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Money Demand, the Equilibrium Interest Rate, and Monetary Policy
Money Demand, the Equilibrium Interest Rate, and Monetary Policy

Technical Prep
Technical Prep

... value for the firm. The equity value divided by the number of diluted shares outstanding is the per share value. (Whew!!!) DCF results should be presented as a RANGE of estimated values, not a single estimate. DCF tends to be overvalued because of projections by management. Trading Comparables (Comp ...
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... shopping. Just as you wouldn’t want to have all of your stocks in one style, you also want to diversify your bond portfolio. A well-rounded bond portfolio should have some exposure to most of the following bond types: Government, mortgage-backed, municipal, corporate, and world bonds. It is importan ...
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... The model specifies the two sources of risk: market or systematic risk attributable to the security’s sensitivity to market movements and firm specific risk. The above equation is a single-variable regression equation of Ri on the market excess return RM. The regression line is called the security c ...
MODIGLIANI-MILLER PROPOSTIONS
MODIGLIANI-MILLER PROPOSTIONS

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... Answer: a 15. Which of the following is not true regarding prepayments? a. The greater the prepayments, the shorter the security's duration. b. Prepayments are relatively low during the first two years of a mortgage. c. Mortgages to older people tend to have more prepayments than mortgages to younge ...
here - EBS
here - EBS

... interest rates. This list may change over time due to reasons both within and outside of our control. If this happens, we will tell you about the change as soon as possible and publish an updated variable rate policy statement on our website. How do we make decisions when setting variable interest r ...
Synopsis_2014_v3 ed 7 and 8
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... Ch. 2-6 presents different financial institutions. Identify the major types of financial institutions, which are they? What do they do? We go through these chapter briefly in class. The material is meant for self-studies. It is important to understand the different institutions and what they do on t ...
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... been expecting rising interest rates for the last several years. Over the last three years, for example, economists had forecast the 10-year U.S. Treasury rate to be 70 basis points (bps), 160 bps, and 80 bps higher than the actual rate at the end of 2010, 2011, and 2012, respectively. Today, econom ...
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11 log121 3 log4 = x - Plain Local Schools

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... The Desjardins Funds are not guaranteed, their value fluctuates frequently and their past performance is not indicative of their future returns. The indicated rates of return are the historical annual compounded total returns as indicated the date of the present document including changes in securit ...
Money Demand, the Equilibrium Interest Rate, and Monetary Policy
Money Demand, the Equilibrium Interest Rate, and Monetary Policy

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... existing assets and the firm plans to keep the same debt / equity ratio, then the firm can value the new project at the after-tax WACC. Example: Project cash flows: -$100 at t = 0, and a perpetuity of $12.50 expected positive cash flows (taxable income) starting at time one. 34% tax rate results in ...
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Chapter 29 - Patrick Crowley

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Chapter 15

... The risk to the equity is increased by the used of financial leverage  Leverage allows the cash flows to be divided into two components: less risky and more risky  Value can be created if debt holder and equity holder have different risk-return preferences ...
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Present value

In economics, present value, also known as present discounted value, is the value of an expected income stream determined as of the date of valuation. The present value is always less than or equal to the future value because money has interest-earning potential, a characteristic referred to as the time value of money, except during times of negative interest rates, when the present value will be greater than the future value. Time value can be described with the simplified phrase, “A dollar today is worth more than a dollar tomorrow”. Here, 'worth more' means that its value is greater. A dollar today is worth more than a dollar tomorrow because the dollar can be invested and earn a day's worth of interest, making the total accumulate to a value more than a dollar by tomorrow. Interest can be compared to rent. Just as rent is paid to a landlord by a tenant, without the ownership of the asset being transferred, interest is paid to a lender by a borrower who gains access to the money for a time before paying it back. By letting the borrower have access to the money, the lender has sacrificed the exchange value of this money, and is compensated for it in the form of interest. The initial amount of the borrowed funds (the present value) is less than the total amount of money paid to the lender.Present value calculations, and similarly future value calculations, are used to value loans, mortgages, annuities, sinking funds, perpetuities, bonds, and more. These calculations are used to make comparisons between cash flows that don’t occur at simultaneous times. The idea is much like algebra, where variable units must be consistent in order to compare or carry out addition and subtraction; time dates must be consistent in order to make comparisons between values or carry out simple calculations. When deciding between projects in which to invest, the choice can be made by comparing respective present values of such projects by means of discounting the expected income streams at the corresponding project interest rate, or rate of return. The project with the highest present value, i.e. that is most valuable today, should be chosen.
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