General Finance
What index represents the market and how many sectors are in it?
S&P 500 index. 11 sectors
What are the three financial statements
Income Statement, Balance Sheet, Cash Flow Statement
What is the accounting formula
Assets = Equity + Liabilities
What have been the Fed's rate decisions since July 2023
Hold
What is the term used for the practice of spreading investments among different assets to reduce risk?
Diversification
What are 4 valuation methods?
Public Comps
DCF
PE x EPS
LBO
DDM
Acquisition Comps
Merger Consequences
Sum of the Parts
If they can't get 3: (DCF, Public comps, LBO)
What is the financial statement and section pertaining to the cash transactions related to the purchase and sale of long-term assets?
Cash Flow Statement, cash from investing activities
What has a larger beta, Caterpillar or JP Morgan?
Caterpillar (1.14) Jpm (1.12)
What S&P 500 stock has grown the most in 2024.
Bonus +200: What Percent has it increased YTD.(+-3%)
Nvidia (NVDA)
81%
What is the slightly more aggressive diversification percentage between stocks and bonds
70% Equity, 30% Fixed Income
70% Equity, 20% Fixed Income 10% Cash
What is Beta?
What is the markets Beta?
Beta measures the responsiveness of a stock's price to changes in the overall stock market.
The market's beta is 1
What are 3 major line items on each of the financial statements?
Income Statement: Revenue; Cost of Goods Sold; SG&A (Selling, General & Administrative Expenses); Operating Income; Pretax Income; Net Income
Balance Sheet: Cash; Accounts Receivable; Inventory; Plants, Property & Equipment (PP&E); Accounts Payable; Accrued Expenses; Debt; Shareholders’ Equity.
Cash Flow: Net Income; Depreciation & Amortization; Stock-Based Compensation; Changes in Operating Assets & Liabilities; Cash Flow From Operations; Capital Expenditures; Cash Flow From Investing; Sale/Purchase of Securities; Dividends Issued; Cash Flow From Financing; Total Cash Flow, Cash at end of the year
What is the phrase used for terms in accounting that don't abide by the conventional reporting standards used in businesses? What is an example of one?
Non-GAAP
Anything that has (excluding, adjusted)
Free Cash Flow
EBITDA, EBIT
Net income (with adjustments)
What is the current Federal Funds Rate Range? (+-.05%)
What is the market for the trading of short-term and highly liquid securities called?
Money Market
What is the CAPM formula and what does it calculate?
a financial model that calculates the expected rate of return for an asset or investment. (based on its systematic risk)
CAPM = Rf * Beta ( Rm-Rf )
If I were stranded on a desert island, only had 1 statement and I wanted to review the overall health of a company – which statement would I use and why?
Cash Flow Statement
Gives a true picture of how much cash the company is actually generating, independent of all the non-cash expenses you might have.
What stock has the largest market cap?
MSFT
How often does CPI Data come out? What does CPI measure?
Monthly
It measures inflation through increases in day-to-day expesnses. (basket of G&S)
Out of these stocks, which one isn't in the HFG Portfolio: Waste Management, Nike, United Health Group, Mondolez, Exxon Mobile, Kinsale
Nike
How do you calculate WACC? What is it used for?
Cost of Equity * (% Equity) + Cost of Debt * (% Debt) * (1 – Tax Rate) + Cost of Preferred * (% Preferred).
Used as the discount rate for valuing a company or its investment oppportunities.
Weight of Equity * Cost of Equity + Weight of debt * Cost of debt * (1-tax)
What happens in each statement when Inventory goes up by $10, assuming you pay for it with cash?
No changes to the Income Statement.
Cash Flow from operations -10, (and net change in cash)
Balance Sheet: Inventory +10, Cash -10
On the Cash Flow Statement, Inventory is an asset so that decreases your Cash Flow from Operations – it goes down by $10, as does the Net Change in Cash at the bottom. On the Balance Sheet under Assets, Inventory is up by $10 but Cash is down by $10, so the changes cancel out and Assets still equals Liabilities & Shareholders’ Equity.
What’s the formula for Enterprise Value?
Equity Value + Net Debt (Easy)
John Meynard Keynes has a famous quote regarding the long run in economics. What is it?
"In the long run we are all dead"
What are 4 of the Financial Markets?
Stocks Market
Bond Market
Money Market
Forex Market
Derivative Market
Commodities Markets
Cryptocurrency Markets