6/2 study cards

Question 1

__________ is the excess return that investing in the stock market provides over a risk-free rate, such as the return from government treasury bonds.

Answer 1

Equity risk premium

Question 2

The _________ of a security refers to the ability to convert the security into cash in a timely manner

Answer 2

Liquidity

Question 3

In terms of securities, ___________ is the order of repayment in the event of liquidation or bankruptcy.

Answer 3

Seniority

Question 4

____________ are affected by changes in consumer tastes for products produced in various countries, relative changes in income in various countries, differing inflation rates, and differences in real interest rates.

Answer 4

Exchange rates

Question 5

This form of financing is advantageous because of its flexibility and only being charged interest on funds actually drawn.

Answer 5

Line of credit

Question 6

The effective interest rate on offering a trade discount is reflected by this equation:

Answer 6

365/(Total credit period - discount period) x Percentage of discount/100% - percentage of discount

Question 7

_________ involves analyzing past market data of price and volume movements to attempt to determine future price movements of individual securities.

Answer 7

Technical analysis

Question 8

The ______ form of the efficient market hypothesis suggests that information about past prices would not be of use in predicting future performance, and therefore technical analysis would not be a viable technique to use

Answer 8

Weak

Question 9

“The price, expressed in terms of the cash equivalent, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.”

Answer 9

Fair market value

Question 10

“The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

Answer 10

Fair value

Question 11

Inventory turnover ratio

Answer 11

COGS/Average inventory

Question 12

Gross profit

Answer 12

Revenue - COGS

Question 13

General inventory reconciliation formula

Answer 13

Beginning inventory + Purchases - Uses = Ending inventory

Question 14

COGS = Cost of Goods Manufactured +/- (increase/decrease) in _____________

Answer 14

Finished goods

Question 15

_________ is an improvement initiative designed to reduce errors or defects.

Answer 15

Six Sigma

Question 16

Collection ratio = ________

Answer 16

A/R divided by average daily sales

Question 17

A ___________ is one that maintains a zero balance since funds only sufficient to cover the checks presented are transferred from another account.

Answer 17

Zero balance account