Tutor Flashcards
(20 cards)
What are 4 ways an organization can raise capital?
Stocks
Bonds
Capital in Excess of Par
Retained earnings
If a company issued Long Term Bonds,
Cash goes up
So does Long Term Bonds
Working Capital calculation
Current assets - Current Liabilities
Current Ratio formula
Current Assets / Current Liabilities
What are the Cash Flow Statement components?
Where would interest and dividends received by an organization appear?
Operating
Investing
Financing
Operating
Current Yield Formula
Annual Income / Current Price
IF you buy a 10-year bond with a 6% coupon and the price is 950, what is the YTM?
4
7
9
4
You just need to lower than 6
THREE ways Fed can control money supply
Buy Sell Treasury securities
Reserve requirements
Discount
Open Market Operations
Fed Buy / sell securities
What was LIBOR replaced with
SOFR
Secured overnight financing rate
Gift tax exclusion
$19,000
5 X $19,000 = into 529 tax free
- then have to wait 5yrs
If a treasury is quoted at 90.8, calculate the price
8/32 = .25 x 10 - 2.50
90*10 = 900
900 + 2.50 = 902.50
T Bills
Notes
Bonds
Which do NOT pay interest
less than 1 yr
2-10 years
10-30 years
Bills - issued at discount from par
TIPS - what adjusts with inflation
- coupon rate or value
Value of the bond and thus the coupon received becomes higher
Rate stays the same
On TIPS the par is $1000, 4% coupon, and 2% inflation.
What is value at the end of the year
What is total interest paid in the year
1000 X 1.01 = 1010
1010 X 1.01 =1020.10
this is because the coupon is paid 2X per year
- 1000*1.01= 1010
a. 1010 *.02 = 20.2 - 1010*1.01 = 1020.1
b. 1020.1 *.02 = 20.402
= 20.2 + 20.402 = 40.602
GNMA - federally backed securities
FNMA and FNMC - federally associated agencies
Pay interest
This is where MBS
If someone sells a call or put, they are SHORT a call or put
If someone buys a call or put, they bought a call.
