财务管理英语教材答案

1、Key AnswersChapter 1 Introduction to Financial Management1-5 BBBBA6-10 BADDAShort answer questions.1. It revolves 3 types of financial decisions a firm has to deal with: (1) Investment Decisions (Capital Budgeting) - What investments should I make? (2) Financing Decisions (Capital Structure) - How t

2、o raise funds and How and to what extent to distribute profits? (3) Working capital management - How do we manage the day-to-day finances of the firm?2. a. The money markets: wholesale markets which enable borrowing on a short-term basis.b. The bond markets: A bond is merely a document that sets out

3、 the borrowers promise to pay sums of money in the future usually regular interest plus a capital amount upon the maturity of the bond.c. The foreign exchange markets: one currency is exchanged for another.d. The share markets: the aggregation of buyers and sellersof shares (also called stock), whic

4、h represents ownership claims on businesses. e. The derivatives market: financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets.3. Solutions include: link managerial rewards to shareholder wealth improvement; sackings; s

5、elling shares and the takeover threat; corporate governance regulation; improve information flow. 4. Reasons for selecting shareholder wealth maximization as the objective of the firm: the practical necessity of a single objective leading to clearer decisions; the contractual theory; survival in a c

6、ompetitive world; it is better for society; counters the tendency of managers to pursue goals for their own benefit; they own the firm.Chapter 2 Introduction to Financial Statements1-4 CCBAShort answer questions.1. (a) Asset turnover(b) Average collection period(c) (Gross) Profit Margin(d) Current/Q

7、uick Ratio2. A high P/E ratio could mean that a companys stock is over-valued, or else that investors are expecting high growth rates in the future. Compared with Telstra Corporation Limited, Pizza Enterprises Limited has a higher P/E ratio, so Telstra will be more favorable by the market.3. (a) Goo

8、d (b)Bad (c) Bad (d) Bad (e) Bad (f)Good 4. In many cases, a companys stocks cannot be converted into cash at short notice and therefore the current ratio (which takes all current assets into account) may give an overoptimistic view of the companys liquidity. The quick ratio provides a more severe t

9、est of liquidity by omitting stocks from the calculation. Chapter 3 Time Value of Money1. a. F=P(F/P, i,n) = 10,000(F/P, 5%,20) = $26,533 b. F=P(F/P, i,n) = 10,000(F/P, 15%,20) =$163,6652. a. $1,000,000 b. P=F(P/F, i,n) = 1,700,000(P/F, 9%,5) = $1,104,883.36 c. PA= A/i= 135,000/9%=$1,500,000d. PA= A

10、(PA/A, i,n)= 200,000(PA/A, 9%,10)= $1,283,531.54Plan C has the most valuable prize.3. F =P(1+i)n 8950=5000(1+i)10 i = 6%4. Present Value of Project A = -120,000+60,000(P/F, 15%,1)+ 45,000(P/F, 15%,2)+ 42,000(P/F, 15%,3)+ 18,000(P/F, 15%,4) = $3,571.84Present Value of Project B = -120,000+15,000(P/F,

11、 15%,1)+ 45,000(P/F, 15%,2)+ 55,000(P/F, 15%,3)+ 60,000(P/F, 15%,4) = $-2,140.415. PA= A(PA/A, i,n)(1+i) =1,500(PA/A, 8%,5)(1+8%) = $6468.196. P=F(P/F, i,n) = 10,000(P/F, 2%,24) = $6,217.21 Effective annual rate = (1+2%)4-1=8.24%Chapter 4 Risk and Return1-5 BBDDDShort answer questions.1. A return ex

12、press the financial performance of a financial asset (or investment), which might be above or below its value at the time of purchase/investment. (1) total return: Any measurement of past return include both the impact of capital gains (or losses) and income received over a holding period.(2) Averag

13、e Return: The arithmetic mean return is the simple average of the series of periodic returns.(3) Expected Return: The expected return is the probability-weighted average of all possible returns.2. E (Ri)=Rf+iERm-Rfwhere: E (Ri) = the expected return on the capital asset; Rf =the risk-free rate of in

14、terest such as interest arising from government bonds; i= the sensitivity of the expected excess asset returns to the expected excess market returns; ERm= the expected return of the market. 3. Covariance measures the extent to which two variables move together over time. A positive covariance means

15、that the two variables tend to move together. Negative covariancemeans that the two variables tend to move in opposite directions. A covariance of zero means there is no linear relationship between the two variables. The correlation coefficient has no units. It is a pure measure of the co-movement o

16、f the two assets returns and is bounded by -1 and +1.4. An efficient portfolio is the portfolios that with the same risk but have the highest expected return. The optimal portfolio is an efficient asset portfolio selected by an investor and has the maximum utility, which can only be at the tangent p

17、oint of the effective set and the indifference curve with the maximum possible utility.The optimal portfolio for an individual investor always on the efficient frontier.Numerical problems.1. a.PossibilitiesProbabilitiesHeads ($100)66.66%Flower ($0)33.33%b. Expected value = $10066.66% +$033.33% = $66

18、.66c. It would be willing to pay less than $66.66 to play this game.2. a. E(r) = 0.330%+0.612%+0.1 (-15%) = 14.7%$100014.7% = $147b. SD(r)= 0.3(30%-14.7%)2+0.6(12%-14.7%)2+0.1(-15%-14.7%)20.5 = 12.76% c. Risk premium = 14.7% - 6% = 8.7%3. E(rp) = 0.316%+0.312%+0.47% = 8.68% SD(rp) =45%20.32+30%20.32

