Why do we use the present value of an asset or investment as basis for its value?

Q: Why would lenders want to see that a business already has some level of capitalization before giving…

A: The banks are the financial institutions who are involved in the process of lending money to the…

Q: Mr. John Dela Cruz, wanted to start investing in the stock market, which of the following financial…

A: In a market, there are different industries and different types of markets for different types of…

Q: Investors become optimistic with respect to the economic situation. Analyze its effect on interest…

A: The scinario given in the question can be understood with the help of loanable funds market.

Q: Suppose people can consume the income they earn or save and invest it at rate ?. If we tax wealth…

A: Wealth is the total value of all the assets tha owned by a person. It includes physical and…

Q: Give at least three examples of how savings can be channeled into productive investment. Why is…

A: Examples of how savings can be channeled into productive investment: When households save their…

Q: When interest rates decrease, how might businesses andconsumers change their economic behavior?

A: The interest rate is the rate charged by the lender on the asset lend by them. The asset lend can be…

Q: How does the financial system coordinate saving and investment?

A: By using the loanable fund as a tool, the financial system coordinates saving and investment in the…

Q: Explain the three main important properties of the saving function?

A: According to the given question Simply we know that the saving function denotes the actual…

Q: How do the sophisticated financial systems of modern economies affect the relationship between…

A: Financial markets (such as those in which stocks or bonds are traded), securities (from bank CDs to…

Q: Describe the Net present-worth with an example?

A: Present value is defined as the current value of the amount of money that a person will receive in…

Q: Write the equation for Net-Present-Worth Criterion?

A: Net present worth is the difference of the present worth of all cash inflows and the present worth…

Q: Evaluate (discussing positives and negatives of) the effect of interest rates on consumer choices.

A: Interest rate: - it is the percentage charge on the principal amount by a lender to a borrower.

Q: Why might an investor prefer to invest indirectly rather than directly?

A: Direct or indirect investment both leads to pay offs, it depends on the investor about what is…

Q: How do investors spend in economy?

A: Any entity or person who purchases capital having an expectation of receiving financial returns in…

Q: What is the financial market, what does it do in terms of saving investment and interest rates

A: A market is a place where the exchange of goods and services takes place between the consumers and…

Q: what is relationship between saving , capital formation and consuption ?

A: Capital formation is given by the amount of investment. In a closed economy without Government…

Q: Suppose that the city of New York issues bonds to raise money to pay for a new tunnel linking New…

A: Investment is considered an important component of economic growth. It can be categorized into two…

Q: Which type of investment is called a mixed investment?

A: Investment refers to the purchase of an asset that entails greater payoff in the form of increased…

Q: What are the different types of investmen

A: Investment is the new expenditure on physical assets such as machines, buildings, tools and…

Q: What is effective disposable income?

A: Effective Disposable income is the net income available to the consumer after income taxes.…

Q: What are three sources of saving that can be used to fnance investment?

A: What is saving To economists, saving is consuming less in present to consume more in the future. It…

Q: Why is savings equal to investment

A: Saving is the portion is income that is not used in consumption and thus does not include in income…

Q: If there is a rise in the real interest rate, how does the quantity of loanable funds demanded…

A: In the loanable funds market, loanable funds are demanded by the firms or businesses because it is…

Q: What are the functions of stock exchanges in the economy? Please explain?

A: Stock exchange: It means a common marketplace for the trading of stocks between buyer and seller.

Q: What is the difference between an asset and liability?

A: In economics and also in business(accounting), it is vital to weigh the assets that a company owns…

Q: Suppose sale of a firm is $22,000 and change in stock is $ 38,000 what would be the value of output?

A: According to question we are given that  sales =$22,000 Change in stock=$38000 we have to find value…

Q: If there is a fall in the real interest rate, how does the quantity of loanable funds supplied…

A: The market in which borrowers and lenders meet is the loanable funds market.

Q: How is a firm's net income important?

A: Net income is earned by the company or individual after deducting expenses and taxes. It is also…

Q: Why is ownership of a corporation the easiest to transfer?

A: A corporation  varies from a sole proprietorship and a partnership in that it is a separate legal…

Q: What is the significance of financial markets in the country’s economy?

A: Financial market: - it is a market for financial securities where people buy and sell financial…

Q: If net personal taxes rise, what happens to private saving ? Public saving ?

A: In an economy, taxes refers to the expenditure by the people and revenue of the government because…

Q: What is importance of financial markets for the productive capacity of the economy?

A: The economies work with the motive of increasing, or enhancing their overall economic growth, and…

Q: What is the meaning of Net Present Worth?

A: The net present worth also known as the net present value calculated the difference between the…

Q: What is the relationship between interest rates and business investment?

A: To determine the relationship between interest rates and investments.

Q: True or false: Investors and lenders are the same group of people

A: The concept that depicts the allocation of money with the primary motive of having a benefit from it…

Q: Explain Net-Present-Worth Criterion?

A: The net- present-worth criterion is a very important and useful method to evaluate investment…

Q: When financial analysts talk about “firm value” or “market value”, what views do they take? What are…

A: The value, or market capitalization, of an organization, is one piece of the organization's…