Finance Questions Essay Example | Topics and Well Written Essays - 250 words

Finance Questions - Essay ExampleEnron established several particular liability special purpose entities which kept inflating its stock price untill the scandal was discovered. Similarly, Satyam, an Indian IT firm was strand guilty of forging account books by creating fictitious assets in a sister company.3. The concept of m value of money can be used to calculate the monthly installment to be stipendiary for a mortgage for a given time period. Similarly, if a person cant contain more than a certain amount per month, the number of years of payment of mortgage can be calculated using the time value of money.4. The primary risk for investment in bonds in pursuance lay outs. Hence, in a rising interest rate scenario, bonds will give lower returns. Higher inflation also makes bonds less attractive. Other risks associated with bonds are default risk of the issuer, lack of liquidity in the grocery store and provision of call back (Hofman, 2010).5. Zero coupon bonds pay the entire interest at matureness unlike other bonds and generally give maximum yields. High net worth investors looking for immense term investments generally invest in these bonds. Banks and big corporations are interested in these bonds.6. Risk is co-ordinated in capital budgeting by either by using a higher discount rate or by requiring a higher annual return on the project. Systemic and unsystemic risks are include by using Beta and standard deviation of the returns.Hofman, Julian. 2010. Bond risks and rewards. Retrieved online 07 February, 2012 from