Exam Information

1
Exam Information

• June 14, 2004. 1030 AM 1230 PM
• 35 Card, back and forth
• Scantron, Calculator
• 40 Multiple Choice Questions

2
Concept Problems

• How will the in-class practice problem be
  modified? Some Hints
• Combine different problems
• Modify the question with the answernone of the
  above to become the one having the correct
  answer
• Modify the question to become the one without the
  correct answer, ie., none of the above becomes
  the best choice
• Modify the question to become the one which all
  of the above is the best choice

3
Concept Problems

• Combine different problems example
• June 2, 2004-2,7,9
• Choose the false statement from among the
  following
• In calculating the Dow Jones Industrial Average,
  the adjustment for a stock split occurs by
  adjusting the divisor.
• The Dow Jones Industrial Average is a price
  weighted average.
• The Standard and Poors 500 is a(n) value weighted
  index.
• None of the above.

4
Concept Problems

• Combine different problems example
• June 9, 2004-16,18,20
• Choose the true statement from among the
  following
• The market collapse of 1987 prompted circuit
  breakers to halt trading as a suggestion for
  regulatory reform.
• The best-effort agreement is more common for
  initial public offerings.
• The process of polling potential investors
  regarding their interest in a forthcoming initial
  public offering (IPO) is called book building.
• All of the above.

5
Concept Problems

• Modify the question with the answernone of the
  above to become the one having the correct
  answer
• June 2, 2004- 4
• Preferred stock is like equity in that _____.
• A) it promises to pay a fixed stream of dividend
  each year .
• B) it has voting power regarding the firm's
  management.
• C) the firm has a contractual obligation to pay
  the dividend.
• D) none of the above.

6
Concept Problems

• Modify the question to become the one without the
  correct answer, ie., none of the above becomes
  the best choice
• June 2, 2004-5
• Preferred stock is like long-term debt in that
  _____.
• A) it gives the holder voting power regarding
  the firm's management.
• B) it promises to pay to its holder a fixed
  stream of dividend each year.
• C) the dividend is a tax-deductible expense for
  the firm.
• D) none of the above.

7
Calculation Problem

• Similar but numbers will be changed

8
Review

• Characteristics for common stock
• Concepts for averages/indexes
• DJIA and SP 500
• How securities are traded?
• Primary vs secondary markets
• Firm commitment underwriting vs best-effort
  agreeement
• Public offerings vs private placements
• IPO related problems
• Exchanges, OTC, Third and Fourth markets
• SIPC, Circuit breakers, insider trading
• Types of orders

9
Review

• How securities are traded?(Continued)
• Margin account
• Buying on margin
• Short sales with margin account
• Valuation
• B/S model
• DDM model
• P/E ratios
• Financial Statement Analysis
• Various ratios
• DuPont System Decompose ROE