What basic principle of finance can be applied to thevaluation of any investment asset?

Q: In a theoretical sense, the financial value of any asset is the present value of:

A: The Answer

Q: In finance, explain how the DuPont system of analysis breaks down return on assets?

A: EXPLANATION:- Financial performance is calculated by multiplying a corporation's profitability by…

Q: What is the purpose of valuation in terms of financ

A: Introduction : In simple words, finance refers to gathering of money by one entity or individual…

Q: Which is more important from a finance perspective-net income or operating cash flow? What is the…

A: Net income is calculated in the income statement whereas and operating cash flows are calculated in…

Q: What are the benefits and corresponding risks of Financial Investment?

A: Financial Investments are investments that are made with the expectation to receive future financial…

Q: What would you choose? Other investment assets or Alternatives to fixed income and equities

A: Allocation of the investment is a much wider and troublesome task. the proper allocation may lead to…

Q: what sense is a firm's WACC also the rate of return that should be earned on its investments?

A: Step 1   The WACC of a company is the overall needed return, which is the discount rate that should…

Q: What approach banks may take to determine adequate capital?

A: For a bank it is highly important to ensure capital adequacy. Capital adequacy leads to stability of…

Q: Explain the meaning and composition of the "return" of a financial investment

A: Financial Investment Funds invested for the purpose of earning returns over a specified period of…

Q: Why is the adjusted present value approach appropriate forsituations with a changing capital…

A: Capital structure is the distribution of various sources of funding to the organization like debt,…

Q: ExplainValuing REITs as Investments?

A: Valuing REITs as investments: A typical way for the calculation of REIT is to find the Net asset…

Q: the Capital Asset Pricing M

A: Explanation : In simple words, Capital asset pricing model for valuing the cost of capital contains…

Q: What does it mean to adopt a maturity matching approach to financing assets, includingcurrent…

A: Maturity matching states that long period funds must be utilized to finance long period assets and…

Q: Explain the Principle of Investing in Financial Assets?

A: Securities are the financial assets that are traded in the financial or secondary or securities…

Q: Discuss the main features of Capital Asset Pricing Model (CAPM) and comment on the validity of the…

A: The capital asset pricing model is a risk adjusted model which will be helpful in finding the…

Q: What is the Principle of Investing in Financial Assets?

A: A financial asset is a liquid asset that gets its value from an authoritative right or guarantee to…

Q: Which of the following methods of capital budgeting indicates the time period required to recover…

A: Capital budgeting is a process of identifying high return project or projects which will increase…

Q: In general terms, what is the Capital AssetPricing Model (CAPM)? What assumptions weremade when it…

A: CAPM: The capital asset pricing model (CAPM) is a method utilized to determine a hypothetically…

Q: Describe the capital investments methods.

A: Capital budgeting: Capital budgeting is a process by which the management can plan and evaluate the…

Q: The net present value of an investment represents the difference between the:

A: The Answer :

Q: What is the compensation for price risk in finance? How do they arise and what issues arise due to…

A: Price risk: Price risk can be defined as the risk that price of a security may reduce. This risk is…

Q: What is meant by asset transformation and how is it the basis for differentiating between indirect…

A: Finance transformation can be defined as a business-wide combination of process, system, and culture…

Q: Describe the affects of the present value of an investment.

A: Present value of the investment: Present value of the investment is calculated using the cash flows…

Q: What are the effects of Borrowing on Project Cash Flows?

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: Which types of investments are valued at amortized cost? Explain the rationale for this accounting.

A:

Q: Is it ever appropriate or acceptable to use the payback method of evaluating capital investment…

A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…

Q: What is net operating working capital? Why does it exclude mostshort-term investments and notes…

A: Introduction: Working capital is the capital of company that is used in its day-to-day operational…

Q: What is the price paid to borrow debt capital called?

A: The amount that is borrowed by the company from financial institutions, banks, or by issuing the…

Q: Explain the concept of “working capital” in finance

A: The investment decision made in financial management is classified into two categories as…

Q: Write Importance of sources of finance. What are the Advantages and Disadvantages of medium term…

A: Source of finance refers to the ways in which the business gets funds to start and execute its…

Q: What is financial asset market?

A: Financial assets generally include bonds, stocks, mutual funds, cash, deposits with bank etc. These…

Q: Will the carrying value of a long-term asset be equivalent to its market value under typical…

A: Here is the Answer

Q: Why valuation is so important in finance?

A: Finance is a very vast term which is mainly used for managing the money. The main functions of…

Q: How can the financial statements provide the basis for future investment analysis?

A: Answer: Financial reports are structured accounts quantifying a firm’s financial power, efficiency,…

Q: how to decide and choose between investments if capital is rationed? Assess the timing effect of…

A: Here asked for multi question we will solve for first question for you.  If you need additional…

Q: Can the firm withdraw funds from the investment pool for other investment purposes?

A: Yes, a firm can initiate the withdrawal of the amount invested from the investment pool in which…

Q: . How does one determine the value of any assetwhose value is based on expected future cash flows?

A: If there is an order of anticipated upcoming cash flows, cash flow technique is one of the finest…

Q: Discuss the following terms…

A: Terms mentioned in the question relates to overall financial markets and management as well risk…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.