To Determine the Amount of Additional Funds Needed (AFN), You

question 33

True/False

To determine the amount of additional funds needed (AFN), you may subtract the expected increase in liabilities, which represents a source of funds, from the sum of the expected increases in retained earnings and assets, both of which are uses of funds.

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Definitions:

Transaction Costs

The expenses incurred when buying or selling securities, including broker fees and taxes.

Futures Markets

Competitive marketplaces where parties can trade standardized futures contracts; that is, legal agreements to buy or sell something at a predetermined price at a specified time in the future.

Leverage

The use of borrowed funds or financial instruments to increase the potential return of an investment, which can also magnify the potential for loss.