FINA 307 Survey of Finance Fall 2018 Prepexam for Midterm 1 Hint for Conceptual questions: 1. Time Line: What are you calculating if you move a cash flow from left to right on the timeline? (P.V. or F.V.?) What do you use in your calculation? (Compounding interest? Single interest? Yield to Maturity? Or others?) 2. How is annuity defined? What are the characteristics that an annuity should have? 3. What is annuity due? How to calculate present value and future value of an annuity due? 4. What is perpetuity? What is the characteristics of a perpetuity? 5. What is bond? What are the major kinds of bonds? Is U.S. Treasury's return the risk-free return? What does the risk-free return mean? 6. Bond's Characteristics: (Drawing a timeline for a bond will help you on all following questions) a. What is the face value of a bond? What are other names for the face value? b. What is the coupon payment? How to calculate the coupon payment? c. What is the time to maturity? How to calculate the time to maturity? d. What is the yield to maturity? How to calculate the yield to maturity? e. How does a typical cash flow for a bond look like? (Single C.F.? Annuity? Or both?) 7. What is the primary market? What is traded at the primary market? What's the difference between primary market and secondary market? Practice for Calculation quecti FINA 307 Survey of Finance Fall 2018 Prepexam for Midterm 1 Hint for Conceptual questions: 1. Time Line: What are you calculating if you move a cash flow from left to right on the timeline? (P.V. or F.V.?) What do you use in your calculation? (Compounding interest? Single interest? Yield to Maturity? Or others?) 2. How is annuity defined? What are the characteristics that an annuity should have? 3. What is annuity due? How to calculate present value and future value of an annuity due? 4. What is perpetuity? What is the characteristics of a perpetuity? 5. What is bond? What are the major kinds of bonds? Is U.S. Treasury's return the risk-free return? What does the risk-free return mean? 6. Bond's Characteristics: (Drawing a timeline for a bond will help you on all following questions) a. What is the face value of a bond? What are other names for the face value? b. What is the coupon payment? How to calculate the coupon payment? c. What is the time to maturity? How to calculate the time to maturity? d. What is the yield to maturity? How to calculate the yield to maturity? e. How does a typical cash flow for a bond look like? (Single C.F.? Annuity? Or both?) 7. What is the primary market? What is traded at the primary market? What's the difference between primary market and secondary market? Practice for Calculation quecti