Finc 425 exam 1 - Study guides, Class notes & Summaries

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FINC 425 exam 1
Exam (elaborations) • 3 pages • 2023

What is generally the fair price of a financial asset? - Answer- the present value of all expected future cash flows What is time "1" - Answer- the end of period 1 (also the beginning of period 2) How are we able to find PV to infinity? - Answer- because the further into the future the CFs get, the less value they have (their values approach zero) What does APR not account for? - Answer- compound interest APR= - Answer- Annual Percentage Rate EAR= - Answer- effective annual rate...

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FINC 425 Exam 1 Complete Questions And Detailed Correct Answers.

FINC 425 Exam 1 Complete Questions And Detailed Correct Answers.
Exam (elaborations) • 5 pages • 2024
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Fair price of a financial asset - correct answer The PV of all expected future CFs associated with the asset PV of Multiple CFs - correct answer Can calculate by discounting each CF separately and then summing Annuity - correct answer equally spaced, level stream of CFs for a specified finite time Perpetuity - correct answer ...