Explain what is meant by the statement- depreciation is a non-cash expense and how do companies use it.

just answer the question

T/F 1. Financial markets connect production needs for money with consumptions available savings.

T/F 2. Money markets deal in short-term debt.

T/F 3. Sunk costs have already been spent and are ignored.

T/F 4. Retained earnings are not a source of capital.

T/F 5 . The FED usually lowers interest rates if there is a fear of inflation.

6.Explain why the cost of debt is lower than the cost of capital?

7.Explain what is meant by the statement- depreciation is a non-cash expense and how do companies use it.

8.How long does it take money earning 12% to double? Use both the rule of 72 and your financial calculator.

9.Explain the three ways a company can raise capital.

10 If an investor has a short term view on her investments and in a time of high interest rates – which is better stocks or bonds? Why?

11.Explain the difference between common and preferred stock.

12.If you own 3 stocks A, B, and C. What is your total return of your portfolio?

Stock $ invested Return

A $ 6,000 6 %

B 9,000 9 %

C 15,000 11 %

13.Explain the RISK/ REWARD theory?

14.GM issued a $ 1,000, 30-year bond 5 years ago at 9 % interest. Comparable bonds yield 6 % today. What should GM bond sell for now?