Unit 6 (Videos) Flashcards
The stockholder’s equity can be made up of:
share capital legal reserves voluntary reserves prior periods' profit and loss net income
net income can comprise
profit/lose of a period
The total stake holder’s equity can be found by …
adding share capital, reserves, profits and losses in the previous period
It is important to understand that the nominal value of the entire share is …
share capital/the number of shares
the nominal value of a share is calculated by …
dividing the number of shares into the share capital
the nominal value is the emission value
true
If we know the nominal value, it’s important to also know the book value of shares because …
if we only have nominal value, and it is the same as the emission value, and both are less than the old value of the shares, the old value of the shares will be reduced.
The book value of an old share can be calculated by …
(total stock holder’s equity)/(the number of old shares)
The difference between the book value of an old share and the nominal value of the old share is the …
issue premium
The emission value of new shares must be equal to the …
book value of the old share
The nominal value is also called the …
face value
The nominal value of the old shares is the same as the nominal value of …
the new shares
The book value of the old shares is the emission value of the new shares, and the book value of the old shares is the same as ___________.
the book value of the new shares.
The book value of the old shares is the emission value of the new shares, and the book value of the old shares is the same as the book value of the new shares.
True
We calculate the book value of the new shares as the (total stock holder’s equity before the issue + the new issue (the value of the new shares*emission value))/the total number of shares
the new issue of a share is calculated as
the value of the new shares*emission value
The book value of a new share is calculated as …
(total stock holder’s equity before the issue + the new issue (the value of the new shares*emission value))/the total number of shares (old shares + new shares)
The total number of shares is calculated as …
old shares + new shares
We issue a share with an emission value equal to the nominal value plus a premium because …
The new book value of the share will be the same as the old book value when we calculate it.
If dealing with EURIBOR, the interest is …
EURIBOR rate + Differential rate
EURIBOR + differential gives a …
nominal interest rate
equal installments are calculated with the function PMT.
True
To calculate a new installment, we must know …
the outstanding loan in that moment.
The outstanding loan in a particular moment can be calculated with the function PV
True
The higher the interest the higher the installment.
True
The function PV discounts values to the present moment.
True
NPER calculates …
the duration of a loan
When the prepayment commision is a percentage, we have to …
isolate the prepaid loan by considering the amount we have for the prepayment and divide it by (1+cancelation fee)
prepayment/(1+cancelation commission %) = prepaid amount
If the commision fee of prepayment is an amount, we just have to ______________.
subtract (discount) the amount from the prepayment
prepaid amount = loan amount actually prepaid + commission
True
“Obtained Funds” are considered __________ flows.
in flows
Opening payment and installments are considered _______ flows.
out flow
Global Cash Flow for each moment is obtained by ___________.
Adding the inflows and out flows in each moment
Postpaid annuities start payment in moment ______.
1
Prepaid annuities start payments in moment ______.
0
We can calculate the internal interest rate with the formula IRR then use the IRR obtained to calculate the APR with the formula EFFECT.
True
If we need to calculate the internal rate of annual cash flows, we use the formula IRR. That IRR that we obtain will also be the ____ of the project because _______.
APR
because the cash flows are annual, so we get an annual internal rate of return.
Leasing is a financial operation in which we …
rent an asset from a financial institution by paying installments, and at the end, we have the option of purchasing the asset.
We can have purchase options that are not equal to the previous installments.
True
In leasing, there are two different formulas depending on when the payments are due.
FALSE
leasing formulas depend on whether or not the purchase option is the same as the installments
If the purchase option of a lease is different from the installments paid, we use the formula:
leasing installment = [cash value of asset (V) - purchase option (PO)]/present value (PV)
If the purchase option of a lease is the same as the installments paid, we use the formula:
leasing installment = [cash value of asset (V) - installment]/present value (PV) = cash value of asset (V)/(1+present value (PV))
If there’s no opening or extra fees, the calculated APR of the cash flow of a project can be the same as the nominal interest rate.
True
When making a principal prepayment, the first thing that the bank will do is …
calculate the outstanding loan at that moment using PV in excel
I want to make a prepayment of $25,000, that $25,000 will cover …
the cancelation commission + the real amount being paid off.
$25,000 = cancelation commision + real prepayment
If the cancelation commission is a percentage, the principal prepayment is equal to the cancelation commission*real amount I pay.
