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Study sets matching "financial management chapter 9"

Financial Management Chapter 9
American Option:
Bermudan Option
European Option
S_t
An option which may be exercised at any time during its life.
An option which must be exercised only at specific times duri…
An option which may only be exercised at the date of expirati…
Asset price at the contract expiration
American Option:
An option which may be exercised at any time during its life.
Bermudan Option
An option which must be exercised only at specific times duri…
20 terms
Financial Management Chapter 9
checking account
demand deposit
overdraft (or NSF)
payee
a banking service in which a customer deposits money and writ…
an account on which the depositor can demand money at any tim…
occurs when a depositor writes a check on an account that is…
the person to whom the check is made payable to
checking account
a banking service in which a customer deposits money and writ…
demand deposit
an account on which the depositor can demand money at any tim…
10 terms
chapter 9 financial management
financial institutions usually do not…
most financial institutions offer onli…
electronic funds transfer involves the…
it is important to reconcile your chec…
f
t
t
t
financial institutions usually do not…
f
most financial institutions offer onli…
t
16 terms
Financial Management Chapter 9
Cost of Capital
Cost of long-term debt
Net Proceeds
Flotation Costs
Represents the firm's cost of financing and is the minimum ra…
The financing cost associated with new funds raised through l…
funds actually received by the firm from the sale of a security
the expenses incurred when selling new issues of securities
Cost of Capital
Represents the firm's cost of financing and is the minimum ra…
Cost of long-term debt
The financing cost associated with new funds raised through l…
20 terms
Financial Management Chapter 9
checking account
demand deposit
overdraft (or NSF)
payee
a banking service in which a customer deposits money and writ…
an account on which the depositor can demand money at any tim…
occurs when a depositor writes a check on an account that is…
the person to whom the check is made payable to
checking account
a banking service in which a customer deposits money and writ…
demand deposit
an account on which the depositor can demand money at any tim…
Financial Management -chapter 9
Insurance premiums in the end help you…
The purpose of insurance is to _______…
Without proper insurance certain losse…
Insurance puts an __________ over your…
keep
transfer
bankrupt
umbrella
Insurance premiums in the end help you…
keep
The purpose of insurance is to _______…
transfer
17 terms
Financial Management Chapter 9
Incremental cash flow
Stand alone principle
Sunk cost
Opportunity cost
The difference between a firm's future cash flows with a proj…
The assumption that evaluation of a project may be based on t…
A cost that already been incurred and cannot be recouped and…
The most valuable alternative that is given up if a particula…
Incremental cash flow
The difference between a firm's future cash flows with a proj…
Stand alone principle
The assumption that evaluation of a project may be based on t…
44 terms
Chapter 9 Financial Management
Rent vs. Buy
Rent vs. Buy (Part 2)
Mortgage loan
Rent
Whether to buy or rent is largely a financial decision. The i…
Based simply on cash-flow, renters appear to win because they…
Loan to purchase real estate in which the property itself ser…
Cost charged for using an apartment or other housing space
Rent vs. Buy
Whether to buy or rent is largely a financial decision. The i…
Rent vs. Buy (Part 2)
Based simply on cash-flow, renters appear to win because they…
20 terms
Chapter 9: Financial Management
Financial Manager's Task
Shareholders
Big firms have many owners that own sm…
A firm generates cash through its oper…
Oversee that the firm invests the cash it generates through i…
Owners of the firm
Stock
Selling goods and services; selling equipment & old building
Financial Manager's Task
Oversee that the firm invests the cash it generates through i…
Shareholders
Owners of the firm
24 terms
financial management chapter 9
weighted average cost of captial
WACC formula
Coupon Rate (rd)
rs
The average of the after-tax component costs of capital-debt,…
wdrd(1-T)+wstdrstd(1-T)+wpsrps+wsrs
Rate on new long-term debt being issued by the firm.
