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Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc.). Enter all monetary answers to the nearest dollar (no decimal/cents) and all interest rates to the nearest on hundredth of a percent (two decimal places). Read the syllabus for examples. The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment add up to 100. Question 1

(5 points) $50 today is worth MORE than $50 tomorrow.
Your Answer| | Score| Explanation|
True| | 5.00| Correct. You understand Time value of money.| Total| | 5.00 / 5.00| |
Question Explanation
We have assumed time value of money is positive.
Question 2
(5 points) $100 invested for 10 years at 12% interest is worth more in FV terms than $200 invested for 10 years at 4% interest. Your Answer| | Score| Explanation|
False| | 0.00| Learn how to calculate FVs of simple one-shot cash flows. Intuitively, compounding should favor the first option.| Total| | 0.00 / 5.00| |
Question Explanation
All about compounding.
Question 3
(5 points) Megan wants to buy a designer handbag and plans to earn the money babysitting. Suppose the interest rate is 6% and she is willing to wait one year to purchase the bag. How much babysitting money (to the nearest whole dollar) will she need to earn today to buy the bag for $400 one year from now? (Enter just the number without the $ sign or a comma) Answer for Question 3

Your Answer| | Score| Explanation|
377| | 5.00| Correct. You know it has to be less than $400.| Total| | 5.00 / 5.00| |
Question Explanation
Simple PV calculation.
Question 4
(10 points) Jeff has $1,000 that he invests in a safe financial instrument expected to return 3% annually. Marge has $500 and invests in a more risky venture that is expected to return 7% annually. Who has more after 20...

...Question 1
The rapid growth in the international trade has also increased the risk of exchange rate uncertainty for the various firms, specially involved in the international business. As compared to other macroeconomic factors like interest rate and inflation rate, foreign exchange rate exposure is four times and ten times as volatile as interest rate and inflation rate respectively (Jorion, 1990). This type of risk has forced the firms to pay more attention to the effect of exchange rate...

...
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...

...Question 1
(5 points) $50 today is worth MORE than $50 tomorrow.
Your Answer Score Explanation
True ✔ 5.00 Correct. You understand Time value of money.
False
Total 5.00 / 5.00
Question Explanation
We have assumed time value of money is positive.
Question 2
(5 points) At an interest rate of 10% it is better to have $100 today than $120 in 2 years.
Your Answer Score Explanation
True ✔ 5.00 Correct; it is compounding!
False
Total 5.00 / 5.00...

...Question 1
(5 points) By simply increasing the number of assets (e.g., assets > 30) in any portfolio, you can diversify your exposure to specific/idiosyncratic risk.
False.
True.
Question 2
(10) You have an equally weighted portfolio that consists of equity ownership in three firms. Firm A is trading at $23 per share and has a beta of 1.15; Firm B is trading at $16 per share with a beta of 1.60; Firm C is trading at $76 per share with a beta of 0.85. Assume a risk free rate of 2% and...

...Question 1
(5 points) $50 today is worth MORE than $50 tomorrow.
Your Answer Score Explanation
True ✔ 5.00 Correct. You understand Time value of money.
Total 5.00 / 5.00
Question Explanation
We have assumed time value of money is positive.
Question 2
(5 points) At an interest rate of 10% it is better to have $100 today than $120 in 2 years.
Your Answer Score Explanation
True ✔ 5.00 Correct; it is compounding!
Total 5.00 / 5.00
Question Explanation
All...

...ment
Chapter-1
INTRODUCTIONINTRODUCTION TO FINANCEFinance is rightly been termed as “master key” providing access to all sources required for running business activity and also finance holds the key to all activity. Finance is also the study of money management.
The Sanskrit saying “Arthah sachiva” which means, “Finance reigns supreme” speaks volume for the...

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