TESTSOLVER9 STORE

After Tax Salvage Value - Answer An estimate of the after-tax value of an asset at the end of its depreciation is called: Net Present Value (NPV) - Answer A measure of how much value is created or added today by undertaking an investment (the difference between the investment's market value and its cost). Accept the project if this is greater than zero. Internal Rate of Return (IRR) - Answer The discount rate that makes NPV = 0. May result in multiple answers or incorrect decis...

-Perpetuity -Also called - Answer - A level stream of cash flows which continue forever (relationship between 1 & 1 very important) - Consols Growing perpetuity - Answer Payments grow by a set growth rate Annuity - Answer a level stream of cash flows for a fixed period of time. Has end date. (PMT, N, I. Must be in same time frame) Annuity due - Answer an annuity for which the cash flows occur at the beginning of the period. EX: Rent (MUST hit: Shift, Beg - Plug in #'s -...

Basic Areas of Finance - Answer 1. corporate finance 2. investments 3. financial institutions 4. international finance Corporate Finance - Answer The business function of obtaining funds for a company and managing them to accomplish the company's objectives. 1. What should we invest in? (Capital Budgeting) 2. How do we finance those investments? (Capital Structure) 3. How do we manage the day-to-day operations of the firm? (S-T Cash flow management) Investments - Answer T...

total return - Answer capital gain and income from dividends dollar returns - Answer total dollar amount of return (rate of return x dollar amount) percentage return - Answer the total percentage return scales the dollar return by the beginning price dividend yield - Answer income received/ beginning price capital gains yield - Answer (ending price - beginning price) / beginning price risk-return relationship - Answer the higher the risk, the higher the return ...

Annuity - Answer A finite series of equal payments that occur at regular intervals - fixed period of time 2 types: - Ordinary Annuity: payment occurs at the END of period - Annuity Due: payment occurs at BEG of period (rent, etc) Perpetuity - Answer infinite series of equal payments - continues forever P=C/R EAR vs. APR - Answer EAR = effective annual rate; actual rate paid APR = annual percentage rate; annual rate quoted by law Coupon - Answer the stated inte...

Capital Budgeting - Answer the process of planning and managing a firm's long-term investments Capital Structure - Answer the specific mixture of long term debt and equity the firm uses to finance it's operations Working Capital - Answer a firm's short-term assets, such as inventory, and its short-term liabilities, such as money owed to suppliers Sole Proprietorship - Answer a business owned by one person Partnership - Answer Having two or more owners in a bus...

FUTURE VALUE OF MULTIPLE CASHFLOWS is the future value of $2,000 invested at the end of each year for 5 years? Use 10% - Answer PMT = 2000 N = 5 I/YR = 10 FV = 12,210.20 FV MULTIPLE CASHFLOW EXAMPLE You open a bank account today with $7,000. You expect to deposit $4,000 at the end of each of the next three years. Interest rates are 8%, compounded annually. How much will you have in your account in three years? - Answer PV = -7,000 PMT = -4,000 N = 3 I/YR = 8 FV = 21,80...

the total return on your investment - Answer returns: capital gain, income - Answer types of returns: price change of the asset - Answer capital gain cash distributions in the form of dividends - Answer income if we can identify the risk of the asset, then we can have an idea of its expected return - Answer how can we predict stock returns? the total dollar amount of return, it depends on the dollar amount invested - Answer dollar returns: $10 return - Answer ...

What are the basic areas of finance? - Answer - corporate finance or business finance - investments - financial institutions - international finance What are the questions corporate finance focuses on? - Answer - What should we invest in? - How do we finance those investments? - How do we manage day-to-day operations of the firm? What should we invest in? - Answer property, plants, equipment, software, stocks, bonds, hedges, cash How do we finance those investments? - Answ...

-Capital Budgeting - 3 steps - Answer -What long-term investments should the firm take on? -1. Estimate the cash flows 2. Estimate cost of those cash flows 3. Discount cash flows- is investment worth it? What is corporate finance and what does it try to answer - Answer Corporate finance is the study of answering: (1) what should we invest in (2) how do we finance those investments (3) how do we manage the day-to-day operations of the firm Capital Structure - Answer -Where will...

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T/F: The conditional probability of A given B is the probability of the union of A and B divided by the intersection of A and B. - Answer False T/F: P(AnBnC) is the same as P(A) + P(B) + P(C) - Answer False T/F: The conditional probability of an event is always less than the unconditional probability. - Answer False T/F: Joint probability and marginal probability are the same thing. - Answer False T/F: Union implies an or condition. That is, a member of the union of sets ...

hypothesis testing - Answer can be used to determine whether a statement about the value of a population parameter should or should not be rejected null hypothesis - Answer a tentative assumption about a population parameter alternative hypothesis - Answer the opposite of what is stated in the null hypothesis what do hypothesis testing procedures use to test competing statements indicated in the null and alternative hypothesis? - Answer data from a sample type I error - A...

categorical variable - Answer a variable that names categories (whether with words or numerals) quantitative variable - Answer a characteristic that can be measured numerically interval scale - Answer a scale of measurement in which the intervals between numbers on the scale are all equal in size nominal scale - Answer measurement in which numbers are assigned to objects or classes of objects solely for the purpose of identification ordinal scale - Answer a scale of me...

As the sample size increases, the variability among the sample means - Answer decrease The area of the continuous uniform probability distribution is - Answer rectangular The random variable x is the number of occurrences of an event over an interval of ten minutes. It can be assumed that the probability of an occurrence is the same in any two time periods of an equal length. It is known that the mean number of occurrences in ten minutes is 5.3. The expected value of the random varia...

The five-number summary consists of what five statistical measures? - Answer min, Q1, median, Q3, max The coefficient of variation indicates how large the standard deviation is relative to the _____. - Answer mean Excel's _____ function can be used to compute the mean. - Answer average The descriptive measure of dispersion that is based on the concept of a deviation about the mean is _____. - Answer neither the range nor the interquartile range How is coefficient of va...

Recession - Answer -a period of mildly falling incomes and rising unemployment ex. -caused by a leftward shift in aggregate demand and a leftward shift in aggregate supply Depression - Answer a severe period of falling incomes and rising unemployment ex. Great Depression The Business Cycle - Answer the short-run fluctuations of the economy Economic Fluctuations - Answer -are irregular and unpredictable -most macroeconomic variables measuring income, spending, or producti...

Binomial experiment - Answer An experiment having four properties: 1. The experiment consists of a sequence of n identical trials. 2. Two outcomes are possible on each trial. We refer to one outcome as a success and the other outcome as a failure. 3. The probability of a success, denoted by p, does not change from trial to trial. Consequently, the probability of a failure, denoted by 1 − p, does not change from trial to trial. 4. The trials are independent. Binomial probability distr...

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amortized loan - Answer A loan that has identical payments throughout the contract. Payments are applied first towards reducing the interest balance, and any remaining sum towards the principal balance. As a consequence, the proportion of each payment that pays interest decreases while the proportion applied to principal increases throughout the loan. annual percentage rate (APR) - Answer simple interest rate that laws require banks to state on all consumer loans. annuity due - Answe...