[PDF] Corporate Finance (FNCE 611/612) - PLACEMENT/WAIVER EXAM

View - Download Corporate Finance (FNCE 611/612) - PLACEMENT/WAIVER EXAM

Previous PDF

Next PDF

Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 1Corporate Finance (FNCE 611/612)

ME8;AFAHS,X8DUAO AY8FwM8OS .

Instructions

1.,61.A1 098$B 9:18 B41 1E.7 C8B56 F9C .?1 B960 B9 09 A9%

2.This exam is being administered under the University"s rules for academic conduct; the Code of

Academic Integrity applies.

3.The exam consists of 5 multiple choice questions and 4 essay questions.

4.Use the white spaces (and backs of pages) in this question booklet as scratch paper for the multiple

choice questions. Your final answers should be indicated

D5B4 . :18in the appropriate boxes on page

1 of your answer sheet booklet.

5.Write your answers to the essay questions in the answer sheet booklet. You can use a pen or a pencil.

If you need more answer sheets, you can request them, and they will be provided for you.

545:;9,

6.IMPORTANT: Print your name and Penn ID number on the first page of your answer sheet booklet.

7.This is an open-book exam, i.e. you are free to use any course material. You are allowed to use a

pocket calculator. Laptop computers and cell phones are not allowed.

8.You have two hours. The time left in the exam will be announced periodically. If you finish early, you

can quietly hand in your answer sheet booklet and leave, ;42,99:/,8,092,99:/(4:,4304;:,92,-:04 :/,,>(3

9.,61.A1 AB9: D?5B583 D418 ?1;C1AB10 B9% -41?1 D566 /1 . :18.6BF 92 "& :958BA 29? B41 :19:61

D49 098$B%

10.Remain seated until all the answer sheet booklets (not just yours) have been collected.

Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 1PART I: MULTIPLE CHOICE QUESTIONS (Total points: 25)

INSTRUCTIONS: A correct answer to each of these questions is worth 5 points. An incorrect answer is

worth 0. Also, for each question that you choose not to answer, you get 1 point. If you do choose to answer,

write your answer (1)&51;in the appropriate box on page 1 of your Answer Sheet Booklet. Your answers should be (&4/7&1letters written with a 4)2. An empty box will be interpreted as a "no answer."

1.A 10-year annuity paying $xat the beginning of every year (i.e. the first of ten payments is made

today) is worth the same (today) as an annuity of $300 payable every 6 months for 10 years (20 payments), the first payment of which is due 66 months from now. If the annual interest rate (compounded annually) is 3%, find x. a.$232.73d.$508.11 b.$502.48e.$521.42 c.$506.23

2.A machine costing $3,000 must be replaced at the end of 8 years. The resale value of the machine at

the time of replacement is $600. At what annual discount rate (compounded annually) would it be

equally economical to use a similar machine costing $4,000 with a life of 8 years and a resale value of

$1,900? (Assume that there is no taxes.) a.2.4%d.3.3% b.2.7%e.3.6% c.3.0%

3.What is the present value of 15 payments of $100 each received every 18 months (the first one

occuring in 18 months from now), if the annual discount rate (compounded annually) is 9%? a.$620.43d.$951.28 b.$875.56e.$1,209.10 c.$930.61

4.Corporate managers can maximize shareholder wealth by choosing positive NPV projects because:

a.all investors have the same preferences. b.the unhappy shareholders can sell off their shares.

c.given the existence of financial markets, investors will be satisfied with the same real investment

decisions regardless of personal preferences. d.managers are wiser than shareholders regarding investments. e.none of the above.

Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 15.Rw ±qn orpD"n knuxF. ±qn -uxyrwp -±"irpq± urwn "ny"n-nw±- ±qn xyyx"±Dwr±rn- ox" rwEn-±vnw± rw ±qn liyr±iu

vi"tn±. iwm ±qn -xurm lD"Enm urwn "ny"n-nw±- ±qn xyyx"±Dwr±rn- ox" rwEn-±vnw± rw yuiw± iwm vilqrwn"H

,"niu i--n±--0 cqn lxvyiwH+- xwuH i--n± i± y"n-nw± r- "43 vruurxw rw li-q0

Tn± Emnwx±n ±qn xy±rviu ivxDw± ±qi± -qxDum kn rwEn-±nm rw "niu i--n±-. iwm i±qn rw±n"n-± "i±n rw

liyr±iu vi"tn±-0 FiulDui±n E-i0 a.504 vruurxwd.62 vruurxw b.34 vruurxwe.82 vruurxw c.54 vruurxw

