Which of the following statements is/are true? Statement 1: A key role of financial markets is to accommodate corporate finance activity. Statement 2: In general, individuals are net demanders of funds, while businesses and governments are net supplier of funds. Statement 3: An important characteristic of securities that are traded in secondary markets is liquidity
Q: According to Modigliani and Miller, what happens to the cost of equity when the firm increases its…
A: Equity financing is the process of raising money from the investors and give ownership to the equity…
Q: ective rate of interest on an investment is 5.52%, what is the nominal rate of interes nded monthly?
A: Solution:- Effective rate of interest means the net interest rate for the year after effect of all…
Q: Rianna is 60 years old. She purchased a deferred annuity for $40,000. The annuity will begin paying…
A: Data given: Deferred annuity = $40,000 Monthly payment =$400 Expected return multiple =20…
Q: Solve manually using formulas. Xia received an HMO card which allows her to reimburse all of her…
A: The future value is used to measure how much money an account will hold after certain deposits have…
Q: True or False. 1. Financial goals can be classified as to timing and purpose. 2. Consumable-product…
A: Financial goals- are the target i.e., saving target, spending target , investment target, etc., set…
Q: Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal.…
A: Evaluating projects is the vital factor in investing in a new project because without evaluating and…
Q: Nuka Cola has a beta of 0.85. If the risk-free rate of return is 4% and the expected return on the…
A: Beta = 0.85 Risk free rate of return = 4% Market return = 9%
Q: Explain the process of securitisation as carried out by banks and discuss its role in the 2008…
A: Securitization Securitization is the process of grouping or pooling together numerous financial…
Q: What are some of the current challenges facing financial regulators?
A: Financial institutions have undergone many changes in the past decades or so mainly due to…
Q: The real risk-free rate of interest, r*, is 3%. Inflation is expected to be 4% this year, 5 percent…
A: Yield on 10 years bond will be the risk free rate,inflation and maturity risk premium.
Q: Which of the following statements is CORRECT? a. A bond is likely to be called if it sells at a…
A: Bonds are the secured instruments which generate fixed income for the investors in the form of…
Q: The QYU, Inc. has sales of P5 million per year (all credit) and an average collection period of 35…
A:
Q: An investment opportunity will pay £100 with a 10% probability, £50 with a 40% probability, or will…
A: Expected value can be calculated as follows = Investment return x Probability There is certain…
Q: Which of the below is true? Select one: Credit spreads tend to be lower in bull markets Credit…
A: From the given statements, we have to select the most correct statement. A bear market is a market…
Q: Which of the following statements is true regarding the sensitivity analysis approach to investment…
A: In simple words we can understand the basic meaning of Sensitivity analysis " Whenever manager takes…
Q: The cost price of 35 pairs of sport shoes was $350 per pair. AG Sport Center plan to sell all the…
A: Concept. Gross profit = selling price - cost of goods sold. Hence , Selling price = gross profit +…
Q: can i get solution with manual formula that i can apply through using my calculator
A: We will use the concept of time value of money here. As per the concept of time value of money the…
Q: HEJO company has the current stock price of $20 today. Use a 1 step binomial tree to estimate the…
A: A binomial options tree method is a method of finding the option price based on the expected prices…
Q: A waitress's base wage is $11 per hour, plus 10% automatic gratuity for all tables served. If she…
A: Gratuity is a benefit paid by an employer to their employee for services rendered.
