Session 1 - Chapter 13
* What is the definition of capital market efficiency?
An efficient capital market (EMH) is one in which stock prices fully reflect available information (i.e. stock market prices are good estimates of underlying intrinsic value).
* What conditions generally lead to market efficiency?
* Independent Deviations
* What are the three forms of market efficiency?
* Weak form
* Security prices reflect all information found in past prices and volume.
* Semi-strong form
* Security prices reflect all publicly available ...view middle of the document...
* Small Cap Value stocks have outperformed the market.
* Some momentum strategies seem to “beat the market.”
Session 2 – Chapter 18 Short-Term Financing
* What are the components of the cash cycle and what are some characteristics of a firm with a long cash cycle?
* The operating cycle is the time period from inventory purchase until the receipt of cash (the operating cycle may not include the time from placement of the order until arrival of the stock).
* The cash cycle is the time period from when cash is paid out to when cash is received.
* Net Income is the bottom line
* Short-term financing policies
* Flexible (i.e., conservative) policy: high levels of current assets relative to sales and relatively more long-term financing.
* Restrictive (i.e., aggressive) policy: low levels of current assets relative to sales and relatively more short-term financing
* What should be considered in setting a firm’s short-term financial policy?
* Cash reserves
* Maturity hedging
* Relative interest rates
* What are the options for short-term financing? What are the pros and cons of the various short-term financing policies?
* 1. Unsecured Loans
* 2. Secured Loans
* 3. Commercial Paper
Session 3 – Chapter 19 Raising Capital from the Public
* What are the basic methods of raising capital?
* What are the basic procedures in a new public security issue?
* What is a general cash offer (IPO and seasoned new issues)? Why go public? What are the basic procedures in an IPO?
* Negotiated offer and Dutch Auction
* What are the costs of issuing securities?
* What is a rights offer, a shelf registration, and a private placement?
Session 4 – Chapters 5.2, 5.4-5.5 and 6.5-6.6 Long-Term Financing
* What are the basic characteristics of common and preferred stock?
* What is the difference between cumulative voting and straight voting?
* What are the rights of shareholders?
* What are characteristics of corporate long-term debt?
* What is an indenture, call provision, sinking fund?