How valuation of financial asset relate to future cash flows


Question 1: What is the present value of:

(a) $9,000 in 7 years at 8 percent

Question 2: If you invest $9,000 today , how much will you have :

(a) In 2 years at 9 percent

(d) In 25 years at 14 percent (compounded semi-annually)

Question 3. How is valuation of any financial asset related to future cash flows?

Question 4. What factors might influence a firm's price earnings ratio?

Question 5. What was the purpose of the Sarbanes Oxley Act of 2002?

Question 6. If inflationary expectations increase, what is likely to happen to yield to maturity on bonds in the marketplace? What is also likely to happen to price of bonds?

Question 7. What two components make up the required rate of return on common stock?

Question 8. In what two ways do security markets provide liquidity?

Question 9. If, as an investor , you had a choice of daily, monthly or , quarterly compounding which would you choose and why?

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Finance Basics: How valuation of financial asset relate to future cash flows
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