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1. Define the concept of ‘time value of money’. Could the ‘time value of money’ vary over time? Why is understanding the concept of time value of money important”
2.What is compounding and discounting? Please explain and provide examples that illustrate what happens to present and future values when either the length of time is increased, or the rate of investment increases/decreases.
3. In the context of the dividend growth model, is it true that the growth rate in dividends and the growth rate in the price of the stock are identical? Please elaborate and explain your answer in full detail.
4. What is forecasting risk? Why is it a concern for the financial manager? Provide a scenario example to illustrate your answer.
5.How do you determine the appropriate cost of debt for a company? Does it make a difference if the company’s debt is privately placed as opposed to being publicly traded? How would you estimate the cost of debt for a firm whose only debt issues are privately held by institutional investors?
6. What is financial leverage and what is it’s impact on stockholders? Is there an easily identifiable debt-equity ratio that will maximize the value of a firm (explain why or why not)?
7. Which ratio(s) do you think is most important for a corporation and why?
8. Why is the DuPont identity a valuable tool for analyzing the performance of a firm? Discuss the types of information it reveals as compared to ROE considered by itself.