c214 financial management exam questions and answers

c214 financial management exam questions and answers intrinsic value - Answer- the value of an asset computed with an economic model. Based on the cash flows generated from the security, intrinsically it is work XX amount Terminal Cash Flow (TCF) - Answer- cash flows that result from winding down a project at the end of its life; does no include final year's differnetial cash flow. EFN - Answer- external financing or funds needed. Another name for DFN bond rating - Answer- a rating assigned to a firm to measure the probablity of default by a company like S&P or Moody's bulldog bonds - Answer- bonds issued in the UK and dominated in British pounds AR turnover - Answer- credit sales/ AR, a liquidity ratio American Depository Receipts ADR's - Answer- certificates issued by us banks and traded on us markets but represent shares of foreign stock long - Answer- to buy something operating balance - Answer- the amount of case the firm needs to pay its immediate bills float - Answer- delay between the payment form customers and the actual receipt of payments financing ratios - Answer- one of the four classifications of ratios designed to measure how the firm finances its operations. present value - Answer- how much spending power money has today Volcker Rule - Answer- the Vlockler rule limits bank investments in hedge funds and proprietary trading. leveraged recapitalizations - Answer- a strategy used by firms to increase their debt to equity ration opportunity costs - Answer- the costs associated with foregone opportunities to use cash or credit in an alternative way Free Cash Flow to Firm FCF - Answer- Cash left over after operations and taxes available to creditors and shareholders external equity - Answer- New equity capital that must be raised through the process of security issuance or provided through other lending mechanisms. discretionary accounts - Answer- Another name for non-spontaneous accounts. financial accounts that do not vary with sales fixed exchange rate system - Answer- a country's currency value is fixed to a second country's currency fixed-return securities - Answer- bonds- slow but returns Securities Act of 1933 - Answer- Resulted from Great Depression. Requires firms to register with the SEC to sell public securities. hybrid security - Answer- A security that has characteristics like stock and bonds - an example could be a preferred stock. ROE - Answer- Return on Equity=_NI/E a profitability ratio naked position - Answer- an ownership position without any hedges IBDTC - Answer- Interest bearing debt divided by total capital disbursement float - Answer- the length of time it takes for a company's payment to become an actual outflow Historical Cost Principle - Answer- Accrual accounting principle to recorded assets, liabilities, and equity at historical levels. dividend yield - Answer- Dividend payment/Current stock price. Could also be written as (Dividend per Share) / (Price per Share). weighted average cost of capital - Answer- the weighted average of the various costs of equity and costs of debt samurai bond - Answer- bonds issued by a firm foreign to japan but dominated by yen balance sheet - Answer- one of three main financial statements. It is a snapshot of ALE at a specific time affermative convenants - Answer- a bond covenant that requires the firm to do something interest expense - Answer- amount owed to creditors that appears on the I.S. between EBIT and earnings before taxes. zeros - Answer- bonds that do not pay interest payments fixed assets - Answer- Assets on the balance sheet with a lifespan greater than a year. negative covenant - Answer- a bond covenant that prohibits the firm from doing something Flotation Costs - Answer- the costs associated with issuing new stocks or bonds IRR - Answer- A capital budgeting method that includes the time value of mon