TAMU FINC 341 Exam 1 – Financial Management Fundamentals (Guyton Exam)
Current head of the federal reserve: - (ANSWER)Jay Powell
Current unemployment rate - (ANSWER)3.9%
An inflation rate under ____ means we're ____ - (ANSWER)4%, fully employed
"Loading the gun" means: - (ANSWER)the fed bringing interest rates up
"Firing the gun" means: - (ANSWER)the fed is bringing interest rates down
The current short term treasury rate is ____ - (ANSWER)1.75%
Recently, the NASDAQ went over ____ - (ANSWER)8000
The number one goal of management is to: - (ANSWER)Maximize the company stock price
The current U.S. GDP is: - (ANSWER)4.27%
An inverted yield curve is indicated by: - (ANSWER)1-year treasuries are higher than 10-year
Short term are higher than long term investments
When inflation is equal to unemployment: - (ANSWER)We typically see a recession
The fed controls what type of interest rates? - (ANSWER)1-year short term rates
The market price of stock is: - (ANSWER)what you would pay for a stock in the market right now
,TAMU FINC 341 Exam 1 – Financial Management Fundamentals (Guyton Exam)
The intrinsic value of stock is: - (ANSWER)what a stock is worth based on all publicly available
information
The _________ theory states that the stock market always tries to be in ______ meaning stocks
approach _______ - (ANSWER)Efficient markets theory
Equillibrium
Their intrinsic value
In a business relationship, stockholders are the _____ and managers are an ______ - (ANSWER)Principle
Agent
_____ is the name of an outspoken stockholder who used direct intervention with the company _____ -
(ANSWER)Carl Icahn
Apple
______, or less politically correct, _______ are people who take over companies with high potential but
low performance - (ANSWER)Activists
Raiders
Why is _____ sometimes referred to as "Operating Income" - (ANSWER)EBIT, because it is the income
the company earns if it didn't have to pay taxes or interest on its debt
Which 2 companies currently have a $1 trillion market share? - (ANSWER)Apple and Amazon
What term refers to when your money is worth less, but your taxes continue to get higher? -
(ANSWER)Bracket Creep
, TAMU FINC 341 Exam 1 – Financial Management Fundamentals (Guyton Exam)
Trump has recently removed the disadvantageous _____ from the tax code - (ANSWER)Marriage rules
What are the different brackets for taxes on capital gains? - (ANSWER)0% for the first 3 brackets
15% for everything in between
20% for the last possible bracket
Examples of capital assets are____ and is defined as: - (ANSWER)Stocks, Bonds, and Real Estate
Things with a useful life of longer than 1 year that are not intended for sale, nor are they required or aid
in normal business operations. They are simply investments.
A tax bracket that has the same tax rate as the average tax rate of the previous brackets is referred to as
a ______ - (ANSWER)maintenance bracket
What is the difference between EVA and Net Income - (ANSWER)EVA considers the cost of assets that
are financed by equity, whereas Net Income only considers debt.
For problems that have ROE or ROA, we can expect to see either a _____ or _____ which can be
converted into eachother to solve the problem - (ANSWER)Debt Ratio
Equity Multiplier
When will ROE = ROA and why? - (ANSWER)When the company has no debt
This is because ROE is simply the Equation for ROA + Equity Multiplier:
If the company has no debt, the equity multiplier is 0
Current head of the federal reserve: - (ANSWER)Jay Powell
Current unemployment rate - (ANSWER)3.9%
An inflation rate under ____ means we're ____ - (ANSWER)4%, fully employed
"Loading the gun" means: - (ANSWER)the fed bringing interest rates up
"Firing the gun" means: - (ANSWER)the fed is bringing interest rates down
The current short term treasury rate is ____ - (ANSWER)1.75%
Recently, the NASDAQ went over ____ - (ANSWER)8000
The number one goal of management is to: - (ANSWER)Maximize the company stock price
The current U.S. GDP is: - (ANSWER)4.27%
An inverted yield curve is indicated by: - (ANSWER)1-year treasuries are higher than 10-year
Short term are higher than long term investments
When inflation is equal to unemployment: - (ANSWER)We typically see a recession
The fed controls what type of interest rates? - (ANSWER)1-year short term rates
The market price of stock is: - (ANSWER)what you would pay for a stock in the market right now
,TAMU FINC 341 Exam 1 – Financial Management Fundamentals (Guyton Exam)
The intrinsic value of stock is: - (ANSWER)what a stock is worth based on all publicly available
information
The _________ theory states that the stock market always tries to be in ______ meaning stocks
approach _______ - (ANSWER)Efficient markets theory
Equillibrium
Their intrinsic value
In a business relationship, stockholders are the _____ and managers are an ______ - (ANSWER)Principle
Agent
_____ is the name of an outspoken stockholder who used direct intervention with the company _____ -
(ANSWER)Carl Icahn
Apple
______, or less politically correct, _______ are people who take over companies with high potential but
low performance - (ANSWER)Activists
Raiders
Why is _____ sometimes referred to as "Operating Income" - (ANSWER)EBIT, because it is the income
the company earns if it didn't have to pay taxes or interest on its debt
Which 2 companies currently have a $1 trillion market share? - (ANSWER)Apple and Amazon
What term refers to when your money is worth less, but your taxes continue to get higher? -
(ANSWER)Bracket Creep
, TAMU FINC 341 Exam 1 – Financial Management Fundamentals (Guyton Exam)
Trump has recently removed the disadvantageous _____ from the tax code - (ANSWER)Marriage rules
What are the different brackets for taxes on capital gains? - (ANSWER)0% for the first 3 brackets
15% for everything in between
20% for the last possible bracket
Examples of capital assets are____ and is defined as: - (ANSWER)Stocks, Bonds, and Real Estate
Things with a useful life of longer than 1 year that are not intended for sale, nor are they required or aid
in normal business operations. They are simply investments.
A tax bracket that has the same tax rate as the average tax rate of the previous brackets is referred to as
a ______ - (ANSWER)maintenance bracket
What is the difference between EVA and Net Income - (ANSWER)EVA considers the cost of assets that
are financed by equity, whereas Net Income only considers debt.
For problems that have ROE or ROA, we can expect to see either a _____ or _____ which can be
converted into eachother to solve the problem - (ANSWER)Debt Ratio
Equity Multiplier
When will ROE = ROA and why? - (ANSWER)When the company has no debt
This is because ROE is simply the Equation for ROA + Equity Multiplier:
If the company has no debt, the equity multiplier is 0
