Chapter Seven
Principles of Market Valuation
This chapter contains 30 multiple choice questions, 10 short problems and 5 longer problems. Multiple Choice
1.In regard to an asset, the ________ is defined as the process well-informed investors must
pay for it in a free and competitive market.
(a)analyst value
(b)technical value
(c)competitive value
(d)fundamental value
Answer: (d)
2.In corporate finance decision making, an extremely important rule is to choose the investment
that ________ current shareholders’ wealth.
(a)minimizes
(b)maximizes
(c)provides zero change in
(d)jeopardizes
Answer: (b)
3.In asset valuation, the method used to accomplish the estimation depends on the ________.
(a)number of participants
(b)quality of calculating instruments
(c)richness of the information set available
(d)geographic location
Answer: (c)
4.The ________ states that in a competitive market, if two assets are equivalent, they will tend
to have the same market price.
(a)Law of Real Interest Rates
(b)Law of One Price
(c)Law of Price Equivalency
(d)Law of Futures
Answer: (b)
5.The Law of One Price is enforced by a process called ________, the purchase and immediate
sale of equivalent assets in order to earn a sure profit from a difference in their prices.
(a)swapping
(b)maximization
(c)arbitrage
(d)speculation
Answer: (c)
6.________ refers to the totality of costs such as shipping, handling, insuring, and broker fees.
(a)Shipping costs
(b)Transaction costs
(c)Installation costs
(d)Insurance costs
Answer: (b)
7.The Law of One price is a statement about the price of one asset ________ the price of
another.
(a)absolute to
(b)relative to
(c)multiplied by
(d)independent of
Answer: (b)
8.If an entity borrows at a lower rate and lends at a higher rate, this is an example of ________.
(a)opportunity arbitrage
(b)interest-rate arbitrage
(c)exchange arbitrage
(d)nominal arbitrage
Answer: (b)
9.If arbitrage ensures that any three currencies are freely convertible in competitive markets,
then:
(a)it is enough to know only one exchange rate to determine the third
(b)we can estimate two exchange rates based on one exchange rate only
(c)it is enough to know the exchange rates between any two in order to determine the
third
(d)it is necessary to know all three rates
Answer: (c)
10.Suppose you have $15,000 in a bank account earning an interest rate of 4% per year. At the
same time you have an unpaid balance on your credit card of $6,000 on which you are paying an interest rate of 17% per year. What arbitrage opportunity do you face?
(a)$240 per year
(b)$600 per year
(c)$780 per year
(d)$1,020 per year
Answer: (c)
11.If the dollar price of Japanese Yen is $0.009594 per Japanese Yen and the dollar price of
Chinese Yuan is $0.1433 per Chinese Yuan, what is the Japanese Yen price of a Chinese Yuan? (i.e., JPY/CNY)
(a)0.001375 JPY/CNY
(b)0.066950 JPY/CNY
(c)9.594 JPY/CNY
(d)14.936419 JPY/CNY
Answer: (d)
12.If the dollar price of guilders is $0.5634 per Guilder and the dollar price of Euros is $1.5576
per Euro, what is the Euro price of the Guilder? (i.e., EUR/ANG)
(a)0.361700 EUR/ANG
(b)0.877552 EUR/ANG
(c)2.764643 EUR/ANG
(d)5.634 EUR/ANG
Answer: (d)
13.Suppose the price of gold is 51.09 British pounds per ounce. If the dollar price of gold is
$100 per ounce, what would you expect the dollar price of a British pound to be?
(a)$1.95733 per GBP
(b)$1.5109 per GBP
(c)$0.5109 per GBP
(d)$0.4891 per GBP
Answer: (a)
Questions 14-18 refer to the following exchange rate table. To answer 14-18 you will have to fill in the missing exchange rates.
14.What is the Euro/Peso exchange rate? (i.e., EUR/MXN)
(a)0.617426EUR/MXN
(b)0.641807 EUR/MXN
(c)6.675516 EUR/MXN
(d)16.196262 EUR/MXN
Answer: (a)
15.What is the Cdn Dlr/Euro exchange rate? (i.e., CAD/EUR)
(a)0.641807 CAD/EUR
(b)1.558099 CAD/EUR
(c)6.420 CAD/EUR
(d)16.196262 CAD/EUR
Answer: (b)
16.What is the Euro/Cdn Dlr exchange rate? (i.e., EUR/CAD)
(a)0.3583 EUR/CAD
(b)0.641807 EUR/CAD
(c)1.558099 EUR/CAD
(d)10.394 EUR/CAD
Answer: (b)
17.What is the Peso/Cdn Dlr exchange rate? (i.e., MXN/CAD)
(a)0.096201 MXN/CAD
(b)0.641807 MXN/CAD
(c)10.394882 MXN/CAD
(d)16.196262 MXN/CAD
Answer: (c)
18.What is the Peso/Euro exchange rate? (i.e., MXN/EUR)
(a)0.617426 MXN/EUR
(b)6.675516 MXN/EUR
(c)15.581112 MXN/EUR
(d)16.196262 MXN/EUR
Answer: (d)
19.You are travelling in FarOut where you can buy 130 kranes (a krane being the unit of
currency of FarOut) with a U.S. dollar at official FarOut banks. Your tour guide has a relative who dabbles in the black market and this particular relative will sell you kranes for just
$0.00833 each on the black market. How much will you lose or gain by exchanging $200 on the black market instead of going to the bank?
