...Resource you used Time value of money Is the idea that money available at a present time is worth a lot more then the amount that its is in the future due to the “potential earning capacity”. The core principle of finance is provided money is able to earn interest and any money received sooner is worth more. Investopedia - Time Value of Money - TVM. (2014). Retrieved from http://www.investopedia.com/terms/t/timevalueofmoney.asp Efficient market Is a market that prices will quicky respond when there is an announcement of any kind of new information. Textbook. Primary versus secondary market Risk-return tradeoff Agency (principal and agent problems) Market information and security prices and information asymmetry Agile and lean principles Return on investment Cash flow and a source of value Project management Outsourcing and offshoring Inventory turnover Just-in-time inventory (JIT) Vender managed inventory (VMI) Forecasting and demand management University of Phoenix Material Definitions Define the following terms using your text or other resources. Cite all resources consistent with APA guidelines. Term Definition Resource you used Time value of money Is the idea that money available at a present time is worth a lot more then the amount that its is in the future due to the “potential earning capacity”. The core principle of finance is provided money is able to earn interest and any money received sooner is worth more. Investopedia...
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...of people used to sit in the bench particularly in Lombardy street of Italy for taking deposit and lending money as a banking business. Definition of Bank: ➢ Different authors have defined the “Bank” in different ways with a common principle to accept deposit from the public and lending the same to the borrowers. ➢ Some important definitions are: ➢ “A bank is an establishment which trades in money, and establishment for deposit custody and issue of money, and also for granting loan and discounting bills and facilitating transmission of remittances from one place top another” …... from Imperial Dictionary. ➢ “An organization through which funds in the form of money or claim to money are assembled and transferred from those individuals and firms having a surplus of economic goods(as represented by such funds) to other individuals & firm whose needs for funds exceed their existing supply”..... from Rollin G. Thomas. ➢ “Banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise. ……………. from The Bank Company Act, 1991. Banker: ➢ Section-3 of NI Act. states that Banker means “ a person transacting the business of accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise and...
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...Islamic money market Based my reading, I founded that most of the stakeholder are seeking for the pure markets, which eliminate interest and other prohibited products. For this reason, Bank Negara Malaysia has made some effort of making the Islamic Money Market become one of the vital and important markets as compared to conventional money market. In addition, I mentioned that the conventional money market or Islamic money market both them have the same characteristics, purposes, and aims. However, there are some point that can differentiate between them is the instruments allowed in the Islamic money market are restricted to certain circumstances and conditions. The Islamic Money Market is one of the financial markets that all the activities are involved or carried out in a ways that do not conflict with the conscience of Muslims and the religion of Islam even Shari’ah principle. The all Instruments involved in the Islamic money market should be adhered and complied to principles established by the Shari'ah or the Islamic law as revealed in the Qur'an and Sunnah. In Islam, it is required that all products involve in the sale and buying (including the instruments in the financial markets) shall be from the ethical sectors or in other words, the profits gained shall not be in or from the prohibited activities. These prohibited activities include alcohol production, gambling, pornography, interest-base (riba) sector and should be free from the interest-based debt. The Islamic...
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...guidelines. |Term |Definition |Resource you used | |Time value of money |The idea that money available at the present time is worth more |Time value of money TVM. (2014). Retrieved | | |than the same amount in the future due to its potential earning |from | | |capacity. This core principle of finance holds that, provided |http://www.investopedia.com/terms/t/timevalueo| | |money can earn interest, any amount of money is worth more the |fmoney.asp | | |sooner it is received. | | |Efficient market |An efficient market is a market in which all the available |Titman, S., Keown, A., & Martin, J. (2014). | | |information is fully incorporated |getting started principals of finance. | | |into securities prices, and the returns investors will earn on |Finanical Managment, principles and | | |their investments cannot be predicted. |appliations (12 ed., p. 210). New Jersey: | | | ...