PART II: ESSAY QUESTIONS %LfkRc gfaekj7 53&

EGJLIM?LEHGJ7 BRT_ fW k_V WfccfnaeY hlVjkafej aj kf SV RejnViVU ae k_V :ejnVi J_VVk ;ffbcVk, Ofl TRe

ljV R gVe fi R gVeTac, EW pfl eVVU dfiV RejnVi j_VVkj( pfl TRe iVhlVjk k_Vd( ReU k_Vp nacc SV gifmaUVU Wfi

pfl, ( jaeTV k_VjV SRTb gRYVj nacc efk SV YiRUVU, L_V eldSVi fW gfaekj

Wfi VRT_ hlVjkafe aj aeUaTRkVU ae gRiVek_VjVj Rk k_V SVYaeeaeY fW k_V hlVjkafe, Ee RejnViaeY k_VjV hlVjkafej(

dRbV jliV kf j_fn Rcc pfli TRcTlcRkafej8 ae gRikaTlcRi(

1.%0. gfaekj&IEn"H Hni". HxD "nlnrEn HxD" nw±r"n iwwDiu -iui"H i± ±qn nwm xo ±qn Hni"0 cqr- Hni". HxD"

nwm/xo/Hni" -iui"H Fruu kn "72.222 ,rw wxvrwiu ±n"v--0 Rw "niu ±n"v-. HxD nGynl± HxD" -iui"H ±x

rwl"ni-n i± i "i±n xo 4( yn" Hni" rw ±qn oD±D"n0

gxD qiEn mnlrmnm ±x -±i"± -iErwp ox" "n±r"nvnw± kH yD±±rwp vxwnH rw i -iErwp- illxDw±0 gxD yuiw ±x

"n±r"n rw 57 Hni"-. iwm HxD nGynl± ±x urEn ox" 47 Hni"- io±n" ±qi±0 gxD i--n-- ±qi± i "ni-xwikun uron-±Hun

mD"rwp ±qx-n 47 Hni"- Fruu "n"Dr"n HxD ±x qiEn. i± ±qn nwm xo nEn"H Hni". i mr-yx-ikun rwlxvn xo

"47.222 rw "niu ±n"v- ,r0n0 ±qn -ivn yD"lqi-rwp yxFn" i- "47.222 ±xmiH-0 cqn wxvrwiu rw±n"n-± "i±n xw

HxD" -iErwp- illxDw± r- ;(. iwm r± r- nGynl±nm ±x -±iH i± ±qi± "i±n ox"nEn"0 cqn "niu rw±n"n-± "i±n r- iu-x

nGynl±nm ±x -±iH i± r±- lD""nw± unEnu xo 507(0 $ Today$ Tomorrow30211517.25 34.5
25

Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 1a.fqi± r- ±qn rwoui±rxw "i±nC

b.OxF vDlq vxwnH ,rw wxvrwiu ±n"v-- Fruu HxD wnnm ±x qiEn rw HxD" -iErwp- illxDw± Fqnw HxD

"n±r"n. rw 57 Hni"- ,nwm xo Hni" 57-. rw x"mn" ±x kn ikun ±x nwsxH ±qn uron-±Hun ±qi± HxD orwm "ni-xw/

ikunC DEGL7 Caijk TRcTlcRkV k_V Rdflek k_Rk pfl nacc eVVU ae iVRc kVidj,

c.bDyyx-n ±qi± HxD Fruu -±i"± -iErwp ox" "n±r"nvnw± i± ±qn nwm xo ±qn lD""nw± Hni"0 bDyyx-n oD"±qn"

±qi± HxD yuiw ±x vitn 57 mnyx-r±- ,xwn i± ±qn nwm xo nEn"H Hni"-0 Duu mnyx-r±- i"n i orGnm o"il±rxw

oxo HxD" -iui"H0 Mrwm ±qn o"il±rxw o±qi± Fruu iuuxF HxD ±x "nilq HxD" J"ni-xwikun uron-±HunK xksnl/

±rEn0

DEGL7 Ofl nacc eVVU kf dRbV ljV fW k_V YifnaeY Reelakp WfidlcR,

2.%/3 gfaekj&gxD i"n i orwiwlriu iwiuH-± ox" i lxvyiwH ±qi± r- lxw-rmn"rwp i wnF y"xsnl±0 Ro ±qn y"xsnl±

r- illny±nm. r± Fruu D-n i o"il±rxw xo i -±x"ipn oilrur±H ±qi± ±qn lxvyiwH iu"nimH xFw- kD± lD""nw±uH

mxn- wx± D-n0 cqn y"xsnl± r- nGynl±nm ±x ui-± 32 Hni"-. iwm ±qn iwwDiu mr-lxDw± "i±n r- 32( ,lxv/

yxDwmnm iwwDiuuH-0

gxD "n-ni"lq ±qn yx--rkrur±rn-. iwm orwm ±qi± ±qn nw±r"n -±x"ipn oilrur±H liw kn -xum ox" "322.222 iwm i

