Define stable-monetary-unit assumption

Q: What is Internal Rate of Return - Variable Cash Flows with Reversion?  Please provide examples.

A: The internal rate of return is the one of the discounted techniques of capital budgeting which is…

Q: Describe the Replacement Analysis Using the Cash-Flow approach?

A: The cash flow approach clearly reflects the real cash-flow effects for each replacement option as it…

Q: Describe term net asset value (NAV)?

A: Net asset value (NAV): It describes an entity's net worth, which is measured as the complete value…

Q: Define Monetary unit assumption.

A: Money measurement assumptions: As per the money measurement assumptions, only quantifiable…

Q: Is the Compounding Period Equal to Payment Period?

A: Compounding period refer to the number of times the interest is paid on the amount deposited or the…

Q: Explain the effect of issuance cost on firm value.

A: There are issues cost associated with debt and equity that has impact on  value of firm.

Q: Explain the sequential payout tranche structure?

A: Sequential payout tranche structure In this type of structure interest payments are received by…

Q: Define Liquidity Analysis?

A: Liquidity analysis is very essential as it shows the ability of the firm in paying short-term bills.…

Q: The following question pertain to the financial sta

A: substantive audit procedure are processes, steps, tests performed by auditors, which creates…

Q: Define each of the following terms:c. Reserve borrowing capacity

A: The Reserve borrowing capacity is explained as below,

Q: Define Monetary assets and liabilities

A: SOLUTION:- The  term monetary assets and liabilities can be defined as the assets and liabilities…

Q: What is the quantitative disclosure of lessor?

A: Definition: Lease: Lease is a contractual agreement whereby the right to use an asset for a…

Q: Define Monetary/non-monetary method

A: Monetary and Non-Monetary Method Monetary Assets/Liabilities - Assets/Liabilities whose value…

Q: Discuss the types of money market instruments, draw a flow chart

A: Money market instruments refer to those financial instruments or securities that provide their…

Q: Define a comparative balance sheet?

A: A comparative balance sheet presents the information about the Assets, liabilities and Equity side…

Q: Give an example assuming that  the Compounding Period equals to Payment Period?

A: The representation on the basis of assumption:

Q: Define reserve borrowing capacity

A: The question is based on the concept of capacity to borrowing of a firm based on the concept of…

Q: Establish a compensatory equilibrium. In financial statements, how are compensating balances…

A: Here is the Answer

Q: What is liquid asset?

A: A liquid asset can be described as the asset which can be sold into the market easily and can be…

Q: Define the term s liquidity position?

A: Definition: Liquidity: Liquidity is the capability of a company to pay the short-term liabilities…

Q: what is the return asset that is used in financial statement analysis?

A: Here in this case we need to understand the meaning of return on asset ratio of financial statement…

Q: Describe the Investment-Pool Concept?

A: Investment pools are institutional elements that are pooled speculation structures, with the…

Q: Describe the Investment-Credit Decision—A Cash Flow Perspective.

A: Answer: Every lender and borrower shall have their own conditions based on their needs and wishes.…

Q: Define Capital Asset Pricing Model (CAPM)

A: The CAPM or capital asset pricing model is considered to be a popular concept in finance. The main…

Q: Which are the several ways of defining the concept of rate of return on investment?

A: Answer: Return on investments is an instrument which can be used to calculate the company’s…

Q: Explain the risk-return trade-off for liquid assets.

A: Risk return trade off tell relationship between the risk and return.

Q: define and describe the concept of money multiplier.

A: The Money Multiplier refers to how an initial deposit can lead to a bigger final increase in the…

Q: Explain held-to-maturity investment.

A: Investment: It refers to the process of using the currently held excess cash to earn profitable…

Q: Define yield to maturity (YTM)

A: Bond is a financial instrument. Issuer issues bond to raise the fund and payback the amount at the…

Q: Explain assumptions related to monetary unit?

A: As per the money measurement assumptions, only quantifiable transactions are recorded in the books…

Q: Define risk-free asset?

A: Risk-free means that anything which does not have any kind of risk associated with it. They are free…

Q: Define the term neutral money.

A: Economics: Economics refers to the social science that deals with the production, distribution and…

Q: Define monetary unit.

A: Step 1 An economic unit that acts as a medium of exchange for transactional purposes is referred to…

Q: how was capital asset pricing model (CAPM) created? GIVE reference

A: Meaning CAPM Capital asset pricing model, It is created to explain the investor that he/she will get…

Q: Define Monetary assets.

A: Definition: Assets: These are the resources owned and controlled by business and used to produce…

Q: Define the term Monetary liabilities.

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…

Q: Assignment: Transmission channels of monetary policy operations

A: Answer: Buying government securities by Central banks lead to injection of external money into the…

Q: Explain the difference between monetary and nonmonetary assets and liabilities.

A:

Q: Distinguish between physical asset markets and financial asset markets.

A: Physical Asset markets are markets where buyers and sellers transact in tangible goods which can be…

Q: economic entitiy assumption

A: Accounting Assumptions:                      Accounting professionals are guided by the accounting…

Q: Explain how to calculate net realizable value.

A: Net realizable value refers to the total amount of money which a company will get from selling the…

Q: Define the term Non-comparable Compounding and Payment periods?

A: The question is based on the concept of interest rate calculation, which depend on the compounding…

Q: Define the term Return on Total Assets? What does it measure?

A:

Q: Recognize the distinctions among yieldto maturity, currentyield, rate of return,and rate of…

A: Introduction: The terms yield to maturity & current yield are associated with bonds.Bonds are…

Q: Capital Asset Pricing Model  a) describe the model b) what are the assumptions in the model c)…

A: The capital asset pricing model describes the relationship between the expected return and the risk…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.