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46 Cards in this Set
- Front
- Back
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The realized return is the sum of what two conponents? |
Dividend yield and capital gain |
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What’s the formula for capital gain? |
(P(t+1)- P(t))/P(t) |
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What is the formula for dividend yield? |
D(t+1)/P(t) |
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What is the formula for when you reinvest the dividends paid by the stock? |
e^(delta • t) |
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Percentage ownership formula for equity financing and Series A, B,etc funding rounds? |
%ownership = number of shares at beginning/number of shares at the end |
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What is a formula for percentage ownership? |
Percentage ownership = amount invested/post money valuation |
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What is another formula for percentage ownership? |
Number of shares owned/total number of shares |
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True of false: Mortgage backed securities issued by Fannie Mae are backed by the full faith and credit of the US government |
False |
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What are some things that asset backed securities can be backed by? |
Credit card receivables, home mortgages, student loans, auto loans, and many others |
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What is a private backed security that is backed by another asset-backed securities known as? |
A CDO |
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What does GNMA stand for? |
Government National Mortgage Association |
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What is the GNMA commonly known as? |
Ginnie Mae |
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What securities are backed by the full faith and credit of the US government and bear no default risk to the investor? |
GNMA |
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True or False: Mortgage backed securities issued by Fannie Mae are backed by the full faith and credit of the US government? |
False |
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The expected return for a zero risk portfolio must equal what to prevent arbitrage |
Must equal the risk free rate |
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What is the correlation that results in the lowest risk? |
-1 |
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r- delta is referred to as what? |
The cost of carry |
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What is the formula for the forward premium? |
F(T)/S(0) |
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What is the maximum payoff of a covered call at expiration |
K |
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What is the max payoff of a covered put at expiration? |
-K |
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A collared stock has the same payoff of what other option strategy? |
Bull spread |
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According to a CAPM assumption, investors hold only what kind of portfolios of traded securities? |
Efficient portfolios |
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The value of an option V, is very similar to what of an option? |
The payoff |
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What is the effective cost of debt without taxes? |
Rd |
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What is the effective cost of debt with taxes? |
Rd(1-rc) |
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What is the PV of the interest tax shield for permanent debt? |
Rc•d |
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Wd•rd•rc is called what? |
The interest tax shield |
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Sovereign debt is issued by what kind of governments? |
National Governments |
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Treasury securities that do not pay coupons and have an original maturity of 26 weeks are called what |
Treasury bills |
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Treasury bills are zero coupon bonds with maturities shorter than how long? |
1 year |
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Blank are semiannual coupon bonds with maturities ranging from 1-10 years? |
Treasury notes |
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What are semiannual coupon bonds with maturities longer than 10 years? |
Treasury bonds |
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Are the dollar coupons of TIPS fixed or varied? |
Varied |
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What variable annuity product is similar to a European put option with expiration contingent on the death of the policyholder or annuitant? |
GMBD with an ROP |
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What variable annuity product is similar to a European put option with payment contingent on the policyholder surviving to the guarantee expiration date and the policy still being in force at the time? |
GMAB with ROP |
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What variable annuity product provides a guarantee that the size of the withdrawals will not be less than the guaranteed withdrawal benefit base at any future time? |
GMWB |
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What variable annuity product provides a guarantee on the future purchase rate for a traditional annuity? |
GMIB |
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What variable annuity product is an optional benefit available with some variable annuity products that acts as a European call option with strike price equal to the original amount invested? |
Earnings enhanced death benefit |
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What two risk measures do not satisfy any of the 4 coherent risk measures? |
Variance and semi-variance |
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What are the bounds for an American put? |
K>American put>max[O,K-S] |
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What are the bounds for an American call? |
S>American call> max[0, S- K] |
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What is the formula for the effective after-tax borrowing rate? |
Rd(1-Rc) |
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What is the formula for the unlevered cost of capital? |
Were +wdrd |
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What is another name for the pre-tax WACC? |
Unlevered cost of capital |
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What is another name for the after tax WACC? |
The weighted average cost of capital |
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What is the formula for the weighted average cost of capital? |
Were + wdrd(1-rc) |
