The original Seven Essays, in a cool, new outfit ...

All posts in General Questions

Can you help? I’m stuck on a few True/False questions…

Categories: General Questions
Comments Off on Can you help? I’m stuck on a few True/False questions…

Can you help? I’m stuck on a few True/False questions…

Chapter 1

1. A financial analyst is responsible for maintaining and controlling the firm’s daily cash balances. Frequently manages the firm’s short-term investments and coordinates short-term borrowing and banking relationships.

2. Finance is concerned with the process institutions, markets, and instruments involved in the transfer of money among and between individuals, businesses and government.

3. Financial services are concerned with the duties of the financial manager.

4. Financial managers actively manage the financial affairs of many types of business-financial and non-financial, private and public, for-profit and not-for-profit.

5. In partnerships, owners have unlimited liability and may have to cover debts of other less financially sound partners.

6. In partnerships, a partner can readily transfer his/her wealth to other partners.

7. The board of directors is responsible for managing day-to-day operations and carrying out the policies established by the chief executive officer.

Chapter 4
8. Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have any significant economic consequences.

9. Time-value of money is based on the belief that a dollar that will be received at some future date is worth more than a dollar today.

10. Future value is the value of a future amount at the present time, found by applying compound interest over a specified period of time.

11. Interest earned on a given deposit that has become part of the principal at the end of a specified period is called compound interest.

12. The future value interest factor is the future value of $1 per period compounded at i percent for n periods.

13. For a given interest rate, the future value of $100 increases with the passage of time. Thus, the longer the period of time, the greater the future value.

14. The greater the potential return on an investment and the longer the period of time, the higher the present value.

A client is given a trust fund worth $1,000,000.00.

Categories: General Questions
Comments Off on A client is given a trust fund worth $1,000,000.00.

A client is given a trust fund worth $1,000,000.00. He can’t access any money until he turns 65, which is in 25 years. At that time, he can withdraw $25,000 per month. If the trust fund is invested at a 5.5% rate, how many months will it last him once he starts withdrawing the money (until there is none left)?

You have just received a windfall from an investment

Categories: General Questions
Comments Off on You have just received a windfall from an investment

9. You have just received a windfall from an investment you made in a friend’s business. He will be paying you $10,000 at the end of this year, $20,000 at the end of the following year, and $30,000 at the end of the year after that (three years from today). The interest rate is 3.5% per year.
a. What is the present value of your windfall?
b. What is the future value of your windfall in three years (on the date of the last payment)?