finman

"Financial management is the application of managerial principles to the area of financial decision-making."

(a)  

Answer explanation

The present value of the cash inflows must be equal to the present value of the cash outflows when subjected to the yield to the maturity.

The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to maturity.

• True

• False

Answer explanation

Under YTM calculation, it is assumed that all coupons are reinvested at the same date. Computing for YTM can be done by interpolation or approximated by using a formula. In case the problem is silent, the interpolation method is preferred.

This can be described simple as the percentage of profit the investor earns from the time of investment until maturity stated in % per year. It is the rate of return anticipated on a bond if it is held until the maturity date.

(a)  

"Financial management is an area of financial decision making, harmonizing individual motives and enterprise goals."

(a)  

Financial management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations."

(a)  

"Financial management is the process of putting the available funds to the best advantage from the long-term point of view of business objectives."

(a)  

Under finman, financial problems are analyzed and considered. A study of the trend of actual figures is made and ratio analysis is done.

(a)