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FIN 645 Midterm Exam (UMUC)

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$70.99

FIN 645 Midterm Exam (UMUC) QUESTION 1. This question has two main parts as follows. Part A. As a CFO-in-training, that is as one who is being trained for a future CFO job where taking FIN 645 is part of such training, and solely based on what you have seen up to this date, explain what you have learned in this course which could help you in your future job as a CFO. Explain in needed details. If you discuss specific lessons, strategies, tools, and or methods, cite the specific page(s) of your books as reference. Hint: First briefly outline what a typical CFO does and then answer the question as asked and to the best of your ability and knowledge at this point. (50/100 points for this part) Part B. As a securities trader, and based on what you have seen up to this date, explain what you have learned in this course which could help you in your trading strategies. Explain in needed details. If you discuss specific lessons, strategies, tools, and or methods, cite the specific page(s) of your books as reference. In your discussion, make sure to cover both market efficiency issues and relevant behavioral finance phenomena. Hint: Traders are mainly concerned about short and not long term. (50/100 points for this part) Note: Points will be taken off for responses that lack organization and order. Maximum pages: 3-4 pages, double-space, size 12. Not page limit on any supporting reference page, table, graph, or exhibit. QUESTION 2. Assume you have been hired as a consultant to present a half-day Valuation Workshop before a group of analysts and managers. Your presentation must be complete and addresses all issues in Valuation of assets in general. Also assume that you must cover Valuation issues from both the Traditional Finance (TF)and Behavioral Finance (BF) points of views; similar to the coverage in chapter 2 of Shefrin on Valuation. Specifically, your task in this question is to prepare and submit to me the needed presentation notes, along with any required examples and any supporting and explained calculations which you can utilize in your workshop. I emphasize on explained calculations to make sure you understand what you are talking about. To make things easier, I let you use the numerical examples discussed in the chapter in your presentation; but as said in above, make sure to provide your OWN explanations on numbers and how they may have been arrived at. You may use Excel for the calculation portions of this question. Note: Points will be taken off for responses that lack organization and order. Maximum pages: 3 pages, double-space, size 12; no page limit on any supporting document in Word or Excel. Total Grade: 100 (50 points for the qualitative portion in Word and 50 points for the quantitative portion in Excel) QUESTION 3. Analyze This! The Behavioral Finance Components of Total Risk! As you may have heard, and as can be seen from the chart at the end of this question, recently the NASDAQ Composite Index (NCI) https://finance.yahoo.com/q/cp?s=%5EIXIC+Components hit the 5,000 level again after 15 long years. Of course the chart had its own fluctuations and instabilities, called risk, all along the way. Such risk is an “average” risk because indexes like NCI or Dow Jones represent the collective risks and movements of their underlying stocks. Moreover and as you may recall each stock had two types of risk; Diversifiable and Non-diversifiable (Systematic) risk. So the present question is about risk and elements or risk as seen and interpreted through the historical movements in a popular index; in this case, NCI. Note that if risk was linear, constant, we normally would have a straight line growing say at 5% per year. However risk in the real world is not linear and at least a portion of non-linearity in risk could be attributed to behavioral phenomena displayed by players on both sides the market; buyers and sellers. Additionally and according to traditional finance, in well-diversif

FIN 645 Midterm Exam (UMUC)

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