Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1. The existence of financial intermediaries greatly increases the efficiency of financial markets because, without them, savers would have to provide funds directly to borrowers, which would be a much costlier process._________
2. One advantage of using common stock as a source of funds is that common stock does not legally obligate the firm to make payments to stockholders._______
3. The Federal Open Market Committee is the U.S. government agency that regulates the issuance and trading of stocks and bonds.__________
4. Under a best efforts arrangement, the investment bank purchases all of the shares from the firm and then resells the shares to the public. Under this arrangement the investment banks assumes significant risk.__________
5. One of the potential benefits of investing early for retirement is that an investor can receive greater benefits from the compounding of interest.__________
6. Discounting is the process of converting today's values, which are termed present value, to future value._________
7. The difference between an ordinary annuity and an annuity due is that each of the payments of the annuity due earns interest for one additional year (period).__________
8. During or near peaks of business activity, yield curves that are flat or downward sloping (possibly with humps) often are prevalent.__________
9. The yield curve is downward sloping, or inverted, if the long-term rates are higher than the short-term rates.________.
10. If you have information that a recession is ending, and the economy is about to enter a boom, and your firm needs to borrow money, it should probably issue long-term rather than short-term debt.__________

Short Answer (3 POINTS EACH)
1. Treasury bills, which represent debt of the U.S. government, have maturities less than one year. As a result, in which type of financial market do outstanding, or already issued, Treasury bills trade?
2. Stock sold by an insurance company to adjust its portfolio of assets, not to fund its own capital structure, would trade in which market?
3. What would a large, well-known public corporation use to save time registering and issuing securities?
4. What do the letters "IPO" stand for, AND what types of securities would be issued in this way?
5. What is the difference between (1) an underwritten arrangement and (2) a best-efforts arrangement?
6. What happens to the present value of a future amount if the interest (discount) rate increases? What type of a relationship exists between present value and interest (discount) rate?
7. describe why the present value of an amount to be received in the future is less than the future value.
8. What is the difference between and annuity due and an ordinary or deferred annuity?
9. List the 3 theories that dictate/predict the shape of yield curves and briefly describe each.
10. a. What is implied by a normal, upward-sloping yield curve?
b. What is implied by an inverted, downward-sloping curve?

PROBLEMS (5 Points each-be sure to show your work for partial credit).
1. You plan to invest an amount of money in a five-year certificate of deposit at your bank. The stated interest rate is 12 % compounded monthly. How much must you invest if you want your investment to be worth $8,500 in 5 years?
2. Sarah is thinking about purchasing an investment from HiBond Investing. She will receive $100 every 3 months for 5 years, with the first $100 payment due as soon as she purchases the investment. If she requires a rate of return of 16%, how much should she pay for this investment?
3. If the annual rate of interest on a 2-year Treasury note is 10.5% and the rate on a 1-year Treasury note is 12%, what rate of interest should you expect on a 1-year Treasury note one year from now?
To complete your last year in business school and then go on to law school, you will need $10,000 per year for a total of 4 years, starting next year (that is, you will need to withdraw the first $10,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 7% interest compounded annually a lump sum of money that is sufficient to provide the four payments of $10,000 each. His deposit will be made today.
a) How large must the deposit be?
b) How much will be in the account immediately after you make the first withdrawal?
c) How much will be in the account immediately after you make the last withdrawal? Show the value in the account before and after each withdrawal at the end of years 2, 3, and 4

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925244

Have any Question? 


Related Questions in Basic Finance

Following the end of world war ii in 1945 the reichsmark

Following the end of World War II in 1945, the Reichsmark, the German currency, lost so much value that a barter economy arose. During this period, many Germans used U.S. cigarettes as currency. Why might cigarettes, rat ...

Investigators studying the mass transfer from single

Investigators studying the mass transfer from single spheres recommended the generalized equation Sh = 2.0 + CRe m Sc 1/3 As discussed in section, the value of 2 can be derived theoretically by considering the molecular ...

Use the normal distribution of fish lengths for which the

Use the normal distribution of fish lengths for which the mean is 11 inches and the standard deviation is 4 inches. Assume the variable x is normally distributed. A. What % of the fish are longer then 12 inches B. If 400 ...

Explain why an options time value is greatest when the

Explain why an option's time value is greatest when the stock price is near the exercise price and why it nearly disappears when the option is deep-in- or out-of-the-money? Critique the following statement, made by an op ...

Sorenson inc has sales of 5119000 a gross profit margin of

Sorenson Inc. has sales of $5,119,000, a gross profit margin of 32.18 percent, and inventory of $1,017,000. What are the company's inventory turnover ratio and days' sales in inventory?

Here is a sketch of two c functions f and gthat is function

Here is a sketch of two C functions f and g: That is, function g calls f . Draw the top of the stack, starting with the acti- vation record for g, after g calls f , and f is about to return. You can consider only return ...

1 contact your state national guard office find out what

1. Contact your state National Guard office. Find out what kinds of resources they can offer to assist local communities in the event of a disaster and what kind of training and exercises they conduct to prepare their me ...

Go to wwwirsgov and click individuals to answer the

Go to www.irs.gov and click "Individuals" to answer the following questions: a. Under "1040 Central," what is the 2012 income limit that may entitle a taxpayer to the earned income tax credit? b. What is the maximum amou ...

Please in your own words what are dividends what are some

Please, in your own words. What are dividends? What are some different types of dividends?

Atlantis reit expects an income of 800 per share this

Atlantis REIT expects an income of $8.00 per share. This includes a deduction of $2.00 per share for depreciation. Atlantis did not have any gains from the sale of real estate. Its properties are mainly apartments, and y ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro