Exam 10: Investing, Borrowing, and the Time Value of Money

A for-profit healthcare corporation creates a bond issue that receives its credit rating from an agency of the state government where the healthcare business is incorporated.

A medium-sized medical practice needs short term loans a few times per year when available cash is less than needed for operations. It can either take multiple single payment loans each year or arrange for a five-year line of credit. Discuss the pros and cons of those choices.

Define investment liquidity.

During stable financial times, investments that pay the highest interest rates are ____.

For-profit medical facilities that are deemed to act in the public interest may borrow money by issuing tax-exempt municipal bonds.

A medical facility arranges a five-year $50,000 line of credit with its bank with a monthly interest rate of 0.4%. The facility borrowed $10,000 initially but paid that off six months later. Two more months have passed with no additional borrowing. What will the line of credit interest expense be for the most recent month?

The Federal Deposit Insurance Corporation is an agency that insures deposits to commercial bank accounts made by corporations.

What is a balloon maturity payment at the end of a term loan?

A small medical facility is investing funds that will form an emergency reserve. Which of the following is the most appropriate order of importance ranking (most important first) for the investment's characteristics?

A corporate bond underwriter ____.

A piece of major medical equipment has a remaining life expectancy of 6 years and will cost $100,000 when replaced. The bank offers a 6-year certifcate of deposit with an interest rate of 4%, compounded annually. How much will need to be invested to provide $100,000 at maturity?

A healthcare corporation that regularly makes substantial profits (and pays taxes on them) has money to invest for five years. The CFO is considering five year corporate or municipal bonds. What are the advantages and disadvantages of those options?

A financial instrument that represents financial ownership or a debt agreement is known as a(n) ____________________.

The amount of money one needs to invest to reach a target amount of money at a future date is known as the ____________________ of a single sum.

A two-year investment $10,000 has an interest rate of 4% per year, compounded annually. What is the future value?