Fina 3770 Final Exam Study Guide
Business organization types
- Sole proprietorship - General Partnership - Limited Partnership - Corporation / C Corporation - S Corporation - LLC - Limited Liability Company - LLP - Limited Liability Partnership - Joint venture
Key features of preferred stock
1. Fixed Dividend 2. Convertibility 3. Votability 4. Yields
Constant Growth Model Inputs
1. Growth rate dividend per share 2. Required rate of return 3. Dividend per share
Key features of Classified stock
1. Higher Dividend 2. Fixed Rate 3. Early payment than others
Key features of Common stock
1. Stock Represents Ownership 2. Voting Rights 3. Common Stock value 4. Attending Board Meetings.
Income Statement
A financial statement showing the revenue and expenses for a fiscal period.
Balance sheet
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
Preferred Stock
A preference share are those type of shares which have fixed dividend and whose payment takes priority at the time of liquidation than other such as equity etc.
Cash Flow Statement
A summary that shows total income and spending for a given time period
The Stock market
A system for buying and selling shares of companies
Careers in finance
Commercial Banking Corporate Finance Financial Planning Insurance Investment Banking Money Management Real Estate Hedge Funds Private Equity
I
Interest Rate per period
Types of Financial Institutions
Investment banks Commercial banks Financial services corporations Credit unions Pension funds Life insurance companies Mutual funds Exchange traded funds Hedge funds Private equity companies
Liquidity or Solvency Ratios
Measure(s) the ability of the firm to pay its debts as they come due
Profitability Ratios
Measures of the operating success of a company for a given period of time.
Types of Financial markets
Primary markets and secondary markets
Constant Growth Model Formula
P0 = D/(k-g)
PMT
Payment, the annuity payment.
Market Value Ratios
Ratios that relate the firm's stock price to its earnings and book value per share.
Goals of the corporation
Stockholder wealth maximization Managerial incentives to maximize shareholder wealth Social responsibility Stock price maximization and social welfare
Non Constant Growth Model
This model is also known as Walters Model. This model shows the clear relationship between the internal rate of return and Cost of capital of the firm in determining the Dividend policy
Constant Growth Model
also known as Dividend discount model ( DDM) is a method which are used for calculating the intrinsic value or fair value of shares. This value the present value of future dividends.
Do Pont system
analysis is a technique used to decompose return on equity (ROE) into different parts. The ROE is used to assess the profitability and performance of the company.
Financial institutions
entities that provide financial services, such as taking deposits, managing investments, brokering financial transactions, or making loans
Financial markets
financial institutions through which savers can directly provide funds to borrowers
FV
future value
Beta
indicates whether Investment is more or less volatile than the market as a whole.
Common Stock
is a stock as well as a security which represents ownership in company and exercise voting right
FCF Model
is equal to cash flow from operations and from business minus operating as well as non operating expenses
Bond's Key Features
issuer, maturity, par value, coupon rate and frequency, and currency denomination.
Secondary Market
market for reselling financial assets
Primary Market
market for selling financial assets that can only be redeemed by the original holder
Financial Leverage or Debt Ratios
measure the firm's ability to pay long-term debt and liabilities It uses firms long-term liabilities in the ratios
N
number of payments
Amortization table
payment, interest paid, payment of principal, remaining balance
PV
present value
Asset Efficiency or Turnover Ratios
the efficiency with which the firm uses its assets to produce sales.
What is finance?
the system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities
Classified Stock
those stock which are divided into more than one class of the common stock