Lecture notes Finance and Risk Management for IB
Contains lecture notes based on the lectures on 2014-2015.
Lecture one
“Chapter 1, 2 and........Read more
In this bundle summaries, exam questions and lecture notes will be shared for the course Global Supply Chain management, International Business, Year 2 University Groningen.
For a compleet overview of the summaries and other study help as provided by JoHo, please check the Business & Economics worldwide: learn, study or share - Starting page
Contains lecture notes based on the lectures on 2014-2015.
“Chapter 1, 2 and........Read more
Six international business exams (last years) for the course Finance and risk management at University of Groningen
In this bundle summaries, practice exams, lecture notes and more, are shared for the course Internal Control - part of the Bachelor Bedrijfskunde and International Business at the Rijksuniversiteit Groningen (RUG).
For a complete overview of the study materials provided by JoHo, and the availability of printed study materials, you can take a look at the JoHo WorldSupporter summary startpage for year 2.
In this bundle summaries, exam questions and lecture notes will be shared for the course Foreign Dir. Investment, Trade & Geography, International Business, Year 2 University Groningen.
In this bundle summaries, exam questions and lecture notes will be shared for the course Global Supply Chain management, International Business, Year 2 University Groningen.
For a compleet overview of the summaries and other study help as provided by JoHo, please check the Business & Economics worldwide: learn, study or share - Starting page
In this bundle summaries, exam questions and lecture notes will be shared for the course Information Systems Management, International Business, Year 2 University Groningen.
For a compleet overview of the summaries and other study help as provided by JoHo, please check the Summary Shop International Business on JoHo.org
This bundle contains Summaries, Lecture Notes and Practice Exams for the course Global Political Economy of the International Business, year 2 program at the University of Groningen
For a complete overview of the summaries & study service offered by JoHo and the available printed summaries for this course, visit the Business & Economics worldwide: learn, study or share - Starting page
A company has a semi-annual coupon bond outstanding. A decrease in the market required rate of return will have an effect on this bond. Which effect is meant here:
A firm is comparing two different capital structure plans, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the firm would have 178,500 shares outstanding. Under Plan II, there would be 71,400 shares outstanding and €1.79 million in debt outstanding. The interest rate on the debt is 10% and there are no taxes. What is the break-even EBIT?
Consider the the dividend growth model, an increase in which of the following will increase the current value of an equity?
I. Dividend amount
II. Number of future dividends
III. Discount rate
IV. Dividend growth rate
A company is considering a new project. The project will require €500,000 for new non-current assets, €200,000 for additional inventory, and €40,000 for additional trade receivables. Short-term debt is expected to increase by €150,000. What is the project's cash flow at time zero, which is the sum of investments in new non-current assets and net working capital?
A conflict of interest between the shareholders and the management of a firm is called:
Daphne invested €1000 seven years ago at 5 per cent interest. She spends her earnings as soon as she earns any interest so she only receives interest on her initial €1000 investment. Which type of interest is Daphne earning?
Shareholders' equity is best described as:
Consider the following features for a bond:
I. It is a discounted price
II. It is a price at a premium
III. The yield-to-maturity is less than the coupon rate
IV. The yield-to-maturity exceeds the coupon rate
Which of the following features currently apply to a bond that has a market price that is lower than its face value?
M&M Proposition I with taxes is based on.....read more
You are considering two loans and would like to select cheaper alternative. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a rate of 8 percent, compounded semi-annually. Loan B offers a rate of 7.75 percent, compounded monthly. Which loan should you select and why?
You just bought a home for €250,000 and are to make payments of 11,162.71 in every two months at 12% annual interest rate. How many years will it take you to pay off your loan of €250,000?
A company has sales of €12,900, costs of €5,800, depreciation expense of €1,100, and no interest expense. What is the operating cash flow if the tax rate is 40%?
You have an annuity of equal end-of-the year cash flows of €500 that begin two years from today (the end of the second year) and last for a total of ten cash flows. Using a discount rate of 4%, what are those cash flows worth in today’s Euros?
EAR of B = {[1+(0.0775/12)]^12}-1 = 0.0803
EAR of A = {[1+(0.08/2)]^2}-1 = 0.0816 B, because the effective annual rate of B is 8.03 percent and cheaper than A.
PV = PMT * (PVIFA %r, n) 250,000 = 11,162.71 * (PVIFA%2, n*6) (PVIFA%2, n*6) = 250,000 / 11,162.71 = 22,396 (10p) for the correct answer for number of months From table with 2% the period is 30, then 30/6= 5 years. (5p)
a) Both are very important. However, a firm's profit is an accounting notion do not reflect real cash flows. Maximizing the stock price is more important because it is this that actually matters to investors. Since the financial goal of managers is shareholder wealth maximization, maximizing stock price will achieve this aim. Wealth is measured by market value and market value is obtained by stock price. Moreover, a firm can maximize value but be making a loss (this happens to many new companies).
b) Secondary market is important to obtain fair market value.....read more
A company has a debt-to-equity ratio of 42%, sales of €749,000, net income of €41,300, and total debt of €198,400. What is the return on equity (ROE=Net Income/Total Equity)?
