FIN335 Fall 2012 Phase 3 Exam Review

Chapters 2, 13, 14, 17Supplementary Materials

on Bankruptcy, M&A42 Questions [MC/TF] , 6

Problems

Chapter 2Financial Markets & Institutions1. How do primary markets differ from secondary

markets?2. How do stock splits affect post split prices (P)3. What effects do increases in debt use have on

ROE? EPS?4. Why would a firm do a reverse split?5. How do Hedge funds differ from regular mutual

funds?6. How do money markets differ from capital

markets?7. What are derivatives? How are the valued?

Chapter 13Leverage and Capital

Structure1. What is the essence of Modigliani & Miller

Proposition 1?2. How do taxes affect the cost of debt?3. How does financial leverage differ from

operating leverage?4. What is the breakeven point and how is it

calculated? (P)5. What is the objective of capital structure

startegy?

Chapter 14Dividends and Dividend Policy

1. What are the 4 important dates regarding the payment of dividends?

2. What does it mean when a stock goes ex-dividend? (P)

3. How do stock splits affect shareholder wealth? (P)

4. How do dividends relate to stock prices?

5. What are dividend clienteles?

Chapter 17International Financial

Management1. How does a direct exchange differ

from an indirect exchange? (P)2. How can we compute a cross rate

for a third given two cross rates? (P)3. How does a spot trade differ from a

forward?4. How do floating rates differ from

Managed rates? Which is more popular?

5. What are Eurodollar deposits?

Supplementary Material

1. Bankruptcy and Reorganization (Supplementary Notes)

a. What are the various definitions of financial distress?

b. What does it mean to reorganize a firm in bankruptcy?

c. How does the Rule of Absolute Priority work?

Supplementary Material

1. Mergers and Acquisitionsa. What is synergy in a

merger/acquisition?b. What is an LBO?c. What is a white knight defense?