BOF FINAL Exam PREP | Questions with Correct
Answers | Latest 2026
stock, share, equity
issued by stock company, giving ownership to stockholder
corporate rights
right to vote, right to control, right to propose resolutions
monetary rights
right to dividend, subscription right, right to participate in liquidation value
dividend
part of net earnings distributed to shareholders
net earning =
retained earnings + dividend
subscription right
financial instrument issued by company. Right given to shareholder to buy shares of new issue at
given price. Number of subscription rights is equal to number of shares
Parameters of stock
Par value
Issue price - price at which a company first sells its shares to the public, once the stock starts
trading on an exchange the price will change almost instantly
Book value - value of a company if it were to shut down and sell everything today (total assets -
, total liabilities)
BVPS - book value per share
Market value - current stock price x total number of shares
Parameters of stock (part 2)
Earnings per share, EPS
Dividend per share, DPS
Dividend yield = DPS / P
P / E, price/earnings ratio = P / EPS
Price/book value ratio = P / BVPS
Payout ratio = DPS / EPS
Retention ratio = 1 - (DPS / EPS)
Cover ratio = EPS / DPS
Derivative instrument
a financial instrument whose value depends on the value of some underlying index
Derivatives - purpose
introduced to decrease market risk of enterprises and financial institutions (transferring risk
between parties)
Market risk
results from the changes of prices on financial and commodity markets
Types of market risk
interest rate risk, exchange rate risk, stock price risk, commodity price risk
Answers | Latest 2026
stock, share, equity
issued by stock company, giving ownership to stockholder
corporate rights
right to vote, right to control, right to propose resolutions
monetary rights
right to dividend, subscription right, right to participate in liquidation value
dividend
part of net earnings distributed to shareholders
net earning =
retained earnings + dividend
subscription right
financial instrument issued by company. Right given to shareholder to buy shares of new issue at
given price. Number of subscription rights is equal to number of shares
Parameters of stock
Par value
Issue price - price at which a company first sells its shares to the public, once the stock starts
trading on an exchange the price will change almost instantly
Book value - value of a company if it were to shut down and sell everything today (total assets -
, total liabilities)
BVPS - book value per share
Market value - current stock price x total number of shares
Parameters of stock (part 2)
Earnings per share, EPS
Dividend per share, DPS
Dividend yield = DPS / P
P / E, price/earnings ratio = P / EPS
Price/book value ratio = P / BVPS
Payout ratio = DPS / EPS
Retention ratio = 1 - (DPS / EPS)
Cover ratio = EPS / DPS
Derivative instrument
a financial instrument whose value depends on the value of some underlying index
Derivatives - purpose
introduced to decrease market risk of enterprises and financial institutions (transferring risk
between parties)
Market risk
results from the changes of prices on financial and commodity markets
Types of market risk
interest rate risk, exchange rate risk, stock price risk, commodity price risk