(a)you would gain approximately 1,660 kranes
(b)you would lose approximately 1,660 kranes
(c)you would gain approximately 1,990 kranes
(d)you would lose approximately 1,990 kranes
Answer: (d)
20.In estimating the value of a share of a firm’s stock, a simple model is to :
(a)divide EPS by a P/E multiple
(b)multiply EPS by a P/E multiple
(c)multiply EPS by EAT
(d)divide EPS by market value
Answer: (b)
21.A firm’s earnings per share are $6 and the industry average P/E multiple is 9. What would
be an estimate of the value of a share of the firm’s stock?
(a)$54.00
(b)$45.00
(c)$1.50
(d)$0.67
Answer: (a)
22.The value of the asset as it appears in the financial statement is called the asset’s ________.
(a)market value
(b)fixed value
(c)book value
(d)expected value
Answer: (c)
23.Consider the following stock market reaction to the information contained in a company’s
announcement. A corporation has just announced that it must pursue the issuance of company equity. We could expect to see ________ in the price of company stock.
(a)a rise
(b)a drop
(c)a rapid rise
(d)zero change
Answer: (b)
24.Consider what the stock market reaction to the following announcement would be. A
corporation has just announced that it is engaging in a stock split of the company’s shares.
We could expect to see a ________ in the overall market capitalization rate and a ________ in the price of company stock.
(a)rise; drop
(b)drop; rise
(c)rise; drop
(d)rise; drop
Answer: (a)
25.The ________ is the proposition that an asset’s current price fully reflects all publicly
available information about future economic fundamentals affecting the asset’s value.
(a)public markets hypothesis
(b)efficient markets exchange rates
(c)fundamental value proposition
(d)efficient markets hypothesis
Answer: (d)
26.The market price of an asset reflects the ________ of all analysts’ opinions with heavier
weights on analysts who control large amounts of money and on those analysts who have better than average information.
(a)best estimate
(b)weighted average
(c)highest estimate
(d)lowest estimate
Answer: (b)
27.Assume that the worldwide risk-free real rate of interest is 4% per year. Inflation in Denmark
is 9% per year and in the United States it is 7% per year. Assuming there is no uncertainty about inflation, what are the implied nominal interest rates denominated in Danish krone and in U.S. dollars, respectively?
(a)16.63% (DKK); 13.50% (USD)
(b)13.50% (DKK); 16.63% (USD)
(c)13.36% (DKK); 11.28% (USD)
(d)11.28% (DKK); 13.36% (USD)
Answer: (c)
28.The ________ theory states that the expected real interest rate on risk-free loans is the same
all over the world.
(a)nominal interest-rate parity
(b)real interest-rate parity
(c)efficient inflation rate parity
(d)efficient market rate
Answer: (b)
29.________ states that exchange rates adjust so as to maintain the same “real” price of a
“representative” basket of goods and services around the world.
(a)Purchasing power parity
(b)Efficient markets hypothesis
(c)Market valuation model
(d)Exchange rate equity
Answer: (a)
30.Assume that the worldwide risk-free real rate of interest is 5% per year. Inflation in Australia
is 9% per year and in Great Britain it is 12% per year. Assuming there is no uncertainty about inflation, what are the implied nominal interest rates denominated in Australian dollars and Great Britain pounds, respectively?
(a)22.08% (AUD), 11.45% (GBP)
(b)11.45% (AUD), 22.08% (GBP)
(c)17.60% (AUD), 14.45% (GBP)
(d)14.45% (AUD), 17.60% (GBP)
Answer: (d)
Short Problems
1.Suppose you have $20,000 in a bank account earning an interest rate of 4% per year. At the
same time you have an unpaid balance on your credit card of $7,000 on which you are paying an interest rate of 18% per year. What is the arbitrage opportunity you face?
Answer: You could take $7,000 out of your bank account and pay down your credit card balance. You would give up 4% per year in interest earnings ($280) but you would save
18% per year in interest expenses ($1,260). So the arbitrage opportunity is worth $980
per year.
2.Fill in the missing exchange rates in the following table:
Answer:
3.You observe that the dollar price of the Mexican peso is $0.09618 and the dollar price of the
Canadian dollar is $0.9997. What must the exchange rate between the Mexican peso and the Canadian dollar be for there to be no arbitrage opportunity?
