Investment w/o Risk:
Inflowoutflow-1>r
R=Δpp0+cfp0
PV:V0=Vt1+kt=Vt*PVIF(k;t)
FV: Vt=V0*1+kt=V0*FVIF(k;t)
keffective=kstatedm, k stated over year:APR
Gross Interest Rate: 1+k
Going from one EAR to other: 1+kx month eff.yx-1=[1+ky month eff.] Compounded to EAR … use this… also, less than a year to annual (special case): EAR=1+kstatedmm-1 EPR=1+APRmmt
Continuous Compounding: Vt=etkc--- if the $ is received in one year then the formula is: V0=e-tkc, t-years and not periods and kc-discount Rate Relation between EAR and kC:kEAR=ekC-1 , kC=ln(1+kEAR)

Present/future Value Additives: Cash flows at a particular time. Invest:NPV>0 Present Value of Annuities: V0=CF1- 11+knk=CF[PVIFAk;n] =
Present Value of Perpetuities:V0=CFk
1k=PVIFAk,n≡Annuity, n→∞
Future Values of Annuities:Vn=V0*FVIFk,n=CF*PVIFAk;n*FVIFk;n=CF*FVIFA(k;n) FVIFAk;n=1+kn-1k
Annuities Due: PVIFAduek;n=1-11+knk(1+k), FVIFAduek;n=1+kn-1k(1+k) Growing Annuity:V0=CF1*1-1+gn1+knk-g≡Annuity at g=0, CF2=CF1(1+g) Growing Perpetuity:V0=CF1k-g≡Prep at g=0
Amortized Loans: V0=CF*PVIFA(k;n)
Loan=Payment*PVIFA(k;n)
Canadian Mortgage: k1 Month eff.Rate=1+k216
Sample Mean: x=i=1nxin n
Risk or variability(s-variance):s2=i=1n((xi-x))^2 (n-1)
S=s2
EX=i=1mprobi*xi
Legend: R-Return, cf=Capital Gain, k=interest rate/year PVIFA: present value interest factor of annuity, m-Com. freq:#times/yr-given by question, k(EAR)-Affected due to compounding of interest rate, t-# of years, n-period, s2:Sample Variance, s:Standard deviation, m:number of different possible rationalization

...
Advance Finance
Insert Name
Insert Institution
Advance Finance
Question 1: Periodic Interest Rates
Calculating Periodic Rate and Effective Annual Interest Rate
Applied Formula by Fouque and Papanicolaou (2011):
Effective interest rate per period, (i) = ( 1 + ( r / m ) )m – 1
Effective interest rate for t periods, it = ( 1 + i )t - 1
or a single equation it = ( 1 + ( r / m ) )mt - 1.
The rate per compounding period P = R / m, in percent.
Where: r = R/100 and i = I/100 (p. 124)
Filled Table (Rounded to two decimal places)
Period
Annual percentage rate (APR)
Compounding per Period (m)
Periodic rate/
Periodic Interest Rate (P)
Effective Annual Rate
(i)
Semiannual
9%
2
4.50%
9.20%
Quarterly
10%
4
2.50%
10.38%
Monthly
8.5%
12
0.71%
8.84%
Daily
3.25%
365
0.01%
3.30%
Question 2: Periodic Interest Rate
Given:
This is a Saving Account, no adding or withdrawing from the account
Which is favorable?
Daily compound rate of 0.045%
Weekly compounded rate of 0.285%
Monthly compounded rate of 1.15%
Quarterly compounded rate of 4.325%
Semiannual compounded rate of 8.5%
(i) An interest rate compounded annually is favorable, since it yields the highest Effective Annual Rate of Interest, and will accumulate more interest after the given period.
Period
Annual percentage rate (APR)
Compounding per Year
Periodic rate
Periodic Interest Rate (P)
Effective Annual Rate...

