Fin 3400 Study guides, Class notes & Summaries

FIN 3400 Ch 14 SMARTBOOK - Complete Solutions (Verified) Which entities issue commercial paper? Select all that apply. Medium-to-large corporations Large banks A banker's acceptance (B.A.) has which one of these characteristics? Low risk Rationale: A banker's acceptance carries a bank guarantee which makes it low-risk. Which term refers to a firm's need to keep cash on hand to pay normal expenses such as utilities and wages? Transaction facilitation Which of these correctly describe the Baum...

FIN 3400 Ch 10 SMARTBOOK - Complete Solutions (Verified) In the CAPM formula, what does the symbol RM stand for? Market rate of return If you buy a stock with a beta of 1.43 when the risk-free rate is 2.4 percent and the market rate is 8.7 percent, what is your expected rate of return? 11.41 percent Rationale: E(R) = 0.024 + 1.43(0.087 - 0.024) = 0.1141 = 11.41% If a stock has more market risk than the market portfolio and is overpriced, where will it plot on a security market line graph? To the...

Financial Markets -One type of Structure through which funds flow - Can be distinguished along 3 dimensions: 1. Primary vs secondary 2. money vs capital markets 3. exchanges vs. over-the-counter Primary Markets Markets in which users of funds (corporations and governments) raise funds by issuing financial instruments (stocks and bonds) Secondary Markets Market where existing financial instruments are traded among investors (NYSE, NASDAQ) Money Markets -markets that trade debt securiti...

FIN 3400 Ch 12 SMARTBOOK - Complete Solutions (Verified) In 4 years, an existing machine will have a zero book value and a market value of $4,200. A new machine costing $26,400 can replace this machine, lower variable costs by $8,200 a year, and have a market value of $13,300 and a zero book value in 4 years. The incremental depreciation is $5,300. The tax rate is 35%. What is the operating cash flow for year 4? $7,185 Rationale: OCF = ($8,200 - $5,300)(1 - 0.35) + $5,300 = $7,185 A firm purchas...

1. If a corporation has no subsidiaries outside the U.S., its book and taxable income are identical. True False 2. Only U.S. corporations are included in a combined GAAP financial statement. True False 3. Foreign entities owned at least 80% by the parent are included in a consolidated group’s U.S. tax return. True False 4. Giant uses the “equity method” to account for the operations of its 40% owned subsidiary Little. A portion of Little’s profits for the year are included in Gian...

FIN 3400 Homework 3 Questions and Answers 2022- Florida International University/FIN 3400 Homework 3 Questions and Answers 2022- Florida International University/FIN 3400 Homework 3 Questions and Answers 2022- Florida International University/FIN 3400 Homework 3 Questions and Answers 2022- Florida International University/FIN 3400 Homework 3 Questions and Answers 2022- Florida International University/FIN 3400 Homework 3 Questions and Answers 2022- Florida International University

FIN 3400 Ch 8 SMARTBOOK - Complete Solutions (Verified) Assume you are computing P0, which is the current price of a stock. What discount factor will you use to discount the dividend in year 3? (1 + i)^3 Which one of these defines the current value of a stock? Discounted value of both the future dividends and the future stock price What is the disadvantage of a market order? The execution price is unknown in advance. A stock is expected to pay a dividend of $2 in year 2, $3 in year 3, and sell ...

FIN 3400 Quiz 2 Practice Questions and Answers- Florida International University/FIN 3400 Quiz 2 Practice Questions and Answers- Florida International University/FIN 3400 Quiz 2 Practice Questions and Answers- Florida International University/FIN 3400 Quiz 2 Practice Questions and Answers- Florida International University/FIN 3400 Quiz 2 Practice Questions and Answers- Florida International University