Final Exam FIN 306
FINANCE 306 FINAL EXAM COVERAGE
The Finance 306 Final Exam evaluates understanding of core
corporate finance concepts and financial decision-making tools. The
exam coverage includes time value of money calculations, present
and future value, annuities, and loan amortization. It also assesses
capital budgeting methods such as NPV, IRR, payback period, and
profitability index. Additional areas include risk and return concepts,
bond and stock valuation, cost of capital (WACC), and financial
leverage. The exam further covers financial statement analysis, ratio
interpretation, working capital management, and basic portfolio
principles.
,A bank has three assets. It has $75 million invested in consumer loans
with a 3-year duration, $39 million invested in T-Bonds with a 16-year
duration, and $39 million in 6-month maturity T-Bills with a 0.5-year
duration. What is the duration of the bank's asset portfolio in years?
(75/153)3 + (39/153)16 + (39/153)*0.5 = 5.6765 years
,True or False
If a bank has a negative repricing gap, the bank is exposed to
refinancing risk, or the risk that interest rates will increase and the cost
of rolling over or reborrowing funds will be higher than the interest
revenue being earned on assets.
True
, A bank has rate sensitive assets of $100 and rate sensitive liabilities of
$70. If interest rates increased by 1%, what would be the expected
annual change in net interest income?
$0.30
100-70 = 30
1% x 30 = .30
FINANCE 306 FINAL EXAM COVERAGE
The Finance 306 Final Exam evaluates understanding of core
corporate finance concepts and financial decision-making tools. The
exam coverage includes time value of money calculations, present
and future value, annuities, and loan amortization. It also assesses
capital budgeting methods such as NPV, IRR, payback period, and
profitability index. Additional areas include risk and return concepts,
bond and stock valuation, cost of capital (WACC), and financial
leverage. The exam further covers financial statement analysis, ratio
interpretation, working capital management, and basic portfolio
principles.
,A bank has three assets. It has $75 million invested in consumer loans
with a 3-year duration, $39 million invested in T-Bonds with a 16-year
duration, and $39 million in 6-month maturity T-Bills with a 0.5-year
duration. What is the duration of the bank's asset portfolio in years?
(75/153)3 + (39/153)16 + (39/153)*0.5 = 5.6765 years
,True or False
If a bank has a negative repricing gap, the bank is exposed to
refinancing risk, or the risk that interest rates will increase and the cost
of rolling over or reborrowing funds will be higher than the interest
revenue being earned on assets.
True
, A bank has rate sensitive assets of $100 and rate sensitive liabilities of
$70. If interest rates increased by 1%, what would be the expected
annual change in net interest income?
$0.30
100-70 = 30
1% x 30 = .30