19、+20%20.42+ 20.30.31.2145%30%+20.30.4 (-0.5)45%20%+20.30.40.430% 20%0.5 = 35.79%4. Down payment = $100,00020% = $20,000 Savings now = $15,000 Save from salary after one year = $5,000 If invest in stock and the economy experience recession, after one year we can get = $15,000(1- 15%) +$5,000 = $17,750

20、. This amount cannot afford down payment.So, it is suggested to invest in a risk-free bond. Chapter 5 Categories of Capital Budgeting Projects1-4 BCBC5-8 BCCDChapter 6 Cost of Capital1-5 CACDC6-10 DCAACNumerical problems.1. P01-f=t=1nPt+It(1-t)(1+Kd)t 550 million(1-0.1%) = 550 million8%(1-25%)(P/A,

21、Kd, 5) + 550 million(P/F, Kd, 5) Kd= 6%2. Kp=DPPn =2455 = 43.64%3. Ke = Kf+b (Km-Kf) = 7%+1.5(14%-7%) = 17.5%4. Ks=D1P0(1-f)+g =4.5151-0.4%+6%=36.12%5. Kd = I (1-T) = 5% (1-25%) = 3.75% Kp=DPPn =515 = 33.33% Ks=D1P0(1-f)+g =6(1+4%)20+4%=35.20%rwacc=j=1nKjWj= 50020003.75%+800200033.33%+700200035.20%=

22、 26.59%Chapter 7 Capital Structure1-4 ADDC5.(1)B (2)A (3)C6.(1)C (2)B (3)DShort answer questions.1. Operating leverage refers to the phenomenon that the change range of profit before interest and tax is greater than the sales quantity because of the existence of fixed cost.Financial leverage refers

23、to the phenomenon that the change range of common stock profit per share is greater than the profit before interest and tax because of the existence of fixed debt interest and preferred stock dividends.Total leverage combines the operating leverage and financial leverage. It refers to the phenomenon

24、 that the change range of common stock profit per share is greater than the sales quantity because of the existence of fixed expense and fixed financial cost.2. Business risk is the equity risk caused by the nature of the companys business activities Financial risk is the equity risks caused by the

25、companys financial policies (capital structure).Chapter 8 Dividend Policy1-5 ACAAA6-10 ABDDDShort answer questions.1. Dividend policy is the decision made by a firm to pay out earning versus retaining and reinvesting them. Several factors must be considered when a firm establishes its dividend polic

26、y: (1) The liquidity position of a firm; (2) The rate of asset expansion; (3) The shareholders and (4) Legal consideration.2. Advantages of residual policy: minimizes new stock issues and flotation costs.Disadvantages of residual policy: results in variable dividends, sends conflicting signals, incr

27、eases risk, and doesnt appeal it any specific clientele.3. Advantages of share repurchase: transfers a positive signal to investors that shares are undervalued, it gives shareholders more choices and it can reduce the threat of being acquisitioned.Disadvantages of share repurchase: may be viewed as

28、a negative signal that the firm has poor investment opportunities.Chapter 9 Introduction to asset valuation1-5 AACDC6-10 DAADDShort answer questions.1. Valuation subject: the institutions and personnel engaged in asset valuation, including legal entities and individuals.Valuation object: the asset t

29、o be valued.Valuation basis: the laws and regulations that must be complied with during the process of asset valuation.Valuation purpose: the reason for asset valuation, depending on the requirements of the client.Valuation principles: the codes that must be followed during the asset valuation.Valua

30、tion procedures: the systematic steps of asset valuation.Type of value: the attribute value of asset appraisal result and its form of expression, which depends on the valuation purpose accordingly.Valuation approaches: the means and techniques that should be applied in asset valuation.Valuation assu

31、mptions: the inferences based on the facts and its reasonable trend during the valuation process. It is the precondition of valuation consequence.Valuation date: the date on which the estimate of value applies. This may be different from the date on which the valuation report is to be issued or the

32、date on which investigations are to be undertaken or completed.2. Marketability, Impartiality, Independence, Specialty, Advisory3. Open Market Concepts, Continue to Use Concepts, Liquidation Concepts4. Three or more references should be selected, as the prices of references are not only affected by

33、the characteristics of assets themselves, such as their function, quality and so on; but also, by the condition of the market and transactions including the relationship between demand and supply, the intentions and dates of transactions and others. The value of an asset is the average of adjusted v

34、alue from references.Numerical problems.1. 150,000(P/A,6,10%) +150,000(1+5%)10%-5% 1 (1+10%)6 = 653,295+1,778,092.88=$2,431,387.882. (150,000+40,000 +10,000+150,0004%) -(8,000 +7,000) =$191,0003. Value of KK by adjusting A=1,000,0008.7/9=$966,666.66 Value of KK by adjusting B=1,000,0008.7/8.5=$1,023

35、,529.41Value of KK by adjusting C=1,000,0008.7/9.4=$925,531.91Value of KK= (966,666.66+1,023 529.41+925,531.91)/3=$971,909.32Chapter 10 Equity & Corporate valuation1-5 CAADD6-10 DDBDDNumerical problems.1. 2/(13%-10%) 10,000,000=$666,67millon2. 31+10%1+13%+31+10%2(1+13%)2+31+10%3(1+13%)3+31+10%4(1+13%)4+(1+8%)31+10%412%-8%1(1+13%)4=2.9203+2.8428+2.7673+2.6939+72.7348=$89.9689.9620=$1779.2million3.Items201620172018201920202021Sales218237.62259.0058282.316330