f100

Credit default swaps (CDS) contributed significantly to the 2007-2008 financial crisis...

because they fueled the MBA pipeline as many banks with large portfolios of MBSs began to treat them as in the same risk class as US Treasuries.

Two competing approaching for basic valuation are...

discounted cash flow and relative valuation.

When early researchers added stocks to portfolios, they discovered that the standard deviation of the portfolios' returns fell. This is a result of...

diversification.

Say your company has a stock beta of 1.85. Generally, if the market moves up in one month by about 5.0%, then your company likely...

moves up about 9.25%

The resume assignment is due...

on October 2 at 11:59 PM.

According to class session, a simple version of the business of private equity is...

private equity firms buy targeted companies at a relatively low price, then make improvements in the business model and (usually) management, and then sell at a relatively high price.

Although hedge funds often used debt to leverage their investments and increase the ROI to equity holders, before it failed, Long-Term Capital Management at one time had an unusually high debt-to-equity ratio of...

250 to 1.

One of the problems facing a company like Simon is that vacancy rates of shopping malls are running high at about...

11.4%.

According to the discussion in class, the worst merger of two large companies is considered to be..

AOL and Time Warner

In our discussion of the Timken case, what was the rating on their bonds at the time of the acquisition?

BBB

In our discussion of the Timken case (where they purchased the Torrington company), what was the primary product the companies produced?

Bearings

The largest investment manager according to assets under management is...

BlackRock

This important credential for finance professional s requires completing three, six-hour exams.

CFA

What is the primary benefit of using a re-invoicing center?

Centralization of FX exposures

The business bankruptcy chapter that is used if a business is considered to be worth more alive than dead is:

Chapter 11

The Five C's of Credit include which of the following factors?

Character, Capacity, Capital, Collateral, Conditions

The key step in the payment process where banks or other parties exchange the payment information in order to transfer money between themselves is know as what?

Clearing

Which of the following is a financing strategy in which long-term financing supports fixed assets, permanent current assets, and some portion of fluctuating current assets?

Conservative financing strategy

Which of the following regulatory bodies was created after the financial crisis of 2007-2008?

Consumer Financial Protection Bureau (CFPB)

Most international (cross-border) settlements are done through what kind of relationship?

Correspondent Bank Relationship

What kind of derivative was AIG writing that got it into so much trouble, the government had to bail it out?

Credit Default Swaps (CDS)

Based on the data provided in our lectures, what area represents the largest percentage of fees collected on average by investment banks?

Debt Capital Markets

Which of the pairs of courses listed below are important finance courses required of all majors after I-Core?

F303 and F305

Say that Home Depot raises capital by issuing bonds in Australia that are denominated in Australian dollars. These bonds will be called...

Matilda bonds.

What is the traditional financial goal we use for publicly traded corporations in the U.S.?

Maximize shareholder wealth

Which of the following federal regulations created the Federal Deposit Insurance Corporation (FDIC)?

Glass-Steagall Act

According to the class lecture on the 2007/08 financial crisis, what government agency was an early developer of the straight pass through pools of conforming mortgages?

Government National Mortgage Association (Ginnie Mae)

Which of the following is NOT considered part of Monetary Policy?

Government Spending

Which of the following is NOT a reason/motive for an acquisition?

Growing organically

A combination of two firms that produce the same products and/or services is known as what kind of merger?

Horizontal

What are the key services that a commercial bank must provide?

II. Accept deposits IV. Make commercial loans

Which of the following would be considered an External Collaboration for the finance and treasury areas?

III. Financial Markets IV. Suppliers and Customers V. Regulatory Agencies

According to class session, Blackstone participates in private equity "secondaries." What is this?

It is a secondary market in private equity investments.

According to class presentations, what is financial intermediation?

It is the service of transferring of capital from savers to users.

Investors are always anxious about the burn rate for startup and growing companies. What is that?

It's how much cash the company is "burning through" during a given period, such as a month or quarter.

Which of the following banks was allowed to fail during the financial crisis of 2008?

Lehman Brothers

Which of the following big banks was allowed to fail during the 2007-2008 financial crisis?

Lehman Brothers

The example in class session of a c corporate venture operation is...

Lilly Ventures.

The two financial economists who researched and published on capital structure are...

Modigliani and Miller (M&).

Some investment management firms specialize only in equity research. One of the companies highlighted in class that was such a specialist is...

Muddy Waters.

The difference between the interest rate at which a bank lends to borrowers and the interest rate the bank pays to depositors is known as:

Net Interest Margin

The career plan assignment is due...