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00 Unit 3 Assignment
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Supporting Children
E1 - Identify FIVE (5) pieces of current legislation (5) Jenny, Maureen and Sam
List five different pieces of legislation that are relevant to influencing the way we work with children in a childcare setting – you must give the full title and date for each one.
E2 – Describe how each piece of legislation will influence working practices in the setting (5) Jenny, Maureen and Sam
For each of the five pieces of legislation you have stated in E1 you must describe how they influence the way we work with children, link to policies and procedures that will be in place that you must follow – what do you do?
E3 – Describe how the policies and procedures will help safeguard children (5). Sam
Consider the different ways you help to safeguard the children – keep them from harm and danger. What policies are in place to minimise cross infection, maintain security, prevent accidents, and what procedures do you follow to ensure these are in place?
E4 – Describe how the policies and procedures promote fair, just and inclusive strategies (5) Jenny
What policies and procedures are in place to ensure the setting is inclusive as well as fair and just too all children and families? Why is it important to have an inclusion policy in place and how will it benefit children, families and the setting?
E5 – Describe two (2) strategies which the...

...from the business, and that loans have a finite term. Investors will provide her with equity, meaning that they will essentially buy into her business and own a ‘slice’ of the company for the future. Investors who see potential in her company will finance her project in the form of cash or securities and she will offer a contractual right in owning part of her business. This means that investors will share in the potential future profits of the company through dividends, and the term for this investment is indefinite.
Part B
A major benefit of debt as opposed to equity is that the borrower does not have to sacrifice ownership interest in the company and has full control over the business’s operations. Equity essentially sells off part of a company’s ownership and this forces the borrower to direct the business in a manner that pleases all the shareholders.
Another benefit of debt is that lenders are limited in the amount of money that the borrower is obliged to repay, as the lender does not receive any ownership shares in the business. This means that the borrower only needs to pay back a fixed amount of money compared to the potentially limitless amount of money she may need to pay investors if she had sold stock in order to finance growth if her business is successful.
The disadvantages of debt include the fact that unlike equity, debt must be repaid in full at a fixed point in time. One of the benefits of equity is that there is no...

... * Hedge funds have traditionally been unregulated.
* derivatives can be used either to reduce risks or to speculate.
* a larger bid-ask spread means the dealer will realize a higher profit.
* Compensating managers with stock options can help reduce conflicts of interest between stockholders and managers, but if the options are all exercisable on a specific date in the near future, this can motivate managers to deceive stockholders.
* A stock is considered overvalued if its intrinsic value is smaller than its market value.
* The income statement shows us the firm’s financial situation over a period of time.
* Last year, Blanda Brothers had positive cash flow from operation; however, cash on its balance sheet decreased.which explain this? Answ:The company purchased a lot of new fixed assets.
* Company A and Company B have the same total assets, Return on Assets (ROA), and profit margin. However, Company A has higher debt ratio and interest expense than Company B. Which of the following statements is most correct? Company A has a higher ROE than Company B.
* Double taxation refers to the fact that corporate income is subject to an income tax, and then stockholders are subject to a further personal tax on dividends received.
Ace Industries has $2.0 million in current assets and $0.75 million in current liabilities. Ace decides to raise funds as additional notes payable and use them to increase inventory. How...

...the capital flows and the resulting fluctuations in the exchange rates from its long term trend (Ramkishen S. Rajan, 2011).
Given that most emerging economy central banks have continued to intervene in foreign exchange markets, the sustainability of reserves accumulation naturally becomes important. Two of the key challenges in managing the accumulation of reserves from intervention operations relate to the currency mismatch in the central bank’s assets and liabilities as well as the rising differential between interest rates in the advanced economies and emerging economies.
First, the central bank’s balance sheet may experience significant volatility from foreign exchange translation gains or losses due to the mismatch between its foreign currency assets and its local currency liabilities. A strengthening local currency may lead to negative capital on the balance sheet as foreign currency-denominated assets are revalued downwards due to currency movements. In addition, during a period of significant capital inflows and heavy intervention, the local currency has a tendency to appreciate for the same reasons that led to the inflows in the first place. To mitigate the impact of such a currency mismatch, the Central Bank of Malaysia has increased the diversification of its foreign currency assets.
Second, carrying costs can arise from the growing differential between the interest returns of advanced and emerging economies. This is especially...