Required return on common stock
weighted average cost of captial
The average of the after-tax component costs of capital-debt,…
WACC formula
wdrd(1-T)+wstdrstd(1-T)+wpsrps+wsrs
51 terms
Chapter 9 Financial Management
Under what conditions must a distincti…
As the compounding rate becomes lower…
If you invest $10,000 today at 10% int…
In determining the future value of a s…
B
B
B
C
Under what conditions must a distincti…
B
As the compounding rate becomes lower…
B
19 terms
Financial Management--Chapter 9
A project has an initial cost of $2740…
Which one of the following methods of…
The length of time a firm must wait to…
The internal rate of return a firm is…
net present value
discounted cash flow valuation
payback period
discount rate which causes the net present value of a project…
A project has an initial cost of $2740…
net present value
Which one of the following methods of…
discounted cash flow valuation
12 terms
Financial Management Chapter 9
What does common stock represent and h…
Are common stock dividends specified b…
What are the two models used to estima…
Discounted dividend model
Common stock represents the ownership position in a firm, and…
No! Common stock dividends are not specified by contract—they…
Two models are used to estimate a stock's intrinsic value: th…
The discounted dividend model values a common stock as the pr…
What does common stock represent and h…
Common stock represents the ownership position in a firm, and…
Are common stock dividends specified b…
No! Common stock dividends are not specified by contract—they…
43 terms
Financial Management Chapter 9
Time Value of Money
What is important to investors when ma…
The financial principal is based on th…
Principal
The math of finance whereby a financial return (like interest…
The ability to diversify away some investment risk through th…
"reputation matters" and reflects the ethical behavior of ind…
Initial investment amount. ... You have 1,000 to invest. so...…
Time Value of Money
The math of finance whereby a financial return (like interest…
What is important to investors when ma…
The ability to diversify away some investment risk through th…
31 terms
Chapter 9 Financial Management
Who provides Operations and Maintenanc…
Who provides these O&M, N funds to the…
OFC-20
OFC-94
Congress
The Navy Comptroller
Supplies and Equipage/Repair of other Vessels
Reimbursable
Who provides Operations and Maintenanc…
Congress
Who provides these O&M, N funds to the…
The Navy Comptroller
15 terms
Financial Management-Chapter 9
What is the reason for investing in ca…
Initial Investment
Cash Inflows
Payback Period
Yearly cash inflows (to generate a profit from the project)
The cash outlay that you will have to make at the beginning o…
If you can sell the asset after its useful life to you
The exact amount of time that it will take to recover the ini…
What is the reason for investing in ca…
Yearly cash inflows (to generate a profit from the project)
Initial Investment
The cash outlay that you will have to make at the beginning o…
24 terms
Financial Management Chapter 9
Identify some actions that companies h…
What is the preemptive right, and what…
What are some reasons a company might…
What is the difference between a stock…
A number of companies have persuaded their stockholders to ag…
A provision in the corporate charter or bylaws that gives com…
Classified stock: common stock that is given a special design…
Stock price: current market price... Intrinsic value: represents…
Identify some actions that companies h…
A number of companies have persuaded their stockholders to ag…
What is the preemptive right, and what…
A provision in the corporate charter or bylaws that gives com…
28 terms
Economics and Financial Management-Chapter 9
Benefit-cost ratio (B/C ratio)
Benefits
Comparative effectiveness research (CER)
Compounded
Dividing total benefits by total costs to determine the dolla…
The outputs are contributions produced by the objective funct…
A method for guiding healthcare decisions based on new and ex…
The interest earned in each time. Earns interest in future ti…
Benefit-cost ratio (B/C ratio)
Dividing total benefits by total costs to determine the dolla…
Benefits
The outputs are contributions produced by the objective funct…
Financial Management T/F Chapter 9
Depreciation is how you account for as…
EBIT gives you tax shield (cost x tax…
the way to calculate before tax income…
the way to calculate after tax income…
true
false
true
false
Depreciation is how you account for as…
true
EBIT gives you tax shield (cost x tax…
false
Chapter 9: Global Financial Management
Corporation
Stakeholders
Stake
Rights
A separate legal entity organized under law which possess leg…
An individual or entity which has an interest, financial or n…
An interest or a share in some organization or undertaking
When a person or group has a legal claim, a contract, or some…
Corporation
A separate legal entity organized under law which possess leg…
Stakeholders
An individual or entity which has an interest, financial or n…
37 terms
Chapter 9 questions Financial Management
What is the difference between saving…
What is an investment's rate of return…
What is the relationship between risk…
How does diversification limit your ov…
Investing is to save in a way which earns an income. Just sav…
The income you earn on an investment is a return and the rate…
The relationship between risk and reward is the higher the po…
Why you diversify, you reduce your overall risk of loss.
What is the difference between saving…
Investing is to save in a way which earns an income. Just sav…
What is an investment's rate of return…
The income you earn on an investment is a return and the rate…
16 terms
Chapter 9: Role of Financial Management
Define goals
Define objectives
What do strategic plans involve?