November 13 at 11:59 PM.

Economies of scale are designated as what kind of synergy?

Operations

When an Investment Bank suggests a potential sale of an entire company of a division of a company to a corporate client this is know as:

Sell Side - Push

Which of the following is generally the last step in a payment system?

Settlement of the instrument

The Check 21 Act of 2003 was legislation that primarily focused on what area?

Payment systems and instruments

Using the select financial information in the table below, what is this company's return on equity (ROE)?

ROE = net income / shareholders' equity

If a company wishes to increase its cash turnover ratio which of the following actions would the company NOT want to take?

Regularly taking advantage of sales prices on inventory supplies, realizing the inventory will be in stock for awhile and may become obsolete before use

Should you consider a minor to accompany your finance or real estate major?

Sure. But as a Kelley major, you must minor in a subject outside the business school.

Which of the following is not a feature of the US Federal Reserve system, as noted in the video available in the class slides?

The Board of Governors is based in New York.

According to Milton Friedman and Anna Schwartz, what was the primary cause of the Great Depression?

The Fed failed to do its job of managing the money supply properly.

According to class session, which of the following items represents a key problem of D'Leon?

The company expanded fast by investing a lot of capital into new equipment that then didn't always work properly.

According to class session, how did the 2008 financial crisis affect Merrill Lynch?

The company had been a leader in the markets for collateralized debt obligations and mortgage backed securities. Losses in these markets forced Merrill into a merger with Bank of America.

In what way did Merrill Lynch "go on strike" in 1987?

The company refused to participate in underwritings until it was allowed lead bank status.

Which of the following was not one of the examples discussed in class of commercial real estate projects?

the renovation of Penn Central Station in New York

Companies return cash to shareholders whenever...

there is more cash than is needed to invest in growth opportunities.

The local startup covered in class that uses an app to help small businesses stay in touch with their customers is...

Townee

The finance professional who is primarily responsible for arranging external financing and managing relationships with banks and other financial institutions is the

Treasurer

Which of the following is not an important advantage of debt financing?

The firm owner can cancel the debt within six months with no penalty.

Which of the following statements is NOT correct regarding the information provided in an aging schedule?

The report is calculated by dividing outstanding accounts receivable at the end of period by the average daily sales for that period.

What is the definition of the Cash Conversion Cycle?

The time it takes to convert a cash outflow into a cash inflow.

The idea that a dollar in your hand today is worth more than a dollar promised one year from now is best summarized as...

Time value of money

What is the primary financial goal for non-profit agencies?

To efficiently use the resources available to provide maximum benefits

Which of the following is an interesting element of the D'Leon company according to its balance sheet and as described in class?

Total assets doubled in 2019 from 2018.

According to F100 class sessions, there are three big questions for finance professionals to answer. We've addressed these in multiple class sessions, most recently during Week #10. What are those three big questions?

What should the company invest in, how should the company finance its investments, and how should the free cash flows be allocated (or distributed)?

The primary business-to-business payment system in most countries outside of the U.S. is:

Wire transfer

Using the select financial information in the table below, what is this company's cost of revenue?

You have revenues and gross profit. Gross profit is calculated by revenues - cost of revenues. So to get to coast of revenues here, do revenues - gross profit - cost of revenues.

According to the class presentation, the recipe for value creation includes...

a company must beat its cost of capital.

WACC stands for weighted average cost of capital, and it is maybe best explained as...

a company's cost of debt weighted by how much debt it carries added to the company's cost of equity weighted by how much equity it uses to finance assets.

The investment bank that basically manages a syndicate of several other banks when moving toward an issue of bonds or stocks is called...

a lead underwriter.

A frequently used strategy for obtaining the capital used in a private equity transaction is...

a leverage buyout.

Handshake is...

a platform for connecting Kelley students with recruiters.

Kelley Connect is...

a site of many resources available for Kelley students.

JP Morgan Chase is an investment bank. But it is also an investment management firm. In fact, it was defined in class session as...

a universal bank.

Angel investors are usually...

an individual investor.

Which of the following types of developments are included in commercial real estate. Choose all that apply.

apartment buildings office buildings

Startups and small businesses trying to grow are very alike, according to class session, because both...

are working hard to develop new ideas. want to satisfy customers and make them happiy. All the answer options available here are correct. need financing to put their ideas into practice.

The accounting identity or equation is...

assets = liabilities + equity.

The process of allocating funds for investments in long-term assets is called...

capital budgeting.

According to a recent class session, accounting is great at bringing attention to revenue, expenses, and profits. Finance focuses more on...

cash flow.

