Difference between equity and bond investment

Question 1: Indicate whether the following are true or false and briefly motivate your answer.

a) Time value of money is equal to inflation plus interest
b) Fixed cost remains the same even if variable cost and production increase.
c) High risk financial instruments are likely to generate high returns
d) Annualised compounding does not takes into account money invested in the first year
e) Investment decisions are when the decisions to lease or buy assets can be made based on net present values.
f) Repayment of loans is a cash inflow
h) Discounts rates are applied to determine future value.

Question 2: Explain the difference between equity and bond investment, which of the two is more risky?

Question 3: You are appointed as financial adviser for Tutale Investment(Pty) Limited,the company intend budgeting for long term capital project, but not clear on the impact of time value of money.You are thus required to advise management on impact of time value of money on capital budgeting.

Question 4: Define the term valuation in the context of financial assets.

Question 5: PWC (The external Auditors) of Tutule Investment (PTY) Limited for 2013 qualified the financial statement for the company.Explain in detail what does this mean for the company's financial control.

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Finance Basics: Difference between equity and bond investment
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