Answer: CAD/MXN = 0.09618
0.9997
= 0.096208 CAD/MXN
4.Suppose that the exchange rate is $0.2970 to the Israeli shekel. How could you make
arbitrage profits with $10,000 if the dollar price of gold is $200 per ounce and the shekel price is 750 ILS per ounce?
Answer: Take $10,000 and buy 50 ounces of gold at $200 per ounce. Sell 50 ounces of gold in Israel for 37,500 ILS (750 ILS per ounce). Take 37,500 ILS and exchange it into dollars worth $11,137.50. The arbitrage profit is $1,137.50.
5.You are travelling in FarOut where you can buy 150 kranes (a krane being the unit of
currency in FarOut) with a U.S. dollar at official FarOut banks. Your tour guide has a relative who dabbles in the black market and this particular relative will sell you kranes for just $0.00685 each on the black market. How much would you gain or lose by exchanging $300 on the black market instead of going to the bank?
Answer:
On the official market: $300 x 150 kranes = 45,000 kranes
On the black market: $300 x 1/0.00685 kranes = 43,796 kranes
Hence, you would lose 1,204 kranes.
6. A firm’s earnings per share are $5.50 and the industry average P/E multiple is 8. What
would be an estimate of the value of a share of the firm’s stock? Is it possible for firms being classified in the same industry to have different price/earnings multiples?
Answer:
Estimated value share of stock = firm’s EPS x Industry average P/E
= $5.50 x 8
= $44.00
Firms classified as being in the same industry may have different opportunities for growth in the future and may therefore differ in their P/E multiples.
7.The P/E multiple of BHM Corporation is currently 5, while the P/E ratio of the S&P 500 is 10.
What reasons could account for this difference?
Answer:
?BHM’s reported earnings may be higher than they are expected to be in the future, or they may be inflated due to special accounting methods used by BHM.
?BHM may be riskier than the S&P 500 either because it is in a relatively risky industry or has a relatively higher debt ratio.
8.The price of Hubris Co. stock recently jumped when the CEO for the company announced an
increased dividend payment for the year. What might account for such a market reaction?
Answer: The market may believe the company’s future prospects look very bright (that is, higher earnings, less risk, sound growth, etc.) and that the company can sustain such an earnings growth.
9.Assume that the worldwide risk-free real rate of interest is 4% per year. Denmark has an
expected rate of inflation of 9% per year and in Spain has an expected rate of inflation of 14% per year. Assuming there is no uncertainty about inflation, what are the implied nominal interest rates denominated in Kroner and Euros?
Answer: Denmark: nominal interest rate = (1.04) x (1.09) – 1
= 13.36% per year
Spain: nominal interest rate = (1.04) x (1.14) –1
= 18.56% per year
10.Assume that the worldwide risk-free real rate of interest is 4% per year. The United Kingdom
has an expected rate of inflation of 8% per year and in Belgium it is 10% per year. Assuming there is no uncertainty about inflation, what are the implied nominal interest rates denominated in Pounds Sterling and Euros?
Answer: United Kingdom: nominal interest rate = (1.04) x (1.08) – 1
= 12.32% per year
Belgium: nominal interest rate = (1.04) x (1.10) – 1
= 14.40% per year
Longer Problems
1.Let’s assume that you have operated your own business for 18 years. For the most recent
fiscal year, sales were $15 million. Net Income for the most recent fiscal year was $1.5
million. The book value of your business was $11 million. Recently, a firm which is engaged in similar activities to your own was sold and the following information was made public: Multiple of Book Value 0.8x
Multiple of Net Income 11x
Multiple of Sales 0.7x
a)How would you determine an appropriate range of value for your company?
b)It has come to your attention that your company has future investment opportunities
that would be less profitable than the competing company above. What does this say
about the valuation of your company?
Answer: a) Multiple of Sales: 0.7x = $15 million x 0.7 = $10.5 million
Multiple of Net Income: 11x = $1.5 million x 11 = $16.5 million
Multiple of Book Value: 0.8x = $11 million x 0.8 = $8.8 million
b) The valuation of your company would be at the lower end of the range.
2.BHM stock is trading for $47 per share on the NYSE and $45 per share on the Sydney Stock
Exchange. Assume that the costs of buying and selling BHM stock are negligible.
a)How can you make an arbitrage profit?
b)Over time what would you expect to happen to stock prices in New York and Sydney?
c)Now assume that the cost of buying and selling shares of BHM are 2% per
transaction. How does this affect your answers?
Answer: a) You could buy BHM stock in Sydney and simultaneously sell it in
New York. Your arbitrage profit would be $2 per share.
b)The prices would become equal.
c)There could remain a 2% discrepancy between the prices which
would be $1.84 in this instance.
