General Finance
How many sectors are in the S&P 500
11
What are the three financial statements
Income Statement, Balance Sheet, Cash Flow Statement
What is the accounting formula
Assets = Equity + Liabilities
Has the Federal Reserve been raising or lowering rates
Raising
What is the CAPM formula and what does it represent
a financial model that calculates the expected rate of return for an asset or investment.
CAPM = Rf * Beta ( Rm-Rf)
Where does Depreciation usually show up on the Income Statement?
Separate line item, COGS, or Operating Expenses
What are the three financial statements
Income Statement, Balance Sheet, Cash Flow
Name a bank that failed in 2023
Signature Bank, New York, NY
Silicon Valley Bank, Santa Clara, CA
What is the term used for the practice of spreading investments among different assets to reduce risk?
Diversification
what are 5 valuation methods
Public Comps
Acquisition Comps
DCF
Merger Consequences
Sum of the Parts
LBO
DDM
If they can't get 5: (DCF, Public comps, LBO)
what are the major line items on each of the financial statements (give me 3 each)
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.
What has a larger beta, Waste Management or Enphase
Enphase
What is the current Federal Funds Rate Range?
What is the typical diversification percentage between stocks and bonds
60% Equity, 40% Fixed Income
60% Equity, 30% Fixed Income 10% Cash
What is Beta?
What is the Markets Beta?
market's beta is 1
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?
AAPL
How often does CPI Data come out?
Monthly
What investment strategy does the RFP use to invest in Equities?
Sector Rotation Strategy
How do you calculate WACC?
Cost of Equity * (% Equity) + Cost of Debt * (% Debt) * (1 – Tax Rate) + Cost of Preferred * (% Preferred).
What happens when Inventory goes up by $10, assuming you pay for it with cash?
No changes to the Income Statement. 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)
What does the risk-free rate represent and what is it now?
the 3 month T bill and around 4.752%
The three-month U.S. Treasury bill is a useful proxy because the market considers there to be virtually no chance of the U.S. government defaulting on its obligations.
Out of these stocks, which one isn't in the HFG Portfolio: Waste Management, Alibaba, Diamondback Energy, Chevron, Tesla
Alibaba