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Why!should!everyone!have!a!basic!understanding!of!finance Identify!
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FIN2801 Final!Exam Name: 1. Why!should!everyone!have!a!basic!understanding!of!finance? 2. Identify!different!forms!of!business!organization!as!well!as!the!advantages! and!disadvantages!of!each? 3. Name!and!describe!3!popular!hybrid!business!forms!that exist!today? 4. Identify!major!goal!(s)!that!firms!pursue!and!what!a!firm’s!primary!goal! should!be? 5. Describe!the!financial!statements!that!corporations!publish!and!the! information!that!each!statement!provides? 6. Discuss!potential!problems!associated!with!financial!statement!analysis? 7. What!are!financial!markets? 8. What!is!the!primary!function!of!the!money!markets? 9. Describe!the!role!that!financial!intermediaries!play!in!the!financial!markets? 10. The!compound!value!of!$1!earning!10%!interest!would!be!________!in!100! years? 11. Mark!borrows!$20,000!for!a!new!car.!The!terms!of!the!loan!are!6%!interest! with!payments!to!be!paid!monthly!for!5!years? 12. Aunt!Mary!leaves!you!$50,000!as!an!inheritance!assuming!you!invest!this!in!a! growth!mutual!fund!earning!on!average!10%!per!year,!how!much!could!you! potentially!have!in!this!account!in!40!years? 13. What!factors!affect!the!cost!of!money? 14. What!is!risk? 15. Last!year,!you!purchased!Ford!stock!at!$10!per!share.!Ford!pays!a!$1.50! dividend!and!is!trading!at!$14!per!share. What!is!your!realized!return! (yield)? 16. What!is!the!term!structure!of!interest!rates!and!why!is!this!important? 17. Explain!how!bond!prices!are!determined? 18. The!Salem!Company!bond!currently!sells!for!$955,!has!a!12%!coupon! interest!rate!and!a!$1000!par!value,!pays!interest!annually,!and!has!15!years! to!maturity.!What!is!the!yield!to!maturity? 19. Proctor!&!Gamble!has!common!stock!selling!at!$60!per!share,!paying!a! dividend!expected!to!be!$3!this!coming!year,!and!expected!to!have!a!dividend! growth!rate!of!7%!a!year.!What!is!your!expected!rate!of!return? 20. What!is!the!significance!of!the!par!value!of!preferred!stock? 21. What!is!Economic!Value!Added!(EVA)? 22. What!risk!is!measured!by!beta? 23. A!firm!with!a!beta!value!of!1.5!has!a!required!rate!of!return!of!_______.!If!the! risk`free!rate!is!10%!and!the!market!rate!of!return!is!15%. 24. Find!the!required!return!for!an!asset!with!a!beta!of!.90!when!the!risk`free! rate!and!the!market!return!are!8%!and!12%!respectively? 25.!What!is!capital!budgeting?

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