Missing

Front 1

Used to detect serial correlation

Back 1

Durbin-Watson

Front 2

Fix serial correlation with

Back 2

Hansen method

Front 3

Used to detect conditional heteroskedasticity

Back 3

Breusch-Pagan

Front 4

Fix conditional heteroskedasticity with

Back 4

White correction

Front 5

Used to detect Multicollinearity

Back 5

Conflicting t and F statistics

Front 6

Fix Multicollinearity with

Back 6

drop one of the correlated variables

Front 7

Used to detect covariance stationary

Back 7

Dickey-Fuller test

Front 8

Two factors determine the demand/supply for a currency

Back 8

1. Interest rate
2. Expected future exchange rates

Front 9

Reason to restrict trade that have some support

Back 9

1. National defense
2. Infant industries
3. anti-dumping

Front 10

Purchasing power parity

Back 10

The same goods should cost the same in diff countries
once exchange rates have been factored in

Front 11

Interest rate parity

Back 11

Exchange rates must change such that the return on investiments
with the same level of risk is the same in any currency

Front 12

Central Bank Intervention can

Back 12

reduce short term exchange rate volatility

Front 13

3 factors that cause a country's currency to appreciate or depreciate

Back 13

1. income growth
2. inflation rate
3. real interest rates

Front 14

Intercorporate investiments
ownership less than 20% use

Back 14

cost or market

Front 15

Intercorporate investiments
ownership 20% to 50% use

Back 15

Equity method

Front 16

Intercorporate investiments
ownership > 50% use

Back 16

Consolidation

Front 17

Equity vs. Consolidation, which produces higher
leverage?

Back 17

Consolidation

Front 18

Equity vs. Consolidation, which produces higher
net profit margin and ROA

Back 18

equity

Front 19

Equity/Consolidation and proportionate consolidation all
report the same?

Back 19

net income, equity and ROE

Front 20

Purchase vs. Pooling
What's higher under purchase method?

Back 20

Assets and equity.

But, net income/profit margin/ROA/ROE all lower

Front 21

Trading Securities

Back 21

BALANCE SHEET
reported at fair market value

INCOME STATEMENT
report unrealized and realized

Front 22

Available-for-sale

Back 22

BALANCE SHEET
reported at fair market value

report unrealized losses/gains in comprehensive income
in shareholders equity

INCOME STATEMENT
report only realized

Front 23

Held-to-maturity debt

Back 23

BALANCE SHEET
reported at historical cost

INCOME STATEMENT
report only realized

Front 24

Increase discount rate does what to PBO, ABO, VBO

Back 24

decrease

Front 25

Decrease rate of compensation does what to PBO, ABO, VBO?

Back 25

PBO - decrease
ABO - no effect
VBO - no effect

Front 26

Increase expected rate of return does what to PBO, ABO, VBO?

Back 26

No effect to any

Front 27

Flow effect

Back 27

change in exposure in LC * ( ending rate - average rate )

Front 28

Holding effect

Back 28

change in exposure in LC * ( ending rate - beginning rate )

Front 29

Translation gain/loss =

Back 29

flow effect + holding effect

Front 30

Temporal vs. All-Current
Appreciating currency under temporal

Back 30

GILTF all higher
Gross Profit margin
Interest Coverage
LTD-to-capital ratio
Total Asset Turnover
Fixed Asset Turnover

Current Ratio down

THINK: GILTF higher, Current Ratio lower

Front 31

Project Risk Analysis

Back 31

1. Sensitivity analysis
2. Scenario analysis
3. Monte Carlo simulation

Front 32

Capital Rationing should go to

Back 32

projects that maximize shareholder wealth
projects that have greatest total NPV

Front 33

Business risk

Back 33

1. Sales risk
2. operating risk (proporion of total costs that are fixed)

Front 34

Breakeven Quantity of sales

Back 34

F
------------------
P - VC

F: fixed cost
P: price
VC: variable cost

Front 35

net agency costs of equity

Back 35

1. Monitoring costs
2. Bonding costs
3. Residual losses

Front 36

pecking order theory

Back 36

managers prefer financing choices that send the least
visible signals to investors, with internal capital being
the most preferred, debt next

Front 37

static trade-off theory

Back 37

managers to balance the benefits of debt (tax shield)
with the costs of financial distress

Front 38

For double taxation and split rate systems the formula for effective tax is

Back 38

effective tax = corp tax + (1 - corp tax)(individual tax)

Front 39

Corp governance, What percent of board members to be independent

Back 39

75%

Front 40

Corp governance, What committees have only independant directors?

Back 40

1. Finance committee
2. Nominating committee

Front 41

Merger consolidation

Back 41

Both companies cease to exist and form new company

Front 42

Subsidiary merger

Back 42

the target becomes a subsidiary of the aquirer

Front 43

Statutory merger

Back 43

the target ceases to exist and all assets and liabilities become part of the acquirer

Front 44

Herfindahl-Hirschman Index

Back 44

2
HHI = sigma 1 to n (MS * 100)

Front 45

Pre-offer defence mechanisms

Back 45

Things that would make you not what to try to purchase
1. poison pills/poison puts
2. incorporation in a state with restrictive takeover laws
3. staggered board elections
4. restrictive voting rights
5. supermajority voting
6. fair price amendments
7. Golden parachutes

Front 46

Post-offer defense mechanisms

Back 46

The cat is out of the bag

1. Just say no
2. Litigation, greenmail
3. share repurchase
4. leverage recap
5. Crown jewel defense
6. Pac Man defense
7. Finding a white night or white squire