Terminology

Question 1

Overhead ratio?

Answer 1

Measurement of the operating costs of doing business compared to the company’s income.
High ratio = operating expenses are higher than its property income (deterrent).

Question 2

Profit and Loss statement?

Answer 2

Financial statement that summarises the revenues, costs, and expenses incurred during a given period (usually quarters or fiscal year).
Provides info about a company’s ability to generate profit by increasing revenue, reducing costs, or both.

Question 3

Discounted Cash Flow?

Answer 3

Valuation method used to estimate the value of an investment based on its expected future cash flows.
DCF figures out the value of an investment today, based on projections of how much money it will generate in the future.

Question 4

Fortress Balance Sheet?

Answer 4

Suitable capital reserves, strong credit ratings, rising market share, strong capital ratio.

Question 5

Prime Brokerage?

Answer 5

PB is a bundled group of services that investment banks offer to hedge funds and other large clients that need to be able to borrow securities or cash to engage in netting to achieve absolute returns.

Question 6

Difference between broker and prime broker?

Answer 6

• Broker = an individual or entity which facilitates the purchase of an asset or security.
• Prime Broker = large institution that provides a multitude of services, from cash management to securities lending to risk management for other large institutions.

Question 7

Prime Services examples?

Answer 7

• Cash management.
• Security analysis.
• Calculate Net Asset Value (NAV) monthly.
• Risk management analysis on the portfolio.

Question 8

Net Present Value (NPV)?

Answer 8

Difference between present value of cash inflows and outflows over a period of time.

Question 9

EBITDA?

Answer 9

Earnings before Interest, Tax Depreciation, and Amortisation.

Question 10

Amortisation?

Answer 10

the action or process of gradually writing off the initial cost of an asset.