Excel template to prepare for Finance and Accounting 4 (Fundamentals of corporate finance) exam. It includes all types of exercises needed to prepare or use during the exam.
Rate of returns if state occurs
Scenario prob. Equity A Equity B
Boom 0.25 0.35 0.45
Good 0.35 0.15 0.12
Poor 0.4 0.05 -0.15
, Weights 0.25 0.55
A. Portfolio return (PR) 11.65%
portfolio variance 0.018 sumproduct(prob;(PR-PERs)^2)
portfolio SD 13.54% sqrt Pvariance
B.
expected T-bill rate 1.65%
portfolio's expected risk Premium?* 10.00% PR - T-bill rate
*excess return as compensation
for taking extra risk
CH.16 Question 4: Stock Dividends 15 p
stock dividend 10% (1+0.10)
sahre € 35.00
par value € 1.00
Equity accounts (now)
Ordinary shares (1 eur par value) € 1,000,000.00
Capital Surplus € 1,500,000.00
Retained earnings € 5,500,000.00
Total Owner's Equity € 8,000,000.00
Initial share outstanding 1,000,000.00
What effects on the equity accounts
will the distribution of the stock dividend have?
new shares outstanding 1,100,000
ordinary shares € 1,100,000.00 (*1 euro pra value)
new shares issued 100,000
capital surplus for new shares € 3,400,000.00
Capital surplus € 4,900,000.00 after issuing new shares you get…
Total market value of new shares 3500000
RE € 2,000,000.00
The new equity portion of the balance sheet will look like this:
Ordinary shares (1 eur par value) € 1,100,000.00
Capital Surplus € 4,900,000.00
Retained earnings € 2,000,000.00
Total Owner's Equity € 8,000,000.00
A. What is the exact real rate of return in Norway and eurozone?
(1+n) = (1+r) × (1+inf) is the same formula as Fisher Effect.
r = ((1+n)/(1+inf))-1 real interest rate rrr:
rrr eurozone 0.49%
rrr Norway 1.96%
B. What is the expected one-year spot rate based on the Purchasing Power Parity (PPP)?
St+1 = St ((1+infnr)/(1+infeu))
Expected One-Year Spot Rate (Using PPP):
st + 1 = St * ((1+inf norw)/(1+inf eur)) 10.70246 Kr/€
C. What would you expect the one-year forward rate to be if no immediate arbitrage opportuniti
(use real interest rate calculated in part a)
Consider the following pre-merger information about two Dutch firms:
Firm A Firm B
Total earnings (€) 1100 400
Shares outstanding 500 150
Price per share (€) 50 20
Assume that firm A acquires firm B via an exchange of equity
share price of B's equity € 23.00
a. What is the cost of the acquisition?
b. How many shares should firm A offer to buy firm B?
c. After the merger, what is the shares outstanding of firm A?
, d. What will the earnings per share (EPS) of firm A be after the merger?
e. What will the price–earnings (P/E) ratio of the
post-merger firm be if the market analyses the transaction correctly?
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller carlalpez. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £6.46. You're not tied to anything after your purchase.
