Chapter One
Financial Economics
This chapter contains 48 multiple choice questions, 20 short problems and 5 longer problems.
Multiple Choice
1.The primary goal of corporate management is to ________ shareholder wealth.
(a)minimize
(b)maximize
(c)leverage
(d)mitigate
Answer: (b)
2. A ________ stock market imposes ________ discipline on managers to take actions to maximize the
market value of the firm’s shares.
(a)competitive, strong
(b)dispersed, weak
(c)mature, no
(d)dispersed, strong
Answer: (a)
3. The ________ form is especially well suited to the separation of ownership and management of firms because it allows relatively frequent changes in owners by share transfer without affecting the operations of the firm.
(a)corporate
(b)sole proprietorship
(c)partnership
(d)household
Answer: (a)
4. ________ is anything that has economic value.
(a)A partnership
(b)An asset
(c)A balance sheet
(d)An income statement
Answer: (b)
5. A household’s wealth or net worth is measured by the value of its ________ minus its ________.
(a)liabilities; assets
(b)assets; liabilities
(c)stocks; bonds
(d)bonds; liabilities
Answer: (b)
6. The branch of finance dealing with financial decisions of firms is called ________ or ________.
(a)investments; international finance
(b)markets; institutions
(c)business finance; institutions
(d)business finance; corporate finance
Answer: (d)
7. Bonds promise ________ cash payments, while stocks pay the ________ value left over after all other claimants have been paid.
(a)variable; residual
(b)residual; fixed
(c)fixed; residual
(d)fixed; variable
Answer: (c)
8. The day-to-day financial affairs of the firm are usually referred to as ________.
(a)working capital management
(b)capital structure
(c)capital budgeting
(d)strategic planning
Answer: (a)
9. A disadvantage of the sole proprietorship is the fact that the sole proprietor has ________.
(a)limited liability for the debts of the firm
(b)unlimited liability for the debts of the firm
(c)expensive costs to establish the firm
(d)limited authority over the day-to-day business decisions of the firm
Answer: (b)
10. In the U.S. corporations with concentrated ownership are called ________ and corporations with broadly dispersed ownership are called ________.
(a)private corporations; public corporations
(b)public corporations; private corporations
(c)public corporations; monopolies
(d)private corporations; state owned corporations
Answer: (a)
11. Billy owns a house worth $350,000 and has a $55,000 bank account. Billy owes $270,000 to the bank on a home mortgage loan and has a $12,000 credit card debt outstanding. Calculate Billy’s net worth.
(a)$135,000
(b)$123,000
(c)$497,000
(d)$37,000
Answer: (b)
12. Marlowe owns a house worth $150,000, a car worth $25,000 and has an $18,000 bank account. Marlowe owes $135,000 to the bank on a home mortgage loan, $18,000 on the car loan and has an $18,000 credit card debt outstanding. Calculate Marlowe’s net worth.
(a)$58,000
(b)$123,000
(c)$22,000
(d)$37,000
Answer: (c)
13. An advantage of the corporate form of ownership is ________.
(a)no liability
(b)unlimited liability
(c)limited liability
(d)CEO liability
Answer: (c)
14. In the corporate form, the separated structure creates the potential for ________ between owners and managers.
(a)a conflict of interest
(b)increased transactional costs
(c)stability in relations
(d)none of the above
Answer: (a)
15. All of the following are reasons for having a separation of management and ownership of the firm except:
(a)the “going concern” effect favors the separated structure
(b)professional managers may be found who possess a superior ability to run the business
(c)it prevents the possibility of a conflict of interest between the owners and management
(d)it allows for savings in the cost of information gathering
Answer: (c)
16. ________ involves the evaluation of costs and benefits spread out over time, and it is largely a financial decision-making process.
