clearly in the body of the exam. You may use a simple/financial calculator only. You may bring two A4 sheets to the exam. Question 1 [5 points]: You wish to borrow $10‚000 from your bank for one year. Which alternative shall you choose? (a) 4.25% APR compound quarterly (b) 4.25% EAR Question 2 [5 points]: Identify each of the following risks as either systematic risk or diversifiable risk: (a) The risk that the CEO of your firm is killed in a plane accident (b) The risk that the economy slows‚ decreasing
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MATH 1003 Calculus and Linear Algebra (Lecture 1) Albert Ku HKUST Mathematics Department Albert Ku (HKUST) MATH 1003 1 / 18 Outline 1 About MATH 1003 2 Mathematics of Finance 3 Simple Interest Albert Ku (HKUST) MATH 1003 2 / 18 About MATH 1003 About MATH 1003 Lecturer: Albert Ku (Office: Rm 3492. E-mail: maybku@ust.hk) Teaching assistant: Dy Chun Yin‚ Li Xing‚ Lau Hing Sang and Wong Kwok Pang Office hours at Learning Commons: Fri 10:00-noon Textbook:
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LENDING TO PRIORITY SECTOR At a meeting of the National Credit Council held in July 1968‚ it was emphasised that commercial banks should increase their involvement in the financing of priority sectors‚ viz.‚ agriculture and small scale industries. The description of the priority sectors was later formalised in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to advances to the Priority Sectors constituted by the Reserve Bank in May 1971. On the basis
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If PV of $1 received n years from today at an interest rate of r=.270 then what is the future value of $1 invested today at an interest rate of r% for n years? FV = 1/(.270) = 3.71 retire in 30 yrs‚ wants to accumulate 1 mill before. I =12%‚ how much should he put into fun each year? (n=30‚ FV=1mill‚ I=12%‚ PV=0‚ PMT=?) = 4143.66 retire in 30 yrs.‚ wants to accum 1 mill before. I=12%/yr. pmt monthly with monthly cmpd interest. (n=20*12=360; r=12%/12=1%monthly; FV=1mill; PV=0;
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same merchandizing outlets and hence have a similar risk Also our goal is value the cash flows of the entire firm; thus a single cost is apt for analysis Cost of Debt There are two methods to calculate Cost of Debt As Cohen calculated using Interest on Debt divided by total Debt but it might not reflect Nike’s current or future cost of Debt More appropriate method for forward looking cost of debt is using the YTM of company’s bonds Cost of Equity
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myself). The national credit card debt for families residing in the United States alone is in the trillions (Maxed Out). The average American family has around $9‚000 in debt‚ and pays around $1‚3000 a year on interest payments (Maxed Out). Many people have the concern today that these interest rates and fees are skyrocketing; and many do not understand why. Most of these people have to try to avoid harassing collecting agents from different agencies‚ which takes an emotional and psychological toll
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Derrick Rose Mr. Tolaramer ENG 1111 September 9‚ 2011 How People Fall Into Debt In today’s financially demanding society‚ it is unfortunate that some people find themselves having to pay off large sums of debt. It can be a mentally stressful situation. There are many different circumstances as to why people accrue debt. Some struggle with financial discipline and personal responsibility. While others who are more responsible‚ can still succumb to debt if they suffer a sudden job loss
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espoused by Adam Smith (1723–1790) and J. M. Keynes (1883–1946): • Smith suggested (Wealth of Nations‚ 1776) that a free economy driven by market forces and free of government intervention is best. • Keynes suggested (General Theory of Employment‚ Interest‚ and Money‚ 1936) that government intervention is important‚ particularly in times of economic stagnation and inflation. His views had a strong influence on actions taken by President Roosevelt in formulating “The New Deal” of the 1930s. 357 358
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difference between the interest rates on AAA corporate bonds and U.S. Treasury notes? 3. Your father is about to retire. His firm has given him the option of retiring with a lump sum of $50‚000 in ten years or an annuity of $8‚000 for ten years. Which is worth more now‚ if the discount rate is (a) 6% (b) 19%? 4. Suppose you open a saving account with $1‚800 earned in a summer job. The account’s stated interest rate is 11%. Calculate effective annual rate (EAR) if interest is paid (a) semiannually
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Social Security taxes because he is over age 65 | a.) They will pay the same amount of Social Security taxes | You would typically NOT include _____ in your gross income. a.) wages and salaries b.) life insurance death benefit payments c.) interest and dividends c.) pension income e.) gambling winnings | b.) Life insurance death benefit payments | ______ would be
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