financial system are: 1. Money 2. Financial institutions 3. Financial instruments 4. Financial markets 5. The central bank Money The definition of money is at least cash and demand deposits (checking accounts). Several people‚ furthermore‚ add time deposits to that definition. The poorest countries don’t even have money‚ so the financial system can’t exist there. Money (a stable currency) is the most fundamental component and a pre-requisite of any financial system. Financial Institutions
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acquisition announcement means that the market either does or does not approve of the acquisition. Since the market value of the company goes up‚ that means there is a market approval for the acquisition and it has created value for the buyers and sellers. B) I found all the ranges for the medians in Exhibit 10. Implied values for PacifiCorp’s enterprise value and market value of equity are derived using the median and mean multiples of the comparable firms. Revenue median = $6‚252 to $6‚584
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returns the present value of a series of cash flows. =FV(rate‚ nper‚ pmt‚ pv‚ type) returns the future value of a series of cash flows. =PMT(rate‚ nper‚ pv‚ fv‚ type) calculates the periodic payment for a loan based on constant payments and a constant interest rate. =NPER(rate‚ pmt‚ pv‚ fv‚ type) returns the number of periods for an investment based on periodic‚ constant payments and a constant interest rate. =NPV(rate‚ range) returns the net present value of an investment
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decisions. Investment decisions are concerned with capital budgeting in which the investment projects are evaluated by capital budgeting techniques. The following are the capital budgeting techniques. 1. 2. 3. 4. 5. Payback Period (PBP). Net Present Value (NPV). Internal Rate of Return (IRR). Accounting Rate of Return (ARR). Profitability Index (PI). A number of different available investment projects are evaluated through the capital budgeting process. The capital budgeting process is used to select
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science of valuation and management of assets. • The field of finance deals with the concepts of time‚ money‚ risk and how they are interrelated. 1 17/07/2013 Two Key Valuation Ideas The Time Value of Money In studying the time value of money‚ we will see it forms the basis for all asset valuations. In this course‚ we will study the following aspects of the time value of money: Time Value of Money Financial Mathematics Valuing Stocks Valuing Bonds Making Investment
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salaries along with the potentially gained experience and lost salary (which he could get if he continue his current job) to make a more profound decision. Question 2 : Nonquantifiable factors are those that can’t be converted into a number value. Thinking of Ben’s situation‚ some of the Nonquantifiable factors that could affect his decision could be: 1. Family – If Ben has a family and kids to raise‚ and especially when he is the only/major source of income for his family‚ taking a year
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percent semiannual coupon bond is priced at $1‚204.60. The bond has a $1‚000 face value and a yield to maturity of 4.88 percent. How many years will it be until this bond matures? A. 15.91 years B. 8.00 years C. 8.65 years D. 17.29 years E. 16.00 years BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 006 #84 SECTION: 6.1 TOPIC: TIME TO MATURITY TYPE: PROBLEMS 3. Which one of the following is a correct method
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TIME VALUE OF MONEY SUMS 1. A finance company advertises that it will pay a lumpsum of Rs 8000 at the end of 6 yrs to investors who deposit annually Rs 1000 for 6 yrs. What is the rate implicit in this offer? 2. You want to take a trip to the moon which costs Rs 10‚00‚000-the cost is expected to remain unchanged in nominal terms. You can save annually Rs 50000 to fulfil this desire. How long will you have to wait if your savings earn an interest of 12 percent p.a.? 3. Suppose a firm borrows
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several useful and easy to read charts‚ diagrams‚ and explanations. In this memorandum you will find a summary of breakeven points using discount rates of 8‚ 10‚ 12‚ 14‚ and 16 percent‚ a breakeven chart comparing the net present value of all benefits to the net present value of all costs‚ and the internal rate of return. I also provide analysis of a couple of different scenarios‚ for example‚ a scenario summarizing the elimination of a staff position‚ and another scenario summarizing the elimination
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Chapter One Basic Areas of Finance: 1. Corporate Finance = Business Finance 2. Investments a. Work with financial assets such as stocks and bonds. b. Value of financial assets‚ risk verses return and asset allocation. c. Job opportunities. 3. Financial Institutions a. Companies that specialize in financial matters. i. Banks – Credit unions‚ savings‚ and loans. ii. Insurance Companies iii. Brokerage Firms b. Job Opportunities. 4. International Finance a. An area of specialization within each of the
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