Financial Planning and
recent survey of CFOs disclosed a paradox regarding financial
planning. On the one hand, almost all CFOs stated that financial
planning is both important and highly useful for allocating
Risk, Return, and the Capital
Asset Pricing Model
s sung by the Grateful Dead, What a long, strange trip its been!
The chart below provides some insights into the stock markets
risks and returns. The top portion shows the relative changes in
An Overview of Financial
Management and the
updates on the ranking.
In a global beauty contest for companies, the winner is Apple.
Or at least Apple is the most admired co
Be sure to visit the
Corporate Finance: A
Focused Approach (4th
Edition) Web site at
site provides access for
instructors and students.
When we wrote the first edition of Corporate Finance: A Focuse
Foreign exchange: means the money of a foreign country; that is, foreign currency
bank balances, banknotes, checks and drafts.
foreign exchange transaction: is an agreement between a buyer and a seller that a
fixed amount of one currency will be
212Ritter/Silber/Udell Money, Banking, and Financial Markets, Eleventh Edition
Bank Reserves and the
The largest component of the money supply (M1) is
A) time deposits.
B) large CDs.
C) demand deposits.
D) coin and cur
204Ritter/Silber/Udell Money, Banking, and Financial Markets, Eleventh Edition
Whos in Charge Here?
The President of the United States appoints the
A) directors of the Federal Reserve regional banks.
B) presidents of the Federal Re
222Ritter/Silber/Udell Money, Banking, and Financial Markets, Eleventh Edition
The Instruments of
The primary function of reserve requirements is to serve as
A) a source of bank liquidity.
B) an instrument of m
Personality: The sum total of ways in which an individual reacts and
interacts with others, the measurable traits a person exhibits
Heredity: The heredity approach refers to factors determined at
conception such as physical stature and gender
hat do U.S. Airways, Apple Computer, Clorox, Kellogg, Dow Chemical, and
Family Dollar Stores have in common? Each led its industry in the latest
CFO Magazine annual survey of working capital management, which
he United States has had plenty of company in the global economic crisis.
According to the International Monetary Fund (IMF), 2008 was a terrible year
globally. World output (measured by real GDP) averaged
Solutions to Self-Test Problems
NCF NI DEP and AMORT
$2;400;000 $1000;000 $3;400;000
NOPAT EBIT1 T
Answers to End-of-Chapter
We present here some intermediate steps and final answers to selected end-of-chapter problems. Please note
that your answer may differ slightly from ours because of rounding differences. Also, although we hope
Financial Statements, Cash
Flow, and Taxes
ven in todays era of financial crises, $14.6 billion is a lot of money. This
is the amount of cash flow that Hewlett-Packards (HP) operations
generated in 2008, up from $9.6 billion in 2007, despite t
Analysis of Financial
o guide or not to guide, that is the question. Or at least its the question
many companies are wrestling with regarding earnings forecasts.
Should a company provide earnings estimates to investors? In 2006,
Bonds, Bond Valuation,
and Interest Rates
lot of U.S. bonds have been issued, and we mean a lot! According to
the Federal Reserve, there are about $5.7 trillion of outstanding U.S.
Treasury securities, more than $2.6 trillion of municipal securi
Financial Options and
Applications in Corporate
n 2008, Cisco had almost 1.2 billion outstanding employee stock options
and about 5.9 billion outstanding shares of stock. If all these options are
exercised, then the option holders will
Stocks, Stock Valuation, and
Stock Market Equilibrium
he opening chart in Chapter 6 showed General Electrics stock rising by
almost eight-fold from 1994 to 2000 but then, from 2000 to 2003,
experiencing a sickening fall, losing over half of it
Time Value of Money
hen you graduate and go to work, either a defined benefit (DB) or a
defined contribution (DC) pension plan will almost certainly be part of
your compensation package. Under a DB plan, the company will put
funds into its pensi
The Cost of Capital
ortune magazine conducts annual surveys of business leaders to identify the
most-admired U.S. companies. Since the surveys began, General Electric has
consistently ranked either at or close to the top of the list. Although
The Basics of Capital
PL Group is a holding company that owns Florida Power & Light,
electric generating plants across the country, the nations largest fleet
of wind turbines, and major solar power facilities.