PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337117005
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Question
Chapter 4, Problem 9FPE
Summary Introduction
To discuss: Some short-term investments that are used to manage cash resources.
A liquid investment is any investment that can be effectively changed over into money without significantly affecting its worth.
Summary Introduction
To discuss: The factors that are focused when inflation is concerned.
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Briefly explain the following;
a. present value of money.
b. future value of money.
Suppose you know that an investment will earna positive return in the future. Why is it important to know the present value of the investment?
Discuss and critically evaluate the relationship between risk and return.
Discuss and critically evaluate Time value of money.
Chapter 4 Solutions
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
Ch. 4 - Prob. 1LOCh. 4 - Describe todays financial services marketplace,...Ch. 4 - Prob. 3LOCh. 4 - Prob. 4LOCh. 4 - Prob. 5LOCh. 4 - Develop a cash management strategy that...Ch. 4 - Adapting to a low-interest-rate environment. A...Ch. 4 - Prob. 2FPECh. 4 - Choosing a new bank. Youre getting married and...Ch. 4 - Prob. 4FPE
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- What determines the anticipated interest rate payout for an investment?arrow_forwardHow does one determine the value of any asset whose value is based on expected future cash flows?arrow_forwardSuppose investors expect interest rates to increase substantially in the future. Currently, should they prefer to purhcase short-term or long-term investments? Explain your asnwer.arrow_forward
- Which of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.arrow_forwardAn investment is a current commitment of money for a period of time, in order to derive future payments that will compensate for, the time the funds are committed, expected rate of inflation and uncertainty of future flow of funds Select one: True Falsearrow_forwardFuture value refers to the worth today of some amount of money received in the future. O True Falsearrow_forward
- Describe the concept of short term finance.arrow_forwardThe expected period of time that will elapse between the date of a capital investment and thecomplete recovery of the amount of cash investedis called: A.The average rate of return period B.The cash payback period C.The net present value period D.The internal rate of return periodarrow_forwardWhich of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value methodarrow_forward
- Suppose an investor observes an upward term structure of interest rate. Answer the followingquestions. (a) According to the expectation hypothesis, what will be the investor’s forecast about futurechange of interest rate (increase, decrease or unchanged)? (b) What will the investor say about the future change of interest rate according to liquiditypreference theory? Explain your argument.arrow_forwardWhy is saving money important short term? Why is it important in the long term ?arrow_forwardThe expected value of an investment: Answer a. Is what the owner will receive when the investment is sold b. Is the sum of the payoffs c. Is the probability-weighted sum of the possible outcomes d. Cannot be determined in advancearrow_forward
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