Introduction to Finance

Q
Quantitative easing (QE), 91–92, 568
defined, 91
monetary policy tool, 224
Quick ratio, calculation, 427
R
Radio frequency identification (RFID), usage, 
485
RADR. 
See
Risk-adjusted discount rate
Random walk, defined, 356
Rapid growth stage, 180
Rates of return. 
See also
Arithmetic average 
annual rates of return
annualization, 295–296
determination, 229
minimum, 569
requirement, 569–570
Ratio analysis
defined, 424
DuPont method, 440–442
Raw materials, ownership cost, 483
Reagan, Ronald, 103
Real assets, defined, 26
Real estate agent (broker), career, 17
Real estate mortgage loans
financial calculator solution, 240
monthly payments, involvement, 240–241
spreadsheet solution, 242
Real Estate Settlement Procedures Act, 94
f
Realized capital gains, 418
Real output (RO), 38
Real property loans, origination, 48, 51
Real property organizations, careers, 16–17
Real rate of interest, defined, 197
Price
changes
impact, 210–211
initiation, 210–211
stability, 105
“Price bubble,” for technology stocks, 6
Price-earnings (P/E) ratio, 438
Price/EPS ratio, 270
Price level (PL), 38
increase, expectations, 178
Price movements, 207–208
historical international price movements, 
207–208
Price-variable cost margin, 585
PricewaterhouseCoopers, 388
Primary credit, rate, 89
Primary deposit, defined, 115
Primary markets, defined, 15, 299
Primary reserves, defined, 68
Primary securities markets, issuance, 299–303
Prime mortgage, defined, 184
Prime rate, defined, 64, 499
Principal-agent problem, 10, 406–407
defined, 406
result, 407
Principal payment streams, 183
Principals, defined, 406
Private borrowers, crowding out (threat), 113
Private equity sales, occurrence, 306
Private party, securities (sale), 306
Private placement, defined, 300
Processing float, 476
Product differentiation, 523
Production methods, efficiency, 5
Profitability, 593
Profitability index (PI) (benefit/cost ratio), 
536–536
defined, 536
Profitability ratios
analysis, 435–437
defined, 435
Profits, comparison, 390
t
Program trading, defined, 320
Progressive tax rates, 417
Project
analysis, data requirements, 526
t
income statement, 543
t
example, 558
t
operating life, cash flows, 555
rate of return, minimum, 569–570
safety margin, 539–540
stages, 554–556
statement of cash flows, firm statement of 
cash flows (differences), 543
t
termination, salvage value/NWC recovery, 
555–556
Project cash flows
estimation, 540–542, 554
approaches, 542–546
initial outlay, 554–555
example, 557
t
irrelevant cash flows, 542
isolation, 540–542
relevant cash flows, 540–542
return, 543
shareholder benefit, 557
level, 169
rate, defined, 175
United States (2006/2009/2012/2015), 176
t
Personal taxable income, examination, 418
Person-to-business (P2B) transactions, 477
Physical money (coin/paper currency), 
28–32
Pink sheet, 323
Pledging (pledge), 508–509
defined, 508
PMT. 
See
Periodic equal payment
Poison pills, defined, 407
Policy makers
economic policy objectives, 106
f
European Economic Union, 106–107
groups, 105–107
impact, 12
Political risk, defined, 141, 283
Ponzi scheme, 10
Portfolio
defined, 358
diversification, risk (relationship), 363
f
expected return, 359
investments, number, 362–363
returns, 358–359
standard deviation, 359–360
risk, 262–264
variance, 359–360
Positive correlation, defined, 360
Positive net cash flow, example, 466
Post-audit phase, 499
Postwar inflation, 193
Post-World War II, inflation, 208–209
Pre-authorized checks, defined, 477
Precautionary motives, defined, 469
Preferred stock, 268–269
cost, 572
defined, 268
elements, 268
t
nonvoting status, 268
valuation, 285
Premium bond, defined, 279
Present value interest factor of an annuity 
(PVIFA)
calculation, 529–530
example, 237