Incorrect questions Flashcards
what is business angel factoring
private individuals or groups of individuals investing directly into a small business
is supply chain finance considered financial debt
no
what does supply chain finance enable small businesses to do
raise finance at a lower interest rate than would normally be available to it
what else is supply chain finance named
reverse factoring
what technique is most important to be high to maximise shareholder wealth
NPV
advs of IRR over investment appraisal
takes into account time value of money
considers whole project
how would an increase of cost of capital affect NPV
it would decrease
how would an increase of cost of capital affect IRR
no effect
what is the formula for total shareholder return
(p1-p0+d1)/p0
where p1 = share price this year
p0- share price in the previous year
d1= dividend per share
what is the reverse yield gap
yields on share being lower than on low risk debt
what does disintermediation mean
borrowers dealing with lenders directly
what type of instrument is a certificate of desposit
money market
are treasury bills bought and sold on a discount basis
yes
what is a secondary market
securities are bought and sold by investors
who are money markets mainly used by
large companies
is money market lending securitised
yes
if a government has a macroeconomic policy what 2 things will they do
increase public expenditure
decrease tax
2 main goals of macro economic policy
low and stable inflation
balance between exports and imports
does sales increase as working capital does
yes
what will an increase in the cash operating cycle do
decrease profitability
what kind of factoring provides insurance against bad debts
factoring with no recourse
does factoring with recourse help with bad debts
no
how do you calculate annual holding costs
average inventory / 2 * holding cost per unit
how do you calculate average inventory
monthly order / 2
how can you use historic dividend growth to predict future growth
g = (n x square root of latest div/ earliest div ) -1
or
1+g = ( latest div / earliest div) 1/n
how can you calculate future dividend growth from reinvestment levels
g = b x re
what is Ve in WACC calculation
total market value of shares ( ex div)
what is Vd in WACC calculation
total market value ex interest of debt
what is Ke in WACC calculation
cost of equity in a geared company
what is Kd in WACC calculation
cost of debt
what method must be used if debt is redeemable
IRR approach
how can you calculate cost of equity
CAPM or dividend valuation depending on info given
what is the dividend valuation
(D1 x (1+g) / Po) + g
profitability index formula
present value of cash flows / initial cash flows
what does PI mean
profitability index
when can you use PI
when the projects are divisible
how to calculate EAC
NPV of costs over replacement cycle / Annuity factor for life of asset
what is maturity transformation
the process by which short term deposits are re- lent by banks as longer term loans
formula for Dividend cover
EPS / Dividend Cover
Formula for EPS
Dividend cover x Dividend per share
Formula for Earnings yield
EPS / Market price per share
how to calculate growth
nth root of( latest dividend / oldest dividend) - 1
is matching a method of translation exposure
no, its a method of transaction exposure
what does the br mean in g = br
proportion of profits retained x rate of return on investment
how to calculate proportion of profits retained
eps - dividend / eps
how to calculate rate of return on investment
EPS/ Net assets per share
formula for operational gearing
Contribution / PBIT
what is the basis risk
possibility that currency futures and spot rate will be different
2 benefits of a financial intermediary
transforms maturity and risk
does the earnings yield and dividend growth model give a similair outcome
no
what is the maximum value of a company
market capitalisation
what is the price / earnings ratio a reciprocal of
earnings yield
what type of instrument is a commercial paper
money market
one way to calculate growth rate
share retention rate x return on equity rate
what is higher, an interest rate floor or a collar
interest rate floor
does the nature of interest rates futures mean you cant over or under hedge
no
