【辅导案例】FINAL Finance 614 Spring 2020

  • April 10, 2020

FINANCE 614

Financial Management of the Firm

FINAL

I.  Definitions.  Define any 10 terms, and provide examples.

Risk Beta Market premium

Capital structure Preemptive rights Dividend yield

Flotation costs Dividend ex dividend

Repurchase Required return Recapitalization

Stock splits Expected return Operating working

Dividend payout cash conversion cycle               capital

Free Cash Flow                 Market risk premium

II.  Essay Questions.  Answer the question below.  Please be sure to complete all parts of the question.

1.   a)  What is Weighted Average Cost of Capital ?

Explain and derive each component part.

      b)  Utilizing the company that you have analyzed, estimate its WACC.

      c)  What is capital budgeting ?

      d)  What is a target capital structure ?

      e)  Derive the Net Present Value methodology of capital budgeting, and explain the use of WACC.

III.  Additional Essay Questions.  Answer any two questions.  Please be sure to complete all parts of each question that you select.

1.  Regarding equities (stock):

a.  What is stand-alone risk ?

b.  How is it measured ?  Create an example and compute the risk

measurement.

c.  What is market risk ?

(1) What is the connection of a stock to market risk ?

(2) Define and provide the formula to determine a stock’s market

risk.

 2.   a)  What is an Investment portfolio ?

       b)  Using historical data:  create a portfolio, and solve for the portfolio’s

                  average, annual return.

                  [Suggestion:  Pick  4 – 10 different companies to comprise the

                             portfolio].

       c)  How would we measure the risk of the PORTFOLIO /

       d)  What is the  conclusion of the  Capital Asset Pricing Model with regard

                   to a portfolio ?  

What are the important conclusions that this model offers

regarding investment portfolios ?

 3.    a)  Why must working capital be “managed” ?

       b)  What is (are) the goal(s) of working capital management ?

       c)  Create an example and explain the Cash Budget.

       d)  How is a Cash Budget distinct from an Income Statement ?

       e)  What are some techniques that a company may undertake to

                   improve its working capital position ?

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