(a)Stock valuation
(b)Bond valuation
(c)Inventory costing
(d)Strategic planning
Answer: (d)
17. Shareholder wealth maximization depends on all of the following except:
(a)production technology
(b)market interest rates
(c)risk aversion
(d)market risk premiums
Answer: (c)
18. A problem with using the profit maximization criterion is ________.
(a)deciding which period’s profit is to be maximized
(b)the definition of “maximize profits” is ambiguous
(c)the failure to consider risk
(d)all of the above
Answer: (d)
19. The existence of a well functioning stock market facilitates the efficient separation of the ownership and management of firms, since stock prices can be substituted for external information about ________.
(a)the firm’s production technology
(b)the wealth, preferences, and other investment opportunities of the owners
(c)the historic costs of the firm’s infrastructure
(d)the firm’s ability to meet its projected goals
Answer: (b)
20. One place to look for a statement of the goals of a corporation’s top managers is the ________.
(a)balance sheet
(b)income statement
(c)annual report
(d)bankruptcy filing
Answer: (c)
21. In the absence of a stock market, managers would require information that is ________ to obtain.
(a)costly if not impossible
(b)costless
(c)readily available
(d)time-consuming but inexpensive
Answer: (a)
22. Management’s task is made much easier when it can observe the ________ of its own and other firms’ shares.
(a)book prices
(b)market prices
(c)historical prices
(d)security prices
Answer: (b)
23. ________ are entitled to a share of any of the distributions from the corporation such as cash dividends.
(a)Sole proprietors
(b)General partners
(c)Professional managers
(d)Shareholders
Answer: (d)
24. ________ is the founder of modern portfolio theory.
(a)Harry Markowitz
(b)Merton Miller
(c)William Sharpe
(d)Bill Gates
Answer: (a)
25. In Germany, public corporations are identifiable by ________ after the company name, whereas private companies are denoted by ________.
(a)PLC, Inc.
(b)GmbH, AG
(c)AG, GmbH
(d)SpA, GmbH
Answer: (c)
26. In the United Kingdom, public corporations are identifiable by ________ after the company name, whereas private companies are denoted by ________.
(a)Inc, PLC
(b)LTD, PLC
(c)AG, GmbH
(d)PLC, LTD
Answer: (d)
27. Shareholders elect ________ who in turn select ________ to run the business.
(a)a board of directors; a treasurer
(b)a board of directors; managers
(c)managers; a board of directors
(d)a board of directors; accountants
Answer: (b)
28. In a competitive stock market, ________ offer(s) another important mechanism for aligning the incentives of managers with those of shareholders.
(a)takeovers
(b)increased taxes
(c)liquidation
(d)increased liability
Answer: (a)
29. If a raider is interested in making a profit through the takeover of a prospective firm, the only expenses that need be incurred are ________.
(a)the cost of identifying a mismanaged firm
(b)the cost of acquiring the firm’s shares
(c)physical capital
(d)both (a) and (b)
Answer: (d)
30. The cost of identifying a mismanaged firm can be low if the raider is which of the following:
(a)a supplier
(b)a customer
(c)a competitor
(d)all of the above
Answer: (d)
31. Takeover mechanisms can most effectively be reduced by ________.
(a)directives from the board of directors
(b)media intervention
(c)government policies
(d)public disapproval
Answer: (c)
32. The chief financial officer (CFO) of a corporation normally reports to the ________ of the company.
(a)controller
(b)treasurer
(c)chief executive officer
(d)chairman of the board of directors
Answer: (c)
33. All of the following departments typically report to the chief financial officer (CFO) except:
(a)marketing
(b)financial planning
(c)treasury
(d)control
Answer: (a)
34. The treasurer’s job includes managing all of the following except:
(a)the firm’s exposure to currency and interest rate risks
(b)the tax department
(c)relations with the external investment community
(d)the analysis of proposed mergers and acquisitions
Answer: (d)
35. The activities of the vice president for financial planning include all of the following except:
(a)analyzing proposed mergers
(b)analyzing proposed spin-offs
(c)preparing internal reports comparing planned and actual costs
(d)analyzing major capital expenditures
Answer: (c)
36.Which of the following statements is most correct?