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...the term ‘Agency Problem’? The agent problem incur when the agent agree to work in favor of principle in return for incentives. Such agreement may incur huge cost for agent, thus the agent may begin to pursue its own agenda or ignore interest of principle which cause agency problem. For example, the management would like to borrow money to repurchase shares to lower the corporation’s share base and increase shareholder return. Stockholders will benefit. However, creditors will concern given the increase in debt that would affect future cash flow. 2. What role does asymmetric information play in producing this problem? Asymmetric information exists in a game when a player does not know some relevant fact about another player. Game of this nature is called incomplete information game. In the principle-game, principle wants to induce some actions by agent. If principle cannot observe the behavior of agent, the information problem is the hidden action. If principle cannot observe some relevant characteristic of agent ( e.g. skill-level, or firm’s cost) , the problem is the hidden information. Thus asymmetric information may cause agency problem. 3. Briefly explain the main series of events that led to the collapse of Storm Financial. Firstly, Storm Financial encourages their investors to buy stock by borrowing against their home and using cash to raise more money to invest. Actually all these investors don’t have sufficient income to make the repayments. ...
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...INTRODUCTION A sovereign wealth fund (SWF) is a state-owned investment fund investing in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. SWFs are invested globally. Central banks use their foreign-exchange reserves or revenues from commodity exports to fund these investments. The three main characteristics of SWFs are 1. To maximize long-term returns using foreign exchange reserves 2. To serve the short-term "currency stabilization" 3. Liquidity management SIGNIFICANCE AND IMPORTANCE OF SOVEREIGN FUNDS OBJECTIVES OF SWFS SWFs are created from budgetary surpluses where the governments have no international debt. In countries where such liquidity is not possible, such as the nations that depend on raw material exports, the main objective for creation of SWF is for controlling high volatility of resource prices, unpredictability of extraction, and exhaustibility of resources. STABILIZATION SWFS The SWFs that are created to reduce volatility of government revenues, to counter the boom-bust cycles' adverse effect on government spending and the national economy are called Stabilization SWFs. SAVINGS SWFS These SWFs are created to build up savings for future generations. Resource curse SWFs can help avoid resource curse in resource-rich countries. Governments may be able to spend the money immediately, but risk causing the economy to overheat, e.g., in Hugo...
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...from where they will raise fund, where they will invest and how much of the profit will be distributed among the shareholders. “Finance” Came from Latin word “finis” means “dealing with the money”.finace is called the art and science of managing money. At the micro level, finance is the study of financial planning, asset management and fund raising for business and financial institutions. At the macro level, finance is the study of financial institution and financial markets and how they operate within the financial systems in both the domestic and global economics. Scholar’s view: “Finance consists of providing and utilizing the money, capital rights, credit and funds of any kind which are employed in the operation of an enterprise.” _George R Terry “Finance is concerned with the process, institutionsmarkets and instruments involved in the transfer of money among and between individuals, business and governments”. _Lawrence J Gitman From the above discussion, it can be said that finance is the process of financial planning, identification of sources of fund raising, investment of fund, protection of fund, distribution of profit to achieve the goal of the organization. Question-2: What is business finance? Ans: Generally, finance which is concerned to meet...
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...Personal Finance: Turning Money into Wealth, 6e (Keown) Chapter 1 The Financial Planning Process 1.1 Facing Financial Challenges 1) Once a sound financial plan is in place, there should be no need to ever change it. Answer: FALSE Diff: 1 Topic: The Financial Planning Process AACSB: 3. Analytical skills 2) When comparing two different investment opportunities the investor should always choose the investment that minimizes the total amount of taxes paid. Answer: FALSE Diff: 2 Topic: Minimization of Taxes AACSB: 3. Analytical skills 3) Being financially secure involves balancing what you earn with A) your investments. B) what you spend. C) your retirement plans. D) your current level of debt. Answer: B Diff: 1 Topic: Financial Planning AACSB: 3. Analytical skills 4) In order for your financial plan to be realistic and attainable it needs to be based upon your A) budget. B) income level. C) number of tax deductions, exemption, exclusions, and credits. D) balance sheet. E) none of the above Answer: B Diff: 2 Topic: Financial Planning AACSB: 3. Analytical skills 5) Personal financial planning can help you to A) deal with unplanned health issues. B) minimize your tax payments to Uncle Sam. C) minimize your chances of personal bankruptcy. D) have enough money for a comfortable retirement. E) all of the above. Answer: E Diff: 2 Topic: Financial Planning AACSB: 3. Analytical skills 6) What are common factors found...
