Q. What can you tell us about the quizzes?
Ans. The quiz on Present Value will include two problems; both
problems will be based on problems found at the end of chapters 3 and 5.
Q. What do I have to study for the midterm?
Ans. The midterm will cover Chapters 2 through 7. You are responsible for all of the material on the
slides. In
addition, whether it is covered on the slides or not, you should cover the
following material:
Basic Accounting Statements
Informational Needs
Asset Measurement and Valuation
Accounting Principles Underlying Asset Management
Measuring Asset Value
Fixed Assets
Current Assets
(read -- it will be useful for you, but I won't ask questions on this) Investments and Marketable Securities
Intangible Assets
How Well do Accountants Categorize Assets and Measure Value?
Value of Assets-in-Place
Value of Growth Assets
Accounting for Acquisitions
Valuing the Research Asset
Measuring Financing Mix
Accounting Principles Underlying Liability and Equity Measurement
Measuring the Value of Liabilities and Equities
Current Liabilities
Long-Term Debt
Other Long-Term Liabilities
Leases
(skip Employee Benefits and Deferred Taxes)
(skip Preferred Stock)
Equity
How well do Accountants measure the Financing Mix of the Firm?
Classification into Debt and Equity
Valuation of Debt and Equity
Operating Leases, Capital Leases and Debt
Chapter 5: pages 116-134; skip Valuing an Asset with Contingent Cash Flows; pages 141-146 (section on Market Prices and Value).
Chapter 6: pages 149-154; do the section "Diversifiable and Non-diversifiable Risk," including the subsections:
The Components of Risk
Why Diversification Reduces or Eliminates Firm-Specific Risk: An Intuitive Explanation
A Statistical Analysis of How Diversification Reduces Risk
Why is the Marginal Investor Assumed to be Diversified
Skip the rest of the chapter.
Chapter 7: Everything, except:
In the problems at the end of Chap. 7, skip Q. 1, do all other questions (under the rubric, Questions.) Under the rubric, Problems, skip Problem 4; do all others.
All slides for Chapter 7.
Q. What will the format of the Midterm
be?
A. Here is the format of the midterm:
One media article, with questions on Corporate Governance (chapter 2)
One quantitative question on present value (similar to questions from end of chapters 3, 5; but not necessarily following the paradigm precisely).
Question on definitions/explanations of terms (from assigned material).
One section with questions requiring brief answers (from Chapter 2, Chapter 4, , 5, 6 and 7).
Q. Give us a sample quiz.
A. Here is a sample short quiz:
1. Answer any two of the three questions below:
Are poison pills generally good or bad for stockholders? (See page 20 for answer.)
What is the Matching Principle in GAAP with respect to revenue recognition? Explain how the use of the matching principle would make it more difficult for financial analysts to use accounting income as a measure of cashflows. (See page 90 for answer.)
Give an example of diversifiable risk.
2. Use no more than two sentences to define the following terms:
market portfolio
beta
market efficiency
operating lease
Q. Are the exams open book or
closed book?
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.
Q. What do I have to study for the final exam?
Ans. The material below will, more
or less, define what will be included for the final.
Chapter 16: Everything. (For an intro to bonds, you can get either a powerpoint presentation or a straightforward text, Valuing Bonds.)
Chapter 17: The section, entitled, "Financing Choices and a Firm's Life Cycle," pages 509-518. Understanding the ideas behind figure 17.1 on page 512.
Chapter 18: Entire chapter. You may want to look at the slides to get a better understanding of the material.
Chapter 19:
Chapter 21 and Slides on Dividends: Maybe one short question similar to the short questions on the Practice page.
There will be a media article based question, dealing with firm risk or capital structure; at least one problem involving capital structure, and probably some short questions.
Q. What will the format of the Final exam be?
Ans. The format of the Final will be as follows:
One media article, with questions on Capital Structure (Chapters 16, 17 and 18)
One quantitative question on Capital Structure (similar to questions from end of chapters 19; but not necessarily following the paradigm precisely).
Question on definitions/explanations of terms (from Practice Questions on Capital Structure and Dividends).
One section with questions requiring brief answers (from Practice Questions on Capital Structure and Dividends).
Q. Can I do extra work to improve
my grade?
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 improvement.
Q. What can I do to check
my understanding of the material and to prepare for the exams?
Ans.
Q. What do I have to study
from each chapter?
Ans. In each chapter, you should know the definitions and the
meanings of key terms, and be able to put them into context. In
addition, you can find a list of important issues in each chapter, here. Note, however,
that this is not necessarily exhaustive.
Updated August 15, 2002.