Fall 2104 Grades

Notice for Fin 425 students

You can find the daily closing data of last ten months from this link. http://www.dsebd.org/data_archive.php

Pick your stock on 'Day End Archive' and select the range. It will give you the closing data for that period of time.

End of summer 2014

I have submitted all your grades today and this is officially the end of this semester. Some of you have done exceptionally well and some missed out. If you got your desired grade then congratulations and you deserved it. If you think you got less than your expectation then don't be disheartened. There was immense competition in most of the sections and as I mentioned earlier, your grade will depend on your position in the class. So if you got less than what you expected then the only explanation is that someone in your class did better than you and took away your grade.

But end of the day you need to remember that grades will not determine what profession you will have, what car you will drive or how much money you are going to make 5-10 years from now. Rather its your knowledge, smartness and honesty that will take you there.

The grades are uploaded in the blog already. I've posted it from my phone so might be a little difficult to read. If you find it too difficult let me know and I will re upload it. Take care and enjoy your vacation. 

Summer 2014 final grades

Summer 2014 final grades

Review of final exams

Fin 201 (sec 7)

Q 1. When it comes to picking the best supplier based on their credit terms you are supposed to calculate their EARs. And the supplier with the lowest EAR is the best option for you. If you calculate both EAR and APR you will lose some points because APR is irrelevant in this case. If you fail to give me the decision or if your decision is wrong because of calculation mistake you will also  lose some points. 

Q2.  Firms speed up the collection of payment and slow down the disbursements because of the’ time value of money’. The earlier you receive the money you can reinvest that somewhere else and earn some interest from it. Same principal goes for disbursements. You want to pay as late as possible and use the money somewhere else to earn some interest. 

Q3. Between line of credit and commercial paper you are supposed to use Line of credit. Even though in your case commercial paper has a lower EAR, you cannot use money raised from commercial paper in capital expenditure. If your decision is wrong you will get 50-60% marks. If your decision is right but the explanation is wrong again you will lose points.

Q4. You need to calculate the NPVs and the higher NPV is better. In your case the proposed policy results in higher NPV

Q5. When you prepare the cash budget you need to include all the expenditures except depreciation. Depreciation is a non-cash expenditure and you should know it from your previous finance and accounting courses. If you fail to include any of the other relevant expenditures you will lose some points. 

The main reason for preparing the cash budget is to know how much money you will have for investment purpose (in case of cash surplus) and how much money you need to borrow to meet the requirement (incase of cash deficit). This is the prime reason which you should cover in your discussion.

Fin 201 (sec 8)

Q1. You are supposed to calculate the NPV and the highest NPV will result in the best option. But in your problem both the NPVs are supposed to be negative. So you can not suggest any of them because both will result in net loss.

Q2. The bank which requires you to maintain a compensating balance of 10% will result in higher simple interest rate. Your objective is to find the cheapest source of financing. So you should pick the bank which does not require you to maintain the compensating balance. You have to explain it properly with your available variables given in the question.  (X and I)

Q3. For the cash budget problem all receipts and disbursements are made on cash basis only. Apart from that it’s quite a straight forward question.

Q4. Between line of credit and commercial paper you are supposed to use Line of credit. Even though commercial paper has a lower EAR, you cannot use money raised from commercial paper in capital expenditure. If your decision is wrong you will get 50-60% marks. If your decision is right but the explanation is wrong again you will lose points.

Q 5. When it comes to picking the best supplier based on their credit terms you are supposed to calculate their EARs. And the supplier with the lowest EAR is the best option for you. If you calculate both EAR and APR you will lose some points because APR is irrelevant in this case. If you fail to give me the decision or if your decision is wrong because of calculation mistake you will lose some points. 

Fin 101

Q1. For the first two years the growth rates of the company are 50% and 25%. And then it will come down to a normal growth rate of 6% perpetually. You need to use the dividend discount model to calculate the firm’s share price.

Q2. For bonds the interest is a fixed amount that you will earn regardless of the firm’s financial performance. But in-case of a stock you can only assume how much of income the company will be able to earn and how much of it they will pay as dividend. But you can never be sure since dividend payment on common stocks is not fixed. 

Q3. There is not much to explain on this one, a very straight forward question. The rate of return from your investment in this problem is 0.

Q4.  Not much to explain here either.

Q5. LRP, MRP, DRP and IP. These are the four risk premiums that you need to include in your calculation of interest rate.

Q6. False. According the Liquidity preference theory short term bonds should have lower interest rate.

Fin 425

Q1. If your analyst is solely using CAPM to figure out which are the undervalued stocks then you should not listen to his/her advice because you also know that DSE doesn’t have any form of efficiency. That means you can predict the future price looking at the past trend, in other words past trend is likely to repeat in future regardless of a firms fundamental performance. So CAPM will not result in accurate prediction.

Q2.  Calculate the beta which is supposed to be negative. 

