The Term Auction Facility

The Term Auction Facility
 By Finance Ocean

The Term Auction Facility (TAF), created by the Federal Reserve to address problems caused by the subprime mortgage crisis, was started in what year?

Pick an answer:

1. 2007
2. 2008
3. 2009
4. 2010

Answer: # 1


Explanation: The Term Auction Facility (TAF) was designed as a temporary Federal Reserve program to "address elevated pressures in short-term funding markets".

With the program, the Federal Reserve auctions collateralized loans with terms of 28 and 84 days to depository institutions. The program started in December 2007 in response to problems caused by the subprime mortgage crisis.

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Measuring Volatility

Measuring Volatility
 By Finance Ocean

What term refers to the measure of a stock's volatility relative to the rest of the market?

Pick an answer:

1. Beta
2. WACC
3. Liquidity
4. Market Capitalization

Answer: # 1


Explanation: A stock's Beta is a measure of its volatility relative to the market. WACC refers to a company's weighted average cost of capital (the weighted rate of its debt and equity). Liquidity refers to the ability to buy or sell and asset quickly without substantially affecting the price.

Market capitalization is the total number of a company's shares outstanding multiplied by its current stock price.

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Oil & Gas Partnerships

Oil & Gas Partnerships
 By Finance Ocean

An investor in which of the following oil and gas limited partnership programs would bear the greatest amount of risk?

Pick an answer:

1. Combination
2. Exploratory
3. Developmental
4. Income

Answer: # 2


Explanation: Exploratory oil and gas limited partnerships are considered to be the most risky.

Such partnerships drill new oil wells where oil has not yet been discovered and therefore carry a lot of risk.

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Private Equity Funds

Private Equity Funds
 By Finance Ocean

What type of private equity fund specializes in very early-stage start-up companies?

Pick an answer:

1. Venture Capital Fund
2. Growth Capital Fund
3. Buy-Out Fund
4. Fund of Funds

Answer: # 1
Explanation: A venture capital fund provides capital early-stage companies. A growth capital fund provides capital to more mature companies looking to continue their growth.

Buy-out funds usually acquire entire companies in order to restructure or reorganize them to create more value. Fund of funds invest less directly in companies and instead fund other types of private equity funds.

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Current Assets Less Current Liabilities

Current Assets Less Current Liabilities
 By Finance Ocean

What term refers to the difference between current assets and current liabilities?

Pick an answer:

1. Financial Spread
2. Gross Margin
3. Net Margin
4. Working Capital

Answer: # 4
Explanation: Working capital represents current assets less current liabilities. More generally, working capital measures how much in liquid assets a company has available to build its business.

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Non-Profit Accounting

Non-Profit Accounting
 By Finance Ocean

On a non-profit organization's balance sheet, what is the equivalent of owner's equity?

Pick an answer:

1. Public Equity
2. Private Equity
3. Public Assets
4. Net Assets

Answer: # 4
Explanation: Net assets is the term used for equity in the non-profit sector. Net assets are equal to total assets minus total liabilities — hence the term "net assets."

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Backing Bonds

Backing Bonds
 By Finance Ocean

Which of the following bonds are directly backed by the United States government?

Pick an answer:

1. Moral Obligation Bonds
2. GO Bonds
3. NHAs & PHAs
4. Double-Barrelled Bonds

Answer: # 3

Explanation: Public Housing Authority (PHA) issues and New Housing Authority (NHA) issues are backed in full by the United States government.

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