Busıness Fınance I

Yanıt Açıklaması: Inventory budget is used to determined the required inventory level for each item or a product during a particular period. By the virtue of production process, three main costs of production exist to form the unit cost per product as to determine the monetary amount of the finished products under both generally accepted accounting principles and international financial reporting standards.

Yanıt Açıklaması: Beta measures the co-movement of a securities returns with the market return. It is stimated by standardizing the covariance between a given security and market portfolio with the variance of the market.

Yanıt Açıklaması: The first dimension of financial planning is the time horizon. There exist two time horizons. Shortterm is specified as maximum 12 months and the long-term which is more critical in the context of planning is said to be 5 years on average. Therefore, the correct option is A.

Yanıt Açıklaması: An increase in interest rates reduces bond values. However,the decline in value of long-term bonds is more than the decline in value of short–term bonds because achange in interest rates has only a modest impact on the present value of near-term cash flows but a greater impact on the present value of distant cash flows. Therefore, long-term bonds have a higher sensitivity to changes in market interest rates and have higher interest rate risk.

Yanıt Açıklaması: Option C is about the forecasts and estimations to prepare the proforma financial reports.The other ones are about the steps of preparation of a proforma balance sheet in order.

Yanıt Açıklaması: Preparation of a proforma balance sheet involves four basic steps: The forecast of sales and distribution of the sales proceeds to financial accounts, Determining the amount of funds intrinsically generated, Determining the equity of the company, Balancing the total of projected asset and liabilities

Yanıt Açıklaması: Capital-Asset-Pricing Model is a model describing the relationship between the systematic risk of a security, namely beta, and expected returns. As long as the market risk premium is positive, higher beta value bring higher returns.

Yanıt Açıklaması: The first time the company offers its shares to the public is called initial public offering (IPO). Therefore, the correct option is B.

Yanıt Açıklaması: Capital gains yield is negative when there is a decline in value of a bond.

Yanıt Açıklaması: Accounts Receivable is a component of "Current Assets".

Yanıt Açıklaması: When the market interest rate is equal to the coupon interest rate, bonds sell at their par value. When the market interest rate is below the coupon interest rate, bonds sell above their par value and they are called premium bonds. When the market interest rate exceeds the coupon interest rate, bonds sell below their par and are called discount bonds.

Yanıt Açıklaması: Financial intermediary is an institution in a financial system that acts as a middleman between borrowers and lenders.

Yanıt Açıklaması: Net Working Capital is defined as the difference between the current assets and current liabilities of the same period.

Yanıt Açıklaması: Holding (or Carrying) Costs: This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.

Yanıt Açıklaması: Cash divident policy is not an output of financial planning but an assumption used in.

Yanıt Açıklaması: When the market's required rate of return for a particular bond is much less than its coupon rate, then this implies the market interest rates have declined and the value of the bond has increased. Hence, the bond is selling at a premium.

Yanıt Açıklaması: The money that can be borrowed today by paying the loan in equal installments referes to the present value of an annuity.

Yanıt Açıklaması: Since covariance is standardized by dividing by the standard deviations, the correlation always lies between +1 (perfect positive correlation) and -1 (perfect negative correlation). Zero correlation would mean there is no relation at all.

Yanıt Açıklaması: Suppose that weight of X in portfolio is w. Then the weight of Y will be 1-w, given 0

Yanıt Açıklaması: The process of financial planning includes the following financial analysis and aspects: • Cash Flows: The building block of financial planning is projected cash flows for future given the activity level of today and the forecasts of future. The cash flows convey the liquidity performance, flexibility and risk concepts to the financial planning as supported by the accounting data and financial reports, • Departmental analysis: For large companies and conglomerates, the targets produced by financial planning for each individual department generated by taking into account its own investment finance and cash flow requirements serves as benchmarks of success. • Scenario Analysis:Theflexibilityoffinancial planning by the use of the capabilities of information technology enables to realize scenario analysis to evaluate the effects of the possible financial and environmental changes on corporate activities in thefuture. • Short and Long-term Time Frame: The financial plans can be prepared for short (less than 1 year) and long t(more than 1 year term. They can also be prepared as monthly, quarterly and semiannually, each of which are used for control purposes. In the short-term, the basic motivation is to determine the funding needs or surplus and the method to secure or invest the relevant amounts. In thelong run financial planning is used as a strategic tool inordertomaximize the return under different risk estimations.