MEF Trivia
The fund has this many pairs of twins
What is 7
Bond coupons are usually paid with this frequency
What is Semi-Annually
How does share issuance affect share value all else equal
Decreases price
Typically precedes a recession
What is the Inverted Yield Curve
What is the process from revenue to net income (major line items only)
Rev- cogs - sga = ebit - int expense - taxes = net income
This was the value of the MEF portfolio in march 2020
What is 180K
Price and Yield have this relationship
What is inverse
The discount rate used for only equity (please give formula too)
What is CAPM (Rf + beta*(ERM-Rf))
What are the two AAA rated companies
JNJ and Microsoft
If you could only have two statements, which two statements and why?
Income statement and balance sheet, can make the cf statement
This stock is the funds largest holding
What is Alphabet
These companies issue junk bonds primarily
What are PE firms
Rank the four valuation methods from highest to lowest
Precedent, Comps, DCF, LBO
When was the last time the 30-year was this high?
August 2019
These flow into retained earnings
What are old retained earnings, net income and dividends
This notable fund member had a shoplifting problem when they were younger
Who is Gunning
Macaulay Duration is defined as this, and Modified Duration is used for this
What is the time it takes in years for an investor to be repaid by a bonds cash flows, Mod D measures sensitivity to interest rates
The two perpetuity approaches (have to give formulas/explain them)
Exit multiple, Gordon growth (Last yr fcf*(1+LTGR))/(WACC-LTGR)
These two major banks were bought in 2008 by these two firms (need to match up)
Lehman and Bear, Barclays and J.P
A company has positive EBITDA the last 10 years but went bankrupt. This is because
Bankruptcy occurs when a company cannot make payments on its debt. EBITDA is before interest, if interest expense> EBITDA, bankruptcy
These two items were mysteriously left outside Ali's house (need both)
Hat and Taco Bell bag
Convexity is this (and why is it important)
Derivative of duration that measures the rate of change of duration as IR changes, important because it makes a linear relationship non-linear
This is the answer to walk me through a DCF (in some depth)
ebit- nopat- add d&a +CWC+ capex = ufcf - discount using wacc then sum 5 yrs + TV found using multiple approach (also discounted) = EV - net debt - minority interest - preferred = equity value / diluted = share price
How many FOMC members are expecting rate hikes in 2022 and 2023 respectively
4 in 2022, 7 in 2023
A 10 dollar increase in depreciation with a 40% tax rate would look like this across the three statements
What is ebit -10, NI -6, CF op +4, Cash +4, assets +4 from cash, - 10 from dep, liabilities - 6 from NI