Q3. For a portfolio with two assets you are supposed to use Standard deviation which is a measure of total risk (systematic and unsystematic). Since its not a well diversified portfolio you cannot use beta.

Q4. This is a very straightforward question so not much to explain here. It was pretty much what we did in the class.

Q5. When you draw the capital allocation line you need to show me the slope of the line and where your company belongs on that line. And since it is on the line it is not under or overvalued rather its fairly priced.

I will be available in my room from 12 pm- 2.30 pm tomorrow (25/08) and 8.30 am-2pm on Tuesday (26/08). If you have any query regarding the final exam you can consult with me during that time.

Pre exam consultation

So today was the last class for summer'14. It has been a hectic semester for me so far but nevertheless I had a good time taking all these different courses. Best of luck with your exams.

I think I mentioned to some of you that I will be available in the university tomorrow from 11.30am till 2. But something came up and I wont be able to make it to the university till 3pm. If you need to see me tomorrow then you will find me in my room at around 3. I will also be available at the university on Thursday (13/08) from 9.30 am till 2pm for consultation.

Final Exam Schedule (Summer 2014)

Bus 101:             Monday (18/08) From 10.10 am
Fin 201 (Sec 7): Wednesday (20/08) From 8.30 am
Fin 201 (Sec-8): Thursday (14/08) From 11.50 am
Fin 101:              Tuesday  (19/08) from 1.30 pm
Fin 425:              Tuesday (19/08) from 10.10 am

Class cancellation notice

I will be marking all your scripts tomorrow  (16/07) So canceling both the classes of fin 201 and bus 101. Come to my room at around 2.30 if you want to see your script. Makeup classes will be announced in the next class.

Class cancellation notice

Due to unavoidable circumstances the classes of tomorrow (18/06/14) are cancelled (Bus 101 and Fin 201). I will be available in my room from 11.30am so drop by if you have any query.

For fin 201 and Fin 425 students

I have uploaded few practice problems for Fin 201 students and also uploaded the 'Margin trading' problems for Fin 425 students which were covered in the class. Have a look at them if needed. best of luck with the exam.

Class cancellation notice

I just came back and really wanted to resume classes from Thursday (29/05) but unfortunately I can't. It has been a very hectic week for me plus the jet lag makes it difficult to start lecturing from tomorrow. So the only class of tomorrow Fin 201 sec 8 will be cancelled. Classes will resume from sunday and all the missed classes will be covered up in coming weeks. Most likely you will have your quiz in the next week so do not miss any lecture. See you all soon

P.S- Share this notice with your friends who are in my Fin 201 sec-8 class.

Class cancellation notice

I will be on holiday from 25th to 28th May so will not be able to take any class during that time. Regular classes will resume from 29th May (Thursday). The schedule for make-up classes will be announced later. Have a good week.

Course materials are updated in course files for Summer 2014

I have uploaded and updated the course files for Bus 101, Fin 201 and Fin 425. You can follow the links of each course and find all course materials in respective folders.

Final exam scripts

I was informed yesterday that faculty members are not allowed to show the final exam scripts to the students. Even though I promised I will, as per the EWU policy I cannot do that.

But I will finalize all the marks including final, presentation, term paper and everything on Thursday. You can find that infront of my room on Thursday and the final grade will be submitted on Sunday (27/04). Final grade will also be uploaded on the blog, so you don't need to travel all the way to the university just to see that. 

Fin 201 students (Practice problems-Final exam)

I have uploaded few practice problems from the chapters you need to cover for your final exam. You can find them in your course folder. The hard copy is also available in 'Shumi'. Best of luck for the final.

Class cancellation notice (Bus 101 Sec 5)

I wont be able to take tomorrow's (10/04/2014) Bus 101, Sec 5 class. Your make-up quiz and last lecture of the semester will be held on Tuesday (15/04/2014).

Maxim

Notice for FIn 201 students

I have uploaded some practice problems from chapter 17 (Financial planning and control) It's in your course folder. Have a look at them and use them as supplementary guides along with the class lectures for your midterm preparation.

Make up class has been cancelled (Bus 101)

The prior mentioned makeup class  of this Saturday has been cancelled due to the university policy that no makeup class can be arranged on a weekend. We will have our regular class on Sunday. Inform your friends from the Bus 101 class regarding this cancellation notice

Makeup class for Bus 101 Sec 4

There will be a makeup class for Bus 101 (Sec 4) on this coming Saturday (08/03/2015).
The room number and time will be announced in the class.

Notice for Bus 101 students

I have uploaded a sample assignment prepared by students from last semester. This will give you an idea of how to prepare the business plan and what type of standard I am expecting from you. Best of luck

For fin 201 students

I have uploaded few selected problems that I feel are relevant to our class discussion. You can check them out. The problems are from your book (14th edition). The book is also there in the blog incase you don't have a hardcopy of it.

Class cancellation notice

Hey guys I know its a bit too late to post this but i'm not feeling too good so will not take the classes tomorrow (29/01)
Let your friends know about this notice. Have a good weekend.