Busıness Fınance I

Yanıt Açıklaması: Real interest rate=[(1+ nominal interestrate)/(1+ Inflation rate)] -1

Yanıt Açıklaması: The companies hold cash by different types of motivations: - Transaction Motive explains holding cash or near cash to meet routine cash requirements of a company to finance transactions in the normal course of business such as purchasing raw materials, paying expenses, taxes, dividends etc. - Precautionary Motive explains holding cash or near cash as a cushion to meet unexpected contingencies such as flood, strikes etc. - Speculative motive explains the situations in which there occurs extra ordinary opportunities for the companies to quickly take advantage. For example, in order to be able to utilize the cash discount provided by a supplier, certain amount of cash can be made available as a strategy

Yanıt Açıklaması: As the name implies, conservative policy aims to minimize the risks associated with the financing of the current assets.Hedging policy, which is also named as matching policy, proposes a strategy by which the fluctuating part of the current assets are financed by the current liabilities. Consequently, the fixed and permanent current assets are financed through long-term sources.The correct answer is D.

Yanıt Açıklaması: All statements are true.

Yanıt Açıklaması: r = (Div1 + P1 - P0)/D0 r= 8+ (250-245) /245 =0.053 = %5.3

Yanıt Açıklaması: Even though coupon interest rates are fixed, bond values still fluctuate with the changes in market interest rates. Bonds exhibit interest rate risk, which is the risk that the return from the bond will change according to changes in the interest rates.

Yanıt Açıklaması: In another study covering a more recent period, the Ibbotson SBBI 2018 study examines the U.S. Market for 1926-2017. They show that $1 invested continuously for 91 years would have grown to $7.353 if invested in stocks of large companies, or even better, $36.929 if invested in stocks of small companies. Over the same period, funds invested in long term government bonds grew to a modest $143 and treasury bills ($21) barely beat out inflation ($14). We can also see from the figure that the higher returns of stocks comes together with significantly higher variability in the returns that can be observed by the larger, sharp movements in the lines.

Yanıt Açıklaması: The risk-free asset has no variability or risk resulting in zero variance and zero correlation and covariance with any asset. The Capital Market Line (CML) is the line that connects the risk-free asset with the market portfolio, where the line is just tangent to the efficient frontier on an expected return/standard deviation graph.

Yanıt Açıklaması: Volume of business: Generally, there exists a strong positive relationship between the size of the company and the working capital needs. The size of a company is defined in terms of sales volume and/or asset size. Whatever the terms of reference of size, increase in size generates higher activity level, larger amount of production, inventory, sales, ending up with higher amounts of raw materials and suppliers credits.

Yanıt Açıklaması: Bonds obligate the issuer to make specified payments to the bondholder on specified dates over a specified time period (maturity). These specified payments are in the form of coupon payments and par value. Par value (also called face value or nominal value) indicates how much the issuer will repay to the bondholder at maturity. Par value of Turkish bonds in general is 100 whereas US bonds typically have a par value of $1.000. The coupon rate of a bond determines the coupon (interest) payments. Coupon payments are the periodic payments received by bondholders until the bond matures. The annual coupon payment is equal to the coupon rate times the par value of the bond. Some bonds pay their coupons in more than one payment per year, such as semi-annually or quarterly. The coupon rate, maturity date and par value of the bond are specified in bond’s indenture. The indenture is a contract between issuer and bondholder specifying the characteristics of the bond. As also understood from the information given, the statements in the options I, II, III and V are correct, so the correct answer is D. The statement in the option IV is not correct because of the fact that the coupon rate, maturity date and par value of the bond are specified in bond’s indenture.

Yanıt Açıklaması:

Yanıt Açıklaması: the following operational and financial data is required for the financial planning process: • Short and long term profit targets, • Divisional financial reports, • Transactions creating cash flow for the divisions and the company, • Divisional proforma and realized budgets, • Cost accounting data on product basis, • Special financial analysis in relation with profitability by product, logistics costs and other expenditure, • Analysis of security portfolio and subsidiaries, • Labor productivity reports, • Internal control reports

Yanıt Açıklaması: Either sales or total assets are used as a denominator in vertical analysis.

Yanıt Açıklaması: If 1> Beta >0, then the security has below average risk and returns are expected to be more less extreme and in the same direction as the market.

Yanıt Açıklaması: There are two main methods for preparation of cash budgets: Direct estimation of cash inflows and outflows Adjusted net profit method The other methods mentioned in other options are for sales forecasting

Yanıt Açıklaması: The first dimension of financial planning is the time horizon. There exist two time horizons.

Yanıt Açıklaması: In the formulation all of them are used.

Yanıt Açıklaması: FV annuity=1500*(1+0.01)^120/0.01=345,058

Yanıt Açıklaması: In an efficient market, prices fully reflect all available information. Therefore the correct answer is E.

Yanıt Açıklaması: The stocks that pay no or very low dividends and still have prices that increase are called growth stocks. Rapidly growing companies require a lot of investments, growth stock companies usually are using their profits and cash flows to support these investments and as a result do not have resources to pay dividends. Therefore, the correct answer is C, Growth Stocks.