-viuun" ,kD± krp nwxDpq- oilrur±H liw kn il"Dr"nm ox" "62.2220 cqn kxxt EiuDn xo ±qn nGr-±rwp oilrur±H

r- "82.222. iwm kx±q ±qn nGr-r±rwp iwm ±qn wnF oilrur±rn- ,ro r± r- il"Dr"nm- FxDum kn mny"nlri±nm

-±"irpq± urwn xEn" 32 Hni"- ,mxFw ±x i In"x kxxt EiuDn-0 cqn lx"yx"i±n ±iG "i±n r- 62(0 fqi± r- ±qn

xyyx"±Dwr±H lx-± xo D-rwp ±qn nGr-±rwp -±x"ipn liyilr±HC

DEGL7 L_aeb RSflk n_Rk pfl nflcU YRae ReU

cfjV aW pfl UaU efk,

3.%/3 gfaekj&gxD xFw i "nw±iu kDrumrwp rw ±qn lr±H iwm i"n rw±n"n-±nm rw "nyuilrwp ±qn qni±rwp -H-±nv0

gxD i"n oilnm Fr±q ±qn oxuuxFrwp iu±n"wi±rEn-A

a.D -xui" -H-±nv. Fqrlq Fruu lx-± "34.222 ±x rw-±iuu iwm "722 i± ±qn nwm xo nEn"H Hni" ±x "Dw. iwm

Fruu ui-± ox"nEn" ,i--Dvn ±qi± HxD" kDrumrwp Fruu ±xx-0

b.D pi-/qni±rwp -H-±nv. Fqrlq Fruu lx-± "7.222 ±x rw-±iuu iwm "3.222 i± ±qn nwm xo nEn"H Hni" ±x "Dw.

iwm Fruu ui-± 42 Hni"-0

c.Dw xru/qni±rwp -H-±nv. Fqrlq Fruu lx-± "5.722 ±x rw-±iuu iwm "3.422 i± ±qn nwm xo nEn"H Hni" ±x "Dw.

iwm Fruu ui-± 37 Hni"-0

Ro HxD" xyyx"±Dwr±H lx-± xo liyr±iu ,mr-lxDw± "i±n- r- 32(. Fqrlq xo ±qn-n ±q"nn xy±rxw- r- kn-± ox" HxDC

Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 14.(25 points)The following bonds are traded in a well functioning market:

a.Assuming that the coupon bond (bond B) makes only annual payments, what discount factors DF 1 , DF 2 ) are imbedded in these prices? NOTE: Show all your calculations; no points will be given for answers found by a sophisticated calculator. b.What are the 1-year, and 2-year spot rates (r 1 and r 2 c.Suppose that you would like to purchase a two-year coupon bond with a face value of $10,000 and a coupon rate of 6% (with annual coupon payments). Since such a bond is not traded in this economy, what portfolio of bonds A and B could you form to satisfy your needs (i.e. how can you replicate this bond using the original two bonds).

NOTE: Make sure to describe that portfolio

clearly, i.e. what you are buying/selling. d.What is the exact yield to maturity on i.bond A; ii.bond B. NOTE: Again, show all your calculations; no points will be given for answers found by a sophisticated calculator. In particular, you will need to use the following formula for the roots of ax 2 + bx + c = 0: ______ _ x =-b ± b 2 - 4ac____________ . 2a Your answers should have at least two decimals, like 9.53%. $/.&250"( %"4 ,3" %/30/. - 231)25 01)%" A #" B " Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 2Corporate Finance (FNCE 611/612)

ME8;AFAHS,X8DUAO AY8FwM8OS /

Instructions

PLEASE READ THESE INSTRUCTIONS

1.,61.A1 098$B 9:18 B41 1E.7 C8B56 F9C .?1 B960 B9 09 A9%

2.This exam is being administered under the University"s rules for academic conduct; the Code of

Academic Integrity applies.

3.The exam consists of 5 multiple choice questions and 4 essay questions.

4.Write all of your answers in the blue booklets. If you need more booklets, you can request them, and

they will be provided for you.

5.You must cross out anything that you do not wish to have marked. For the multiple choice questions,

please write your letter answers D5B4 . :18. (You can do your calculations in either pen or pencil.

