Yes Support tranches are designed to provide protection as well, but they are more focused on one specific type of risk. Support tranches primarily protect against extension risk by absorbing prepayment variability. They do not provide as balanced protection against both extension and contraction riRead more
Yes Support tranches are designed to provide protection as well, but they are more focused on one specific type of risk. Support tranches primarily protect against extension risk by absorbing prepayment variability. They do not provide as balanced protection against both extension and contraction risk as Pac tranches do.
The correct ans I think is option B. GNP includes the total income earned by a country's residents both domestically and abroad. In this case, the country is making 100 million more income from foreign capital invested within the country than from domestic investment abroad, which boosts its GNP. GNRead more
The correct ans I think is option B.
GNP includes the total income earned by a country’s residents both domestically and abroad. In this case, the country is making 100 million more income from foreign capital invested within the country than from domestic investment abroad, which boosts its GNP.
GNP also includes the total value of goods and services produced by a country’s residents both domestically and abroad. In this case, the country is producing 100 million more goods and services by foreign labor within the country than its citizens abroad, which again increases its GNP.
High-interest rates in INR can make Indian assets more attractive to investors, as they can earn higher returns on their investments denominated in INR. This increased demand for INR can lead to an appreciation of the Indian Rupee against the U.S. Dollar. In other words, the USD/INR exchange rate maRead more
High-interest rates in INR can make Indian assets more attractive to investors, as they can earn higher returns on their investments denominated in INR. This increased demand for INR can lead to an appreciation of the Indian Rupee against the U.S. Dollar. In other words, the USD/INR exchange rate may decrease, meaning the USD may weaken against the INR.
Yes, the value of a Zero-Coupon Bond (ZCB) can change when interest rates change. The par value of a ZCB remains the same throughout its life. However, the current market value of the bond will fluctuate with changes in interest rates. When interest rates are above the ZCB's YTM, it will trade at aRead more
Yes, the value of a Zero-Coupon Bond (ZCB) can change when interest rates change.
The par value of a ZCB remains the same throughout its life. However, the current market value of the bond will fluctuate with changes in interest rates. When interest rates are above the ZCB’s YTM, it will trade at a discount. When interest rates are below the YTM, it may trade at a premium.
Base rate neglect is the tendency to ignore general information or statistics (the base rate) in favor of specific, or recent information when making decisions or judgments. In this case, Candidate B is asking for additional information about industry peers and competitors to provide a broader conteRead more
Base rate neglect is the tendency to ignore general information or statistics (the base rate) in favor of specific, or recent information when making decisions or judgments. In this case, Candidate B is asking for additional information about industry peers and competitors to provide a broader context (base rate) for the profitability estimates, rather than relying solely on specific data about one company.
Suppose you’re considering investing in a tech company, and you have its financial data. Base rate neglect would be solely focusing on that company’s performance without considering how similar companies in the industry are doing. Candidate B is trying to avoid this bias by seeking information about industry peers and competitors to get a better sense of the overall industry’s profitability, which is the base rate.
Hi Shivek First of all EBITDA is a measure of a company's operating performance, excluding non-operating expenses like interest, taxes, and non-cash expenses such as depreciation and amortization. EBITDA represents the earnings generated from the core operations of the business. Now the The formulaRead more
Hi Shivek
First of all EBITDA is a measure of a company’s operating performance, excluding non-operating expenses like interest, taxes, and non-cash expenses such as depreciation and amortization. EBITDA represents the earnings generated from the core operations of the business.
Now the The formula multiplies EBITDA by (1 – Tax Rate) to account for the tax savings resulting from tax-deductible expenses, including depreciation. By multiplying EBITDA by (1 – Tax Rate), you effectively remove the tax expense from EBITDA, as the formula assumes that depreciation is tax-deductible.
Now, Depreciation is a non-cash expense that represents the allocation of an asset’s cost over its useful life. Since it is a non-cash expense, it does not impact the company’s cash flow directly. However, when calculating FCFF, you add back the tax shield provided by depreciation. Multiplying Depreciation by the Tax Rate represents the tax savings resulting from depreciation. This is because depreciation reduces the taxable income, which in turn reduces the tax expense.
Hi Himangshu First of all let's understand why depreciation is added back! So Depreciation is a non-cash expense, meaning it does not involve an actual outflow of cash. It represents the allocation of the initial or historical cost of an asset over its useful life. Since it doesn't involve cash, addRead more
Hi Himangshu
First of all let’s understand why depreciation is added back! So Depreciation is a non-cash expense, meaning it does not involve an actual outflow of cash. It represents the allocation of the initial or historical cost of an asset over its useful life. Since it doesn’t involve cash, adding back depreciation to net income helps adjust for the fact that it’s not a true cash outflow.
Now talking about the interest factor, so interest expenses are tax-deductible. You might heard that those companies which have take the debt i.e leverage, they enjoy the tax shield. Now depreciation is subject to a separate tax treatment. Companies typically use accounting methods, such as straight-line depreciation or accelerated depreciation, to calculate the depreciation expense for financial reporting purposes. However for tax purpose companies may follow different methods. So the tax depreciation may not align with the accounting depreciation, resulting in differences in the tax impact.