3.Suppose you have $50,000 in a bank account earning an interest rate of 3.5% per year. At the
same time you have an unpaid balance on your credit card of $13,000 on which you are
paying an interest rate of 21% per year. What is the arbitrage opportunity you face?
Answer: You could take $13,000 out of your bank account and pay down your credit
card balance. You would give up 3.5% per year in interest earnings ($455) but you would save 21% per year in interest expenses ($2,730). So the arbitrage opportunity is worth
$2,275 per year.
4.The quotes from Hubris Bank and Modesty Bank are given below:
Hubris Bank: 106 Yen/$
Modesty Bank: 104 Yen/$
Answer the following questions based on these figures.
a)If we assume no transaction costs, there is evidently an opportunity for arbitrage here.
If an arbitrageur started with $10,000, exactly how would (s)he make profits and
how much profit would (s)he make?
b)As many traders engage in arbitrage who do you expect to see in the above quotes at
these two banks?
c)If there is a 1% transaction cost for transactions is there still an opportunity for
arbitrage?
Answer:
Hubris Bank: 106 Yen/$ Modesty Bank: 104 Yen/$
a)At Hubris Bank, buy Yen with dollars (Yen are cheaper).
At Modesty Bank, buy dollars with Yen (dollars are cheaper).
Start with $10,000:
At Hubris Bank: $10,000 x 106 Yen/$ = 1,060,000 Yen
At Modesty Bank: 1,060,000 Yen x 1$/104 Yen = $10,192.31
You make a profit of $192.31.
b)The Yen will appreciate at Hubris Bank and it will depreciate at Modesty Bank.
Eventually the exchange rate will stabilize between 106 Yen/$ and 104 Yen/$.
c)Assume 1% transaction cost.
At Hubris Bank: $10,000 (0.99) x 106 Yen/$ = 1,049,400 Yen
At Modesty Bank: 1,049,400 Yen x (0.99) x $1/104 Yen = $10,090.38
There is still an opportunity for arbitrage profit, but it has decreased from
$192.31 to $90.38.
5.In the United States, the real rate of return is expected to be 5% and in Switzerland it is
expected to be 4%.
a)If the inflation rate in the United States is expected to be 6% and the Swiss
inflation rate is expected to be 8%, what will the nominal interest rates be in the
United States and Switzerland?
b)Are these markets in equilibrium? Where would you prefer to invest and why?
c)What if the Swiss inflation rate were 6%? Are the markets in equilibrium?
d)What are the respective nominal rates if the worldwide risk-free real rate of
return is 4% and inflation in the U.S. is 6% and in Switzerland it is 8%?
Answer:
a) United States: Nominal interest rate = (1.05)(1.06) – 1
= 11.30% per year
Switzerland: Nominal interest rate = (1.04)(1.08) – 1
= 12.32% per year
b)The markets are not in equilibrium. Investors will go where the real rate is highest.
That is, in the U.S.
c) United States: Nominal interest rate = (1.05)(1.06) – 1
= 11.30% per year
Switzerland: Nominal interest rate = (1.04)(1.06) – 1
= 10.24% per year
Markets are still not in equilibrium.
d) United States: Nominal interest rate = (1.04)(1.06) – 1
= 10.24% per year
Switzerland: Nominal interest rate = (1.04)(1.08) – 1
= 12.32% per year
Chapter Six The Analysis of Investment Projects This chapter contains 41 multiple choice problems, 20 short problems and 8 longer problems. Multiple Choice 1.The objective of a firm's management is to only undertake the projects that ________ the market value of shareholders' equity. a)decrease b)do not decrease c)change d)do not change Answer: (b) 2.The decision rule that management uses with the net present value is to undertake only those projects with ________ NPV. a) a discounted b) a contingent c) a positive d)negative Answer: (c) 3.If a firm decides to invest in automated machines that will allow the firm to reduce labor costs, this is an example of a ________ capital expenditures project. a)new products b)replacement of existing assets c)cost reduction d)advertising Answer: (c) 4.The NPV of a project represents the amount by which it is expected to increase ________. a)the break-even point b)capital budgeting c)capital expenditures d)shareholder wealth Answer: (d)
Chapter Nine Valuation of Common Stocks This chapter contains 47 multiple choice questions, 17 short problems, and 9 longer problems. Multiple Choice 1.In a quote listing of stocks, the ________ is defined as the annualized dollar dividend divided by the stock’s price, and is usually expressed as a percentage. (a)cash dividend (b)dividend payout (c)dividend coverage (d)dividend yield Answer: (d) 2.According to the discounted-dividend model, the price of a share of stock is the ________ value of all expected ________ dividends per share, discounted at the market capitalization rate. (a)present; current (b)present; future (c)future; future (d)future; current Answer: (b) 3.The value of common stock is determined by which of the following expected cash flows? (a)dividends and interest payments (b)dividends and maturity value of stock (c)dividends and net cash flows from operations of the firm (d)interest payments and maturity value Answer: (c)
Chapter Seven Principles of Market Valuation This chapter contains 30 multiple choice questions，10 short problems and 5 longer problems. Multiple Choice 1.In regard to an asset，the ________ is defined as the process well-informed investors must pay for it in a free and competitive market. (a)analyst value (b)technical value (c)competitive value (d)fundamental value Answer：(d) 2.In corporate finance decision making，an extremely important rule is to choose the investment that ________ current shareholders’ wealth. (a)minimizes (b)maximizes (c)provides zero change in (d)jeopardizes Answer：(b) 3.In asset valuation，the method used to accomplish the estimation depends on the ________. (a)number of participants (b)quality of calculating instruments