What are the main elements of business…
Longer term outcomes of a business
Break the business operations into achievable and manageable…
- Long term view... - Method of achieving goals... - Monitoring pro…
- Goals... - Objectives... - Strategic planning... - Tactical planning…
Define goals
Longer term outcomes of a business
Define objectives
Break the business operations into achievable and manageable…
95 terms
Financial Management Chapter 9- Test 3
-Represents Ownership
rs
g
-Control
-What does common stock represent?
total returns
growth rate
-Ownership Implies
-Represents Ownership
-What does common stock represent?
rs
total returns
20 terms
Financial Management Midterm 2- Chapter 9
Net present Value
Discounted Cash Flow Valuation
Net Present Value Formula
Discounted Cash Flow Valuation Rule
the difference between an investment's market value and its c…
the process of valuing an investment by discounting its futur…
Estimated Cost + Present Value Asset
An investment should be accepted if the net present value is…
Net present Value
the difference between an investment's market value and its c…
Discounted Cash Flow Valuation
the process of valuing an investment by discounting its futur…
28 terms
Financial Management Chapter 9 Test
check
Demand Deposit
Canceled Check
Overdraft
written order to a bank to pay the amount stated to the perso…
money that may be withdrawn at any time-that is, "on demand"
a check that has cleared your account
A check written for more than your account contains
check
written order to a bank to pay the amount stated to the perso…
Demand Deposit
money that may be withdrawn at any time-that is, "on demand"
27 terms
Financial Management Final-Chapter 9
Net Present Value (NPV)
Discounted Cash Flow Valuation
payback period
Internal Rate of Return (IRR)
Difference between initial cost and market value of a project…
finding the value of a project based upon the present value o…
The length of time a firm must wait to recoup the money it ha…
Discount rate which causes the net present value of a project…
Net Present Value (NPV)
Difference between initial cost and market value of a project…
Discounted Cash Flow Valuation
finding the value of a project based upon the present value o…
23 terms
Financial Management of Healthcare Organization Chapter 9
Revenue Cycle
Accounts Receivable
Gross Receivable
Net Receivable
A multidisciplined approach to reducing the amount in account…
Money due to the organization form patients and third parties…
The full amount a healthcare organization charges
The gross receivable minus any negotiated discounts
Revenue Cycle
A multidisciplined approach to reducing the amount in account…
Accounts Receivable
Money due to the organization form patients and third parties…
15 terms
Chapter 9: Efficient Time & Financial Management
Recommended Expenditure of Time
Type A Personality
Workaholic Personality
Time Juggler Personality
Sleep: 8 hrs... Personal Hygiene: 1 hr... Prep/Eating Meals: 3 hrs…
Appear to be organized and productive but they are less organ…
Self-validation is received from prolonged working hours to m…
Try to do more than one thing at a time (e.g. driving + using…
Recommended Expenditure of Time
Sleep: 8 hrs... Personal Hygiene: 1 hr... Prep/Eating Meals: 3 hrs…
Type A Personality
Appear to be organized and productive but they are less organ…
21 terms
Chapter 9 - Banking and the Management of Financial Institutions
liabilities
checkable deposits
nontransaction deposits
discount loans
the sources of funds the bank uses
bank accounts that allow the owner of the account to write ch…
the primary source of bank funds
borrowings from the Fed; aka advances
liabilities
the sources of funds the bank uses
checkable deposits
bank accounts that allow the owner of the account to write ch…
27 terms
Chapter 9: Banking and the Management of Financial Institutions
Asset Management
Balance Sheet
Capital Adequacy Management
Compensating Balance
The acquisition of assets that have a low rate of default and…
A list of the assets and liabilities of a bank that balances:…
A bank's decision about the amount of capital it should maint…
A required minimum amount of funds that a firm receiving a lo…
Asset Management
The acquisition of assets that have a low rate of default and…
Balance Sheet
A list of the assets and liabilities of a bank that balances:…
33 terms
Chapter 9 Banking and the Management of Financial Institutions
Bank Balance Sheet~Liabilities section
Bank Balance Sheet~Assets section
Discount Rate
Cash Deposit
-Checkable deposits... -Nontransaction deposits... -Borrowings... -Ban…
-Reserves... -Cash items in process of collection... -Deposits at o…
interest rate charged to banks when borrowing from the FED
Opening of a checking account leads to an increase in the ban…
Bank Balance Sheet~Liabilities section
-Checkable deposits... -Nontransaction deposits... -Borrowings... -Ban…
Bank Balance Sheet~Assets section
-Reserves... -Cash items in process of collection... -Deposits at o…
58 terms
Chapter 9 & 10 - Financial Management & Securities Markets
capital budget
capital expenditures
