midterm practice 5

Question 1 a. What is the significance of a demand curve and a supply curve? b. Suppose $2,000 is borrowed at a simple interest rate of 8%. Calculate (i) the principal plus interest at the end of the 6th year? (ii) what will be the future value if the interest was compounded within the stated period? c. What is meant by the terms discounting and compounding? Why are these important in investment analysis? d. What is the difference between simple and compound interest? e. Compare the interest earned on $1,500 over: (i) 10 years at an interest rate of 8%, compounded yearly, and (ii) 10 years at an interest rate of 8%, compounded quarterly. f. Calculate the future value of the following investments. (1) $1,000 in 10 years at an interest rate of 8%, compounded annually. $15,000 in 8 years at an interest rate of 8%, compounded monthly. (ii)

Compounding refers to:   Select one: a. the increased value of an investment that arises from the payment of periodic interest. b. the process of earning interest on both the interest and the principal of an investment. c. the paying back of both interest and principal during the life of a fixed-payment loan. d. the calculation of interest rates after the compounding effect of taxes has been allowed for.

(a) You are selling your home, which has a large mortgage with favourable rates. You want to know whether a new purchaser can assume this mortgage. (i) Explain when assumption of a mortgage may occur, and also discuss whether you could bear any liability if the mortgage is assumed. (ii) Would novation of the mortgage be a better idea? Explain what novation is, when it may occur, and any liability you may face. (b) You are able to sell your property and now your financial advisor suggests that you should invest your new windfall in mortgages. He lists the various types of mortgages available. Discuss at least three different types of mortgages, relating their advantages and disadvantages from a legal standpoint, in particular with respect to the security involved. 4.

Financial managers should consider this when improving the financials of the firm  A. that the overall goal is the maximization of the market value of the equity through improved income and cashflows.B. that cost minimization is the primary concern of the firm.C. that exposing the firm to the most risk for the most return should be priority.D. that the personal goals of customer and employees are above the goals of the shareholders.

QUESTION 25 You buy a mortgage pass through security with a 7.5% coupon rate and a 5.5% discount rate. The price at the time of purchase reflects a 10% annual prepayment rate. One hour after your purchase, the expected annual prepayment rate falls to 5%. The value of your mortgage pass through security should: A. Remain the same B. Rise OC. There is not enough information to answer the question D. Fall

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What is the relationship between risk and return? What is the significance of this relationship for the investor?

An agent (a financial institution or individual financial investor) that has agreed to deliver a specific asset (as yet unpossessed) to another party at a future date has:A. taken a long position.B. hedged against risk.C. entered a forward transactionD. taken a short positionE. bought an option.

6. A) If a company will pay $100,000 for a truck that will increase deliveries to be made, giving an additional $15,000 in revenue each year for 10 years, should the company buy it? Interest rates are 5%. Show your math. B) Now revenue is estimated to be only $12,000 a year for 10 years. Same interest rate, should the truck be purchased? C) Explain where interest rates come from, using details.

Select all of the following that are true regarding hedging: A. Hedging is risk mitigation through diversification.  B. Hedging is the same as arbitirage since it acts in across markets C. Hedging increases the returns of an investment D. Buying an risky investment is an example of hedging Detailedly Explanation Please, Thank you!

Question: What are the equations for measuring return and risk?

a) Explain the reason(s) why bond ratings and interest rate spreads on bonds differ. Which measure is considered by many investors to be a more comprehensive measure of risk? Why?

A. True or False: Write T if the statement is correct. If it is not, write F, and state your reason briefly. 1. Financial planning applies only to the area of business finance. 2. Financial planning is solely undertaken by the finance unit of an organization. 3. The projected financial statements can be prepared without determining the level of operating expenses. 4. The preparation of financial plan gets more difficult once capital expenditures are included in the projected cost 5. Sales predictions based on previous sales are considered final in making the financial plan. 6. The long-term financial plan need not be congruent to the vision of a business. 7. The vision of the business defines its short-term financial direction. 8. Financial goals are broader than financial objectives 9. The production schedule is prepared ahead of the sales forecast 10. The financial plan is easily prepared and becomes logical if the expected cost and expenses are determined first. 11. Financial…

1) Do you feel about using financial statement analysis to evaluate an organization’s performance?

M10

When planning to perform an audit, an accountant must have a clear understanding of audit risk and its components. The existing audit risk components consist of: 1. Control Risk 2. Detection Risk 3. Inherent Risk For each of the following situations, determine the component of audit risk that exists and explain why. 4. There is no adequate separation of duties and responsibilities. 5. The required substantive test procedure is not performed by the auditor. 6. Technology makes the client's company's products lagging and unsold. 7. The client lacks working capital to continue the business. please answer all

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qUESTION 1   Please help me figure out which of the following multiple choice questions are correct.   Please tell me which choices are correct and which are wrong

Choose the correct answer. 1. The following life situations affect and influence one's personal financial planning. Which is not included? a. employment status b. age c. household members d. habits 2. In identifying alternative courses of action, one should consider the following, except a. continue the same course of action b. change the same course of action c. expand the current situation d. change the current situation 3. Among the sources of information in financial planning, which is not considered as one? a. media and publications b. investment analyst c. financial institutions d. loan sharks