Finance 320: Questions on Finance

1. Barker Corp. has a beta of 1.10, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Barker's required rate of return?

The credit boom of the 1920’s is one of the things that contributed most to the stock market crash on 1929 and then the eventual cause of the Great Depression. “We find that the credit boom view provides a useful perspective on both the boom of the 1920s and the subsequent slump. In particular, it directs attention to the role played by the structure of the financial sector and the interaction of finance and innovation.” (Eichengreen) As many people know today, having a credit card and going shopping without realizing exactly how a credit card works can put the user in a tough situation. After a person puts something on credit they must pay it back at a later date. In the 1920’s the “credit boom” was where people had started to use credit more frequently and were getting carried away with the idea of credit. People putting more

In words Newark General Hospital had no affect of volume to the costs of the Hospital, so, there was no change in the volume, which leaded to higher cost.

All questions are worth five (5) points. If there are any graphs on the test, then leave

The term "financial services" became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act of the late 1990s.

Calculate the above ratios for 2009 and comment on how they relate to the actual ratios for 2008 and the industry average.

The risks that need to be put in the spotlight for the CFO are the following:

In regards to the Financial Crisis of 2007-2009, a few conceivable reasons can be taken into consideration. For instance, high consumer deficit, high corporate deficit, complex money related securities, transient subsidizing markets got to be vital, extensively feeble administrative/business sector controls, shortcoming in the share trading system, shortcoming in the housing business sector, as well as worldwide monetary shortcomings. Besides the previously mention examples, the untrustworthy conduct by budgetary organizations, the disappointment of the national bank to stop lethal home loans, and over-obtaining by consumers can also be incorporated and taken into account. The effect of the monetary crisis from the perspective of firms was that they confronted declining interest for their products. The organizations thought that it was hard to acquire reserves, in light of the fact that the banks' trust in them had declined. Moreover, the organizations confronted solid rivalry from outside organizations. The likelihood of bankruptcy lingered. From the point of view of investors, the crisis implied conceivable loss of stores and loss of avenues to contribute (Carbaugh, 2006). The financial specialists expected to hunt down more

In this period hedge funds were registered for the first time and the agency’s examination program was revised to make it more risk based. Rules also were set for over-the-counter derivatives and asset-backed ¬securities.

3. What factors need to be considered when determining the optimal form of organization for a business enterprise?

1. Market risk is the chance that a totally unexpected event will have a significant effect on the value of the firm or a specific investment. Answer: FALSE

Listing on a stock exchange might be highly desirable for a company, but there are a number of requirements, conditions and costs associated with becoming a publicly listed corporation.

The financial manager is responsible for giving financial advice and support to clients and colleagues that will enable them to make good business decisions. Particular work environments differ considerable and involve both public and private sector organizations such as retailers, corporations, financial institutions, charities, and even small manufacturing companies and schools (Financial Manager, 2011).

MJ Co. pays out 60% of its earnings as dividends. Its return on equity is 15%. What is the stable dividend growth rate for the firm?

The topic of Taylor's keynote speech is not an original one: he wants to know, share, and understand how the financial crisis in the first decade of the 21st century occurred. The method or approaching in tackling this issue is more original: he contends that some of the greatest factors influencing the onset of financial catastrophe is due to policies. At the heart of Taylor's argument is the presence of policies that created a sort of breeding ground for such a crisis to occur. The time period of his focus are the years 2000 2008.