ADMS 3530 Study Guide - Midterm Guide: Creative Accounting, Compound Interest, Cash Flow

• School: York University
• Department: Administrative Studies
• Course: ADMS 3530
• Professor: Alagurajah

Document Summary

Investment decision: value > investment = attractive, financing decision. Level cash flows: perpetuities/annuities: perpetuities/annuities/perpetuities due/annuity due, use formula sheet know how to rearrange for certain measurements. Pv/fv of growing annuity use formula sheet. Inflation & time value of money: real vs. nominal cash flow, nominal cash flow fixed amount, real cash flow fluctuate to inflation. Ch 6 valuing bond: bonds & bond market, collect debt, bond market data, coupon/bid price/ ask price / bid yield / ask yield. If not buy bond on coupon payment pay more: compensate accumulated settle date. Interest rates & bond price: value of bond pv of (cid:271)o(cid:374)d"s flo(cid:449) If reinvest account for coupon income increase: yield curve. Important characteristics: yields on bonds that differ in maturities not the same. Level of interest rate change over time: real interest rate depends on inflation. If expect inflation increase demand higher short term rates: upward curve, opposite if inflation decrease.