FIN 2164 UPDATED TESTED QUESTIONS AND ANSWERS
RATED A+
✔✔Downside Case - ✔✔A forecast scenario where business performance is worse than
expected.
✔✔Net Present Value (NPV) - ✔✔A valuation method that calculates the total value of
future cash flows discounted back to today.
✔✔Internal Rate of Return (IRR) - ✔✔The rate of return a project generates.
✔✔Payback Period - ✔✔The amount of time it takes to recover the initial investment.
✔✔Return on Invested Capital (ROIC) - ✔✔A measure of how efficiently a company
generates profits relative to the capital invested.
✔✔Business Development - ✔✔A group that finds ways to grow the company through
acquisitions, partnerships, new markets, or major deals.
✔✔Treasury Department - ✔✔Handles cash management, banking relationships,
investor relations, hedging, raising capital, and investing pension funds.
✔✔Hedging - ✔✔Using financial contracts to reduce risk.
✔✔Commercial Paper - ✔✔Short-term debt issued by large companies to borrow
money for a few days or months.
✔✔Investor Relations (IR) - ✔✔Managing communication with shareholders, analysts,
and potential investors.
✔✔Entrepreneur - ✔✔A person who starts and runs a new business, taking on financial
risk in hopes of profit.
✔✔Market Size - ✔✔The number of potential customers and the total revenue
opportunity for a business idea.
✔✔Angel Investor - ✔✔A wealthy individual who invests their own money into startups.
✔✔Venture Capitalist (VC) - ✔✔A professional investor who invests large sums into
startups in exchange for ownership and control rights.
✔✔Equity Ownership - ✔✔Shares or percentage ownership of a startup, given to
founders, investors, and early employees.
, ✔✔Intellectual Property (IP) - ✔✔Legal protections for ideas and products, including
patents, trademarks, copyrights, and trade secrets.
✔✔Pivot - ✔✔A major strategic change a startup makes when the original plan is not
succeeding.
✔✔Scalability - ✔✔A business's ability to grow revenue without dramatically increasing
costs.
✔✔Institutional Investor - ✔✔Large entities like mutual funds, pension funds, or
endowments that invest huge amounts of money.
✔✔Mutual Fund - ✔✔An investment fund that pools money from the public and invests
it in a diversified portfolio.
✔✔Pension Fund - ✔✔A large pool of money set aside by employers or governments to
pay retiree benefits.
✔✔Endowment - ✔✔A long-term investment fund at universities/hospitals used to
support operations.
✔✔Family Office - ✔✔A private firm that manages the wealth of ultra-rich families.
✔✔Sovereign Wealth Fund (SWF) - ✔✔A government-owned investment fund.
✔✔Hedge Fund - ✔✔A high-risk investment fund that uses advanced strategies
including short selling, derivatives, and leverage.
✔✔Short Selling - ✔✔Betting that a stock will go down in price by borrowing and selling
shares.
✔✔Portfolio Manager (PM) - ✔✔The person who makes final investment decisions for a
fund.
✔✔Investment Analyst - ✔✔Researches companies, builds models, values assets, and
recommends investments.
✔✔Operations Analyst - ✔✔Processes trades, updates databases, and ensures
accuracy in reporting.
✔✔Underwriting - ✔✔Evaluating risk to determine the price and terms of an insurance
policy.
✔✔Premium - ✔✔The amount of money paid for insurance coverage.
RATED A+
✔✔Downside Case - ✔✔A forecast scenario where business performance is worse than
expected.
✔✔Net Present Value (NPV) - ✔✔A valuation method that calculates the total value of
future cash flows discounted back to today.
✔✔Internal Rate of Return (IRR) - ✔✔The rate of return a project generates.
✔✔Payback Period - ✔✔The amount of time it takes to recover the initial investment.
✔✔Return on Invested Capital (ROIC) - ✔✔A measure of how efficiently a company
generates profits relative to the capital invested.
✔✔Business Development - ✔✔A group that finds ways to grow the company through
acquisitions, partnerships, new markets, or major deals.
✔✔Treasury Department - ✔✔Handles cash management, banking relationships,
investor relations, hedging, raising capital, and investing pension funds.
✔✔Hedging - ✔✔Using financial contracts to reduce risk.
✔✔Commercial Paper - ✔✔Short-term debt issued by large companies to borrow
money for a few days or months.
✔✔Investor Relations (IR) - ✔✔Managing communication with shareholders, analysts,
and potential investors.
✔✔Entrepreneur - ✔✔A person who starts and runs a new business, taking on financial
risk in hopes of profit.
✔✔Market Size - ✔✔The number of potential customers and the total revenue
opportunity for a business idea.
✔✔Angel Investor - ✔✔A wealthy individual who invests their own money into startups.
✔✔Venture Capitalist (VC) - ✔✔A professional investor who invests large sums into
startups in exchange for ownership and control rights.
✔✔Equity Ownership - ✔✔Shares or percentage ownership of a startup, given to
founders, investors, and early employees.
, ✔✔Intellectual Property (IP) - ✔✔Legal protections for ideas and products, including
patents, trademarks, copyrights, and trade secrets.
✔✔Pivot - ✔✔A major strategic change a startup makes when the original plan is not
succeeding.
✔✔Scalability - ✔✔A business's ability to grow revenue without dramatically increasing
costs.
✔✔Institutional Investor - ✔✔Large entities like mutual funds, pension funds, or
endowments that invest huge amounts of money.
✔✔Mutual Fund - ✔✔An investment fund that pools money from the public and invests
it in a diversified portfolio.
✔✔Pension Fund - ✔✔A large pool of money set aside by employers or governments to
pay retiree benefits.
✔✔Endowment - ✔✔A long-term investment fund at universities/hospitals used to
support operations.
✔✔Family Office - ✔✔A private firm that manages the wealth of ultra-rich families.
✔✔Sovereign Wealth Fund (SWF) - ✔✔A government-owned investment fund.
✔✔Hedge Fund - ✔✔A high-risk investment fund that uses advanced strategies
including short selling, derivatives, and leverage.
✔✔Short Selling - ✔✔Betting that a stock will go down in price by borrowing and selling
shares.
✔✔Portfolio Manager (PM) - ✔✔The person who makes final investment decisions for a
fund.
✔✔Investment Analyst - ✔✔Researches companies, builds models, values assets, and
recommends investments.
✔✔Operations Analyst - ✔✔Processes trades, updates databases, and ensures
accuracy in reporting.
✔✔Underwriting - ✔✔Evaluating risk to determine the price and terms of an insurance
policy.
✔✔Premium - ✔✔The amount of money paid for insurance coverage.
