CAIA - 21 - Investing in Intellectual Property Flashcards Preview

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Flashcards in CAIA - 21 - Investing in Intellectual Property Deck (60)
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1

Film production and distribution generally provides ___-skewed return distributions, with box-office returns depending on film genres.

Film production and distribution generally provides right-skewed return distributions, with box-office returns depending on film genres.

2

Art provides relatively ___ returns with ___risk and is subject to ___transaction costs.

Art provides relatively low returns with moderate risk and is subject to high transaction costs.

3

Patents and R&D offer ___ returns, but requires significant ___.

Patents and R&D offer high returns, but requires significant expertise.

4

___ IP is IP that can be owned, finance, or traded on a stand-alone basis at different development stages.

Unbundled IP is IP that can be owned, finance, or traded on a stand-alone basis at different development stages.

5

The value of ___or ___ IP is uncertain and may not recover initial costs.

The value of new or exploratory IP is uncertain and may not recover initial costs.

6

___ intellectual property is developed IP that has an established use with an ability to generate income from licensing or royalties. Its valuation is relatively ___and can incorporate ___ ___.

Mature intellectual property is developed IP that has an established use with an ability to generate income from licensing or royalties. Its valuation is relatively stable and can incorporate risk premiums.

7

According to Soloveichik, theatrical film is a long-term asset with a lifespan of ___ years that loses ___% of its value in the first year after release and depreciates at ___% per year thereafter. Once available for home purchase, films typically generate revenue in alignment with ______revenues.

According to Soloveichik, theatrical film is a long-term asset with a lifespan of 80 years that loses 50% of its value in the first year after release and depreciates at 5% per year thereafter. Once available for home purchase, films typically generate revenue in alignment with box office revenues.

8

Economic reasoning and empirical evidence suggests that IP that is primarily a ___ good is unlikely to generate substantial long-term investment returns.

Economic reasoning and empirical evidence suggests that IP that is primarily a consumption good is unlikely to generate substantial long-term investment returns.

9

Revenues from film production are fairly ___.

Revenues from film production are fairly stable.

10

There are four film production stages:

 

1. Acquisition of ___ ___

2. ___-___

3. ___

4. ___-___

There are four film production stages:

 

1. Acquisition of story rights

2. Pre-production

3. Production

4. Post-production

11

___ ___ ___refers to investors funding a set of films and is often provided by a hedge fund or investment bank.

Slate equity financing refers to investors funding a set of films and is often provided by a hedge fund or investment bank.

12

___ ___refers to a private placement or public offering that funds a production company.

Corporate equity refers to a private placement or public offering that funds a production company.

13

___-___refers to studios collaborating on a film, splitting equity costs as well as risk and return.

Co-production refers to studios collaborating on a film, splitting equity costs as well as risk and return.

14

___-___ ___ refers to high net worth individuals, institutional investors, and other third-party investors funding costs not covered by other forms of financing.

Third-party equity refers to high net worth individuals, institutional investors, and other third-party investors funding costs not covered by other forms of financing.

15

___ ___ ___ is typically used for smaller, independent films.

Third party equity is typically used for smaller, independent films.

16

When a film distributor agrees to buy the film for a specific price after taking delivery of the completed film, it is called a ___ ___ ___.

When a film distributor agrees to buy the film for a specific price after taking delivery of the completed film, it is called a negative pickup deal.

17

___ ___ -___ occur before the film is made, distribution rights for specific foreign regions are sold for a fixed price, with most payment due when the film is ___ .

Foreign pre-sales occur before the film is made, distribution rights for specific foreign regions are sold for a fixed price, with most payment due when the film is completed.

18

___ ___ ___ cover any difference in financing between the production budget and the senior secured debt. These loans are often collateralized by selling distributors rights to unsold territories.

Gap financing loans cover any difference in financing between the production budget and the senior secured debt. These loans are often collateralized by selling distributors rights to unsold territories.

19

___ ___or ___ ___ financing is a second level of financing that covers the difference between senior loans and first-level ___financing. These loans are often ___.

Super gap or junior debt financing is a second level of financing that covers the difference between senior loans and first-level gap financing. These loans are often syndicated.

20

Film production costs can also be supplemented with ___ participations.

Film production costs can also be supplemented with royalty participations.

21

Larger film budgets usually result in ___ revenues and ___profitability.

Larger film budgets usually result in higher revenues and lower profitability.

22

Most film stars (do/do not) have a positive effect on revenues.

Most film stars do not have a positive effect on revenues.

23

Movie directors may have a positive effect on ___.

Movie directors may have a positive effect on profitability.

24

Sequels tend to generate ___ revenue and ___risk.

Sequels tend to generate higher revenue and less risk.

25

Thrillers and sci-fi tend to generate ___ revenues and romantic films tend to generate ___revenues.

Thrillers and sci-fi tend to generate high revenues and romantic films tend to generate low revenues.

26

Cash on cash returns of films (equation)

GBOR = global box office revenue; DBOR = Domestic

27

___ films are the least likely to generate a loss.

Horror films are the least likely to generate a loss.

28

A number of general reasons exist for considering art as an asset class:

 

1. ___ ___of demand

2. Market ___

3. Lack of ___

A number of general reasons exist for considering art as an asset class:

 

1. Long history of demand

2. Market inefficiency

3. Lack of transparency

29

___ ___ ___synthetically construct a continuous price series by controlling for each transaction's unique characteristics.

Hedonic price estimators synthetically construct a continuous price series by controlling for each transaction's unique characteristics.

30

___-___ ___ calculate returns to works of art with more than one transaction, using pairs of repeated sales to estimate returns.

Repeat-sales estimators calculate returns to works of art with more than one transaction, using pairs of repeated sales to estimate returns.

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