10/29/24, 7:55 PM 2024 update |fin 2603 final prep |2024-2025 latest |COMPREHENSIVE MOST TESTED QUESTIONS AND VERIFIED SOLU…
2024 update |fin 2603 final prep |2024-2025
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QUESTIONS AND VERIFIED SOLUTIONS | GET IT
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Terms in this set (39)
a market place where companies and government
capital market can raise long term funds, a market where money is
lent for periods longer than 1 year
sound financial decision making requires that an
analysis of the total cost and the total benefits be
cost-benefit principle
conducted - as far as possible, the benefit should
be greater than the cost of any decision
an organisation that acts as a channel between
savers and borrowers of funds (Two main types of
financial institutions are banks that pay interest on
deposits from the interest earned on the loans, and
Financial institution
insurance companies and mutual
funds that collect funds by selling their policies or
shares to the public and provide returns
in the form of periodic benefits and profit payouts.)
uses financial statements to make capital-budgeting
decisions, capital structure decisions and working-
financial manager
capital decisions in order to create wealth for the
organisation's shareholders
the financial markets for short-term borrowing and
lending; provide short-term liquidity with securities
Money markets such as treasury bills, commercial paper and
bankers'
acceptances
, 10/29/24, 7:55 PM 2024 update |fin 2603 final prep |2024-2025 latest |COMPREHENSIVE MOST TESTED QUESTIONS AND VERIFIED SOLU…
the firm's ability to generate revenues that will
exceed total costs by using
the firm's assets for productive purposes; may be
achieved by marketing products or services to
Profitability
maintain a sufficient profit margin with the support
of promotions at competitive prices directed to
appropriate target markets through appropriate
distribution channels
the difference between the rate charged and the
rate paid (Financial institutions need to invest or
Spread lend out their available funds at a rate that exceeds
the rate they are
paying to their depositors
the extent to which a firm's assets exceed its
liabilities; differs from liquidity in that liquidity
Solvency pertains to the settlement of short-term liabilities,
while solvency pertains
to the excess of total assets over total liabilities
a concept used to evaluate any financial decision
involving differences in the timing of cash inflows
and outflows; a matter of interest that may be
earned if money is available today and invested, or
Time value of money
of opportunity cost if an amount will only be
received at some future date - an amount of money
today is worth more than it will be at some point in
the future
an account due for payment that, in contrast to a
note payable, does not involve the issuing of a
Accounts payable formal written promise to the creditor (the two
types of liabilities are shown separately in the
balance sheet)
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