Q. What can you tell us about the quizzes?
Ans. The first quiz will be on chapters 1 through 3. They will
cover three parts -- first, definitions; second, short questions; third,
short problems. All the questions that are eligible for inclusion can
be found in the webnote "Important Terms
Q. What do I have to study
for the Midterm?
A. One, definitions from chapters 1, 2, 3, 6 (I am not going to ask definition
questions on Chapter 7).
Two, critical thinking questions from chapters 1, 2, 3, 6 (I am not going
to ask critical thinking questions on Chapter 7)
Three: problems similar to end-of-chapter problems from chapters 3 (problems
26-43), 5 (problems 29-56), 6 (problems 1-14, 15, 16, 17, 18, 21) and
7 (problems 13-18 and 20).
Give us a sample midterm.
A. Here is one:
Define the following terms -- agency costs, operating cash flow, profit
margin, bid price, sinking fund.
2. a. Is an IPO a primary market transaction or a secondary
b. How are auction markets like the NYSE different from dealer markets?
c. Under standard accounting rules, is it possible for a company's liabilities
to exceed its assets? If this happens, is the company bankrupt?
d. What information does the capital intensity ratio provide about a firm?
e. How does a bond issuer decide on the appropriate coupon rate to set
on its bonds? Explain the difference between the coupon rate and the required
rate of return on a bond?
3. Chapter 3, problem 29 (p. 82); Chapter 5, problem no.
48 (p. 149); Chapter 7 problem 15 (p. 219).
Q. Are the exams open book or closed
Ans. The midterm and the final exams are closed book; however, you can
bring in one 8.5x11 sheet, which can contain only formulas. You may write
on both sides of the paper. However, you may not staple several
sheets of paper together. Going through your notes probably
cannot make up for the lack of a proper understanding of the material.
The short quizzes are closed book; you may not bring in any sheets
Q. What do I have to study for the final exam
and what will be its format?
A. Chapter 8 will be included for the final, as will chapter 9. However,
you are also responsible for Chapters 10 and 11. You will not be responsible
for computing portfolio variance or computing portfolio expected return
or computing standard deviations of returns and mean returns from sample
return data. However, you will be responsible for knowing the concepts
in these chapters.
For example, you have to know the following concepts:
- Market efficiency
- Systematic and Unsystematic Risk
- Systematic Risk and Beta
- The Security Market Line
- The SML and the cost of capital
You have to know all the critical thinking and concept review questions
in Chapter 10 and chapter 11. In Chapter 10, you need to know all the
sections 10.1 to 10.5. However, in section 10.4, you can skip the computation
of standard deviation. In Chapter 11, you must know the following sections:
11.3 to 11.8.
As far as quantitative and computational questions from Chapters 10 and
11, you only need how to compute returns (that's too basic; you cannot
have taken MBA 632 and not know that), to know the CAPM formula, and how
to apply it.
The format of the Final will be as follows:
- Definitions (from Chapters 8-11)
- Short questions (critical thinking and concepts review, from chapters
- Quantitative Questions (Chapters 8-11); there will be at least one
question from Chapters 8/9 and one from Chapter 10/11; there may be
Q. Can I do extra work to improve my
Ans. Sorry. I believe that in order to be fair, I have to give every student
the same opportunity to do extra work. Obviously, this is not feasible.
However, on occasion I will allow you to resubmit an assignment for grade
Q. What can I do to check my
understanding of the material and to prepare for the exams?
- You can do the problems from the end of each chapter. The answers
can be found on the Web (see Blackboard).
- You can try to answer the questions at the end of media
- You can read current newspaper and magazine articles on relevant topics
and make up your own questions and articles.
Q. What do I have to study from
Ans. In each chapter, you should know the definitions and the meanings
of key terms, and be able to put them into context. You should also look
at the end-of-chapter problems.