cash budget
cash flow forecast
a budget that highlights a firms spending plans for major ass…
major investments in either tangible long-term assets such as…
a budget that estimates cash inflows and outflows during a pa…
forecast that predicts the cash inflows and outflows in futur…
capital budget
a budget that highlights a firms spending plans for major ass…
capital expenditures
major investments in either tangible long-term assets such as…
30 terms
Chapter 9: Banking and the Management of Financial Institutions
Balance Sheet
Discount Loans
Reserves
Vault Cash
A balanced list of the assets and liabilities of a bank (or f…
A bank's borrowings from the Federal Reserve System; also kno…
Banks' holding of deposits in accounts with the Fed plus curr…
Currency that is physically held by banks and stored in vault…
Balance Sheet
A balanced list of the assets and liabilities of a bank (or f…
Discount Loans
A bank's borrowings from the Federal Reserve System; also kno…
28 terms
Chapter 9- Banking and the Management of Financial Institutions
Asset management
Asset transformation
Balance sheet
Capital adequacy management
The acquisition of assets that have a low rate of default and…
The process of turning risky assets into safer assets, accomp…
A balanced list of the assets and liabilities of a bank (or f…
A bank's decisions about the amount of capital it should main…
Asset management
The acquisition of assets that have a low rate of default and…
Asset transformation
The process of turning risky assets into safer assets, accomp…
31 terms
Chapter 9: Banking and the Management of Financial Institutions
balance sheet
liabilities
types of liabilities
checkable deposits
a list of the bank's assets and liabilities ... 1. total assets=…
sources of funds the bank uses... 1. a bank acquires funds by is…
1. checkable deposits ... 2. nontransaction deposits... 3. borrowin…
bank accounts that allow the owner of the account to write ch…
balance sheet
a list of the bank's assets and liabilities ... 1. total assets=…
liabilities
sources of funds the bank uses... 1. a bank acquires funds by is…
128 terms
Chapter 9: Banking and the Management of Financial Institutions
Which of the following statements are…
Which of the following statements is f…
Which of the following are reported as…
Which of the following are reported as…
A bank's balance sheet shows that total assets equal total li…
Bank capital is recorded as an asset on the bank balance sheet.
Checkable deposits
Discount loans
Which of the following statements are…
A bank's balance sheet shows that total assets equal total li…
Which of the following statements is f…
Bank capital is recorded as an asset on the bank balance sheet.
Financial Management FIN 3400 Chapter 9
The discount rate is the interest rate…
An increase in the interest rate will:
Compound interest can be described as:
You plan to invest $2,000 per year for…
True. There are several interchangeable names for the interes…
increase the future value & decrease the present value... The PV…
interest earned on principal and on accrued interest
$24,012.21... n = 10... I/y = 4... pv = 0... pmt = $2,000... cpt fv = $24,01…
The discount rate is the interest rate…
True. There are several interchangeable names for the interes…
An increase in the interest rate will:
increase the future value & decrease the present value... The PV…
39 terms
Chapter 9: Banking and the Management of Financial Institutions
Bank Balance Sheet
Source of funds
Uses of funds
Bank Liabilities
A list of the bank's assets and liabilities... -total assets= to…
Selling Liabilities and capital
Asset aquisition
-Checkable Deposits... -Nontransaction deposits... -Borrowings... -Ban…
Bank Balance Sheet
A list of the bank's assets and liabilities... -total assets= to…
Source of funds
Selling Liabilities and capital
26 terms
Financial Management (FIN 2000): Chapter 9
capital
budget
capital budget
capital budgeting
fixed (long-term) assets used in production
plant that details projected cash inflows and cash outflows
outline of planned expenditures on fixed assets
the process of planning and evaluating expenditures on assets…
capital
fixed (long-term) assets used in production
budget
plant that details projected cash inflows and cash outflows
30 terms
Chapter 9: Global Finance, Financial Management
SWM - Shareholder Wealth Maximization…
Corporation
Stakeholder Capitalism Model
Economic Channel
Model of a business in which the companies primary goal is to…
An entity with its own legal structure and to which laws appl…
Maximization of capital of a company. Maximize the wealth of…
actions defined by self interest even if the company pursues…
SWM - Shareholder Wealth Maximization…
Model of a business in which the companies primary goal is to…
Corporation
An entity with its own legal structure and to which laws appl…
43 terms
Human Resource Management- Chapter 9- Direct Financial Compensation
Compensation
Direct Financial Compensation
Indirect Financial Compensation
Nonfinancial Compensation
Total of all rewards provided to employees in return for thei…
