finance lec 1 Flashcards
any descison company makes is
financial
what are the 2 main tyopes of ddesicsions
investments to make
how to finance investments
when to invest
economic assumption is we like to have more of
something we like
£1 today is wort morethan
a poun tomrrow / in future
if you decide to invest money today you give up the oportunity
spend it on something now or invest in something else
opportunity cost
value of next best alt foregone
if we tie up money in savings we et a reward called
interest , yield , return
how is interest measured -
rate
what are the two elements of an interest rate
compensation for inflation
real rate above inflation
rea IR can be +ve or -ve t/f
yes
cashflows at differnet times are not the
same
you cannot add cashflows that are at
differnent times
when we bring money from future to the present
discounting
if we bring money from present to future
compounding