This question is about microeconomics analysis. Think of it as an answer to the test and answer it in 3-5 sentence long paragraph. 11. a) What determines the interest rate? b) What do financial institutions do? c) Explain the meaning of Arbitrage and Present Value.
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- Choose the correct answer. 1. The following life situations affect and influence one's personal financial planning. Which is not included? a. employment status b. age c. household members d. habits 2. In identifying alternative courses of action, one should consider the following, except a. continue the same course of action b. change the same course of action c. expand the current situation d. change the current situation 3. Among the sources of information in financial planning, which is not considered as one? a. media and publications b. investment analyst c. financial institutions d. loan sharksCompounding refers to: Select one: a. the increased value of an investment that arises from the payment of periodic interest. b. the process of earning interest on both the interest and the principal of an investment. c. the paying back of both interest and principal during the life of a fixed-payment loan. d. the calculation of interest rates after the compounding effect of taxes has been allowed for.6. A) If a company will pay $100,000 for a truck that will increase deliveries to be made, giving an additional $15,000 in revenue each year for 10 years, should the company buy it? Interest rates are 5%. Show your math. B) Now revenue is estimated to be only $12,000 a year for 10 years. Same interest rate, should the truck be purchased? C) Explain where interest rates come from, using details.
- SECTION E: ANSWER ONLY ONE QUESTION 1. "Economics and personal finance are intertwine". Outline and briefly discuss five reasons why to practice good financial management demands the understanding of economics1) Do you feel about using financial statement analysis to evaluate an organization’s performance?5. Define financial system and then discuss the difference between financial markets and financial intermediaries. Medium answer
- Question 2 "Financial intermediaries are institutions that borrow funds from savers and lend them to borrowers, providing risk sharing, liquidity and information services in the process." If these are some of the functions of financial institutions, how do you explain the impact of these functions on: 1. İnvestor's decisions 2. The economy 3. Financial markets Question 3 How the following events affect interest rates? Be clear in your answer. 1. An earthquake destroys bridges and roads in Turkey, leading to increased investment spending for rebuilding the infrastructure. 2. Future taxes of businesses are expected to be increased. 3. Corona pandemic is forcing people to stay home to protect themselves and spend less money than usual. 4. The government proposes a new tax on savings.A well-functioning financial system does all of these EXCEPT: a. foster economic growth by directing savings to its most productive use. b. allocate risk among market participants. c. eliminate systematic risk through diversification. d. direct resources from savers to borrowers.Question 4. Working with Numbers and Graphs Q4 The face value of a bond is $6,000, and the annual coupon payment is $180. The coupon rate is_
- One of the biggest problems for any economy is to figure out how to get or transfer money from people or firms who want to save (savers) to people or firms who want to borrow (investors). Explain how financial markets can help to solve this problem efficiently. Discuss how financial markets function and which tools they can offer to solve this problem. Discuss how financial systems are of crucial significance to adequate capital formation, which is indispensable to a speedy economic growth and development.Multiple Choice Questions 3. If the loan portfolio of a bank consists of a five-year, 10 percent annual coupon loan selling at par, what is the market, or economic, value of capital if interest rates increase by 1 percent? Securities (at par) Loans (at par) A. $35 million. B. -$155 million. C. $7 million. D. -$7 million. E. $0. $250 $760 Deposits Capital $975 $35_________________ are a unit of measurement in which the relative value of goods and services can be expressed. A. Mutual Funds B. Curency C. Demand Deposits D. Prices