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Practice midterm

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FIN 401
Alan Kaplan

FINANCE 401 RYERSON UNIVERSITY Mid-Term Exam - Alan Kaplan Thursday, October 22, 3:00 P.M. Version A Time allowed: 2 hours Aids allowed: Closed book except for an 812 by 11 note sheet Answer all multiple choice questions on the scan sheet. All multiple choice questions are worth 1 mark each. There are 40 multiple choice questions 1. Which version of the exam do you have? This is a free mark. Take it. a) A b) B 2. In the article dated September 09, 2009, titled Barrick dumps hedges, Barrick states that they will place an equity issue. Which of the following statements is true? a) The money from the issue will be used to buy back bonds that are about to come due b) The issue will be for $3 billion c) The money from the issue will be used to finance Barricks new project in the Yukon d) The issue will be for $500,000 e) None of the above 3. In the newspaper article titled Spurned as Low, dated September 08, 2009, Kraft is trying to do one of the following activities. Which one is it trying to do? a) Kraft is trying to buy Cadbury b) Kraft management is saying that an offer from Hershey for the shares of Kraft is too low c) Kraft is trying to convince investors that is own shares are worth more than the current market price d) Kraft is trying to borrow funds in order to finance its new food operations in the U.S. e) None of the above Please use the following information to answer the next TWO questions. Management of Doubleit Corp. promises investors a return of $10 per year, paid at the end of the year for each of the next eight years, and then $20 at the end of each year from then onforever. 4. Based on this information, and assuming that the money is guaranteed (no risk), what is the maximum price that you as an investor would pay for 100 shares of this stock? Assume no taxes or transactions costs, and a discount rate of 12%. a) $3,152.59 b) $491.32 c) $34,897.44 d) 55,493.22 e) None of the above
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