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FUR 2601 study guide questions and complete answers [semester 1 2024]
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FUR 2601 study guide questions and complete answers [semester 1 2024]
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FUR 2601 study guide questions and complete answers [semester 1 2024]1. Financial Statements and Analysis: Understanding balance sheets, income statements,
and cash flow statements.
2. Time Value of Money: Concepts like present value, future value, discounting, and
compounding.
3. Investment Analysis: Portfolio theory, asset pricing models, and risk management.
4. Corporate Finance: Capital budgeting, cost of capital, and financial decision-making.
5. Financial Markets and Instruments: Stocks, bonds, derivatives, and market structures.
6. International Finance: Exchange rates, global financial markets, and international
financial management.
1. Financial Statements and Analysis
Q1: What is the purpose of a balance sheet? A1: The balance sheet provides a snapshot of a
company's financial position at a specific point in time. It shows the company's assets, liabilities,
and shareholders' equity, and it helps assess the company's liquidity and financial stability.
Q2: How do you calculate the current ratio, and what does it indicate? A2: The current ratio is
calculated as current assets divided by current liabilities. It indicates a company's ability to pay
short-term obligations with short-term assets. A ratio greater than 1 suggests that the company
has more current assets than current liabilities.
2. Time Value of Money
Q1: What is the difference between present value and future value? A1: Present value (PV)
refers to the current worth of a sum of money that will be received or paid in the future,
discounted back at a specified interest rate. Future value (FV) is the amount of money an
investment will grow to over a specified period at a given interest rate.
Q2: How do you calculate the future value of an investment with monthly compounding? A2:
The formula for future value with monthly compounding is FV=PV×(1+rn)n×tFV = PV \times (1
+ \frac{r}{n})^{n \times t}FV=PV×(1+nr)n×t, where PVPVPV is the present value, rrr is the
annual interest rate, nnn is the number of compounding periods per year, and ttt is the number of
years.
3. Investment Analysis
Q1: What is the Capital Asset Pricing Model (CAPM)? A1: CAPM is a model used to determine
the expected return on an investment based on its risk relative to the market. The formula is
E(Ri)=Rf+βi(Rm−Rf)E(R_i) = R_f + \beta_i (R_m - R_f)E(Ri)=Rf+βi(Rm−Rf), where
E(Ri)E(R_i)E(Ri) is the expected return, RfR_fRf is the risk-free rate, βi\beta_iβi is the beta of
the investment, and RmR_mRm is the expected market return.
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