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Fin 301 Ch 01 Basics of Finance Exam Questions with Verified Answers
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Refer to the HCP bond example in Chapter 1 of the IBF text and Class Handout 1. In HCP's Cash Flow Statement, what is the total Cash Flow from Operating Activities for Quarters 3 and 4? (Refer to in-class Notes) - Answer-296 182.7 + 113.3 = 296.00 Refer to the cash flow table on Lecture Handou...

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  • August 23, 2024
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  • 2024/2025
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Fin 301 Ch 01 Basics of Finance Exam
Questions with Verified Answers
Refer to the HCP bond example in Chapter 1 of the IBF text and Class Handout 1. In
HCP's Cash Flow Statement, what is the total Cash Flow from Operating Activities for
Quarters 3 and 4? (Refer to in-class Notes) - Answer-296
182.7 + 113.3 = 296.00

Refer to the cash flow table on Lecture Handout page 14, and recall that, for example,
Cash flow for year = Cash flow for Q1 + Cash flow for Q2 +... + Cash flow for Q4.

Refer to the HCP bond example in Chapter 1 of the IBF text and Class Handout 1. If the
purchase price of HCP's bond was $90.0 (and nothing else changed), would it be a
smart idea to buy the bond? (Refer to in-class notes) - Answer-Yes

Yes. 102. = 1.14
14% return in 6 months unless they declare bankruptcy!


Use the "What we get / What we pay" ratio developed on Lecture Handout page 7, and
the probability that HCP will go bankrupt in the next 6 months.

Choose all entities below that would be studied in the arenas of Public and Quasi-Public
Finance.
(i) The entire U.S. Federal Government; (ii) the Municipality of Blairstown, NJ.; (iii) the
Port Authority of New York. - Answer-All of the listed answers

See notes p. 20-22

To survive, for profit businesses must - Answer-1. Make more cash than they spend
2. Follow applicable laws

Bond "maturing" - Answer-Means end of contract

Contracts - Answer-Not all contracts are transferable (sellable)

US treasury - Answer-Safest bond (low chance of default)

Bond - Answer-What we get/ What we pay

Bonds - Answer-Fixed income contracts
- Issuer gets cash now, in return for contractual promise to make payments in the future
Slide5 Cash flow diagram of a 3-year bond

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