CHAPTER 12 CHOOSING AN INVESTMENT PORTFOLIO Objectives ?To understand the process of personal investing in theory and in practice. ?To build a quantitative model of the tradeoff between risk and reward. Outline 12.1 The Process of Personal Portfolio Selection 12.2 The Trade-off between Expected Return and Risk 12.3 Efficient Diversification with Many Risky Assets Summary ?There is no single portfolio selection strategy that is best for all people. ?Stage in the life cycle is an imp ortant determinant of the optimal composition of a person’s optimal portfolio of assets and liabilities. ?Time horizons are important in portfolio selection. We distinguish among three time horizons: the planning horizon, the decision horizon, and the trading horizon. ?In making portfolio selection decisions, people can in general achieve a higher expected rate of return only by exposing themselves to greater risk. ?One can sometimes reduce risk without lowering expected return by diversifying more completely either within a given asset class or across asset classes. ?The power of diversification to reduce the riskiness of an investor’s portfolio depends on the correlations among the assets that make up the portfolio. In practice, the vast majority of assets are positively correlated with each other because they are all affected by common economic factors. Consequently, one’s ability to reduce risk through diversification among risky assets without lowering expected return is limited. ?Although in principle people have thousands of assets to choose from, in practice they make their choices from a menu of a few final products offered by financial intermediaries such as bank accounts, stock and bond mutual funds, and real estate. In designing and producing the menu of assets to offer to their customers these intermediaries make use of the latest advances in financial technology.
Chapter Five Household Savings and Investment Decisions This chapter contains 28 multiple choice questions, 10 short problems, and 9 longer problems. Multiple Choice 1.Getting a professional degree can be evaluated as ________. a) a social security decision b)an investment in human capital c)an investment in a consumer durable d) a tax exempt decision Answer: (b) 2.Suppose you will face a tax rate of 20% before and after retirement. The interest rate is 8%. You are 30 years before your retirement date and invest $10,000 to a tax deferred retirement plan. If you choose to withdraw the total accumulated amount at retirement, what will you be left with after paying taxes? a)$51,445 b)$64,000 c)$80,501 d)$100,627 Answer: (c) 3.Suppose you will face a tax rate of 20% before and after retirement. The interest rate is 8%. You are 30 years before your retirement date and have $10,000 to invest. If you invest this in an ordinary savings plan instead of a tax deferred retirement plan, what amount will you have accumulated at retirement? a)$51,445 b)$64,000 c)$80,501 d)$100,627 Answer: (a)
Chapter Four Allocating Resources Over Time This chapter contains 46 multiple-choice questions, 18 short problems and 9 longer problems. Multiple Choice 1.________ is the process of going from present value to future value, whereas ________ is finding the present value of some future amount. (a)Discounting; compounding (b)Compounding; annualizing (c)Compounding; discounting (d)Discounting; leasing Answer: (c) 2.________ refers to the interest rate at which money received before the end of the planning horizon can be reinvested. (a)Internal rate (b)Reinvestment rate (c)Cost of equity (d)Compound interest Answer: (b) 3.The difference between an immediate annuity and an ordinary annuity is ________. (a)the number of periods (b)the amount of the payments (c)the interest rate (d)the timing of the payments Answer: (d)
CHAPTER 1 – Financial Economics End-of-Chapter Problems Defining Finance 1. What are your main goals in life? How does finance play a part in achieving those goals? What are the major tradeoffs you face? SAMPLE ANSWER: ? ? ? ? ? ? ? Finish school Get good paying job which I like Get married and have children Own my own home Provide for family Pay for children’s education Retire How Finance Plays a Role: SAMPLE ANSWER: ? Finance helps me pay for undergraduate and graduate education and helps me decide whether spending the money on graduate education will be a good investment decision or not. ? ? Higher education should enhance my earning power and ability to obtain a job I like. Once I am married and have children I will have additional financial responsibilities (dependents) and I will have to learn how to allocate resources among individuals in the household and learn how to set aside enough money to pay for emergencies, education, vacations etc. Finance also helps me understand how to manage risks such as for disability, life and health. ? Finance helps me determine whether the home I want to buy is a good value or not. The study of finance also helps me determine the cheapest source of financing for the purchase of that home. Finance helps me determine how much money I will have to save in order to pay for my children’s ? education as well as my own retirement. Major Tradeoffs: SAMPLE ANSWER ? Spend money now by going to college (and possibly graduate school) but presumably make more money once I graduate due to my higher education. Consume now and have less money saved for future expenditures such as for a house and/or car or save ? more money now but consume less than some of my friends Financial Decisions of Households 2. What is your net worth? What have you included among your assets and your liabilities? Would you list the value of your potential lifetime earning power as an asset or liability? How does it compare in value to other assets you have listed?
