Finance F370 Icore Midterm |39 Questions| With Correct Answers.

Growing Perpetuity {Ans: a stream of cash flows that occurs at regular intervals and grows at a constant rate forever}Time Value of Money {Ans: Money's potential to grow in value over time. The relationship between time, money, a rate of return, and earnings growth.}Selling at Par {Ans: selling at price equal to face value (if the market yield equals the coupon rate)}Default {Ans: Failure to fulfill the obligations of a loan.}Maturity Risk {Ans: refers to the risk that is associated with uncertainty of interest rate over a length of time}Perpetuity {Ans: An annuity in which the cash flows continue forever.}Amortized Debt {Ans: A debt in which the principal is repaid over the life of the loan rather than in a lump sum at the end.}Intx {Ans: Balx-1(i)}Value {Ans: The PV of any cash flows gained above and beyond what is the norm for a competitive deal}Negative Amortization {Ans: Occurs when the loan payment is not sufficient to cover the interest cost and results in the unpaid interest being added to the original balance, causing the loan amount to increase.}Uneven Stream {Ans: I CF... NPV (no N required) when solving