FALSE
principal prepayment (amount I want to prepay) = (cancelation % + 1)*amount I really pay
The commision is the difference between the amount I want to pay and the amount I really pay.
True
When the moment for the cash flows is in years, the effective interest rate and APR are the same.
True
When the issue premium is a percentage, the emission value is calculated by …
discounting the nominal value using the formula emission value = nominal value*(1-issue premium%)
When we have an emission premium, this means that …
we have a bond, and the emission value will be less than the face value
When there is no emission premium, this means that the emission value …
will be exactly the same as the face value
The premium is a profit for investors but a ________ for the company getting the financing.
cost
If we have 100,000 bonds and we have to payback 20,000 each year, we will finish in …
100,000 bonds/20,000 each year = 5 years (when we pay back everything)
When there is no refund premium, this means that …
we are talking about a bond, and the refund value is the same as the face value
When there is a refund premium, the refund value …
is larger than than the face value
The face value is the real value of the bond.
True
We pay ______ than the real value of the bond when there is an emission premium and _____ than the real value of the bond when there is a refund premium.
less
more
The premium is always …
a benefit for the investor and a cost for the company
The alive bonds and the amortized bonds are the basis of the calculations of cash flows, when dealing with bonds.
True
Amortized bonds are cash outflows.
True
Alive bonds are …
the number of bonds that are part of our financial structure.
Alive bonds =
Alive bonds = alive bond in moment n +amortized bond of previous moment
Alive bonds =
Alive bonds = alive bond in moment n - amortized bond of previous moment
Alive bonds help calculate the annual coupons
True
Collection emission = bonds issued * emission value
True
Award payment is also called the price of the bond
True?
Refund value = amortized bonds * refund value
True
The refund value must be a negative value because they are cash outflow
True
When we amortize bonds, a fraction of the amortized bonds equal to the refund value receives an award equal to the award of each redeemed bond ($) * the number of bonds being redeemed.
FALSE
a fraction of the amortized bonds receives an award equal to some amount stipulated by the terms of the bond
When we pay amortizations, we also ______________-.
pay an award (price)
The refund value and award payment depend on …
the amortized bonds
refund payment = amortized bonds * refund value
True
award payment = # amortized bonds * $ each bond will receive
True
The interests in the annual coupons are as follows:
the alive bonds in the financial structure of the company receives a coupon
when the alive bonds get amortized, they no longer receive interest (coupon)
annual coupons depend on …
the alive bonds and the face value
if the alive bonds decrease, the annual coupons …
ALSO DECREASE
The only difference between a coupon paid annually and a coupon paid semi-annually is …
in a semi-annual coupon payment, the coupon is paid twice a year, but the refund payment and award payment are paid annually
Only alive bonds receive coupons.
True
When there is 0 coupons in a bond, we call the annual coupons …
interest
The difference between a bond with coupons and a bond with interest (0 coupons) is that …
during the life of the bond with interest, we don’t receive any of the interest, but we accumulate them and when we amortize the bond, we give all the interest to the investor
the interest in 0 coupon bonds generate more interests on its own
when we have coupons, the alive bonds will receive coupons while they are part of the financial structure of the company
In a 0 coupon bond, we accumulate the interest and …
In 0 coupon bonds, the alive bonds …
give all of it to the investor
don’t receive interest, but the amortized bonds receive interest when the refund value is repaid to the investors
In 0 coupon bonds, the interest is calculated on the …, and we are talking about _______ interest
amortized bonds
compound
In 0 coupon bonds, interest =
interest = AM.B * FV*((1+i)^n-1)
where AM.B = amortized bonds
FV = face value
n = period in which we are
AM.B * FV * i% is wrong for calculating interest in 0 coupon bonds because …
AM.B * FV * i% is for simple interest, but we are talking about compound interest when we are talking about 0 coupon bonds
A difference b/w 0 coupon bonds and bonds with coupon, is that if there is no amortized bond in a moment, there is no _________, but there is for ___________.
interest in the 0 coupon bond
bonds with coupon
when we amortize, we pay interest in 0 coupon bonds.
True
bonds with coupons are cheaper than bonds without coupon.
FALSE
bonds with coupons are more expensive than bonds without coupons