...FORMULA SHEET – for student reference only
Perpetuity:
The value of a perpetuity of $RM1 per year is:
Equivalent Annual Cost:
If an asset has a life of ‘t’ years, the equivalent annual cost is:
Annuity:
The value of an annuity of $RM1 per period for t years (t-year annuity factor) is:
Measures of Risk:
Variance of returns = σ2
= expected value of
Standard deviation of returns, σ =
Covariance between returns of stocks 1 & 2 = σ1,2 = expected value of
Correlation between returns of stocks 1 & 2:
Beta of stock i = βi =
The variance of returns on a portfolio with proportion xi invested in stock i is:
A Growing Perpetuity (Gordon model):
If the first period’s cash flow is $RM1 at year 1 and if cash flows thereafter grow at a constant rate of ‘g’ in perpetuity:
A Growing Annuity:
The formula for an annuity discounted at an annual rate (i) and where cash flows are growing at an annual rate (g) is as follows:
An = 1- {(1+g)n/(1+i)n} x (1+g)
( i-g )
Continuous Compounding/Discounting:
If ‘r’ is the continuously compounded rate of interest, the present value of $RM1 received in year ‘t’ is:
Capital Asset Pricing Model (CAPM):
The expected risk premium on a risky investment is:
r – rƒ = β(rm – rƒ)
Bond Duration and Volatility:
Duration of T-period bond =
Volatility (modified duration) = Duration/(1+y)
Weighted Average Cost...

...
Introduction - Types Of Financial Institutions And Their Roles
A financial institution is an establishment that conducts financial transactions such as investments, loans and deposits. Almost everyone deals with financial institutions on a regular basis. Everything from depositing money to taking out loans and exchanging currencies must be done through financial institutions. Here is an overview of some of the major categories of financial institutions and their roles in the financial system.Commercial BanksCommercial banks accept deposits and provide security and convenience to their customers. Part of the original purpose of banks was to offer customers safe keeping for their money. By keeping physical cash at home or in a wallet, there are risks of loss due to theft and accidents, not to mention the loss of possible income from interest. With banks, consumers no longer need to keep large amounts of currency on hand; transactions can be handled with checks, debit cards or credit cards, instead.Commercial banks also make loans that individuals and businesses use to buy goods or expand business operations, which in turn leads to more deposited funds that make their way to banks. If banks can lend money at a higher interest rate than they have to pay for funds and operating costs, they make money.Banks also serve often under-appreciated roles as payment agents within a country and between nations. Not only do banks issue debit cards that allow account holders to pay for...

...rectangles, and relationships are shown by lines between the rectangles. Attributes are generally listed within the rectangle. The many side of many relationships is represented by a crows footentity-relationship (E-R) modelA set of constructs and conventions used to create data models. The things in the users world are represented by entities, and the associations among those things are represented by relationships. The results are usually documented in an entity-relationship (E-R) diagramID-dependent entityan entity whose identifier includes the identifier of another entityidentifierwhich are attributes that name, or identify, entity instancesidentifying relationshipIn such relationships, the parent is always required, but the child (the ID-dependent entity) may or may not be required, depending on application requirements. Identifying relationships are shown with solid lines in E-R diagrams.is-aRelationships among supertype/subtype entitiesmandatoryat least one entity instance must participate in the relationshipmaximum cardinalityThe maximum cardinality is the maximum number of entity instances that can participate in a relationship instance.minimum cardinalityThe minimum cardinality is the minimum number of entity instances that must participate in a relationship instance.nonidentifying relationshiprelationship drawn with a dashed line (refer to Figure 5-7) is used between strong entities and is called a nonidentifying relationship because there are no ID-dependent...