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Date Posted: 22:18:43 07/31/01 Tue
Author: Charles Hodges
Subject: Information about Summer 2001 MBA 8622 Final Exam

Information about the Summer 2001 Final Exam for MBA 8622

Liability Statement

Everything covered in the book and/or in any class by any instructor is fair game for the Final Exam. While it is not our intention, the Final may contain badly written, confusing, and unfair questions. While it is not our intention, the below information may distract, confuse, or mislead some students and may adversely affect preparation on the Final Exam. We make no warranties, expressed or implied, about the usefulness of the below information in preparing for the Final Exam.

Time and Place Information
The Summer 2001 MBA 8622 Final Exam is scheduled for August 4, 2001 from 8:30 a.m. to 10:30 a.m. The room assignments for each class are:

Faculty Room/Bldg Date
Fendler Alpharetta 08/04/2001
Ghoneim 500-G 08/04/2001
Hodges 500-G 08/04/2001

Exam Information

There will be 25 multiple choice questions, with five choices per question. There are 8 concept questions and 17 questions with numerical answers. Note, while most of the questions with numerical answers are quantitative (i.e., require calculations), some may be solved using logic alone.
Be aware that many concepts are covered in multiple chapters, for example calculations involving the CAPM are from Chapters 5/ 6, 9, and 10. Related to this, on the Final Exam there are questions that cross chapter boundaries. For example, the well known relationship - that increasing the discount rate will decrease the present value – could be phrased as a time value of money, bond, stock, or capital budgeting question. For the questions below, the listed chapter refers to the topics that we were considering when we wrote the question. Your classification of questions could differ from ours. There are multiple versions of the exams and it is unlikely that your version of the exam will be in the question order shown below. Here is the breakdown of question type by number.

Number Type Question
1. Concept question from Chapter 1 on the objective of management
2. Concept question from Chapter 1
3. Concept question from Chapter 5/6 (Risk and Return)
4. Concept question from Chapter 5/6 (Risk and Return)
5. Concept question from Chapter 5/6 (Risk and Return)
6. Question with Numerical Answer from Chapter 5/6 (Risk and Return)
7. Question with Numerical Answer from Chapter 5/6 (Risk and Return)
8. Question with Numerical Answer from Chapter 5/6 (Risk and Return)
9. Question with Numerical Answer from Chapter 7 (Time Value of Money)
10. Question with Numerical Answer from Chapter 7 (Time Value of Money)
11. Question with Numerical Answer from Chapter 7 (Time Value of Money)
12. Question with Numerical Answer from Chapter 9 (Stocks)
13. Question with Numerical Answer from Chapter 10 (WACC)
14. Question with Numerical Answer from Chapter 10 (WACC)
15. Question with Numerical Answer from Chapter 10 (WACC)
16. Question with Numerical Answer from Chapter 10 (WACC)
17. Question with Numerical Answer from Chapter 10 (WACC)
18. Concept question from Chapter 11/12 (Capital Budgeting)
19. Concept question from Chapter 11/12 (Capital Budgeting)
20. Question with Numerical Answer from Chapter 11/12 (Capital Budgeting)
21. Question with Numerical Answer from Chapter 11/12 (Capital Budgeting)
22. Question with Numerical Answer from Chapter 11/12 (Capital Budgeting)
23. Question with Numerical Answer from Chapter 11/12 (Capital Budgeting)
24. Question with Numerical Answer from Chapter 11/12 (Capital Budgeting)
25. Question with Numerical Answer from Chapter 11/12 (Capital Budgeting)

Exam Hints

MBA 8622 is a core course. As such, our objective is to assure that students have a “body of knowledge” about certain fundamental finance concepts. The Final Exam tests a student’s knowledge over the fundamental finance concepts (i.e., Chapter 1, 5, 6, 7, 8, 9, 10, 11, and 12) covered after session five. Although certain concepts (e.g., sources and uses of funds in calculating initial cash flows for capital budgeting) are needed for the Final Exam, we do not design questions to directly test your knowledge of chapters 2, 3, 4, 14, 16, 17, 20, and 21.
For the past several years, the topics covered in MBA 8622 have not changed. For this reason we strongly suggest you review the sample Final Exams listed on the course WebPages. Especially for quantitative questions, the same material is tested each term. As an example, consider the stock chapter. There are two models (CAPM and Constant Growth) with two types of valuation problems (constant growth and non-constant growth) and four variables that can possibly be calculated (dividend, price, growth rate, and required return on stock). We therefore have very few types of questions that we can ask. If you look on past exams from the course webpage, you will generally find 2-4 calculations involving stocks. On almost every exam, one of the questions is a non-constant growth problem and one of the questions is a required rate of return (possibly given as part of a WACC problem). Another reasons to study the old exams to see the way in which questions are written.
There are no formulas listed on the exam. You are not allowed to program you calculator with formulas and thus there are certain formulas/methods/techniques you should memorize. In the list that follows, we have placed a (M), for Memorize, by types of calculations that are not normally directly solvable with the standard calculator. Here are some of the calculations that you will be asked to make; weighted returns/average (M), standard deviation (M), standard deviation of a two stock portfolio from page 206 (M), present value, future value, annuity, annuity due, solving for interest rate and time, compounding periods other than annual, periodic to stated to effective interest rate conversions (M), amortized loan tables (M), perpetuities (M), CAPM (M), bond valuations, current yield, coupon rate, yield to maturity, Constant Growth stock valuation model (M), non-constant growth stock valuations, preferred stock valuation(M), WACC(M), NPV, IRR, Payback(M), Initial Cash Flows for new and/or replacement projects(M), Operating Cash Flows for new and/or replacement projects(M), Terminal Cash Flows for new and/ or replacement projects(M).
Some things that will not be tested are discounted payback period, unequal lives capital budgeting questions, MIRR, fractional time periods, Chapter 13.

Some test technique hints:

1. If you do not understand a question, ask your instructor. The worst case scenario is that the instructor says they cannot answer your question.
2. “Cherry Pick” your questions save the longest and most difficult questions for last.
3. You will need formulas on the exam. Memorize the formulas you expect to need (based on the old exams) and then upon receipt of the exam, write the formulas on the back of the exam.
4. Budget your time. You have 2 hours to complete the exam. While we design the exam to take about 90 minutes for the average student, there is always a group of students that take the entire 2 hours.

Hope this helps and have fun.



Charles Hodges
Georgia State University
404-651-2691
mba8622@hotmail.com or chodges@gsu.edu
Course Webpage Link: http://www-cba.gsu.edu/~wwwfin/ba862home.html

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