Q: Could you explain how you getting the effective interest rate....and any other formula that can be…
A: Effective interest rate is different from the annual percentage rate. This is because effective…
Q: q7 Lightening Bulk Company is a moving company specializing in transporting large items…
A: The quantity of funds generated by an investment after all revenue items have been collected and…
Q: National Co. has a debt to equity ratio of 25% and a weighted average cost of capital at 25%. The…
A: Weighted Average cost of capital (WACC): The WACC is the overall cost of capital from all the…
Q: analysis? What are identified as possible risks associated with cost
A: Definition: A technique for calculating the costs related to a business prospect or proposal, as…
Q: Explain how a mortgage company’s degree of exposure to interest rate risk differs from that of other…
A: Commercial banks, investment banks, insurance companies, and brokerage firms are the most frequent…
Q: 1. John approached you with a business proposition to invest in a project. The Annual Cash Flows…
A: Cash flows are the cash generated from the operation of the business organisation. In other words,…
Q: Nougat Corporation wants to raise $5.2 million via a rights offering. The company currently has…
A: Some significant financial institutions, such as banks, insurance firms, and investment houses,…
Q: A typical London cyclist might expect to earn £40k a year. This is reduced to £20k for one year…
A: London cyclists might expect to earn £40k a year. This is reduced to £20k for one year following a…
Q: The stock price is $25. A company has reported earnings per share (EPS) of $4.60 and has a dividend…
A: Stock price per share of a company is the value placed by the investors on a stock. Earnings per…
Q: A & B D. Consider a port folio of E CRA) : 207. E CR): 30% 2. assets where nsky = 10% A,B :20% hnd…
A: Solution:- Minimum Variance Portfolio is that portfolio in which the weights of securities are such…
Q: Suppose that a new government is elected and it changes the law applying to firms to: • Allow…
A: The trade-off theory of capital structure proposes that a corporation balances costs and advantages…
Q: National Co.’s stock sells for P35 that recently paid a P5 dividend. The growth rate will remain the…
A: As per formula Cost of newly issued equity = [D0*(1+g)/(P0-F)]+g Where D0 - Recent dividend i.e. P5…
Q: Discuss risks and returns characteristics of investing in ordinary shares and corporate bonds from…
A: A bond is a financial instrument that represents a loan made by an investor to a borrower (usually a…
Q: A trust fund is to be formed by depositing ₱4,000 every six months for 25 years in a bank that…
A: Semi-annual deposit - 4000 Time period - 25 years Amount at maturity - 300,000 Formula for…
Q: You decide to invest P35,000 in RX Pharmaceuticals, P35,000 in TS Banks, and P10,000 in each of the…
A: Expected Return: The expected return is the minimum required rate of return which an investor…
Q: Explain why traditional banking has been on the decline in recent years.
A: Traditional banking refers to banks that have a physical presence and are licensed to operate in the…
Q: Which of the following is a characteristic of common stock? a. The right to the residual income…
A: The main source of finance for companies are debt and equity. Equity shares are of two types: common…
Q: hich is not a section of the cash budge
A: Cash budget is a budget or an estimation of all cash inflows and outflows for a specified period of…
Q: When a stock repurchase occurs, which of the following is not correct? a. EPS decreases b. Shares…
A: Solution:- Share repurchase means that the company (ie. the issuer) buybacks the shares from the…
Q: What is the change in price the bond will experience in dollars?
A: Bond Price: It represents the current value of the bond and is estimated by discounting the coupon…
Q: 50,000 is invested for 6 months at 12% per annum. The value of the investment, to the nearest whole…
A: We know that the formula for compound interest is as follows. Compound Interest = P (1 + (r/n)/100)^…
Q: the total labour cost associated with the maintenance activity.
A: Given: Total number of annual hours = 2000 hoursBenefit ratio = 0.2 Labour rate per hour = $15…
Q: A company purchases an asset for P10,000 and plans to keep it for 20 years. If the salvage value is…
A: Depreciation: A depreciation is a non-cash expenses for the company. The depreciation expenses is…
Q: Assume an investor with the coefficient of risk aversion A=5.5. To maximize her expected utility,…
A: Utility functions are used to measure the risk-reward tradeoff as the maximum return that a person…
Q: Austin is going on holiday with his infant daughter and has a first class air ticket. He values…
A: A negotiation is a proactive dialogue that addresses a problem in a way that is agreeable to both…
Q: eristics?
A: Step 1 Risk is defined as an occurrence that harms financial performance and/or reputation as a…
Q: Becky is a corporate account manager at a company that sells athletic equipment to other businesses.…
A: Bonus is the part of remuneration paid to employees in addition to the basic pay. Bonuses are paid…
Q: You bought a house with a 30-year mortgage with loan size $500,000 and interest rate 6%. Assuming…
A: First, we need to find out, yearly installment to be made. Solved using Financial Calculator PV =…
Q: Giant Eagle Markets is considering the following two dividend policies for the next five years. Year…
A: Present value of future amount With future value (FV), discount rate (r) and period (n), the present…
Q: average cash balance (ro
A: Average cash balance refers to the amount determined by an officer of a company dividing by the…
Q: What trust, privacy and ethical issues do businesses need to be concerned with when trading online?…
A: The main trust, privacy and ethical concerns of business while doing online trading are as follows:…
Which of the following statements is/are true?
