Question about Miscellaneous Finance

1. Calculating the number of periods. At 7 percent interest, how long does it take to double your money? To quadruple it?

2. Explain why the income statement can also be called a "profit and loss statement"
What exactly does the word "balance" mean in the title of the balance sheet? Why do we balance the two halves?

3. What does it mean to say the managers should maximize shareholder wealth "subject to ethical constraints"? What ethical considerations might enter into decisions that result in cash flow and stick price effects that are less than they might otherwise have been?

4. Describe the rule "72" and show a real world example where it would be helpful.

5. How is the flow of Capital interlinked with banks and Federal Reserve?

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Solution Summary

This solution explains the following concepts:

1) The time it takes to double your money
2) The purpose of profit and loss statements
3) The definition of Rule '72'
4) How ethical constraints are used
5) How money flows from the Federal Reserve