This is the final exam for FIN 6500. There are 10 questions, each worth 10 points. Respond to each question in your OWN WORDS (please) do not cut and paste from the textbook. You must paraphrase your answers in order for me to gauge your understanding of the subject matter.
- What is the marginal rate of substitution (MRS)?
- What is the value-additivity principle?
- When using the CAPM framework, what is market risk premium? Define it.
- What is the main purpose of the Capital Markets?
- What are some of the common errors of Empirical Studies?
- Explain stock splits. What effect, if any, do they have on shareholders’ wealth?
- What are the advantages of Mutual Funds?
- What is the role of the CFO (Chief Financial Officer)? How has the role evolved in the last 50 years?
- Define EVA (use your own words)
- What is the purpose of maximizing Shareholders’ Wealth?