Statement 1: A key role of financial markets is to accommodate
Statement 2: In general, individuals are net demanders of funds, while businesses and governments are net supplier of funds.
Statement 3: An important characteristic of securities that are traded in secondary markets is liquidity
Step by step
Solved in 2 steps
- Financial Market is a market in which financial assets (securities) such as stocks and bonds can be purchased or sold. Assess the following statements: I. The financial markets serve as the mechanism whereby corporations (acting as deficit units) can obtain funds from investors (acting as surplus units). II. Financial institutions serve as intermediaries to connect the investment management activity with the corporate finance activity. II. Once financial instruments such as stocks are issued in primary markets, they are then traded-that is, repurchased and resold-in secondary markets. IV. Secondary markets help support primary markets because secondary markets reduce the cost of trading the primary market claims O All of the statements are correct. O Only one statement is correct. O Two statements are correct. Three statements are correct.Which of the following is not a main core function of the financial system?a. Provide a payments system for the exchange of goods and services.b. Provide mechanisms to separate funds for smaller-scale investmentc. Provide the channels to transfer funds and economic resources across industriesd. Provide ways to manage uncertainty and mitigate risk According to the market segmentation theory of the term structure,a. the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.b. bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.c. investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward.d. only A and B of the above. Costs associated with the correspondent bank process include:a. Interestb. Currency conversion spreadc. Reputation costsd. Payroll costsRole of the component of the financial system is very important to ensure smooth flow of funds and financial system stability. Financial markets are mechanisms where those requiring finance (deficit units) can get connected with those able to supply it (surplus units) a) Critically evaluate the role of the components of the financial system. b) What are some of the characteristics associated with dividends paid on common stock? c) In what major ways do stocks differ from bonds?
- 1. Which of the following is a function of every financial market? A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2. Securities are for the person who purchases them, but they are for the person/firm who sells them. A) assets; liabilities B) liabilities; assets C) income; liabilities D) liabilities; expenses 3. Which of the following is/are money market instrument(s)? A) Negotiable certificates of deposits B) Common stock C) T-bonds D) 4-year maturity corporate bond 4. Who has voting rights at a shareholders' meeting? A) All common stock owners. B) Common stock owners who own more than 1% of the company. C) Only the company's managers. D) All preferred stock owners. 5. These are investments where shareholders become the owners of the portfolio of the account. These portfolios of securities could be made up of equity securities or debt securities. A)…What is the difference between primary and secondary markets? 1. Primary markets help in capital formation, while secondary capital provides liquidity to the investor 2. Initial public offerings are undertaken in both primary and secondary markets 3. Stock exchanges are an example of secondary markets Select the correct answer using the codes given below:Choose the correct statement about different types of financial markets: a. Capital market is the market for short-term government and corporate debt securities b. None of these c. Money market is market for long-term financial instruments d. Stock market is the market where participants can issue and trade stocks
- Which of the following is NOT a purpose of valuing financial securities? a. Valuation is used to provide sensible financial decisions.b. Valuation is used to get the intrinsic value of a financial security.c. Valuation is helpful for investors in order to determine whether to buy or sell their securitiesd. Valuation is used to predict the exact prices of financial securities.Explain the roll of debt and equity markets in the economy. How do they interact with both Primary and Secondary Markets? What roles do debt and equity markets and primary and secondary markets play in the “flow of funds?”which of the following instrument are traded in capital market. check all that apply A. commercial paper b. treasury bills c. cooperate bonds d. bankers appectances e. common stock
- Explain each of the investment instruments stated below that offered by financial institutions. These are the investment instruments you like to invest. Explain and justify why. 1. stocks 2. bonds 3. AnnuitiesA. Provide brief explanations/definitions for each of the following:Tracking error, Asset Swaps, Liquidity Theory of the Term Structure, Contraction Risk. B. Why would a corporation elect to raise funds via a securitization rather than a corporate bond?What is one of the functions of the financial markets and how does financial institutions play a role in this process.