(a)The shareholders of a corporation elect managers who in turn select a board of directors to
run the business.
(b)Partnerships do not pay corporate tax.
(c) A disadvantage of the corporation is unlimited liability.
(d)The government is powerless to discourage corporate takeovers.
Answer: (b)
37.For a typical firm, which of the following statements is most correct?
(a)The CFO has three departments reporting to him: financial planning, treasury and control.
(b)The treasurer oversees the accounting and auditing activities of the firm.
(c)The controller has responsibility for managing the financing activities of the firm and for
working capital management.
(d)The CEO is a senior vice president with responsibility for all the financial functions in the
firm.
Answer: (a)
38.Which of the following are financial decisions a firm has to make?
(a)financing decisions
(b)capital budgeting decisions
(c)working capital decisions
(d)all of the above
Answer: (d)
39.The controller’s job includes responsibility for ________.
(a)relations with the external investment community
(b)preparation of financial statements for use by shareholders, creditors and regulatory
authorities
(c)analysis of proposed mergers, acquisitions and spin-offs
(d)all of the above
Answer: (b)
40.The basic unit of analysis in capital budgeting is the ________.
(a)financing project
(b)investment project
(c)strategic project
(d)variable project
Answer: (b)
41.The steps involved in any capital budgeting process include:
(a)evaluating projects
(b)deciding which projects to undertake
(c)identifying ideas for new investment projects
(d)all of the above
Answer: (d)
42.Preferred stock, bonds, and convertible securities are also known as ________.
(a)nonmarketable claims
(b)standardized securities
(c)variable securities
(d)covenants
Answer: (b)
43.The basic unit of analysis in capital structure decisions is the ________.
(a)firm as a whole
(b)investment project
(c)firm’s personnel
(d)financial system
Answer: (a)
44.Which one of the following correctly orders the steps involved in capital structure decisions?
(a)determining a feasible financing plan; identifying new ideas for investment projects
(b)determining the optimal financing mix; determining a feasible financing plan
(c)identifying ideas for investment projects; determining the optimal financing mix
(d)determining a feasible financing plan; determining the optimal financing mix
Answer: (d)
45.Which of the following is not a financial function of a corporation?
(a)investor relations
(b)tax administration
(c)provision of capital
(d)regulatory legislation
Answer: (d)
46.Which of the following functions may be categorized as administration of funds?
(a)custodial responsibilities
(b)tax administration
(c)internal auditing
(d)all of the above
Answer: (a)
47.Investor relations includes:
(a)government reporting
(b)establishment and maintenance of communications with company stockholders
(c)relations with taxing agencies
(d)consultation with and advice to other corporate executives
Answer: (b)
48.Oscar owns a boat worth $2 million, a house worth $https://www.doczj.com/doc/c75874077.html,lion and has $900,000 in a bank account.
Oscar owes $1.1 million to the bank on the boat loan, $2 million on the home loan and has $20,000 credit card debt. Calculate Oscar’s net worth.
(a)$3.12 million
(b)$5.28 million
(c)$7.28 million
(d)$8.4 million
Answer: (b)
Short Problems
1.Give a brief definition of the financial system.
Answer: A financial system is defined as the set of markets and other institutions used for financial contracting and the exchange of assets and risks.
2.List the markets that the financial system likely includes.
Answer: A financial system includes the markets for stocks, bonds and other financial instruments, financial intermediaries, financial service firms and the regulatory bodies that govern all of these institutions.
3.Briefly describe the distinction between physical capital and financial capital.
Answer: Physical capital includes items such as buildings, machinery and other intermediate products used in the production process. Financial capital, however, includes stocks, bonds and loans used to finance the acquisition of physical capital.
4. Give a brief description of the wide range of financial instruments and claims a firm can issue. Answer: These include common stock, preferred stock, bonds and convertible securities (standardized securities that can be traded in organized markets). Financial instruments and claims can also include nonmarketable claims such as bank loans, employee stock options, leases and pension liabilities.
