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Tutoring For 65 > 3/27/2023 > Flashcards

3/27/2023 Flashcards

1
Q

Draw The Balance Sheet

A

Components:
CA
LTA
OA
CL
LTL

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2
Q

What are

Current Assets

Current Liabilities

A

CA - Assets that can be liquidated in 12 months

CL - Liabilities that need to be paid in the next 12 months

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3
Q

Income Statement

A

Shows How much The Company Made or Lost during the specified period of time

Revenue - Operating expenses = Net Revenue
- Taxes = Net Earnings
- Dividends = Retained Earnings

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4
Q

P&L

A

(Profit and Loss Statement)

Same as Income Statement

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5
Q

List out all Ratios/ Formulas For Income Statement

A

P/E Ratio
EPS
EPS fully diluted
Dividend payout Ratio
Debt Service Ratio

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6
Q

Net Present Value

A

What its worth - How much it Cost to have it

usually reflected in $ signs

If NPV is negative its probably not a good investment

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7
Q

What’s an example of Net Present Value

A

Stock Worth $110
Current Stock Price: $100

NPV $10

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8
Q

IRR

A

Internal Rate of Return

the rate you actually get compared to what’s expected

The Rate you actually get - the Expected rate

is shown in ___%

DOES NOT ADJUST FOR INFLATION

Shown how much of your rate of return is value (how much is more than what they market is paying)

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9
Q

Standard Deviation

A

The amount the Stock price Fluctuates

High Fluctuation = High Standard Deviation
Low Fluctuation = Low Standard Deviation

You want your return to be as close as possible to the standard deviation

is Shown in ___%

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10
Q

Whats an example of Standard Deviation

A

Expected Return 12%
Standard Deviation 5

Means the Security might return anywhere from 7% to 17% most of the time

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11
Q

Beta

A

Measures the volitility of a security compared to the market

Market is always a 1

the stock might be a 1.1 or .7

Higher Return = Higher Risk

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12
Q

example of Beta

A

Market return is 10%
securities Beta is 1.2

means return would be 12%

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13
Q

Alpha

A

Measure of how much a portfolio out preforms the market

Beating the market isnt Impressive but beating it without taking any extra risk IS

Alpha is reflected in
+___% means you out preformed the market by __%
or
-___% Means you under preformed the market by __%

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14
Q

Correlation

A

Positive Correlating - if 2 Securities go up and down at similar times and at similar rates

Negative Correlating - if 2 Securities DONT go up and down at similar times and at similar rates

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15
Q

Working Capital

A

current Assets - current liabilities

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16
Q

Current Ratio

A

Current Assets/ Current Liabilities

Higher # = Higher Liquidity of the company

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17
Q

Quick Ratio

A

Current Assets - Inventory = Quick Assets

Quick Assets/current Liabilities = Quick Ratio

Higher # = Higher Liquidity of the company

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18
Q

Cash Asset Ratio

A

Cash and Equivelants / Current Liabilities

Higher # = Higher Liquidity of the company

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19
Q

Types of Municipal Bonds

A

General Obligation

Revenue

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20
Q

CMO’s

A

Collateralized Mortgage Obligation

A Pool of Mortgages That pay interest to Investors

Issued By Goverment Agencies or Private Finance Companies

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21
Q

Risks of CMO’s

A

Prepaid Risk - Interest rates go Down - Homeowner pays off mortgage early

Extension Risk - Interest rates go Up - Homeowner pays off mortgage late

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22
Q

types of Cmo’s

A

PO - principle Only
IO - Interest Only
PAC - Planned Ammortization Class (Most protection)
TAC - Target Ammortization Class
Private Label - (Issued by private sector)

23
Q

STRIPS

A

Zero coupon bond issued by the US goverment

24
Q

To hedge against a short sell what options should you do

A

Buy calls against the shorted security

25
Q

what action can reset the holding period for short and long term gains and losses

A

Buying a put

26
Q

P/E
(Price To Earnings Ratio)

A

Price of Stock / EPS

27
Q

EPS
(Earnings Per Share)

A

Net Earnings / # Shares Outstanding

28
Q

EPSFD
(Earnings Per Share Fully Diluted)

A

Net Earnings / # Shares Outstanding

Assuming all convertible securities issued by company have been converted into common stock

29
Q

Dividend Payout Ratio

A

Dividends per share / EPS

Or just
Total Company Dividends paid / Net Earnings
if they give both of those in the question

30
Q

Audited Statement

A

Accurate Numbers
CPA’s Verify the books
Big Companies publish these 2x per year

31
Q

UnAudited Statements

A

just a ball park figure of what a companies books look like

32
Q

Cash Accounting

A

Cash if posted on books whenever its received or payed

33
Q

Accrual Accounting

A

You can post items on your books before you actually recieve it or pay it

34
Q

Give example of Accrual Accounting

A

Boeing gets a $20 MILLION contract to make planes but will be paid that in 4 years.
instead of it being reflected on the books in 4 years it can be reflected now

35
Q

Mean

A

Average

36
Q

Median

A

The Middle #

37
Q

Mode

A

Which Occurs Most often

38
Q

Lower Standard Deviation =

A

Lower Risk

39
Q

Higher Standard Deviation =

A

Higher Risk

40
Q

If IRR is greater than Expected Return what happens to NPV

A

NPV = Positive

41
Q

Real Rate of Return

A

Is the rate of return minus inflation

shows what the actual purchasing power will be of that return

42
Q

process of solving Inflation Adjusted After-tax Yield Questions

A

1) Take out taxes 1st
2) Take Out Inflation 2nd

43
Q

How to calculate how much 2 securities are correlating

A

divide the bigger return by the smaller return (ignore if a security has a negative return)

ie:
+4%
-12%
means negatively correlating by 3

ie:
+4%
+16%
means positivly correlating by 4

44
Q

If you want to pick 2 securities that are most diverse from Eachother

A

Pick the 2 that are most NEGATIVELY Correlating

45
Q

List All Types of Money Market Securities

A

T Bills
T Notes (If they mature in less than 12 months)
T Bills (If they mature in less than 12 months)

Negotiable (Jumbo) CD’s
Commercial Paper
Bankers Acceptance
REPO (Repurchase agreement)

46
Q

Negotiable (Jumbo) CD’s

A

100k Face amount

Just like normal bank CD’s but much bigger and can be bought and sold

47
Q

Commercial Paper

A

pool of debt issued by a company to investors

270 day max duration

Ususally has no Interest and sold at a discount to par (like zero coupon bond)

48
Q

Bankers Acceptance

A

Great for Imports and Exports

a loan from a bank that pays the exporter to ship the goods then is paid back by the Importer once shipment is recieved

49
Q

REPO (Repurchase agreement)

A

instead of getting a loan from the bank

company sells the bank their own securities with a contract to buy them back at a specified date and Price (usually higher than when bank bought them)

50
Q

Municipal Bonds Interest are Taxed

A

Federal - Tax-Free
State - Tax Free (If Resident of State)
Local - Tax Free (If resident of Locality)

51
Q

Muni Bonds Issued by a Territory interest are taxed

A

Tax free at all levels

52
Q

Treasury Securities Interest is taxed how

A

Federal - Taxed
State - Tax Free
Local - Tax Free

53
Q

Difference between Normal Revenue bonds and Double Barrel Bonds

A

Normal Revenue Bonds are not additionally backed by Municipality in the event of facility defaulting whereas double barrel bonds are

54
Q

Are IDR bonds taxed?

A

Some are and some aren’t it depends upon who is benefiting from it

Tutoring For 65 (11 decks)

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