1. HFT 4464 Final Exam Review Fall 2008

2. Final Exam is Cumulative Chapter 1 through Chapter 10 Chapter 1 through Chapter 10 50 Multiple Choice Questions 50 Multiple Choice Questions –Vocabulary oriented –Problems

3. Chapter 1 Vocabulary Vocabulary –Advantages / disadvantages of organizational structures –Definition of financial management –Agency relationship

4. Chapter 2 Stock trading Stock trading –Primary market –Secondary market Calculate holding period return Calculate holding period return How to read a bond quotation How to read a bond quotation Advantages / Disadvantages Advantages / Disadvantages –Bonds –Preferred stock –Common stock

5. Chapter 3 Classes of ratios Classes of ratios Ratio calculations Ratio calculations –P/E –EPS –Turnover –Current & Quick ratio –Times interest earned

6. Chapter 4 Vocabulary Vocabulary –What is risk –Risk aversion Expected return Expected return Return variance Return variance Standard deviation Standard deviation

7. Chapter 5 Time value of money Time value of money –Future value of a lump sum investment Table p. 91 Table p. 91 –Present value of a lump sum payment Table p. 93 Table p. 93 –Future value of a series of payments made Table p. 96 Table p. 96 –Present value of a series of payments received Table p. 102 Table p. 102

8. Chapter 6 Vocabulary Vocabulary –Indenture –Debenture –Subordinated/Unsubordinated –Senior/Junior

9. Chapter 6 Yield to maturity of a bond (calculation) Yield to maturity of a bond (calculation) Value of preferred stock Value of preferred stock –V = D/I –Other formats

10. Chapter 6 Bond Market Rate vs. Coupon Rate Bond Market Rate vs. Coupon Rate –Market Rate > Coupon Rate Bond Value is ? Par value Bond Value is ? Par value –Market Rate = Coupon Rate Bond Value is ? Par Value Bond Value is ? Par Value –Market Rate < Coupon Rate Bond Value is ? Par Value Bond Value is ? Par Value

11. Chapter 7 Vocabulary Vocabulary –Common stock features –Pro & Cons of common stock financing

12. Chapter 8 Cost of Capital Cost of Capital –Cost of debt –Cost of preferred stock –Cost of external equity –Weighted Average Cost of Capital

13. Chapter 9 Capital Budgeting Capital Budgeting Calculate Net Investment for a project Calculate Net Investment for a project Calculate Net Cash Flows for a project Calculate Net Cash Flows for a project Vocabulary Vocabulary –Independent / Mutually Exclusive projects –Opportunity / Sunk Costs –Project Purposes Growth Growth Reduce costs Reduce costs Legal requirements Legal requirements

14. Chapter 10 Capital Budgeting Capital Budgeting –Payback period –Discounted payback period –Net present value –Profitability index –Internal rate of return

15. Summary Scantron required !!! Scantron required !!! Present / future tables provided Present / future tables provided Bring a calculator !!! (And maybe a spare?) Bring a calculator !!! (And maybe a spare?) Scratch paper provided Scratch paper provided Formula sheet will be provided for calculations Formula sheet will be provided for calculations