Question

True or False

1. The “future value” technique uses a process called “discounting” to calculate the future value of each cash flow at the end of an investment’s life.

2. An “annuity due” will always have a greater value than an otherwise equivalent “ordinary annuity,” because interest will compound for an additional time period on the “annuity due.”

3. Compounding interest more frequently than once per year results in a higher “effective annual rate” (EAR) for an investor.

4. When the inflation rate in the economy increases, the level of interest rates in the economy generally declines.

5. Most corporate bonds are purchased and held by individual investors.

6. Rising interest rates in the economy reduce the market value of outstanding bonds.

7. Holders of debt instruments, such as bonds, have a voice in the management of the corporation, as they are given one vote for each bond held.

8. Interest which a corporation pays to bondholders is not tax-deductible on the firm’s Income Statement.

9. Payment of dividends to common shareholders is determined solely by the corporation’s Chief Executive Officer (CEO).

10. The dividend paid to preferred stockholders varies from year to year and is set by the corporation’s Board of Directors.

Answer #1

As per rules I am answering the first 4 subparts of the question

1: False

Future value uses compounding technique while discounting is used by present value method.

2: True

Since annuity due occurs at the beginning of the period, it will be greater.

3: True

EAR = (1+ APR/n)^n -1 where n is the number of compounding in a year. Higher the number of compounding, higher will be the EAR.

4: True

Higher the inflation, lower the demand for money. This pulls down the interest rates.

d. Calculate the future sum of $1 comma 700, given that it
will be held in the bank for 22 years and earn 8 percent compounded
semiannually. e. What is an annuity due? How does this differ from
an ordinary annuity? f. What is the present value of an ordinary
annuity of $2 comma 600 per year for 8 years discounted back to
the present at 15 percent? What would be the present value if it
were an annuity due?...

Instructions: use the correct Compound interest table to
solve
-Future value of 1 (future value of a single sum)
-Present value of 1 (present value of a single sum)
-Future value of an ordinary annuity of 1
-Present value of an ordinary annuity of 1
-Present value of an annuity Due of 1
A. If $4,000 is deposited into an investment account yielding
10% every 6 months starting on 1/1/2018, what amount will be
available in the investment account in...

Example 1: Future Value (FV) of a Present Single
Sum
Your client
has $500,000 in an IRA and has asked you to estimate
its value
when the client reaches retirement age in 8 years, assuming
a 6% return each year.
Example 2: Future Value (FV) of a present single Sum
with
Multiple Interest Rates
Same facts
as Example 1 except the client would like to adjust the
asset
allocation of the investments over time, evolving from a
more
aggressive strategy...

( ) 1. According to present value (PV)
formula, which one of the following changes will increase the
present value when everything else stays the same?
A) Future value (FV)
decrease.
B) Period discount rate
(r) decrease.
C) Number of periods in
discounting (t) increase.
D) None of the above.
( ) 2. You deposit $100 today into your
savings account and you will continue this annual $100 deposit
activity for the next 29 years without withdrawing...

Intermediate
1. Multiple compounding periods: Find the future value of an
investment of $2,500 made today for the following rates and
periods:
a.
6.25 percent compounded semiannually for 12 years
b.
7.63 percent compounded quarterly for 6 years
c.
8.9 percent compounded monthly for 10 years
d.
10 percent compounded daily for 3 years
2. Multiple compounding periods: Find the present value of
$3,500 under each of the following rates and periods.
a.
8.9% compounded monthly for five years.
b. ...

1.)
Sam Strother and Shawna Tibbs are vice presidents of
Mutual of Seattle Insurance Company and co-directors of the
company’s pension fund management division. An
important new client, the North-Western Municipal Alliance, has
requested that Mutual of Seattle present an investment seminar to
the mayors of the represented cities, and
Strother and Tibbs, who will make the actual presentation, have
asked you to help them by answering the following
questions.
a. What are the key features of a bond?
b....

QUESTION 1
All of the followings are the rights and privileges of a
Common Stockholders EXCEPTING:
a.
Voting/Proxy Rights
b.
Right to Dividends
c.
Residual Right
d.
Pre-emptive Right
e.
Right to Interest Payments
10 points
QUESTION 2
Your best friend's parents want to buy a home in the
Worcester County, but they don’t know the exact amount of money
that they can afford to borrow. They can afford monthly payments of
$ 1,800. A friendly bank in Worcester...

Please read the article and answear about
questions.
Determining the Value of the Business
After you have completed a thorough and exacting investigation,
you need to analyze all the infor- mation you have gathered. This
is the time to consult with your business, financial, and legal
advis- ers to arrive at an estimate of the value of the business.
Outside advisers are impartial and are more likely to see the bad
things about the business than are you. You should...

Delta airlines case study
Global strategy. Describe the current global
strategy and provide evidence about how the firms resources
incompetencies support the given pressures regarding costs and
local responsiveness. Describe entry modes have they usually used,
and whether they are appropriate for the given strategy. Any key
issues in their global strategy?
casestudy:
Atlanta, June 17, 2014. Sea of Delta employees and their
families swarmed between food trucks, amusement park booths, and
entertainment venues that were scattered throughout what would...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago