Introduction to Finance - 2776 Words

Question 1 (5 points) In a world with no frictions (i.e., taxes, etc.), having debt is always better because it increases the value of the firm/projet. Your Answer | Score | Explanation | False | 5.00 | Correct. You understand the irrelevance of financing. | Total | 5.00/5.00 | | Question Explanation | | | Fundamental question about value creation. | Question 2 (5) the return of equity is equal to the return on debt of a project/firm Your Answer | Score | Explanation | Never true | 5.00 | Correct. Equity is always riskier. | Total | 5.00/5.00 | | Question Explanation | | | Financing`s effects on equity. | Question 3 (10 points) Suppose the expected returns on equity of two firms, Macrosoft and Microsoft, that†¦show more content†¦Both firms are expected to generate cash flows of $50 million per year for the foreseeable future and the market value of the equity of ABC, Inc is $500 million. Estimate the return on equity of XYZ, Inc. Assume there are no taxes, and the risk-free rate is 4%. (No more than two decimals in the percentage interest rate, but do not enter the % sign.) Your Answer | Score | Explanation | 16.0 | 10.00 | Correct. You understand risk and return and the mechanics of calculating returns. | Total | 10.00/10.00 | | Question Explanation | | | A mechanical problem if you understand the effects of financing and use all information. | Question 8 (10 points) Mango, Inc. has had debt with market value of $1 million that has paid a 6% coupon and has had an expiration date that is far, far away. The expected annual earnings before interest and taxes for the firm are $2 million and the firm has not grown, nor does it have plans for any growth. The firm however has just raised more equity to retire all its debt. If the required rate of return to equity-holders (after the capital structure change) is now 20%, what is the market value of the firm? Assume there are no taxes. (Enter just the number without the $ sign or a comma; round to the nearest whole dollar.) Your Answer | Score | Explanation | 10000000 | 10.00 | Correct. You know how value is determined. | Total | 10.00/10.00 | | Question Explanation | | | An assessment of your ability toShow MoreRelatedFeedback Introduction to Finance1991 Words   |  8 PagesQuiz Feedback | Introduction to Finance 12/07/13 18:50 Feedback — Assignment 3 Thank you. Your submission for this quiz was received. You submitted this Assignment on Sun 7 Jul 2013 10:22 AM PDT (UTC -0700). You got a score of 90.00 out of 100.00. Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc.). Enter all dollars without decimals and all interest rates in percentage with upRead MoreIntroduction of Finance Industry1451 Words   |  6 Pagesof other services such as leasing, credit card banking, international finance and trade credit. If you are well-prepared and enthusiastic about entering the field, you are likely to find a wide variety of opportunities open to you. Carefully, read through the material below as you decide whether you ve got what it takes to pursue a career in commercial banking. Corporate Finance: Overview career in corporate finance means you would work for a company to ((help it find money to run theRead MoreIntroduction to the Finance Company Project979 Words   |  4 PagesIntroduction to the Finance Company Project Your team is required to analyze the future business and economic prospects of a major, publicly traded corporation using financial concepts and techniques as well as the concepts and techniques from other business areas. Make sure any statements you make in your analysis are consistent with the knowledge base of finance. Also please include your calculations (including spreadsheets), data sources (be specific, including date and page number(s)), andRead MoreEssay about Introduction Finance836 Words   |  4 PagesQuestion 1 (5 points) By simply increasing the number of assets (e.g., assets 30) in any portfolio, you can diversify your exposure to specific/idiosyncratic risk. False. True. Question 2 (10) You have an equally weighted portfolio that consists of equity ownership in three firms. Firm A is trading at $23 per share and has a beta of 1.15; Firm B is trading at $16 per share with a beta of 1.60; Firm C is trading at $76 per share with a beta of 0.85. Assume a risk free rate of 2% and marketRead MoreIntroduction to Finance Assignment 11153 Words   |  5 PagesQuestion 1 (5 points) $50 today is worth MORE than $50 tomorrow. Your Answer Score Explanation True âÅ"” 5.00 Correct. You understand Time value of money. False Total 5.00 / 5.00 Question Explanation We have assumed time value of money is positive. Question 2 (5 points) At an interest rate of 10% it is better to have $100 today than $120 in 2 years. Your Answer Score Explanation True âÅ"” 5.00 Correct; it is compounding! False Total 5.00 / 5.00 QuestionRead MoreAn Introduction to Public Finance Essay5553 Words   |  23 PagesPublic Finance 2009-2010 spring semester Chapter 1 - Introduction 1. a. McCain’s statement is consistent with an organic conception of government. Individuals and their goals are less important than the state. b. Locke makes a clear statement of the mechanistic view of the state in which individual liberty is of paramount importance. c. Chavez’s statement is consistent with an organic view of government. The individual has significance only as part of societyRead MoreIntroduction to Finance - Week 1 Assignment1145 Words   |  5 PagesQuestion 1 (5 points) $50 today is worth MORE than $50 tomorrow. Your Answer Score Explanation True âÅ"” 5.00 Correct. You understand Time value of money. Total 5.00 / 5.00 Question Explanation We have assumed time value of money is positive. Question 2 (5 points) At an interest rate of 10% it is better to have $100 today than $120 in 2 years. Your Answer Score Explanation True âÅ"” 5.00 Correct; it is compounding! Total 5.00 / 5.00 Question Explanation All about compoundingRead MoreBrief Introduction Overview of McGraw Hills 9th Edition of Fundamentals of Corporate Finance655 Words   |  3 PagesFundamentals of Corporate Finance – Ross, Westerfield, Jordan McGraw Hill Education (India), 2012, 878 Pp 9th edition ISBN: 13:978-1-25-9027628 Kumar Ratnesh* About Authors Stephen A. Ross is the Franco Modigliant Professor of Finance Economics at the Sloan School of management, Massachusetts Institute of Technology. Randolph W. Westerfield is Dean Emeritus of the University of Southern California’s Marshall school of Business. Bradford D. Jordan is Professor of Finance Holder of the RichardRead MoreThe Ascent Of Money By Niall Ferguson1516 Words   |  7 Pageshistory of finance provides some insights into making better financial decisions. Although Ferguson’s book is not an introduction to finance, it contains some well-supported arguments with historical lessons and insights of world finance. Ferguson’s book has many strengths and a few weaknesses. One of the strengths of the book is the organization and presentation of key concepts in chronological order, which lets the reader easily follow the evolution of money. The book consists of an introduction, sixRead MoreThe Ascent Of Money By Niall Ferguson1524 Words   |  7 Pageshistory of finance provides some insights into making better financial decisions. Although Ferguson’s book is not an introduction to finance, it contains some well-supported arguments with historical lessons and insights of world finance. Ferguson’s book has many strengths and a few weaknesses. One of the strengths of the book is the organization and presentation of key concepts in chronological order, which lets the reader easily follow the evolution of money. The book consists of an introduction, six