International Corporate
Finance LATEST 2024/2025
WITH QUESTIONS AND
VERIFIED CORRECT
ANSWERS GRADED A+
GUARANTED PASS
capital gains yield - ANSWER-the dividend growth
rate, or the rate at which the value of an investment
grows
Dividend Yield - ANSWER-a stock's expected cash
dividend divided by its current price
,terminal value (Horizon Value) - ANSWER-the sale
price at the end of the expected holding period
Perpetual Growth Method - ANSWER-dividing the
last cash flow forecast by the difference between the
discount rate and terminal growth rate. The terminal
value calculation estimates the value of the
company after the forecast period.
(FCF * (1 + g)) / (d - g)
Free Cash Flow Valuation Model - ANSWER-A
model that determines the value of an entire
company as the present value of its expected free
cash flows discounted at the firm's weighted average
cost of capital, which is its expected average future
cost of funds over the long run.
FCF Constant Growth Model - ANSWER-A variation
of the constant growth model
Market Multiple Analysis - ANSWER-A method of
valuing a target company that applies a market
determined multiple to net income, earnings per
share, sales, book value, and so forth.
Preferred Stock Dividends - ANSWER-Fixed. Have
priority over common stock dividends.
,convertible preferred stock - ANSWER-Preferred
stock with an option to exchange it for common
stock at a specified rate.
cumulative preferred stock - ANSWER-Preferred
stock on which undeclared dividends accumulate
until paid; common stockholders cannot receive
dividends until cumulative dividends are paid.
Free Cash Flow - ANSWER-net operating profit after
taxes (NOPAT), add in depreciation expense, then
subtract money set aside for capital expenditures
and any need for increasing working capital
Capital Asset Pricing Model (CAPM) - ANSWER-a
model that relates the required rate of return on a
security to its systematic risk as measured by beta
call option - ANSWER-the option to buy shares of
stock at a specified time in the future
put option - ANSWER-the option to sell shares of
stock at a specified time in the future
, Cash Conversion Cycle (CCC) - ANSWER-the
length of time funds are tied up in working capital, or
the length of time between paying for working capital
and collecting cash from the sale of the working
capital
Return on Equity (ROE) - ANSWER-Net
Income/Total Equity
Weighted Average Cost of Capital (WACC) -
ANSWER-the weighted average of the cost of equity
and the aftertax cost of debt
Why is Equity more expensive than Debt? -
ANSWER-Because it comes w/ higher expected rate
of return due to higher risk (residual claimant of the
firm's cash flows)
Levered Beta - ANSWER-The unlevered beta
adjusted for financial risk due to leverage
Unlevered Beta - ANSWER-The firm's beta
coefficient if it has no debt
working capital requirement - ANSWER-(Current
assets - inventory) - current liabilities
Finance LATEST 2024/2025
WITH QUESTIONS AND
VERIFIED CORRECT
ANSWERS GRADED A+
GUARANTED PASS
capital gains yield - ANSWER-the dividend growth
rate, or the rate at which the value of an investment
grows
Dividend Yield - ANSWER-a stock's expected cash
dividend divided by its current price
,terminal value (Horizon Value) - ANSWER-the sale
price at the end of the expected holding period
Perpetual Growth Method - ANSWER-dividing the
last cash flow forecast by the difference between the
discount rate and terminal growth rate. The terminal
value calculation estimates the value of the
company after the forecast period.
(FCF * (1 + g)) / (d - g)
Free Cash Flow Valuation Model - ANSWER-A
model that determines the value of an entire
company as the present value of its expected free
cash flows discounted at the firm's weighted average
cost of capital, which is its expected average future
cost of funds over the long run.
FCF Constant Growth Model - ANSWER-A variation
of the constant growth model
Market Multiple Analysis - ANSWER-A method of
valuing a target company that applies a market
determined multiple to net income, earnings per
share, sales, book value, and so forth.
Preferred Stock Dividends - ANSWER-Fixed. Have
priority over common stock dividends.
,convertible preferred stock - ANSWER-Preferred
stock with an option to exchange it for common
stock at a specified rate.
cumulative preferred stock - ANSWER-Preferred
stock on which undeclared dividends accumulate
until paid; common stockholders cannot receive
dividends until cumulative dividends are paid.
Free Cash Flow - ANSWER-net operating profit after
taxes (NOPAT), add in depreciation expense, then
subtract money set aside for capital expenditures
and any need for increasing working capital
Capital Asset Pricing Model (CAPM) - ANSWER-a
model that relates the required rate of return on a
security to its systematic risk as measured by beta
call option - ANSWER-the option to buy shares of
stock at a specified time in the future
put option - ANSWER-the option to sell shares of
stock at a specified time in the future
, Cash Conversion Cycle (CCC) - ANSWER-the
length of time funds are tied up in working capital, or
the length of time between paying for working capital
and collecting cash from the sale of the working
capital
Return on Equity (ROE) - ANSWER-Net
Income/Total Equity
Weighted Average Cost of Capital (WACC) -
ANSWER-the weighted average of the cost of equity
and the aftertax cost of debt
Why is Equity more expensive than Debt? -
ANSWER-Because it comes w/ higher expected rate
of return due to higher risk (residual claimant of the
firm's cash flows)
Levered Beta - ANSWER-The unlevered beta
adjusted for financial risk due to leverage
Unlevered Beta - ANSWER-The firm's beta
coefficient if it has no debt
working capital requirement - ANSWER-(Current
assets - inventory) - current liabilities
