1.

Recent financial crisis

2. Goal of the business
3. Relationship between agent and principal
4. Factors which affect the value of firm
5. Job of treasurar
6. Financial System
7. Income statement and balance sheet
8. Relationship Between market share and dividend
9. Statement of cash flows
10. Difference between preferred and common stock
11. why company hav multiple share classes
12. can preferred stock be traded like common stock
13. can stock market be traded as leading indicator
14. computation of stock valuation
15. interest rate differential
16. ratio analysis
17. forward spot rate
18. future and fwd market
19. Is currency market ,future or fwd market?
20. Is commodity ,future or fwd market?
21. bond duration
22. WACC
23. CAPM
24. breakeven analysis
25. Difference between financing and investing?
26. which is more coslty equity financing or debt financing

LEVRAGE

Leverage is a business term that refers to borrowing. If a business is "leveraged," it means that
the business has borrowed money to finance the purchase of assets. The other way to purchase
assets is through use of owner funds, or equity.

One way to determine leverage is to calculate the Debt-to-Equity ratio, showing how much of the
assets of the business are financed by debt and how much by equity(ownership).

Leverage is not necessarily a bad thing. Leverage is useful to fund company growth and
development through the purchase of assets. But if the company has too much borrowing, it may
not be able to pay back all of its debts.

CREDIT DEFAULT SWAP

A specific kind of counterparty agreement which allows the transfer of third party credit risk from
one party to the other. One party in the swap is a lender and faces credit risk from a third party,
and the counterparty in the credit default swap agrees to insure this risk in exchange of regular
periodic payments (essentially an insurance premium). If the third party defaults, the party
providing insurance will have to purchase from the insured party the defaulted asset. In turn, the
insurer pays the insured the remaining interest on the debt, as well as the principal.
For example, the buyer of a credit swap will be entitled to the par value of the bond by the seller
of the swap, should the bond default in its coupon payments.

Mortgage-Backed Security (MBS)

An MBS is a way for a smaller regional bank to lend mortgages to its customers without having
to worry about whether the customers have the assets to cover the loan. Instead, the bank acts as a
middleman between the home buyer and the investment markets.

This type of security is also commonly used to redirect the interest and principal payments from
the pool of mortgages to shareholders. These payments can be further broken down into different
classes of securities, depending on the riskiness of different mortgages as they are classified
under the MBS.

EURODOLLAR
EuroDollar could be any financial instrument which is issued by other country outside your
country.
EuroDollar is issued by an international syndicate and categorized according to the currency in
which it is denominated.
Example :
A Eurodollar bond that is denominated in U.S. dollars and issued in Europe by a Pakistan
Government would be an example of a Eurobond. Pakistan Government in this example could
issue the Eurodollar bond in any country other than the Pakistan.

INTEREST RATE DIFFERENTIAL

Difference between interest of two particular company in terms of valuation of currencies.
Forward Rate is ascertained by Interest Rate Differentiation

ARBKITAGE
Whenever there is a difference in two currency market in same country it is called ARBKITAGE

READY MARKET – Where settlement is done on same day

SPOT MARKET – Where settlement is done after Two Days.

FORWARD MARKET
a. The market where buyer and seller is known on Day One.
b. Two parties involved
 c. Risk is high as compared to Future Market
d. One default other loose.

FUTURE MARKET
a. Buyer and seller not known
b. No Risk of default but only Risk of Exchange.

SWAP
A contract in which two parties agree to exchange periodic interest payments, especially when
one payment is at a fixed rate and the other varies according to the performance of a reference
rate, such as the prime rate.
Swap can be Buy/ Sale - For Lending Prospective
Swap Sale /Buy Swap – For Borrowing prospective

OUTRIGHT
a. Outright is the opposite of SWAP.
b. One time buy or sell either buy or sell.
c. Importer/Exporter prospective.
d. No interest rate advantage in outright transaction.

BOND
-Borrower – who issue Bond
- Lender – Who pays for Bond
- Bond is a credit instrument.
- Has Face Value
- Has Time Period
- Has Interest attached
- Coupon Rate