So, by adding back depreciation without considering taxes, it allows for a more direct assessment of the cash flow generated by the company’s operations, excluding the tax implications of depreciation.
When calculating free cash flow from net income, cash and cash equivalents are not considered in the working capital calculation because they are already factored into the net income figure. FCF is typically calculated by adjusting net income to account for non-cash expenses, changes in working capiRead more
When calculating free cash flow from net income, cash and cash equivalents are not considered in the working capital calculation because they are already factored into the net income figure.
FCF is typically calculated by adjusting net income to account for non-cash expenses, changes in working capital, and capital expenditures. The purpose of this calculation is to determine the amount of cash generated by a company’s operations that is available for discretionary purposes.
Working capital represents the capital required to fund a company’s day-to-day operations and is calculated as the difference between current assets and current liabilities. It reflects the short-term liquidity position of a company.
Now while calculating FCF from net income, the starting point is the net income figure, which is already derived after accounting for all expenses, including non-cash items such as depreciation and amortization. Net income is calculated on an accrual basis, meaning it includes transactions that do not involve actual cash flows.
Now you might be thinking that how cash & cash equivalents are captured in Net income! So Cash and cash equivalents are not directly captured in the net income figure. Net income represents a company’s total revenue minus all expenses, including both cash and non-cash expenses on accrual basis. So it’s indirectly captured the effect of Cash & cash equivalents but if you think to derive Free cash flow from cash flow statement you will acknowledge that cash and cash equivalents are part of the operating cash flow, including them again in the working capital calculation would lead to double-counting. By excluding cash and cash equivalents from the working capital calculation when calculating free cash flow, we ensure that the cash flows from operating activities are not duplicated.
Same situation in the case of net income.The net income figure captures the effects of changes in working capital, including cash flows from the company’s cash and cash equivalents.
To calculate FCF from net income, adjustments are made to remove the non-cash expenses and account for changes in working capital separately. By excluding cash and cash equivalents from the working capital calculation, we ensure that the cash flows related to those assets are not counted twice in the calculation of FCF.
Please once go through the core. If it's not there then it's not in the syllabus. Also recommend you to go through the I/S classes which are available on YouTube.
Please once go through the core. If it’s not there then it’s not in the syllabus. Also recommend you to go through the I/S classes which are available on YouTube.
Asset backed security
Yes Support tranches are designed to provide protection as well, but they are more focused on one specific type of risk. Support tranches primarily protect against extension risk by absorbing prepayment variability. They do not provide as balanced protection against both extension and contraction riRead more
Yes Support tranches are designed to provide protection as well, but they are more focused on one specific type of risk. Support tranches primarily protect against extension risk by absorbing prepayment variability. They do not provide as balanced protection against both extension and contraction risk as Pac tranches do.
See lessInternational trade and capital flows
The correct ans I think is option B. GNP includes the total income earned by a country's residents both domestically and abroad. In this case, the country is making 100 million more income from foreign capital invested within the country than from domestic investment abroad, which boosts its GNP. GNRead more
The correct ans I think is option B.
GNP includes the total income earned by a country’s residents both domestically and abroad. In this case, the country is making 100 million more income from foreign capital invested within the country than from domestic investment abroad, which boosts its GNP.
GNP also includes the total value of goods and services produced by a country’s residents both domestically and abroad. In this case, the country is producing 100 million more goods and services by foreign labor within the country than its citizens abroad, which again increases its GNP.
See lessTechnical Analysis PM
High-interest rates in INR can make Indian assets more attractive to investors, as they can earn higher returns on their investments denominated in INR. This increased demand for INR can lead to an appreciation of the Indian Rupee against the U.S. Dollar. In other words, the USD/INR exchange rate maRead more
High-interest rates in INR can make Indian assets more attractive to investors, as they can earn higher returns on their investments denominated in INR. This increased demand for INR can lead to an appreciation of the Indian Rupee against the U.S. Dollar. In other words, the USD/INR exchange rate may decrease, meaning the USD may weaken against the INR.
Hope it helps.
See lessZero Coupon Bond
Yes, the value of a Zero-Coupon Bond (ZCB) can change when interest rates change. The par value of a ZCB remains the same throughout its life. However, the current market value of the bond will fluctuate with changes in interest rates. When interest rates are above the ZCB's YTM, it will trade at aRead more
Yes, the value of a Zero-Coupon Bond (ZCB) can change when interest rates change.
The par value of a ZCB remains the same throughout its life. However, the current market value of the bond will fluctuate with changes in interest rates. When interest rates are above the ZCB’s YTM, it will trade at a discount. When interest rates are below the YTM, it may trade at a premium.
See lessFinancial Modeling
Base rate neglect is the tendency to ignore general information or statistics (the base rate) in favor of specific, or recent information when making decisions or judgments. In this case, Candidate B is asking for additional information about industry peers and competitors to provide a broader conteRead more
Base rate neglect is the tendency to ignore general information or statistics (the base rate) in favor of specific, or recent information when making decisions or judgments. In this case, Candidate B is asking for additional information about industry peers and competitors to provide a broader context (base rate) for the profitability estimates, rather than relying solely on specific data about one company.
