# finance set 4

The concept of present value relates to the idea that

The money you have now is worth more today than an identical amount you would receive in the future

The formula for calculating future value (FV) is

FV = PV x (1+r)^n

What is an annuity?

A series of equal payments at equal time periods and guaranteed for a fixed number of years

What is a DRHP?

A **Draft Red Herring Prospectus**, or offer document, is when a company that is planning to raise money from the public provides detailed information about its business operations and financials

**What is a par value of a bond?**

The amount borrowed by the issuer of the bond and returned to the investors when the bond matures

When the price of a bond is above the face value, the bond is said to be

Trading at a premium

Which of the following is true when a bond is trading at a discount?

Coupon Rate < Current Yield < Yield to Maturity

The concept of time value of money is that

The cash flows that occur earlier are more valuable than cash flows that occur later

What is the enterprise value of a business?

The entire value of the business without giving consideration to its capital structure

Which of the following is the formula to calculate cost of capital?

Net debt/Total assets x Cost of debt + Equity/Total assets x Cost of equity

What is working capital?

Current Assets - Current Liabilities

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