A1 Study Pack
Study Pack for the A1 Lecture
Vocabulary for the A1 Lecture (Be comfortable with these terms)
Financial Contract, Financial Security
Money Market Securities: T-Bill, Commercial Paper, Certificate of Deposit
Debt Contracts: Bills, Notes, Bonds, Loans, Leases, Preferred Stock
Equity Contracts: Common Stock
Contingent Claims or Derivatives: Options, Futures
Face Value
Term, Loan Amount
Coupon Payments, Dividend Payments, Loan and Lease Payments
Dividend Growth Rate
Mortgage-Backed Securities
Mutual Fund vs. Hedge Fund
Market Price P0
Implied Return, Yield to Maturity
Default Risk vs. Price Risk
Business Investment vs. Capital Investment
Passive Investor vs. Active Investor (Speculator)
Valuation, Comparables Approach vs. DCF Approach
Private Market, Public Market, IPO
Liquidity, Excess Volatility
Corporate Finance and Investment Management
Formulas for the A1 Lecture
C = c * Face
PA/EA = PB/EB (setting the price to earnings ratio to be equal for two firms)
Conceptual Questions for the A1 Lecture
The following questions to help you study and frame-up the A1 Lecture Notes. This is just a partial list. Try to think of some other questions that you could ask with respect to the A1 notes. Solutions will not be provided for the A1 unit, but will in some later units.
Pages 3-19
1. Financial contracts are basically concerned with the exchange of _______ and _______ between two parties.
2. What is a debt security? What are some short-term debt contracts/ What are some long-term debt contracts and how do they differ form each other?
3. What are some of the different names exist for the types of future cash flows that are found with financial contracts? What are some names for the amount of cash exchanged today for those future flows?
4. What is the difference between a loan and a lease?
5. What is the idea of valuation about? What are the differences between a DCF and a comps approach to valuation?
6. Banks and average people both lend money to
Vocabulary for the A1 Lecture (Be comfortable with these terms)
Financial Contract, Financial Security
Money Market Securities: T-Bill, Commercial Paper, Certificate of Deposit
Debt Contracts: Bills, Notes, Bonds, Loans, Leases, Preferred Stock
Equity Contracts: Common Stock
Contingent Claims or Derivatives: Options, Futures
Face Value
Term, Loan Amount
Coupon Payments, Dividend Payments, Loan and Lease Payments
Dividend Growth Rate
Mortgage-Backed Securities
Mutual Fund vs. Hedge Fund
Market Price P0
Implied Return, Yield to Maturity
Default Risk vs. Price Risk
Business Investment vs. Capital Investment
Passive Investor vs. Active Investor (Speculator)
Valuation, Comparables Approach vs. DCF Approach
Private Market, Public Market, IPO
Liquidity, Excess Volatility
Corporate Finance and Investment Management
Formulas for the A1 Lecture
C = c * Face
PA/EA = PB/EB (setting the price to earnings ratio to be equal for two firms)
Conceptual Questions for the A1 Lecture
The following questions to help you study and frame-up the A1 Lecture Notes. This is just a partial list. Try to think of some other questions that you could ask with respect to the A1 notes. Solutions will not be provided for the A1 unit, but will in some later units.
Pages 3-19
1. Financial contracts are basically concerned with the exchange of _______ and _______ between two parties.
2. What is a debt security? What are some short-term debt contracts/ What are some long-term debt contracts and how do they differ form each other?
3. What are some of the different names exist for the types of future cash flows that are found with financial contracts? What are some names for the amount of cash exchanged today for those future flows?
4. What is the difference between a loan and a lease?
5. What is the idea of valuation about? What are the differences between a DCF and a comps approach to valuation?
6. Banks and average people both lend money to