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...University of Phoenix Material Definitions Define the following terms using your text or other resources. Cite all resources consistent with APA guidelines. |Term |Definition |Resource you used | |Time value of money |“A dollar received today is worth more than a|Titman, S. Keown, A. J. & . Martin ,J. D. (n.d.). | | |dollar received in the future. Conversely, |Financial Management. Principles and Applications: | | |a dollar received in the future is worth less|Chapter 1: Getting Started: Principles of Finance: 1.4. | | |than a dollar received today. Perhaps the |The Five Basic Principles of Finance. 12th,. ed. | | |most fundamental principle of finance is that|Copyrighted by Pearson Education. (2014). Retrieved from| | |money has a time value. A dollar received |https://newclassroom3.phoenix.edu/Classroom/#/contextid/| | |today is more valuable than a dollar received|OSIRIS:48546409/context/co/view/activityDetails/activity| | |one year from now. That is, we can invest the|/3195cb75-8a75-4bd9-a1c3-0092ba334301/expanded/False | | ...
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...Expected Returns BUS 401 Principles of Finance Instructor: February 29, 2016 Present and Future Values, and Expected Returns Critically reflect on the importance of present and future values. This week started rough for me but while reviewing the material for this week’s lesson I learned the importance of the present value (PV) and future value (FV). PV and FV are related in a sense because they both represent the financial worth of the money at a given time. For starters, present value is the current financial worth of money at that moment. In contrast used to increase a likely return profit. The future value is the financial worth of value of the items at a particular time. In contrast used to measure the expected amounts of money that a given quantity of the cash that will be worth at the available time. Furthermore, FV assists in investment decisions when determining the amount of money by calculating the financial value of the money. The time value of the money is an indication that the money available now is worth more than it would be on the forthcoming date due to the potential money making capacity. What factors must be considered when calculating present and future values? Calculating PV, the factor must include discounting because discounting reveals the time value of the investment and any liabilities occurs along the way with the investment. The use of present value in the calculation of money provides future value as well for...
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...made significant efforts in this time and introduce Islamic banking to the public awareness of ethical and social values. In 2010, the "Third Country Investment Brokerage" entered the German market with a license. Kuwait Turkish Participation Bank, in October of 2012 to get a bank license to the German Supervisory Authority [Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)] filed an application. the necessary licenses to be able to collect deposits and provide loans granted in December 2014. Thus, German law the provisions of the Investment Bank to enter KT Lender status, the German Bank for Savings Deposit and Insurance Fund [Entschädigungseinrichtung deutscher Banken GmbH (EDB)] has been a member. Since July 1, 2015 KT perform banking transactions Bank AG Berlin branch has opened in Frankfurt and Mannheim. We planned future branches will be opened in Cologne and Munich. It is also considered as well as the opening of a branch in Hamburg. In other European ülkelerindede serve their Islamic banking products according to KT Bank AG are among the long-term plans. "Islamic / Muslim appropriate banking / Islamic Banking" refers to the base of the banking and financial affairs of the Islamic religion, values and the obligations of the responsibility in the sense of making accordingly. This means that, given the money lent money at interest ( "Riba"), all kinds of jobs with gambling character ( "Mays") and investing in jobs not conform to...
