F100 Final Exam Review
A bond that has a face value of $1,000 and a coupon of $50 would pay...
$25 every six months.
According to the discussion in class, the worst merger of two large companies is considered to be...
AOL and Time Warner
How did the US government effectively bailout the big banks?
According to the video clip played in class, the US government forced all the big banks to take a large injection of capital, whether or not the banks were actually in trouble.
As World War II was nearing its end, several countries, and their finance and economics experts, gathered to discuss a post-war international monetary system. Where did they gather?
Bretton Woods, New Hampshire
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
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)
All of the following are typical uses for ACH debits, EXCEPT:
Direct deposit of payroll
Which of the following was NOT one of the tips covered in class regarding working in groups?
Elect a president (or a leader) and a secretary ( or note taker).
If you become a finance major, how many courses are the minimum required for electives?
Four typical courses, worth at least 12 credits.
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
Payment card systems manage the processing of which types of payments I. Debit cards II. Credit cards III. Stored value cards IV. Smart cards
I, II, III and IV
What are the key services that a commercial bank must provide? I. Charge high fees for accounts II. Accept deposits III. Provide safety deposit boxes IV. Make commercial loans V. Have both a lobby and a drive-through
II & IV
Which of the following would be considered an External Collaboration for the finance and treasury areas? I. Internal Audit II. Accounts Receivable III. Financial Markets IV. Suppliers and Customers V. Regulatory Agencies
III, IV and V only
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.
This person founded the first investment bank in Philadelphia in order to help fund the American Civil War.
Jay Cooke
What was the game used in the clip from the Big Short to illustrate the problems in the real estate and mortgage-back securities market?
Jenga
One of the recommended sites for investing and markets was Seeking Alpha, a sort of crowd-sourced site for stock analysis. The "alpha" in the name is a reference to...
Jensen's alpha.
Probably somewhat surprising from the class session in entrepreneurial finance was this:
Less than 1.0% of startups raise venture capital.
Ensuring the company's ability to meet current and future financial obligations in a timely and cost-effective manner is related to which of the following treasury management objectives?
Maintain liquidity
What is the traditional financial goal we use for publicly traded corporations in the U.S.?
Maximize shareholder wealth
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 primary party that is responsible for making a payment is known as the:
Payor
Large payments that are time-sensitive are typically paid via what type of system?
RTGS
Which of the following is generally the last step in a payment system?
Settlement of the instrument
Developments which may prompt significant changes in Accounts Receivables include all of the following EXCEPT:
Steady sales volume
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.
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.
Freshmen in the course should use which format for the resume assignment?
The freshman resume example from UCS.
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 advantages of obtaining long-term export financing through an export credit agency include the following EXCEPT:
The time required to obtain the necessary approvals
Which of the following would indicate a restrictive current investment strategy?
Tight credit policy and limited inventory
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
According to class session, what is a way for investors to participate in the real estate market without actually owning property?
Use REITs.
All companies that have publicly traded stock submit an annual report to the SEC. This report is called...
a 10-K.
Say that Apple buys Netflix. This would be an example of...
a company growing inorganically.
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.
Financial managers generally demand that anything their company invests in must return at least some minimally acceptable rate. According to a recent class session, the rate that must be met or surpassed is also called...
a hurdle rate.
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.
Using the select financial information in the table below, what is this company's return on equity (ROE)?
about 28%
Using the select financial information in the table below, what is this current ratio?
about 4.5
Inflation throughout the 1970s averaged...
about 7%.
Which of the following types of developments are included in commercial real estate. Choose all that apply.
all except single family homes
According to class presentation, a REPO is...
an agreement by a bank to sell a security for some cash and then buy it back later at a slightly higher price.
If you can buy an asset in one market and sell it right away for a higher price in another market, then you may have made...
an arbitrage profit.
Angel investors are usually...
an individual investor.
The mix between fixed-income (debt) and equity (stock) is a key decision in the management of a long-term portfolio and is known as (according to class presentations)...
asset allocation.
The accounting identity or equation is...
assets = liabilities + equity.
Companies from other countries that do not want to list on US stock exchanges can still obtain capital from US investors...
by issuing American Depository Receipts (ADRs) through banks.
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.
What are the three basic choices for investments, according to class presentation?
cash, bonds, stocks
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 not one of the major objectives of treasury management, as noted in F100 class sessions?
conducting presentations prior to an IPO
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.
When early researchers added stocks to portfolios, they discovered that the standard deviation of the portfolios' returns fell. This is a result of...
diversification.
The sample equity analysis report available to you is...
from JP Morgan and covers 21st Century Fox.
To simplify what an investment management career is all about, it might be helpful to consider it as...
helping clients invest their money or wealth.
According to the class presentations, investment management is all about...
helping investors make good decisions.
Most foreign exchange rates are set...
in a market where supply and demand determine prices.
Interest rates and bond prices are...
inversely related.
An asset bubble...
is any unusual and extended rise in asset prices.
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
The kinds of securities that were at the center of the 2007-2008 financial crisis were:
mortgage backed securities and collateralized debt obligations.
The resume assignment is due...
on February 27 at 11:59 PM.
Venture capitalists are usually...
professionals collaborating inside a formal venture capital firm.
Because every kind of stakeholder gets paid before common shareholders, these shareholders are often called...
residual investors.
Which of the following was presented in class as, typically, having access to greater investment management resources and opportunity to specialize?
sell side analysts
A normal yield curve is one in which..
short-term interest rates are lower than long-term interest rates.
If you have questions about your degree requirements, you should...
speak with your Kelley academic advisor.
What are the two primary goals of monetary policy at the Fed?
stable prices and maximum employment
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.
Particularly popular among professionals in investment management is...
the CFA credential.
Earnings per share (EPS) indicates...
the amount or company profit per share of common stock.
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, a lot of the work in commercial banking is sort of...
the mirror equivalent of work in corporate finance.
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.
According to class session, the target capital structure is...
the mix of debt and equity the company wants to use to finance a project.
GAAP references...
the standard accounting rules and conventions used, mostly in the US.
Companies return cash to shareholders whenever...
there is more cash than is needed to invest in growth opportunities.
REITS are especially popular among some kinds of investors because...
they pay a substantial portion of profits to shareholders as dividends.
During multiple class sessions, instructors noted that the most important step freshman should take right now is...
to learn how to study at IU and make good grades.
We looked at financial statements quickly online at Yahoo! Finance. There, we discovered that TTM is short for...
trailing twelve months.
According to class session, a lot of CFOs today come from what part of the finance function in the firm?
treasury management
Operating income and EBIT are often the same numbers...
unless a company reports some non-operating income or expense.
An important early insight by financial manager looking over the D'Leon financial statements...
was the realization that the fourth quarter performance was pretty good.
It's important for the resume for you 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.
