Ch 1 Intro To Finance Study Guide

Consumption of perquisites (agency problem) – The use of items such as corporate jets, fancy offices, and other executive privileges
Market to Book Value Ratio – Market Value of Equity / Book Value of Equity
London Interbank Offer Rate (LIBOR) – the rate most international banks charge one another for overnight euro dollar loans
Escalation Clause – A clause allowing the lender to raise the existing interest rate-although most often associated with an Adjustable Rate Mortgage,it can be used to overcome an alienation clause
Interest rate – A rate that is charged or payed for the use of money
Often expressed as an annual percentage of the principal
Calculated by dividing amount of interest by the amount of principal
Liabilities – Debts owed by the business.
Return on Net Assets (RONA) – Profitability Ratio: Shows: how well a company converts assets to sales = Net Income / (Fixed Assets + Net Working Capital)
At a production level of 3,850 units, a project has total costs of $92,800. The variable cost per unit is $11.74. Assume the firm can increase production by 650 units without increasing its fixed costs. What will the total costs be if 4,000 units are produced?
Character – – a responsible attitude toward living up to agreements
Reverse Annuity Mortgage – a home equity loan available to homeowners over 62 yrs old-the lender makes payments to the borrower based on the equity in their property-the loan comes due upon the sale of the property or the death of the owner
Differences in scale (IRR) – The IRR rule is unaffected by the scale of the investment opportunity because the IRR measures the average return of investment. Hence, we cannot use the IRR rule to compare projects of different scales.
FDIC – a federally sponsored corporation that insures accounts in national banks and other qualified institutions
Compounding Interest More Frequently Than Annually –
At а prоductiоn level оf 3,850 units, а project hаs total costs of $92,800. The variable cost per unit is $11.74. Assume the firm can increase production by 650 units without increasing its fixed costs. What will the total costs be if 4,000 units are produced?
RESPA was enacted to – insure buyer and seller are informed of all settlement costs and procedures prior to closing.
profit out – получать прибыль из (the potential profits out of these companies)
personal data sheet – detailed info about yourself that is needed when you fill out the job application form
CRV – VA appraisal-certificate of reasonable value
Money market account – – a combination savings-investment plan in which money deposited is used to purchase safe, liquid securities

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