Based on class sessions, restructuring refers to...

changing the company's capital structure - its proportion of equity and debt used to finance assets.

Which of the following is the professional position that provides advice on the full spectrum of an investment bank's products?

client relationship manager

Which of the following careers was noted during class sessions as hiring the largest number of Kelley finance majors?

corporate finance

The returns paid to investors are effectively...

costs of capital to the company.

The role of the commercial real estate developer was defined in class session as...

creating and executing the vision of making a property productive.

As noted in class session, if you want to modify the required format...

don't. There are no exceptions for freshmen with respect to the required format.

If you intend to participate in the X272 Global Business Immersion program, you'll need to be prepared to apply for this program...

during fall semester of your sophomore year.

The sample equity analysis report available to you is...

from JP Morgan and covers 21st Century Fox.

The investment management firm, Guggenheim was used in class session to...

illustrate portfolio management.

Both the career plan and resume assignments should be submitted...

in .pdf file format.

Large corporations that want to borrow very short term might well...

issue commercial paper.

It makes good sense that a company's basic return on assets should be greater than...

its cost of capital.

If the cap rate for a mixed-use property is 7.0% and the net operating income is $220,000 per year, what is an estimate of the property's value?

just over $3 million

Which stage of money laundering involves a series of financial transactions designed to separate cash proceeds from their criminal or terrorist origins?

layering

One reason to downplay some of the exciting elements of startups, such as getting together with venture capitalists, is...

less than 1.0% of startups ever raise venture capital.

Owners of private equity firms are typically general partners in private equity funds. Outside investors are typically the...

limited partners.

Various market, competitive, and political pressures made mortgage lenders anxious to help people buy their own homes - to own a piece of the traditional "American pie." One of the consequences of these pressures was...

loans were approved for home purchasers who were not realistically qualified for those loans.

According to class presentation, stand-alone risk consists of...

market risk + diversifiable risk.

A typical business lifecycle consists of the startup and growth phases, followed by...

maturity and decline.

Investment banks usually have several sources of revenues. These different sources were highlighted in class sessions. Which of the following is not one of those revenue sources?

real estate sales

Robert Merton and Myron Scholes were two individuals involved in Long-Termm Capital Management who also...

received the Nobel Prize in Economics.

According to the class presentation, asset allocation is about...

selecting a mix of investments appropriate for your risk tolerance, financial goals, and time horizon.

Paying dividends is highly valued by some shareholders who want a constant receipt of income. Paying out dividends also means that...

some earned cash is not used to reinvest in the firm.

According to class session, one way to think about investment banking is...

that it is a lot about deal making.

The workshops we will continue discussing in F100 are managed by the finance department, except for consulting. The Consulting Workshop is managed by...

the Business Law and Ethics department.

A good example of a pegged exchange rate, as explained in the class session slides, is...

the Hong Kong dollar pegged to the US dollar.

One of the consequences of Japan's asset bubble bursting is that...

the Japanese economy suffered through two decades of almost no growth. These are known as the lost decades.

a key benchmark rate used in lending between major global banks is called...

the London Interbank Offered Rate, or LIBOR.

If businesses in Japan sell more of their goods and services to US businesses than is usual, then it is likely (assuming nothing else significant changes) that...

the US dollar will weaken relative to the yen

Earnings per share (EPS) indicates...

the amount or company profit per share of common stock.

One of the bright spots in attempts to improve diversity in financial services is...

the appointment of Jane Fraser as CEO of Citi.

Company assets represent things the firm owns. Liabilities and equity represent...

the claims on those assets.

In F100 class sessions, we saw how it was possible to buy an iPhone in LA and sell it in Nagoya, Japan and end up with a profit due to exchange rates. The profit seemed relative small, however, especially when transactions costs are considered. This example in class was meant to illustrate...

the law of one price.

The stock market crash in 1929 is dramatic because...

the market fell 25% across four days.

According to class session, the target capital structure is...

the mix of debt and equity the company financial managers hope will minimize the weighted average cost of capital.

One of President Ford's responses to high inflation was...

to create a "Whip Inflation Now" campaign.

The title of the recommended book When Genius Failed, was in large part a reference...

to the involvement in LTCM of academics Myron Scholes and Robert Merton.

A bond that has a $1,000 face value and a $50 coupon...

will pay interest of 5.0%.

It's important for your resume to demonstrate you have some kind of engagement at IU, even though you will have been on campus for only a few weeks. In class sessions, we further explained that...

you don't have to join just a business or finance club. Exploring other kinds of groups at IU will be just fine.