GCAP Exam Questions With 100% Correct Answers 2024

GCAP Exam Questions With 100% Correct Answers 2024 What are the key points of the life cycle of a company? - answer1. Launch - low revenue and high initial start-up costs 2. Growth - sales increase and cash flow positive 3. Shakeout - peak sales; approaching market saturation and decline in profits leads to increase in costs 4. Maturity - thinner profit margins 5. Decline - ultimate costs of competitive advantage What are Michael Porter's Five Forces? - answer1. Rivalry Amongst Existing Competitors 2. Threat of New Entrants 3. Threat of Substitutes 4. Bargaining Power of Suppliers 5. Bargaining Power of Buyers How do you apply Porter's Five Forces? - answer1. Determine the rivalry among competitors in the industry. 2. What barriers to entry exist? 3. What would a substitute look like in the industry? What can they do to market themselves? 4. Do suppliers possess leverage? 5. Is buying power lower or high in the industry? Apply Porter's Five Forces to the Airline Industry - answer1. Rivalry: Numerous airlines; all provide same fixed costs; difficult to leave industry; huge capital required and wait in line to get 737s 2. New Entrance: Threat is MEDIUM; Lots of capital required; licensing FAA; flight routes; financing is easily obtained; TRULY ALL DEPENDENT ON ACCESS TO CAPITAL 3. Substitutes: US lags behind; high-speed trains; hyper-loop technology 4. Suppliers: Have strong leverage; Boeing and Airbus are major players; fuel 5. Buying Power: HIGH; Expedia for price comparisons; brand loyalty is low What is the Chasm Bell Curve (Law of Diffusion)? - answerThe companies must cross the chasm to survive. 1. Innovators 2. Early Adopters 3. Early Majority 4. Late Majority 5. Laggards Capital Markets - answerConnect institutional and retail with those in need of capital such as firms, businesses, or governments Primary Markets - answerSelling stocks/bonds as an initial public offering (IPO) or on stock exchange Secondary Market - answerInvestors buy and sell securities they already own Who are the agents in capital markers? - answer1. Firms 2. Advisors 3. Intermediates 4. Investors What is the "buy side"? - answerRaise money and then use capital into buying firms What is the "sell side"? - answerWork with companies looking for capital to connect them with institutional investors What is debt? - answerMoney raised by companies; backed by collateral; PE firms utilize debt to gain leverage What is a bond? - answerDebt is often issued through bonds; bond = IOU What is face-value of a bond? - answerHow much you pay for a bond today What is a coupon rate? - answerThe rate of interest paid by bond issuers on the bond's face value What is the market rate? - answerThe current in