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...Management: Principles and Applications) This is a mechanism that is used to facilitate the transfer of savings from those economic units with a surplus to those with a deficit. If we didn’t have financial markets people or companies couldn’t buy houses, life insurance policies, governments or firms couldn’t spend more money than what they actually earned. The text says that the economy would suffer without a developed financial market system. That the rate of capital formation would not be as high if financial markets did not exist. 14-2. Define in a technical sense what we mean by financial intermediary. Give an example of your definition. The financial intermediary collects the savings of individuals and issues its own (indirect) securities in exchange for these savings. The intermediary then uses the funds collected from the individual savers to acquire the business firm’s (direct) securities, such as stocks and bonds. I think an example would be a business giving a direct payment in a savings bond that the employee can match and put the same amount into the same savings plan. 14-3. Distinguish between the money and capital markets. Money market refers to all institutions and procedures that provide for transactions in short-term debt instruments generally issued a by borrowers with very high credit ratings. Capital markets refer to all institutions and procedures that provide for transactions in long-term financial instruments. (Financial Management: Principles and Applications) ...
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...Time Value of Money Terminology Terminology (AKA jargon) can be a major impediment to understanding the concepts of finance. Fortunately, the vocabulary of time value of money concepts is pretty straightforward. Here are the basic definitions that you will need to understand to get started (calculator key abbreviations are in parentheses where appropriate): Banker's Year A banker's year is 12 months, each of which contains 30 days. Therefore, there are 360 (not 365) days in a banker's year. This is a convention that goes back to the days when "calculator" and "computer" were job descriptions instead of electronic devices. Using 360 days for a year made calculations easier to do. This convention is still used today in some calculations such as the Bank Discount Rate that is used for discount (money market) securities. Compound Interest This refers to the situation where, in future periods, interest is earned not only on the original principal amount, but also on the previously earned interest. This is a very powerful concept that means money can grow at an exponential rate. Compounding Frequency This refers to how often interest is credited to the account. Once interest is credited it becomes, in effect, principal. Note that the compounding frequency and the frequency of cash flows are not always the same. In that case, the interest rate is typically adjusted to an effective rate that is of the same periodicity as the cash flows. For example, if we have quarterly cash flows...
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...University of Phoenix Material Definitions Define the following terms using your text or other resources. Cite all resources consistent with APA guidelines. |Term |Definition |Resource you used | |Time value of money |The idea that money available at the present time is worth more than the same |www.investopedia.com | | |amount in the future due to its potential earning capacity. This core |that my current money is worth more than| | |principle of finance holds that, provided money can earn interest, any amount |my future money | | |of money is worth more the sooner it is received. | | |Efficient market |Market efficiency was developed in 1970 by Economist Eugene Fama who's theory |www.investopedia.com | | |efficient market hypothesis (EMH), stated that it is not possible for an |that an investor can not out smart the | | |investor to outperform the market because all available information is already|stock | | |built into all stock prices | | |Primary versus |A market that issues...
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...ESSAY CASE: ‘Ponzi schemes’ ‘Ponzi schemes’ are scams in which investors are promised exaggerated profits (often short-term) from supposedly can’t-miss investments. If and when early investors are paid returns, the money doesn’t come from actual investment gains; it comes from new cash pouring in from later investors. Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The "return" to the initial investors is paid out of the investments of new entrants, and not out of profits. Often the high returns lead investors to leave their money in the scheme, leading the promoter not to have to pay out very much to investors; they simply have to send statements to investors showing them how much they earned. This maintains the deception that the scheme is a fund with high returns. Ponzi scammers promise windfall returns, counting on their victims to be either gullible or greedy—and sometimes both. The appeal of quick and hefty profits is precisely why some people fall for Ponzi schemes, even though they clearly fall into the category of too good to be true. Charles Ponzi, an Italian immigrant living in Boston in the early 20th century, was a master at playing the gullibility-greed game. He was clever, yes, but more than that, he was charming and charismatic, easily convincing people to jump aboard his pie-in-the-sky schemes. He...
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