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Investments > Chapter 1 & 2 > Flashcards

Chapter 1 & 2 Flashcards

1
Q

An accumulation of assets owned by the investor and designed to transfer purchasing power to the future

A

Portfolio

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2
Q

The purchase of plant, equipment, or inventory.

A

Investment (in economics)

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3
Q

Acquisition of an asset such as a stock or a bond

A

Investment ( in lay terms)

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4
Q

A market for buying and selling previously issued securities

A

Secondary market

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5
Q

The initial sale of securities

A

Primary market

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6
Q

What something is worth; the present value of future benefits

A

Value

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7
Q

The process of determining the current worth of an asset

A

Valuation

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8
Q

The sum of income plus capital gains earned on an investment in as asset

A

Return

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9
Q

The flow of money or its equivalent produced by an asset; dividends and interest

A

Income

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10
Q

An increase in the value of a capital asset, such as a stock.

A

Capital gain

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11
Q

The annual percentage return realized on an investment

A

Rate of return

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12
Q

The possibility of loss; the uncertainty of future returns

A

Risk

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13
Q

An investment that offers a potentially large return but is also very risky; a reasonable probability that the investment will produce a loss

A

Speculation

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14
Q

The ease with which an asset may be bought and sold

A

Marketability

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15
Q

Moneyness; the ease with which assets can be converted into cash

A

Liquidity

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16
Q

The informal secondary market for unlisted securities

A

Over the counter market

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17
Q

Market makers who buy and sell securities for their own accounts

A

Dealers

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18
Q

The general unit of trading in a security, such as 100 shares

A

Round lot

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19
Q

A unit of trading, such as 22 shares, that is smaller than the general unit of sale

A

Odd lot

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20
Q

Prices at which a securities dealer offers to buy and sell stock

A

Bid and ask

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21
Q

The difference between the bid and the ask prices

A

Spread

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22
Q

A price that equates supply and demand

A

Equilibrium price

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23
Q

Over-the-counter market for securities listed on an exchange

A

Third market

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24
Q

An agent who handles buy and sell order for an investigator

A

Broker

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25
Q

A person who buys and sells securities for customers; a broker

A

Registered representative

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26
Q

Earning assets for their income and possible price appreciation

A

Long position

27
Q

Expecting that prices will rise

A

Bullish

28
Q

Selling borrowed assess for possible price deterioration; being short and a security or a commodity

A

Short position

29
Q

Expecting that prices will decline

A

Bearish

30
Q

In order to buy or sell at the current market price or quote

A

Market order

31
Q

An order placed with a broker to buy or sell at a specified price

A

Limit order

32
Q

An order placed with the broker that is canceled at the end of the day if it is not executed

A

Day order

33
Q

Order placed with a broker that remains in effect until it is executed by the broker or canceled by the investors

A

Good-till-cancelled-order

34
Q

A purchase or sell order designed to limit an investors loss or to assure a profit on a position in a security

A

Stop order

35
Q

A statement received from a brokerage firm detailing the sale or purchase of a security and specifying a settlement date

A

Confirmation statement

36
Q

The amount an investor must put down to buy securities on credit

A

Margin

37
Q

The minimum percentage, established by the Federal Reserve, that the investor must put up in cash to buy securities

A

Margin requirement

38
Q

The minimum equity required for a margin account. (The minimum level of funds required before a margin call)

A

Maintenance margin

39
Q

The registration of securities in a brokerage firm’s name instead of in the buyers name

A

Street name

40
Q

Fees charged by brokers for executing orders

A

Commissions

41
Q

A broker who charges lower commissions on security purchases and sales

A

Discount broker

42
Q

The sale of borrowed securities in anticipation of a price decline; a contract for future delivery

A

Short sale

43
Q

The purchase of securities to close a short position

A

Covering the short sale

44
Q

Receipts issued for foreign securities held by a trustee

A

American depositary receipts

45
Q

The federal and state laws requiring publicly held firms to disclose financial and other information that may affect the value of their securities.

A

Full disclosure laws

46
Q

Required annual report filed with the SEC by publicly held firms.

A

10-K report

47
Q

A required quarterly report filed with the SEC by publicly held firms

A

10-Q report

48
Q

A document filed with the SEC that describes a change in a firm that may affect the value of its securities

A

8-K report

49
Q

Document filed with the SEC by an individual who acquires 5 percent of a publicly heals firms stock

A

13-D report

50
Q

The agency that insures investors against failures by brokerage firms

A

Securities investor protection corporation

51
Q

A financial institution, such as a commercial bank, that borrows from one group and lends to another

A

Financial intermediary

52
Q

The non public sale of securities

A

Private placement

53
Q

Firm specializing in the securities of small, emerging companies.

A

Venture capitalist

54
Q

An underwriter, a firm that sells new issues of securities to the general public

A

Investment banker

55
Q

The first sale of common stock to the general public

A

Initial public offering (IPO)

56
Q

The process by which securities are sold to the general public and in which the investment banker buys the securities from the issuing firm

A

Underwriting

57
Q

An investment banker that makes in agreement with a firm to sell a new issue of securities and forms the syndicate to market them

A

Originating house

58
Q

A selling group assembled to market an issue of securities

A

Syndicate

59
Q

Agreement with an investment banker who does not guarantee the sale of a security but who agrees to make the best efforts to sell it

A

Best-efforts agreeement

60
Q

Agreement with an investment banker who guarantees a sale of securities by agreeing to purchase the entire issue at a specified price

A

Firm commitment

61
Q

Initial document detailing the financial condition of a firm that must be filed with the SEC to register a new issue of securities

A

Preliminary prospectus

62
Q

Government agency that enforces the federal securities laws

A

Securities and Exchange Commission (SEC)

63
Q

Process of filing information with the SEC concerning a proposed sale of securities to the general public

A

Registration

Investments (3 decks)

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