A project that provides annual cash flows of €9,377.18 for 12 years costs €67,150 today. At what rate would you be indifferent between accepting the project and rejecting it?
Yesterday, the president of HB Enterprises received a phone call from a competitor. The competitor is a sole proprietorship. An unexpected family situation has caused the owner to suddenly want to retire and relocate closer to his family. Thus, the assets of the competitor are being offered to HB Enterprises at a bargain basement price. While HB Enterprises had not anticipated purchasing these assets, it was decided that the opportunity was too good to pass up. This illustrates which of the following needs to hold cash?
If a firm effectively manages its financial risks, what can this firm do?
Which one of the following statements concerning interest rates is the most correct?
This question is based on the dividend growth model. If you expect the market required rate of return to increase across all equity securities, then you should also expect:
You are considering two mutually exclusive projects with the following cash flows.
Year Project A Project B
0 - € 80,000 - € 80,000
1 0 €32,000
2 0 €32,000
3 € 105,000 € 32,000
Which project(s) should you accept if the discount rate is 8 per cent? What if the discount rate is 12 per cent?
The National Bank has an agreement with The Foreign Bank to exchange £500,000 for.....read more
Which one of the following actions will provide you with the right, but not the obligation, to buy the underlying asset at a specified price during a specified period of time?
Agency costs refer to:
Shareholders' equity:
Which one of the following statements is the most correct?
Interest rates that include an inflation premium are referred to as:
The optimal capital structure is the one that balances
Which one of following is the rate indicating that a stock's price is expected to appreciate?
Which one of the following is a net working capital management decision?
When the Net Present Value (NPV) is negative, the Internal Rate of Return (IRR) is __________ the required rate of return (or the weighted average cost of capital).
Which of the following measures the systematic risk for an asset held in a diversified portfolio?
Currently, the bond market requires a return of 12 percent on the 10-year semi-annual with 10 percent coupon.....read more
The four stocks A, B, C, and D have standard deviations, respectively, of 5%, 10%, 15% and 20%. Which one is the riskiest?
According to the Pecking Order Hypothesis: less probable companies in an asymmetric world will need more ________; they will first seek ________ and will avoid ________.
Consider the following sales:
For any month the following percentages are received over time in cash: 40% in cash from that same month of sales, 50% in cash from the previous month's sales and 10% in cash from the sales from two months ago. What amount of cash will be received during July?
Which model shows how soon one will recover from an initial investment?
Consider the following information from a balance sheet: the value of common stock is €60,000, preferred stock has a value of €10,000, retained earnings are €40,000, long-term debt is €120,000. For the purpose of estimating the WACC of the firm,what are the weights of long-term debt, preferred stock and equity? (Note: D = debt, PS= preferred stock, E = equity and V = total value).
Which of the following types of securities cannot be issued by a large public firm?
A company that offers a credit discount to its customers is trying to ________, and a company that pays a credit in time rather than take a discount and paying it early is attempting to ________.
Assume you have signed a call option contract for an asset. The premium of this option is €0.90 and expires in 2 months. The asset is currently sold on the market at €25 (current spot price). The strike price of the option is €26. What are the intrinsic and time value components of the premium for this call option?
The annual salary of Sam fifteen years ago was €52,500. Today he earns an annual salary of €94,552.50. What is the average annual rate of growth of John's salary?
For this question use the dividend growth model. Suppose a firm has just paid a dividend of €1.50 per share and that the recent price is €31.82 per share. The growth rate in dividends is 4% per year for the future. What is the required rate of return for equity?
Which of the following statements is FALSE?
Suppose that the EBIT before depreciation is €50,000, depreciation is €10,000 and the tax rat is 15%. What is the operating cash flow?
In which market does the sale of new securities, where the financial asset is being traded for the very first time, take place?
Which of the following helps us analyze whether a company is moving toward financial stress or is using debt to benefit the company and ultimately the owners of the company?
Assume that you just bought a home for €250,000 ad that you make payments of €11,162.71 per two months at 12% annual percentage rate. How long will it take you to pay of your loan of €250,000?
Gazelle has an adjusted WACC of 8.56%. Its capital structure consists of 60% equity and 40% debt. The cost of equity is 11%, before-tax cost of debt is7% and the tax rate is 30%. Gazelle is considering expanding by building a new shop and considers the project to be riskier than the current operation. Gazelle has an existing beta of 1, the required return on the market portfolio is 11%, the risk-free rate is 3% and the beta for the new project is 1.3. What adjusted WACC should be used in making a decision whether to undertake the new project?
In this bundle summaries, exam questions and lecture notes will be shared for the course Global Supply Chain management, International Business, Year 2 University Groningen.
For a compleet overview of the summaries and other study help as provided by JoHo, please check the Business & Economics worldwide: learn, study or share - Starting page
Add new contribution