5.Siggy owns a house worth $200,000, a car worth $25,000 and has an $18,000 bank account. He also
has furniture worth $4,000 and jewelry worth $10,000. However, Siggy owes $145,000 to the bank on a home mortgage loan, $17,000 on the car loan, $40,000 on student loans and has an $16,000 credit card debt outstanding. Calculate Siggy’s net worth.
Answer: Net Worth = Total Assets – Total Liabilities
= ($200,000 + $25,000 + $18,000 + $4,000 + $10,000) –
($145,000 + $17,000 + $40,000 + $16,000)
= $39,000
6.Briefly list the problems associated with profit maximization as the chief goal of corporate managers. Answer: The profit-maximization criterion has two problems associated with it. The first is that it is difficult to determine which period’s profit is to be maximized if the production process requires many periods. Secondly, if either future revenues or expenses are uncertain, then what exactly is the meaning of “maximize profits” if profits are described by a probability distribution?
7.Kecia owns a house worth $220,000, a car worth $20,000 and has a $13,000 bank account. She also
has furniture worth $8,000. However, Kecia owes $165,000 to the bank on a home mortgage loan, $17,000 on the car loan, $50,000 on student loans and has an $18,000 credit card debt outstanding.
Calculate Kecia's net worth.
Answer: Net Worth = Total Assets – Total Liabilities
= ($220,000 + $20,000 + $13,000 + $8,000) –
($165,000 + $17,000 + $50,000 + $18,000)
= $261,000 - $250,000
= $11,000
8.Give an example of a potential conflict of interest that can arise between owners and managers of a
firm.
Answer: Managers being concerned with their own personal welfare may lead to concern about job security in the long run. This concern about long run survival may cause managers to limit the risk incurred by the firm and make other decisions not with the objective of shareholder wealth maximization.
9.What use does the existence of a stock market serve to the manager of a firm?
Answer: Observing its own and other firms’ market price of shares helps it make decisions about maximizing the firm’s value to its shareholders. If there was not a stock market, then managers would be required to obtain information that is costly, if not impossible, to obtain. This includes the wealth, preferences and other investment opportunities of the owners.
10.Outline the role of the takeover in aligning the incentives of managers with those of shareholders. Answer: The threat of a takeover provides a strong incentive for current managers to act in the interests of the firm’s current shareholders by maximizing market value. If managers fail to maximize the market value of the firm’s shares, the firm will be vulnerable to a takeover in which the managers may lose their jobs.
11.Outline the role of the chief financial officer (CFO) in a corporation.
Answer: The CFO is a senior vice president with responsibility for all the financial functions in the firm and reports directly to the CEO. Three departments report to the CFO: financial planning, treasury, and control.
12.Discuss the role of the treasurer in a corporation.
Answer: The treasurer has responsibility for managing the financing activities of the firm and for working capital management. The treasurer is responsible for managing relations with the external investor community, managing the firm’s exposure to currency and interest rate risks, and managing the tax department.
13. Discuss the tasks performed by the controller of a corporation.
Answer: The controller oversees the accounting and auditing tasks of the firm. The controller is responsible for the preparation of internal reports comparing planned and actual costs, revenues, and profits from the corporation’s various business units. The controller will also be involved with preparation of financial statements for use by shareholders, creditors and regulatory authorities.
14. Discuss why voting rights for shareholders are not adequate to compel managers to act in the best
interests of the shareholders.
Answer: Because a major benefit of the separated structure is that the owners can remain relatively uninformed about the operations of the firm, it is not apparent how these owners could know whether their firm is being mismanaged. The value of voting rights is further cast into doubt if ownership of the firm is widely dispersed. If that is the situation, then the holdings of any single owner are likely to be so small that he or she would not incur the expense to become informed and to convey this information to the other owners.
15.Is it possible for government to reduce the effectiveness of the takeover mechanism?
