The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

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Answer 1

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1RQ

Summary Introduction

To determine: The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

Expert Solution & Answer

Explanation of Solution

Person A's first investment goal should be to ensure adequate liquidity. Through depositing funds in financial institutions or investing in money market bonds, stability can be achieved. Nevertheless, as these types of investments focus primarily on providing liquidity, they are currently offering very low returns.

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(d) Estimate the value of a share of Cisco common stock using the discounted cash flow (DCF) model as of July 27, 2019 using the following assumptions Assumptions Discount rate (WACC) Common shares outstanding 7.60% 5,029.00 million Net nonoperating obligations (NNO) $(8,747) million NNO is negative, which means that Cisco has net nonoperating investments CSCO ($ millions) DCF Model Reported 2019 Forecast Horizon 2020 Est. 2021 Est. 2022 Est. 2023 Est. Terminal Period Increase in NOA FCFF (NOPAT - Increase in NOA) $ 1241 1303 1368 10673 11207 11767 1437 $ 12354 302 ✓ Present value of horizon FCFF 9918 9679 9445 ✔ 0 × Cum. present value of horizon FCFF $ 0 × Present value of terminal FCFF 0 ☑ Total firm value 0 ☑ NNO -8747 ✓ Firm equity value $ 0 ☑ Shares outstanding (millions) 5029 Stock price per share $ 40.05

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Answer 2

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1RQ

Summary Introduction

To determine: The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

Expert Solution & Answer

Explanation of Solution

Person A's first investment goal should be to ensure adequate liquidity. Through depositing funds in financial institutions or investing in money market bonds, stability can be achieved. Nevertheless, as these types of investments focus primarily on providing liquidity, they are currently offering very low returns.

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Answer 3

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1RQ

Summary Introduction

To determine: The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

Expert Solution & Answer

Explanation of Solution

Person A's first investment goal should be to ensure adequate liquidity. Through depositing funds in financial institutions or investing in money market bonds, stability can be achieved. Nevertheless, as these types of investments focus primarily on providing liquidity, they are currently offering very low returns.

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Answer 4

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1RQ

Summary Introduction

To determine: The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

Expert Solution & Answer

Explanation of Solution

Person A's first investment goal should be to ensure adequate liquidity. Through depositing funds in financial institutions or investing in money market bonds, stability can be achieved. Nevertheless, as these types of investments focus primarily on providing liquidity, they are currently offering very low returns.

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Answer 5

Chapter 14, Problem 1RQ

Summary Introduction

To determine: The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

Expert Solution & Answer

Explanation of Solution

Person A's first investment goal should be to ensure adequate liquidity. Through depositing funds in financial institutions or investing in money market bonds, stability can be achieved. Nevertheless, as these types of investments focus primarily on providing liquidity, they are currently offering very low returns.

Answer 6

Chapter 14, Problem 1RQ

Summary Introduction

To determine: The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

Expert Solution & Answer

Explanation of Solution

Person A's first investment goal should be to ensure adequate liquidity. Through depositing funds in financial institutions or investing in money market bonds, stability can be achieved. Nevertheless, as these types of investments focus primarily on providing liquidity, they are currently offering very low returns.

Answer 7

Chapter 14, Problem 1RQ

Summary Introduction

To determine: The first priority of investing of person A and the disadvantage of investments that satisfy that priority.

Answer 8

Expert Solution & Answer

Explanation of Solution

Person A's first investment goal should be to ensure adequate liquidity. Through depositing funds in financial institutions or investing in money market bonds, stability can be achieved. Nevertheless, as these types of investments focus primarily on providing liquidity, they are currently offering very low returns.