The calculations will not be marked, only the letter answer, so no partial credit is given). For the essay

questions, you may use either a pen or a pencil; partial credit may be given. 6. )7:9?B.8B(Print your name and Penn ID number on the first page of your answer sheet booklet.

Also indicate which section of the course you attend, so I can return your exam in the proper section.

7.This is an open-book exam, i.e., you are free to use any course material. You are allowed to use a

pocket calculator. Laptop computers and cell phones are not allowed.

8.You have two hours. The time left in the exam will be announced periodically. If you finish early, you

can quietly hand in your answer sheet booklet and leave, ;42,99:/,8,092,99:/(4:,4304;:,92,-:04 :/,,>(3

9.,61.A1 AB9: D?5B583 D418 ?1;C1AB10 B9% -41?1 D566 /1 . :18.6BF 92 "& :958BA 29? B41 :19:61

D49 098$B%

10.Remain seated until .66the answer sheet booklets (not just yours) have been collected.

Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 2PART I: MULTIPLE CHOICE QUESTIONS (Total points: 25)

INSTRUCTIONS: A correct answer to each of these questions is worth 5 points. An incorrect answer is

worth 0. Also, for each question that you choose not to answer, you get 1 point. If you do choose to answer,

write your answer (1)&51;on page 1 of your blue booklet. Your answers should be (&4/7&1letters written with a 4)2 . Only the final answer will be marked and there shall be no partial credit for the multiple choice questions.

1.(5 points)Suppose that the price of the stock is S

0 , and its annual volatility is . Suppose also that the annual riskfree rate is r f . According to Black-Scholes, what is the price of a European put option with a strike price of Xmaturing in Tyears? NOTE: In the answers below, we use a. b. c. d. e. 2. (5 points) Which of the following statements are true?

I. In a perfect capital market, it is advantageous for the firm to issue debt (vs. equity) to finance a

project, because the cost of debt ( r D ) is always smaller than the cost of equity (r E II. The reason that Modigliani and Miller"s Proposition I does not hold in the presence of corporate taxes is because levered firms pay less taxes than identical unlevered firms. III. Equity financing is always better than debt financing when the personal tax rate on equity income ( t E ) is smaller than the personal tax rate on interest income (t D a.I and IId.I, II and III b.I and IIIe.fewer than two statements are true. c.II and III

Corporate Finance(FNCE 611/612) PLACEMENT/WAIVER EXAMR -PART 23.(5 points) If a firm borrows $50 million for one year (i.e., the firm is levered for one year only) at an

interest rate of 9%, what is the present value of the interest tax shield? Assume that there are no per-

sonal taxes, and that the corporate tax rate is 35%. a.$50.000 milliond.$1.575 million b.$17.500 millione.$1.445 million c.$4.128 million 4. (5 points) Suppose that you would like to take a position that will give you the following payoff at time

T, as a function of the stock price S

T at that time:

Which of the following strategies will give you this position (assume that all the call and put options

are European options maturing at T, and are written on the given stock)?

I. Buy 1 put with a strike price of 60, buy 1 call with a strike price of 40, and buy 1 call with a strike

price of 20.

II. Buy 1 call with a strike price of 40, buy 1 put with a strike price of 20, and lend (at the riskfree

rate) the present value of $40 deliverable at time T.

III. Buy 1 put with a strike price of 40, buy 1 put with a strike price of 20, and buy 1 share of the

stock. a.I and IId.I, II and III b.I and IIIe.fewer than two positions will give you the desired payoff. c.II and III 5. (5 points) The Hifalutin Corporation has no debt in its capital structure, and the expected rate of return on its equity is 15%. There are 300,000 shares outstanding. The company has expected annual pre-tax earnings of $3 million in perpetuity. The corporate tax rate is 40%. If Hifalutin announces

that it will issue $3.75 million worth of perpetual debt and use the entire proceeds to buy back some

stocks, what will be its new share price? (Ignore personal taxes.) a.40.00d.50.00 b.45.00e.52.50 c.48.50

Payoff

60
40
20 40 60
ii S Tquotesdbs_dbs21.pdfusesText_27

[PDF] mba corporate finance exam questions and answers pdf

[PDF] mba financial management exam questions and answers

[PDF] mba financial management exam questions and answers pdf

[PDF] mba inventory 5 languages of appreciation

[PDF] mbappé height in feet

[PDF] mbappé weight lbs

[PDF] mbbs bds online registration 2019

[PDF] mblock arduino tutorial

[PDF] mblock download

[PDF] mblock programs

[PDF] mbos nj

[PDF] mbot course

[PDF] mbot ranger programming

[PDF] mbot tutorial pdf

[PDF] mca cet 2020 registration date