Solomon Ch1 Deck 5 Flashcards
CAPEX calculation
CAPEX= New net PPE - Old net PPE + Depreciation
FCFE measures cash flow available to
equity shareholders only
FCFE is related to FCFF how?
FCFE can be thought of as FCFF after interest payments are made to bondholders and any increases in borrowing have been accounted for
The amount potentially available for dividends if the board decides is
FCFE
MLP is a
Master Limited Partnership
MLPs are taxed
using pass-through taxation if they qualify
Are MLP’s traded on exchanges?
Yes and they are freely transferrable unlike LP interests
effect of lower interest rates on consumer spending
increases it
S corp can have ownership in
LLC’s, C-corps, Partnerships
PIPE
Private Investment in Public Equity
PIPE’s are often eventually registered so that
investors will not be subject to resale restrictions
NASDAQ requires issuers of PIPE’s to notify
within 10 days of closing if the transaction will result in 5% or more increase in shares outstanding
Limit to shares sold in a PIPE
none
Exchanges require PIPEs that sell shares equal to more than 20% of outstanding stock
to sell at or above fair market price or obtain permission from shareholders to do otherwise
Pricing for shares of PIPEs not selling more than 20% of outstanding stock
can be above or below market price
If a PIPE remains unregistered
then shares are not freely tradable because of restrictions on investor resales
NYSE Rule 472 prohibits research analysts from submitting
research reports on companies to those companies prior to publishing them
NYSE Rule 472 allows analysts to contact companies to
verify facts for a report
NYSE Rule 472 allows analysts to submit sections of report on a company to that company if
they have prior approval from legal or compliance and for purpose of verifying factual information
Federal funds rate is set by
banks who borrow from each other
Discount Rate is set by
the Fed for overnight borrowing from the Fed by banks
Discount rate is deliberately set above
Fed’s target federal funds rate, to keep it as a backup tool for temporary liquidity shortages
Highest duration security is
Zero coupon bond because interest and principal not paid out until bond matures
Duration is a measure of
an investments sensitivity to interest rates
ADR’s have extra expenses such as
banks passing on expense for currency conversion
banks deduct fees for purchasing ADR’s from dividends
Form 13F does not require reporting of securities in
open ended investment companies (mutual funds).
Warrants, options, closed end companies and other securities being managed by an institutional investor managing securities over $100M must be reported on
Form 13F
