Finance 515 Final Exam

Keller Graduate School of Management

Student Name:_____________________________________________

Points:_______________

Grade:_________________

Instructor : Mario Ducret

Course : FI515

Center : POMONA

Term :

Quiz : SAMPLE Final Exam

Time :

Open Note :

Open Book :

Other :

Instructions :

Attachments :

---------------- Test items used in this exam -----------------

1) A.04.15

2) A.05.15

3) C.06.13

4) J.02.13

5) H.03.13

6) H.04.13

7) F.02.12

8) E.01.14

9) D.04.13

Question 1 ( 10 Points )

Corporations tend to devote a great deal of care to cash and portfolio management when

a. interest rates are high and their profit rates are low.

b. interest rates are low and their profit rates are high.

c. they have an obvious excess of cash.

d. the marginal cost of cash management exceeds its marginal return.

e. in the springtime (around April 15th).

Discuss fully the reasons for your choice.

Question 2 ( 10 Points )

Carmichael Corp., usually purchases $2 million of its inventory from the Van Horne Company because of the high quality of its merchandise. Van Horne had been selling on terms of 1/10, net 30, but has just switched to terms of net 30. Carmichael Corp., had been borrowing from its bank at 12 percent and paying Van Horne in 10 days. Assuming the $2 million purchases are uniformly distributed throughout a 360-day year, calculate Carmichael Corp.'s, additional trade credit and its cost, using the approximation formula.

Please show all work.

Question 3 ( 10 Points )

Fort Myers Fishing Inc. had the following balance sheet last year end (December 31st):

($000,000)

Cash $ 4 A/P $ 13

A/R 26 N/P 27

Inventory 5 Accruals 14

Net Fixed...