Chapter Two Financial Markets and Institutions This chapter contains 49 multiple-choice questions, 20 short problems and 10 longer problems. Multiple Choice 1. A market that has no one specific location is termed a(n) ________ market. (a)over-the-counter (b)geographic location (c)intermediary (d)conceptual Answer: (a) 2. ________ problems arise because parties to contracts often cannot easily monitor or control one another. (a)Payment (b)Counter (c)Incentive (d)Exchange Answer: (c) 3. Incentive problems take a variety of forms and include: (a)moral hazard (b)adverse selection (c)principal-agent (d)all of the above Answer: (d) 4. The ________ problem exists when having insurance against some risk causes the insured party to take greater risk or to take less care in preventing the event that gives rise to the loss. (a)moral hazard (b)adverse selection (c)principal-agent (d)all of the above Answer: (a)
Chapter Eight Valuation of Known Cash Flows: Bonds This chapter contains 50 multiple choice questions, 18 short problems and 9 longer problems. Multiple Choice 1. A ________ is a quantitative method used to infer an asset's value from market information about the prices of other assets and market interest rates. (a)fixed model (b)perpetual valuation model (c)valuation model (d)variable model Answer: (c) 2.________ are examples of fixed-income securities. (a)Common stock and pension funds (b)Mortgages and pension annuities (c)Mutual funds and common stock (d)Preferred stock and common stock Answer: (b) 3.Consider a fixed-income security that promises to pay $150 each year for the next five years. How much is this five-year annuity worth if the appropriate discount rate is 7% per year? (a)$534.74 (b)$615.03 (c)$802.50 (d)$867.96 Answer: (b) 8-1
博迪《金融学》（第2版）笔记和课后习题详解（修订版）完整版>精研学习?>无偿试用20％资料 全国547所院校视频及题库全收集 考研全套>视频资料>课后答案>往年真题>职称考试 第1部分金融和金融体系 第1章金融学 1.1复习笔记 1.2课后习题详解 第2章金融市场和金融机构 2.1复习笔记 2.2课后习题详解 第3章管理财务健康状况和业绩 3.1复习笔记 3.2课后习题详解 第2部分时间与资源配置 第4章跨期配置资源 4.1复习笔记 4.2课后习题详解 第5章居民户的储蓄和投资决策 5.1复习笔记 5.2课后习题详解 第6章投资项目分析 6.1复习笔记 6.2课后习题详解 第3部分价值评估模型 第7章市场估值原理 7.1复习笔记 7.2课后习题详解 第8章已知现金流的价值评估：债券 8.1复习笔记 8.2课后习题详解 第9章普通股的价值评估 9.1复习笔记 9.2课后习题详解 第4部分风险管理与资产组合理论 第10章风险管理的原理 10.1复习笔记 10.2课后习题详解
第11章对冲、投保和分散化 11.1复习笔记 11.2课后习题详解 第12章资产组合机会和选择 12.1复习笔记 12.2课后习题详解 第5部分资产定价 第13章资本市场均衡 13.1复习笔记 13.2课后习题详解 第14章远期市场与期货市场 14.1复习笔记 14.2课后习题详解 第15章期权市场与或有索取权市场 15.1复习笔记 15.2课后习题详解 第6部分公司金融 第16章企业的财务结构 16.1复习笔记 16.2课后习题详解 第17章实物期权 17.1复习笔记 17.2课后习题详解
Chapter Ten Principles of Risk Management This chapter contains 30 multiple choice questions, 10 short problems, and 5 longer problems. Multiple Choice 1.________ that “matters” because if affects people's welfare. ________ exists whenever one does not know for sure what will occur in the future. (a)Uncertainty is risk; Uncertainty (b)Risk is uncertainty; Uncertainty (c)Risk is uncertainty; Risk (d)Uncertainty is risk; Risk Answer: (b) 2.________ is a measure of willingness to pay to reduce one's exposure to risk. (a)Risk aversion (b)Risk avariciousness (c)Risk predilection (d)Risk inflation Answer: (a) 3.When choosing among investment alternatives with the same expected rate of return, a risk averse individual chooses the one with the ________ risk. (a)surest (b)most uncertain (c)lowest (d)highest Answer: (c) 10-1
