Fin300

FIN300 Spring 2013 Midterm #1 Study Guide General instructions: 1. This is NOT a comprehensive list of topics that may be covered on your exam. All the lecture material and everything from chapters 1-9 in your textbook (with noted exceptions) is fair game. However, it is probably a good idea to emphasize these topics when you study for the test. 2. Understanding the concepts is a prerequisite for succeeding in this course. 3. You should practice solving problems until you feel comfortable you can solve all of them correctly in a reasonable amount of time without referring to your lecture notes or textbook. The pool of practice problems includes practice problem sets posted on Compass, old exams, in-class problems, lecture examples and end of chapter problems from your textbook. 4. I will give you a formula sheet on the exam (see old midterms), but you still need to know where things come from and how to use them 5. The list of topics below is intended to give you a summary of the material we have covered. Ideally it will help you organize your time when preparing for the exam. 6. Do not assume that the exams will be identical in each section – it may turn out to be a costly mistake. 7. You may not take the midterm with a different instructor. 8. Please, don’t forget to bring approved calculators, pencils/pens, and erasers to the exam. You may want to bring a small ruler as well. 10. Exams will start and end on time (no extra 5 minutes for latecomers).

Key topics/concepts Lecture 1 CHAPTER 1 - Why do financial markets exist? - What is the difference between a primary and a secondary market? - What do we mean by efficiency (weak, semi-strong, strong. - Characteristics of efficient markets. Lecture 2 CHAPTER 2: - Interest on Interest: Know how to compute it - Know how to calculate gross and simple holding period returns (HPRs) - Given a series of cash flows, know how to calculate the cash flow adjusted

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rate of return Know how to calculate the