Quiz PDF - Finance Concepts

Money is anything that is generally accepted in payment for goods and services or to pay off debts. The money supply is the total quantity of money in the economy. A bank’s primary sources of funds are deposits, and primary uses of funds are loans, which are summarized in the bank’s balance sheet....

Money is anything that is generally accepted in payment for goods and services or to pay off debts. The money supply is the total quantity of money in the economy. A bank’s primary sources of funds are deposits, and primary uses of funds are loans, which are summarized in the bank’s balance sheet. A balance sheet is a statement that shows an individual’s or a firm’s financial position on a particular day. Assets = Liabilities + Shareholders’ equity. Asset is something of value that an individual or a firm owns; in particular, a financial claim. Liability is something that an individual or a firm owes, particularly a financial claim on an individual or a firm. Bank capital is the difference between the value of a bank’s assets and the value of its liabilities; also called shareholders’ equity. Interest rate & bonds price relationship? When interest rates increase, the prices of bonds fall because fixed investments of bonds become less valuable. When interest rates rise, the fixed payments from existing bonds become less attractive compared to new bonds that are issued at higher rates. This leads to a decrease in the market price of existing bonds, as investors seek better returns elsewhere. Essentially, the fixed income from bonds loses its value when new options offer higher yields. Tax management goal in corporate →To reduce tax liabilities with the help of legal strategies such as tax dedication, credit The goal of tax management in a corporate setting is to minimize tax liabilities through legal strategies. This can include utilizing tax deductions, credits, and other planning techniques to optimize the company's tax position. By effectively managing taxes, corporations can enhance their financial performance and retain more capital for reinvestment. The foreign-exchange market is an over-the-counter market where international currencies are traded. Large commercial banks are market makers because they are willing to buy and sell major currencies at any time. Most foreign-exchange trading takes place among commercial banks located in London, New York, and Tokyo, with secondary centers in Hong Kong, Singapore, and Zurich. With daily trading in the trillions of dollars, the foreign-exchange market is one of the largest financial markets in the world. Participants include investment portfolio managers and central banks.