博迪《金融学》第2版课后习题及详解 第1章金融学 一、概念题 1．金融学（finance） 答：金融学是一项针对人们怎样跨期配置稀缺资源的研究。其主要研究货币领域的理论及货币资本资源的配置与选择、货币与经济的关系及货币对经济的影响、现代银行体系的理论和经营活动的经济学科，是当代经济学的一个相对独立而又极为重要的分支。金融学所涵盖的内容极为丰富，诸如货币原理、货币信用与利息原理、金融市场与银行体系、储蓄与投资、保险、信托、证券交易、货币理论、货币政策、汇率及国际金融等。 2．金融体系（financial system） 答：金融体系是金融市场以及其他金融机构的集合，这些集合被用于金融合同的订立以及资产和风险的交换。金融体系是由连接资金盈余者和资金短缺者的一系列金融中介机构和金融市场共同构成的一个有机体，包括股票、债券和其他金融工具的市场、金融中介（如银行和保险公司）、金融服务公司（如金融咨询公司）以及监控管理所有这些单位的管理机构等。研究金融体系如何发展演变是金融学科的重要方面。 3．资产（assets） 答：资产是指个人、公司或者组织拥有的具有商业或交换价值的任何物品，它能在未来产生经济利益，资产有三个非常重要的特征：①能在未来产生经济利益；②由实体控制；③由过去发生的事项或交易产生。
在国民账户体系中，资产是指经济资产，即所有者能对其行使所有权，并在持有或使用期间可以从中获得经济利益的资源或实体。资产可分为金融资产和非金融资产两大类。金融资产是指以价值形态或以金融工具形式存在的资产，它包括金融债权以及货币黄金和特别提款权。非金融资产是指非金融性的资产，它包括生产资产和非生产资产。 在企业财务会计中，资产是指由过去的交易和事项所形成的，并由企业拥有或控制，预期会给企业带来经济利益的资源。按流动性可分为流动资产和非流动资产两大类。流动资产是指企业可以在一年或超过一年的一个营业周期内变现或者耗用的资产。非流动资产是指不能在一年或者超过一年的一个营业周期内变现或耗用的资产。 4．资产配置（asset allocation） 答：资产分配是指将投资在各种资产（如股票、债券、不动产和现金等）中进行分配的过程。根据某人或者某机构特定情况和目标进行资产分配，可使投资的风险—收益组合最优化。资产配置是财务规划和资金管理中的一个重要概念。 5．负债（liability） 答：负债是指一个经济主体对另一个经济主体应尽的偿还义务，即应偿付的债务。常用的负债概念有金融负债和企业负债。金融负债指金融交易中的负债，它与金融债权相对应。金融债权和金融债务产生于一个经济主体向另一个经济主体提供资金时所缔结的契约关系，是同时对应存在的。企业负债指过去的交易、事项形成的现时义务，履行该义务预期会导致经济利益流出企业。企业负债按流动性分为流动负债和长期负债。流动负债指应在一年或者在超过一年的一个营业周期内偿还的债务；长期负债指偿还期在一年以上或者在超过一年的一个营业周期以上的负债。
博迪莫顿版金融学(第二版)课后习题答案
金融学（第二版）答案 博迪默顿 第一章课后习题答案 一 . 我的生活目标： ●完成学业 ●找到一份自己喜欢且收入不菲的工作 ●结婚和生养子女 ●拥有我自己的房子 ●供养我的家庭生活 ●供养孩子上学 ●退休 在我实现目标的过程中，金融所扮演的角色： 答案样例：1，金融现在可以为我提供大学本科及研究生教育的学费并帮我完成学业，帮我决定投资于上学是否是一个好的投资决定 2，高等教育可以帮助提高我赚钱的能力以及获得一个我喜欢的工作的能力 3，当我结婚并且有了孩子以后，我就有了额外的金融责任（以具体情况
负债包括：学生贷款 信用卡结余的差额 各种租用金的协定（不包括转租） 应付车款 在计算净值时学生会特别地排除了他们一生潜在的赚钱能力的价值 三．一个单身汉之需要养活他自己，所以他可以独立自主的作出金融决策。如果他不想购买健康保险（而愿意承担由这个决定而带来的金融风险）那么除了这个单身汉自身，没谁会受这个决定的影响。另外，他不需要在家庭成员之间分配收入这件事上做任何决定。单身汉是很灵活自由的，可以选择住在几乎任何地方。他主要是在今天的消费（开支）和为明天储蓄之间做出权衡决策。既然他只需要养活他自己，那么他储蓄的重要性就比对一家之主的重要性小。 有许多孩子的一家之长必须在这些家庭成员中分配资源[或者说是收入].他们必须随时准备着处理各种风险,比如说潜在财政危机的突然发生[诸如家庭成员经历的严重健康问题,或者
因为火灾和其他疏忽导致的保险问题].因为在一般一个家庭里人会比较多,有些人生病或受伤的风险就会更大.并且因为家庭中有许多依赖性的个体,所以薪水收入者得认真地考虑生活和残疾保险.还有,家庭并不像个体那样富有机动性,这是因为有了适龄儿童的缘故,这个家庭会想离所谓好的学校近一点,同时良好的教育会对孩子将来的生活和财政状况有所裨益.因此一家之主的资源配置会更加的复杂:要有更多的钱于目前的消费（这也是他或她需要来抚养成员的）,但是同时又需要更多的钱储蓄起来以支付未来的费用,诸如教育和房屋购置,还有风险投资,比如生活和残障保险. 四．在双收入家庭中,家庭失去全部经济收入的风险比单收入家庭要小,同时,单收入家庭比双收入家庭更愿意购买残疾保险,人身保险.然而,如果单收入家庭需要有人照顾放学后回家的孩子,他们还要再支付照看小孩的额外费用. 五．学生们结合他们具体的经历和看法会给出不同的答案。很多的人很可能会说应该是在完成学业，并获得一份可观收入的工作之后实现经济上的独立。
Chapter Thirteen Capital Market Equilibrium This chapter contains 43 multiple choice questions, 19 short problems, and 9 longer problems. Multiple Choice 1.If one holds a diversified portfolio in which securities are held in the same relative proportions as in a broad market index, this is referred to as ________. (a)eliminating (b)discounting risk (c)indexing (d)capitalizing Answer: (c) 2.The CAPM provides a way of estimating ________ for use in a variety of financial applications. (a)actual rates of return (b)expected rates of return (c)expected standard deviation (d)actual standard deviation Answer: (b) 3.The CAPM may be used to provide ________. (a)inputs to DCF valuation model for stocks (b)inputs to DCF valuation model for bonds (c)estimation of a “fair” rate of return on invested capital (d)both (a) and (c) Answer: (d) 13-1
