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Quantitative Finance Analysis
Pages 18 (4518 words)
Quantitative Financial Analysis Introduction Quantitative financial analysis techniques are widely used these days in order to assess the performance and viability of the past financial decisions and future investment opportunities respective. There are certain techniques that investigate the reasons, patterns and specific behaviors of a previous financial decision whereas some techniques are designed to judge whether a future investment opportunity is worthwhile for the entity to encounter.
This report highlights various kinds of scenarios in which the specialized quantitative techniques are applied in order to sort out the behavior of the financial decision taken under that scenario. Specialized techniques such as regression, correlation, NPV, IRR, yield to maturity, annuity, etc are utilized to analyze the different scenarios. Part a Question 1 Net Present Value Background Information This question inquires about the viability of an investment opportunity such that the opportunity requires $10,000 to be invested today. The cash inflows from this opportunity will be derived in such a way that $500 will be received after one year, $1,500 after two years and $10,000 after ten years. With reference to the particular technique of Net Present Value (NPV), the viability of this opportunity is asked whether the opportunity is attractive if interest rates are 6% and 2% respectively. Theoretical Background Net Present Value (NPV) is the technique, which mainly works on the concepts of time value of money. ...
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