Understanding Financing in Business and Investment

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What is the primary purpose of financing in the context of business activities?

To create a market for money by connecting surplus and demand

To exploit the time value of money for personal gains

To generate returns for individuals with a surplus of money

To allow companies to purchase products beyond their immediate reach (correct)

Why do investors prefer to receive money today rather than the same amount of money in the future?

To take advantage of compounding interest (correct)

To generate immediate returns through investment

Due to the increasing value of currency in the future

Because currency depreciates over time

What role do financial institutions like banks and NBFS play in the financing process?

Providing capital to businesses and investors (correct)

Issuing credit cards to consumers

Creating a market for securities and derivatives

Generating profits through currency trading

According to the principle of the time value of money, why is a currency today worth more than the same currency in the future?

Because money grows over time when invested Signup and view all the answers

What does financing leverage in order to put future expected money flows to use for projects started today?

The power of compounding interest Signup and view all the answers

Why is financing considered vital in any economic system?

To allow companies and individuals to leverage the time value of money Signup and view all the answers

Which of the following best describes the concept of opportunity costs mentioned in the text?

The additional money earned by investing the money instead of keeping it in a mattress Signup and view all the answers

What is the main purpose of a finance lease as described in the text?

To obtain the right to use an asset in return for regular rental payments Signup and view all the answers

What is the main difference between debt financing and equity financing, as mentioned in the text?

Debt financing must be paid back with interest, while equity financing does not need to be paid back Signup and view all the answers

What does inflation do to the value of money over time, as mentioned in the text?

Reduces its value Signup and view all the answers

What is the primary role of financial institutions, as discussed in the text?

Providing capital to businesses, consumers, and investors to help them achieve their goals Signup and view all the answers

What is the main difference between $10,000 received today versus $10,000 received two years from now, as mentioned in the text?

$10,000 today has more value and utility due to opportunity costs associated with the delay Signup and view all the answers

What type of assets are commonly leased as mentioned in the text?

Property, buildings, and vehicles Signup and view all the answers

What best describes a finance lease according to the text?

A type of lease where a finance company is typically the legal owner of the asset for the duration of the lease Signup and view all the answers

What does a lease agreement entail according to the text?

The lessee also agrees to abide by various conditions regarding their use of the property or equipment. Signup and view all the answers

What is financing primarily used for according to the text?

To obtain funds for business activities and making purchases. Signup and view all the answers

What is the main difference between full-service leasing and fleet management as described in the text?

Full-service leasing includes covering vehicle resale value risk, while fleet management exposes the client to vehicle resale value fluctuations. Signup and view all the answers

What are the benefits of full-service leasing with Myathlon according to the text?

No hidden extras, improved productivity, and outsourcing solutions Signup and view all the answers

What is the primary focus of fleet management from Myathlon as described in the text?

Driver and asset management Signup and view all the answers

Understanding Financing in Business and Investment

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