L4: Debt and Time Value of Money Flashcards
1
Q
Why should money be invested?
A
More money is received in terms of interest; interest rates are compounded
2
Q
What do PV and CF stand for?
A
Present Value
Future Cash Flow
3
Q
Who are the main ‘lenders’ to consider?
A
Banks and investors
4
Q
Which bodies issue financial assets to lenders in return for money?
A
Companies (corporations) and governments
5
Q
What is the main advantage and disadvantage of secured lending?
A
In cases of default, secured lenders have the greatest claim to assets. They get the smallest return.
6
Q
What are bank loans mostly used by?
A
Small businesses