Answer: Yes. It is possible for government policy to prevent the formation of monopolies in various product markets – as in the case of the United States Department of Justice, which can take legal action under the antitrust laws to prevent mergers and acquisitions that might reduce competition.
16.In terms of the financial functions of a corporation, what responsibilities do administration of funds
entail?
Answer: Management of cash; maintenance of banking arrangements; receipt, custody and disbursement
of the company’s monies and securities; credit and collection management; management of pension
funds; management of investments and custodial responsibilities.
17.Discuss the liability a partnership faces.
Answer: Unless otherwise specified, all partners have unlimited liability as in the sole proprietorship.
However, it is possible to limit the liability for some partners called “limited partners”. At least one of
the partners, called the general partner, has unlimited liability for the debts of the firm.
18.Describe the advantages of the corporate form of business organization.
Answer: The corporate form of ownership has the advantage that ownership shares can usually be
transferred without disrupting the business. Limited liability is also another advantage of the corporate
form. In this case, if the corporation fails to pay its debts, the creditors can seize the assets of the
corporation but have no recourse to the personal assets of the shareholders.
19.Briefly outline the process of capital budgeting.
Answer: The process of capital budgeting includes identifying ideas for new investment projects,
evaluating them, deciding which ones to undertake, and then implementing them.
20.Briefly discuss the process of working capital management.
Answer: Working capital management refers to the day-to-day financial affairs of the business, such as
whether to extend credit to customers or demand cash on delivery or managing cash flow.
Longer Problems
1.Describe the four basic types of financial decisions faced by householders.
Answer: Investment decisions – whether to invest in stocks or bonds
Consumption/Savings Decisions – how much to save for one’s retirement or a child’s education
Risk management decisions – whether to buy disability insurance
Financing decisions – what type of loan to adopt in order to finance the purchase of a home
or
car.
2.Give a brief description of each of the four main areas of financial decision-making in a business.
Answer: Strategic Planning: Evaluating the costs and benefits associated with the firm’s
business line, which may change over time.
Capital Budgeting: Identifying ideas for new investment projects, evaluating them,
deciding which ones to undertake, and then implementing them.
Capital Structure: The initial step is deciding upon a feasible financing plan for the firm.
The next decision involves the optimal debt/equity mix to use.
Working Capital Management: The day-to-day affairs of the business. This includes
paying bills as they come due, collecting from customers, managing the firm’s cash
flows to ensure that operating cash flows deficits are financed and that cash flow
surpluses are efficiently invested to earn a good return.
3.Explain the five basic reasons for separating the management from the ownership of an enterprise.
Answer:
?Professional managers may be found who have a superior ability to run the business.
?To achieve the efficient scale of a business the resources of many households may have to be pooled.
?In an uncertain economic environment, owners will want to diversify their risks across many firms.
?The separated structure allows for savings in the costs of information gathering.
?There is a “learning curve” or “going concern” effect, which favors to separated structure.
4.Discuss the types of decisions that firms must make.
Answer: Capital budgeting decisions – whether to build a new plant or produce a new product.
Financing decisions – how much equity and how much debt a firm should adopt in its capital structure.
Working Capital decisions – whether credit should be extended to a customer or cash
demanded on delivery.
5.Outline the roles of the three departments that report to the Chief Financial Officer.
Answer: Treasury: This department is responsible for managing the financing activities
of the firm and for working capital management. This includes managing relations with the
external investment community, managing the firm’s exposure to currency and interest rate
risks, and managing the tax department.
Financial Planning: This department is responsible for analyzing major capital
expenditures such as proposals to enter new lines of business or to exit existing businesses.
This includes analyzing proposed mergers, acquisitions and spin-offs.
Controller: This department oversees the accounting and auditing activities of the firm.
Activities include preparation of financial statements for use by shareholders, creditors and
regulatory authorities, as well as the preparation of internal reports comparing planned and
actual costs, revenues, and profits from the corporation’s various business units.
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.