Pay that a person receives in the form of wages, salary, comm…
All financial rewards that are not included in direct financi…
Satisfaction that a person receives fro the job itself or fro…
Compensation
Total of all rewards provided to employees in return for thei…
Direct Financial Compensation
Pay that a person receives in the form of wages, salary, comm…
22 terms
Financial Management Ch 9
Capital Budget
Capital Budgeting
Straight-line Depreciation
Marginal Corporate Tax Rate
lists the projects and investments that a company plans to un…
the process of analyzing projects and investment opportunitie…
a method of depreciation in which an asset's cost is divided…
the tax rate a firm will pay on an incremental dollar of pret…
Capital Budget
lists the projects and investments that a company plans to un…
Capital Budgeting
the process of analyzing projects and investment opportunitie…
43 terms
Personal Financial Literacy - Chapter 9
Credit
Credit Bureau
Credit Report
Credit Score
Money that a lender makes available to a borrower with the un…
Organizations that collect credit information about individua…
Summarizes an individual's existing and past credit history,…
A numeric score that uses your credit history to assess your…
Credit
Money that a lender makes available to a borrower with the un…
Credit Bureau
Organizations that collect credit information about individua…
48 terms
arm 54 Principles and Practices of risk management chapter 9- financial statements
accounting
financial statement
four primary financial statements
Balance sheet
the classification, analysis and determination of the appropr…
a document that quantitatively presents a company's financial…
balance sheet... income statement... statement of changes in shareh…
listing of everything that the organization owns and owes at…
accounting
the classification, analysis and determination of the appropr…
financial statement
a document that quantitatively presents a company's financial…
15 terms
Chapter 9 Key Terms-Financial Management (FIN 4326-70)
Cost of capital
Cost of long-term debt
Net proceeds
Flotation costs
Represents the firm's cost of financing and is the minimum ra…
The financing cost associated with new funds raised through l…
Funds actually received by the firm from the sale of a securi…
The total costs of issuing and selling a security.
Cost of capital
Represents the firm's cost of financing and is the minimum ra…
Cost of long-term debt
The financing cost associated with new funds raised through l…
26 terms
Financial Accounting Chapter 9
Amortization of Intangible Assets
Book (or Carrying) Value
Capitalize
Copyright
The systematic and rational allocation of the cost of an inta…
The amount at which an asset or liability is reported after d…
To record a cost as an asset rather than an expense.
A form of protection provided to the original authors of lite…
Amortization of Intangible Assets
The systematic and rational allocation of the cost of an inta…
Book (or Carrying) Value
The amount at which an asset or liability is reported after d…
Financial Management Chapter 9 Making Capital Investment Decisions
Incremental cash flows
The incremental cash flows for project…
Stand-alone principle
Sunk cost
The difference between a firm's future cash flows with a proj…
any and all changes in the firm's future cash flows that are…
The assumption that evaluation of a project may be based on t…
A cost that has already been incurred and cannot be recouped,…
Incremental cash flows
The difference between a firm's future cash flows with a proj…
The incremental cash flows for project…
any and all changes in the firm's future cash flows that are…
15 terms
Financial Management Chapter 6-9
coupon
face value
coupon rate
maturity
stated interest payment made on a bond
the principal amount of a bond that is repaid at the end of t…
the annual coupon divided by the face value of a bond
date on which the principal amount of a bond is paid
coupon
stated interest payment made on a bond
face value
the principal amount of a bond that is repaid at the end of t…
32 terms
Financial Accounting Chapter 9
Long-Lived Assets
Tangible Assets
Intangible Assets
Land Improvements
resources owned by a business that enable it to produce the g…
long lived assets that have physical substance, which simply…
long-liveed assets that have special rights but no physical s…
include sidewalks, pavement, landscaping, fencing, lighting,…
Long-Lived Assets
resources owned by a business that enable it to produce the g…
Tangible Assets
long lived assets that have physical substance, which simply…
33 terms
Financial Accounting Chapter 9 EAS
Liabilities
Current Liabilities
Liabilities are recorded at ...
Liquidity
Probable debts or obligations of the entity that result from…
Short-term obligations that will be paid in cash (or other cu…
... their current cash equivalents
Ability to pay current obligations.
Liabilities
Probable debts or obligations of the entity that result from…
Current Liabilities
Short-term obligations that will be paid in cash (or other cu…
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