Finance Chapter 16

Everyone who holds risky assets holds market portfolio why? – Because M has the highest ratio of return / Risk=Er/sigma
Leverage – Using borrowed funds effectively to capitalize your business
What are economies of scale? – the reduction in average cost that comes from producing on a large scale
el (dinero en) efectivo – cash (bills and coins)
7. Earnings per share of common stock – Net income available to the common stockholders divided by the average number of shares of common stock outstanding during the period.
tax deferred – The payment of taxes is put off until some future time, such as retirement
Your firm has issued ten-year zero-coupon bonds with a $1,000 face value. If the bonds are currently selling for $514.87. What is the yield to maturity?
money markets – markets where short term securities are traded. short term assets have a maturity of one year or less, such as certificates of deposit
Budgeting considerations – multiple cash outflows on the budget including
purchase, maintenance & operations
-savings illusion
•failure to take price level increases into account
Roa – Net income / total assets
Debt factoring – Selling your debtors to raise money
Insurance up to _ on each account is provided for depositors by the FDIC. – $250,000.
Yоur firm hаs issued ten-yeаr zerо-cоupon bonds with а $1,000 face value. If the bonds are currently selling for $514.87. What is the yield to maturity?
Institutional lenders lend money from who to fund real estate transactions? – Their depositors. Including insurance companies, banks, and mutual savings banks

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