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CFA > Corporate Finance > Flashcards

Corporate Finance Flashcards

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CFA flashcards
1
Q

What is matrix pricing?

A

Estimating discount rate and price of a bond based on quoted prices of other bonds

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2
Q

What is the Asset beta?

A

Asset beta = Equity beta + Debt beta

Debt beta adjusted for tax effect

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3
Q

How to calc cash conversion cycle?

A

Cash Conv. = DOI + DOA/R - DOA/P

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4
Q

How to calc degree of financial leverage

A

DFL = Op Income / Pre-tax earnings

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5
Q

How to calc DBY?

A

DBY = (% price change) x (360/days to maturity)

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6
Q

What is CEO duality?

A

Both chair and CEO

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7
Q

What is primary sources of liquidity?

A

Cash & equivalents

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8
Q

Where is the optimal capital budget?

A

Where marginal cost of capital = investment opportunity schedule

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9
Q

What is sales risk?

A

Uncertainty on quantities and price

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10
Q

How to calc breakeven point?

A

Op BEP = (Fixed Costs + Fixed cost of debt) / CM

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11
Q

How to compare yields on the same instrument from MMY, DBY, and BEY?

A

BEY > MMY > DBY

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12
Q

Compare how to calc BEY, MMY, DBY

A

DBY = (% price change) x (360/days to maturity)
MMY = same as DBY except % change over purchase price
BEY is MMY but with 365 instead of 360.

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13
Q

How to calc effective annualized cost

A

EAC = (monthly interest)/(net proceeds) x 12

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14
Q

What are sell-out rights?

A

Forces acquirers of a company to pay a fair price for minority shareholders’ shares

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15
Q

How to calc Op Cycle

A

Op Cycle = DOI + DOA/R

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16
Q

How to calc Degree of Total Leverage?

A

DTL = CM / NI

Also: DOL x DFL

17
Q

What is cumulative voting?

A

Cumu voting: 1 vote per share x number of directors to be elected

18
Q

What is the cost of preferred stock?

A

Cp = D/P

19
Q

What is business risk?

A

Biz risk = sales risk and operating risk

20
Q

How to calc degree of fin leverage?

A

% change in NI / % change in EBIT

21
Q

How to calc float factor?

A

Float Factor = Avg. daily float / Avg. daily deposit

22
Q

How to calc Profitability index?

A

PI = (NPV / Cost) + 1

CFA (8 decks)

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