Question Types: Multiple choice, Truefalse w explanation, Short answer, Short essay, Fillintheblank - PowerPoint PPT Presentation

1 / 4
About This Presentation
Title:

Question Types: Multiple choice, Truefalse w explanation, Short answer, Short essay, Fillintheblank

Description:

Question Types: Multiple choice, True/false w/ explanation, ... Different types of bonds; convertible bond, warrants, etc. Why rd is used as the discount rate ... – PowerPoint PPT presentation

Number of Views:266
Avg rating:3.0/5.0
Slides: 5
Provided by: jamesrc7
Category:

less

Transcript and Presenter's Notes

Title: Question Types: Multiple choice, Truefalse w explanation, Short answer, Short essay, Fillintheblank


1
  • Question Types Multiple choice, True/false w/
    explanation, Short answer, Short essay,
    Fill-in-the-blank
  • Problems Multiple choice answer must show all
    work / calculator inputs cash flow diagrams
  • Overview of Finance
  • The difference between Value and Price
  • Return, ROR, Yield, Rate of Profit
    Profit/Investment
  • Chapter 5
  • Concept Questions
  • Interest rate (what it is, what it does)
  • 4 major factors that affect the cost of money
    (short answer identify describe effects
    provide examples)
  • 4 secondary factors that affect the cost of money
    (short answer identify describe effects
    provide examples)
  • Components of interest rates (r
    rIPDRPLPMRP) (short answer identify
    describe what they do)
  • Nominal risk-free rate (rRF)
  • Minimum ROR
  • Term structure of interest rates (definition)
  • Yield curve
  • definition
  • how to read it

2
  • Chapter 4
  • Concept Questions
  • Future value (definition)
  • Present value (definition)
  • Compounding (definition)
  • Discounting (definition)
  • Whats the difference between a nominal rate and
    EAR
  • The 1, all-important, never-to-be-forgotten
    process used to determine the theoretical/fair
    market value of any financial asset
  • rnominal, rperiodic
  • Know the effects of other-than-annual compounding
    on PV, FV
  • Types of Problems (work them any way you know
    how)
  • Find FV
  • Find PV
  • Find r
  • Find n
  • Annuities (ordinary due)
  • Find PMT
  • Un-even cash flows
  • Perpetuities

3
  • Chapter 6 Bonds
  • Concept Questions
  • The fundamental, all-important,
    never-to-be-forgotten valuation concept process
  • Bond terms Premium bond, discount bond, selling
    at par
  • Bond value sensitivity to changing rd
  • bond investment decisions
  • Interest rate risk, reinvestment risk
  • Bond ratings
  • Different types of bonds convertible bond,
    warrants, etc.
  • Why rd is used as the discount rate
  • Types of Problems
  • Find fair market value/theoretical value of a
    bond
  • Given 2 bonds, which is most fairly priced
  • Find bond YTM
  • Find expected realized total return / yield for
    bonds

4
Formulas   ROR Profit/Investment (Sales
Price COGS)/COGS (End Price Begin Price) /
Begin Price (New Old) / Old   Cost
of Money   Nominal Interest Rate r r IP
DRP LP MRP     Time Value of Money  
Discrete Compounding rperiodic rnominal/m n
m x T FV PV(1 rnominal/m)n PV FV / (1
rnominal/m)n EAR (1 rnominal/m)m 1
PVperpetuity PMT / rperiodic   Continuous
Compounding FV PVerT PV FV / erT EAR er
1   Bonds   Cpn FV(rCPN/m) Capital Gains
Yield ROR Bond Total Yield EARCoupon
Capital Gains Yield Real ROR (1 rnominal
)/(1 Inflation) - 1  
Write a Comment
User Comments (0)
About PowerShow.com