finance question
HWXJQ
financial.docx1. Why is Agency Relationship an important issue? Explain with a clear example.
2. How can managers demonstrate value creation?
3. Why do people invest? Also, give examples of investments.
4. What is the purpose of hedging risk and how can it be accomplished?
5. Why do we conduct ratio analysis, and when do they make any real sense?
6. Differentiate between the following emphasizing the similarities and dissimilarities between the two in each pair: profitability versus turnover ratios; liquidity versus solvency ratios; and activity versus investor ratios.
8. Differentiate between systematic and unsystematic risks. Why do they matter?
9. Why do we need to calculate present and future values of amounts we will receive or pay?
10. Why do investors invest in bonds?
11. How do you value bonds and preferred stocks? What is the difference between the Par Value and market value of a bond?
12. What is the significance of g, or growth in valuing common stock?
13. Explain the difference between the book value and market value of common stock?
14. Explain the concept of the weighted average cost of capital and its importance in making investment decisions.
15. How can businesses estimate their net cash flows?
16. What do we mean by capital budgeting? What is the net present value, and why is it needed?