CHAPTER 10 AN OVERVIEW OF RISK MANAGEMENT Objectives ?To explore how risk affects financial decision-making. ?To provide a conceptual framework for the management of risk. ?To explain how the financial system facilitates the efficient allocation of risk-bearing. Outline 10.1 What Is Risk? 10.2 Risk and Economic Decisions 10.3 The Risk Management Process 10.4 The Three Dimensions of Risk Transfer 10.5 Risk Transfer and Economic Efficiency 10.6 Institutions for Risk Management 10.7 Portfolio Theory: Quantitative Analysis for Optimal Risk Management 10.8 Probability Distributions of Returns Summary ?Risk is defined as uncertainty that matters to people. Risk management is the process of formulating the benefit-cost trade-offs of risk-reduction and deciding on a course of action to take. Portfolio theory is the quantitative analysis of those trade-offs to find an optimal course of action. ?All risks are ultimately borne by people in their capacity as consumers, stakeholders of firms and other economic organizations, or taxpayers. ?The riskiness of an asset or a transaction cannot be assessed in isolation or in the abstract; it depends on the specific frame of reference. In one context, the purchase or sale of a particular asset may add to one’s risk exposure; in another, the same transaction may be risk-reducing. ?Speculators are investors who take positions that increase their exposure to certain risks in the hope of increasing their wealth. In contrast, hedgers take positions to reduce their exposures. The same person can be a speculator on some exposures and a hedger on others. ?Many resource-allocation decisions, such as saving, investment, and financing decisions, are significantly influenced by the presence of risk and therefore are partly risk-management decisions. ?We distinguish among five major categories of risk exposures for households: sickness, disability, and death; job loss; consumer-durable asset risk; liability risk; and financial asset risk. ?Firms face several categories of risks: production risk, price risk of outputs, and price risk of inputs. ?There are five steps in the risk-management process: risk identification, risk assessment, selection of risk-management techniques, implementation, review. ?There are four techniques of risk management: r isk avoidance, loss prevention and control, risk retention, risk transfer. ?There are three dimensions of risk transfer: hedging, insuring, and diversifying. ?Diversification improves welfare by spreading risks among many people, so that the existing uncertainty matters less. ?From society’s perspective risk-management institutions contribute to economic efficiency in two important ways. First, they shift risk away from those who are least willing or able to bear it to those who are most willing to bear it. Second, they cause a reallocation of resources to production and consumption in accordance with the new distribution of risk-bearing. By allowing people to reduce their exposure to the risk of undertaking certain business ventures, they may encourage entrepreneurial behavior that can have a benefit to society. ?Over the centuries, various economic organizations and contractual arrangements have evolved to facilitate a more efficient allocation of risk-bearing by expanding the scope of diversification and the types of risk that are shifted. ?Among the factors limiting the efficient allocation of risks are transactions costs and problems of adverse selection and moral hazard.