which you want to calculate the internal rate of return. Guess is a number that you guess is
close to the result of IRR. MIRR Excel syntax Syntax MIRR(values, finance_rate,
reinvest_rate) Values: required. An array of a reference to cells that contain
numbers. These
numbers represent a series of payments (negative numbers) and income
(positive values) occurring at regular period. Finance_rate: Required. The interest rate you pay on the money used in
the cash flow. Reinvest_rate:
Required. The interest rate you receive on the cash flows as you reinvest
them Chapter 12: Cash flow estimation case study questions (last case study required) 
Last Six WSJ papers Q: Why FORM 1099B is the worst? Your opinion? Inflation Is
Now at the Fed’s Service Q: What is the goal of Fed with respect to
inflation? Does it mean that Fed raise interest rate due to concerns of
inflation? Funds That Lose Less Can Be Winners
Over Time These four largestock mutual funds
are near the top of the charts in longterm performance Q: As a mutual fund manager, shall you have a short
term or long term goal? Europe Looks
Ever More Divided After Brussels Deal Whatever
its citizens decide, U.K.’s push to renegotiate membership shows trend toward
weaker union Q: Why UK and Germany do not get along on this
subject? Brexit’s Hidden
Threats—To Europe Q: As said, what about Europe? Bracing for ‘Brexit’: Traders Get Defensive on British Pound Q: As an investor, what is your opinion about the
impact of the so called BREXIT? 
Net Present Value
NPV Explained with
NPV Example for NPV Calculation (Cartoon, video)
https://www.youtube.com/watch?v=7FsGpi_W9XI Using Excel for Net Present Values, IRR's and MIRR's


Week8 
Exit
Exam, Final and Due of Cases, HWs, and
WSJ Qs Study Guide Final Exam
Conceptual Section Study Guide
Multiple Choice: Conceptual (1*30=30, total 34 questions)
117.
Conceptual questions from bond chapter
·
What is bond rating? What is the association
between bond rating and bond yield and price changes.
·
Association between bond rating and leverage. ·
The association between bond price, yield, par
value, coupon, maturity, etc. ·
Differences between long term bond and short term
bond, and the differences when there is a sudden change in interest rate.
Which one is more risky? ·
Definition of current yield. 1830
·
What is flotation cost. ·
Concept of diversification ·
Risk, return and standard deviation ·
What is beta? What is CAPM? What is Security market
line? What is association between beta and stock return.
·
How to pick stocks? (Hint: based on beta, not standard
deviation for portfolio) Final Calculation Sections (Open Book) Multiple
Choice Questions (2.5* 16 = 40, short answer question 1: 3*5=15, short answer
question 2: 5*3=15) 1.
Calculate payback period 2.
Calculate multiirrs, given uneven cash flow 3.
Calculate IRR, given cash flow 4.
Calculate crossover rate, given cash flows of two
projects 5.
Calculate MIRR 6. Given MACRS table, calculate depreciation of a certain year. 7. Given probability and return table (Chapter 8 case) calculate expected return, using sumproduct 8. Given a series of returns, calculate the standard deviation using stdevp (Chapter 8 case) 9.
Given probability and return table
(Chapter 8 case) calculate standard deviation (Tedious but doable, refer to
case of chapter 8) 10.
Stock price calculation using Po=D1/(rg) 1116:
Bond calculations: Price calculation, yield to maturity, current yield
calculation. Short
answer questions (3 questions * 5 = 15 points) Similar
to case study of chapter 12, calculate the followings. 1.
What is the initial cost of this project? 2. What
is the operating cash flows from year 1 to year 4 3. What
is the operating cash flows in year 5 (last year) Short Answers (total 15 points) 1.
Find after tax cost of debt 2.
Find cost of equity 3.
What
is weight of debt? 4.
What is weight of equity? 5.
What is WACC? 

