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BYU > Ch4-6 > Flashcards

Ch4-6 Flashcards

1
Q

Asset Usage Efficiency Lever

A

One of the three parts of the DuPont = S/TA.

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2
Q

Cash Budget

A

A forecasting tool typically used for the short term (a year or so)

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3
Q

DFN

A

Discretionary financing (or funds) needed. How much cash the firm needs in a pro forma statement.

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4
Q

Discretionary Accounts

A

Another name for non-spontaneous accounts.

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5
Q

Dividend Payout Ratio

A

Dividends/Net Income.

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6
Q

Dividend Policy

A

The amount of dividends management decides to pay out to shareholders.

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7
Q

EFN

A

External financing (or funds) needed. Another name for DFN.

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8
Q

Excess Capacity

A

When fixed assets do not need to increase as sales increase.

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9
Q

Full Capacity

A

When fixed assets have to increase if the firm wants to increase sales.

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10
Q

Leverage Lever

A

DuPont = TA/TE, also known as the equity multiplier.

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11
Q

Non-Spontaneous Accounts

A

Financial accounts that do not vary directly with sales.

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12
Q

Percent of Sales Forecast

A

A way to make pro forma financial statements based on a sales prediction and how accounts vary with sales.

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13
Q

Plowback Ratio

A

Another name for the retention ratio.

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14
Q

Pro Forma Statements

A

Future or forecasted financial statements.

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15
Q

Profitability Lever

A

DuPont = NI/S.

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16
Q

Retention Ratio

A

1 - dividend payout ratio.

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17
Q

SGR

A

ROE * (1-Div/NI).

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18
Q

Spontaneous Accounts

A

vary directly with sales.

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19
Q

Annuity

A

A series of payments or receipts.

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20
Q

Annuity Due

A

pays at the beginning of each period.

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21
Q

Compounding

A

Future value of present money

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22
Q

Compounding Problem

A

When the periods, payments, and interest must be adjusted for non-annual time value of money problems.

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23
Q

Deferred Annuity

A

An annuity that starts sometime in the future.

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24
Q

Discount Rate

A

The rate at which money is discounted or compounded.

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25
Q

Discounting

A

Present value of future money.

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26
Q

Effective Yield

A

(1+stated rate/m)^m -1.

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27
Q

Future Value

A

Future spending power of money

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28
Q

FV

A

Future Value, a lump sum.

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29
Q

FVIF

A

Future value investment factor = PV * (1+r)^n.

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30
Q

FVIFA

A

Future value investment factor of an annuity.

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31
Q

I/Yr

A

Interest rate per period.

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32
Q

Lump Sum

A

A single amount of money.

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33
Q

N

A

Number of periods.

34
Q

Ordinary Annuity

A

pays at the end of each period.

35
Q

Perpetuity

A

An annuity that lasts forever.

36
Q

PMT

A

Payment, the annuity payment.

37
Q

Present Value

A

Spending power of money today.

38
Q

PV

A

Present Value, a lump sum.

39
Q

PVIF

A

Present value investment factor = FV/(1+r)^n.

40
Q

PVIFA

A

Present value investment factor of an annuity.

41
Q

Required Rate of Return

A

Another name for the discount rate.

42
Q

Time Value of Money

A

The process of valuing money at specific points in time.

43
Q

Uneven Cash Flows

A

A series of cash flows that are not equal.

44
Q

Affirmative Covenant

A

A bond covenant that requires the firm to do something.

45
Q

Bond

A

A fixed income financing instrument.

46
Q

Bond Indenture

A

The legal document detailing a bond.

47
Q

Bond Ratings

A

A rating assigned to a firm to measure the probability of default by a company like S&P or Moody’s.

48
Q

Convertible Bonds

A

Bonds that can be converted into equity at the owner’s request.

49
Q

Convexity

A

The curvature of the price-yield relationship not captures by duration.

50
Q

Coupon Rate

A

Another name for coupon yield.

51
Q

Coupon Yield

A

The rate the bond issuer promises to pay its investors.

52
Q

Covenants

A

Rules set forth in the bond indenture to protect bond investors.

53
Q

Current Yield

A

Annual Coupon/Current Market Value

54
Q

Debenture

A

A bond that is not secured by collateral or guarantees.

55
Q

Debt Capital

A

Firm financings that appears in the debt section of the balance sheet.

56
Q

Duration

A

A measure of the interest rate sensitivity of a bond.

57
Q

Eurobonds

A

Bonds issued in a country not in that country’s currency.

58
Q

Face Value

A

The lump sum amount paid on a bond’s maturity date.

59
Q

Fixed-Income Securities

A

pay an equal payment on fixed periods

60
Q

Foreign Bonds

A

Bonds issued in a domestic market by a foreign firm, but in the domestic currency.

61
Q

Inverse Price-Yield Relationship

A

When market yields go up, bond prices go down and vice versa.

62
Q

Investment Grade

A

Bonds rated BBB or above.

63
Q

Junk Bonds

A

Speculative bonds rated BB or below.

64
Q

Macaulay Duration

A

A specific type of Duration, a measure of interest rate sensitivity.

65
Q

Maturity Date

A

The date the bond issuer pays the face value and the bond expires.

66
Q

Modified Duration

A

An adjusted version of Macaulay Duration which makes it a little more accurate.

67
Q

Mortgage Bonds

A

secured by real property.

68
Q

Muni

A

Short for municipal bond.

69
Q

Municipal Bond

A

A bond issued by a local municipality

70
Q

Negative Covenant

A

prohibits the firm from doing something.

71
Q

Par Value

A

Another name for face value.

72
Q

Promised Yield

A

Another name for yield to maturity.

73
Q

Security Valuation

A

The process of valuing assets.

74
Q

Subordinated Debenture

A

A lower-ranked bond that is not secured by collateral or guarantees.

75
Q

Trade at Discount

A

When a bond’s market price is less than its face value.

76
Q

Trade at Premium

A

When a bond’s market price is greater than its face value.

77
Q

Treasury Bill

A

A short-term bond issued by the US federal government.

78
Q

Treasury Bond

A

A bond issued by the US federal government

79
Q

YTM

A

Yield to maturity, the required rate of return of a bond.

80
Q

Zero Coupon Bond

A

Another name for zeros.

81
Q

Zeros

A

Bonds that do not pay interest payments.

BYU (4 decks)

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