Suppose you’re considering investing in a tech company, and you have its financial data. Base rate neglect would be solely focusing on that company’s performance without considering how similar companies in the industry are doing. Candidate B is trying to avoid this bias by seeking information about industry peers and competitors to get a better sense of the overall industry’s profitability, which is the base rate.
See lessFCFF formula from EBITDA
Hi Shivek First of all EBITDA is a measure of a company's operating performance, excluding non-operating expenses like interest, taxes, and non-cash expenses such as depreciation and amortization. EBITDA represents the earnings generated from the core operations of the business. Now the The formulaRead more
Hi Shivek
First of all EBITDA is a measure of a company’s operating performance, excluding non-operating expenses like interest, taxes, and non-cash expenses such as depreciation and amortization. EBITDA represents the earnings generated from the core operations of the business.
Now the The formula multiplies EBITDA by (1 – Tax Rate) to account for the tax savings resulting from tax-deductible expenses, including depreciation. By multiplying EBITDA by (1 – Tax Rate), you effectively remove the tax expense from EBITDA, as the formula assumes that depreciation is tax-deductible.
Now, Depreciation is a non-cash expense that represents the allocation of an asset’s cost over its useful life. Since it is a non-cash expense, it does not impact the company’s cash flow directly. However, when calculating FCFF, you add back the tax shield provided by depreciation. Multiplying Depreciation by the Tax Rate represents the tax savings resulting from depreciation. This is because depreciation reduces the taxable income, which in turn reduces the tax expense.
Hope it helps.
Equity Free Cash Flow
Hi Himangshu First of all let's understand why depreciation is added back! So Depreciation is a non-cash expense, meaning it does not involve an actual outflow of cash. It represents the allocation of the initial or historical cost of an asset over its useful life. Since it doesn't involve cash, addRead more
Hi Himangshu
First of all let’s understand why depreciation is added back! So Depreciation is a non-cash expense, meaning it does not involve an actual outflow of cash. It represents the allocation of the initial or historical cost of an asset over its useful life. Since it doesn’t involve cash, adding back depreciation to net income helps adjust for the fact that it’s not a true cash outflow.
Now talking about the interest factor, so interest expenses are tax-deductible. You might heard that those companies which have take the debt i.e leverage, they enjoy the tax shield. Now depreciation is subject to a separate tax treatment. Companies typically use accounting methods, such as straight-line depreciation or accelerated depreciation, to calculate the depreciation expense for financial reporting purposes. However for tax purpose companies may follow different methods. So the tax depreciation may not align with the accounting depreciation, resulting in differences in the tax impact.
So, by adding back depreciation without considering taxes, it allows for a more direct assessment of the cash flow generated by the company’s operations, excluding the tax implications of depreciation.
See lessEquity valuation
When calculating free cash flow from net income, cash and cash equivalents are not considered in the working capital calculation because they are already factored into the net income figure. FCF is typically calculated by adjusting net income to account for non-cash expenses, changes in working capiRead more
When calculating free cash flow from net income, cash and cash equivalents are not considered in the working capital calculation because they are already factored into the net income figure.
FCF is typically calculated by adjusting net income to account for non-cash expenses, changes in working capital, and capital expenditures. The purpose of this calculation is to determine the amount of cash generated by a company’s operations that is available for discretionary purposes.
Working capital represents the capital required to fund a company’s day-to-day operations and is calculated as the difference between current assets and current liabilities. It reflects the short-term liquidity position of a company.
Now while calculating FCF from net income, the starting point is the net income figure, which is already derived after accounting for all expenses, including non-cash items such as depreciation and amortization. Net income is calculated on an accrual basis, meaning it includes transactions that do not involve actual cash flows.
Now you might be thinking that how cash & cash equivalents are captured in Net income! So Cash and cash equivalents are not directly captured in the net income figure. Net income represents a company’s total revenue minus all expenses, including both cash and non-cash expenses on accrual basis. So it’s indirectly captured the effect of Cash & cash equivalents but if you think to derive Free cash flow from cash flow statement you will acknowledge that cash and cash equivalents are part of the operating cash flow, including them again in the working capital calculation would lead to double-counting. By excluding cash and cash equivalents from the working capital calculation when calculating free cash flow, we ensure that the cash flows from operating activities are not duplicated.
Same situation in the case of net income.The net income figure captures the effects of changes in working capital, including cash flows from the company’s cash and cash equivalents.
To calculate FCF from net income, adjustments are made to remove the non-cash expenses and account for changes in working capital separately. By excluding cash and cash equivalents from the working capital calculation, we ensure that the cash flows related to those assets are not counted twice in the calculation of FCF.
FINANCIAL STATEMENT ANALYSIS
Please once go through the core. If it's not there then it's not in the syllabus. Also recommend you to go through the I/S classes which are available on YouTube.
Please once go through the core. If it’s not there then it’s not in the syllabus. Also recommend you to go through the I/S classes which are available on YouTube.
See lessEquity valuation
https://forum.sseiqforum.com/question/equity-valuation-206/ Please refer
Please refer
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