Chapter 19 Flashcards
This type of model assumes that a stock’s intrinsic value is equal to the present value of a stream of future cash flow.
discounted cash flow model
This type of model assumes that a stock’s intrinsic value is equal to the present value of a stream of future dividends.
dividend discount model
It represents ownership interest in the issuing corporation.
common share
It involves understanding a company’s business, analyzing its financial statements, and forecasting its future financial performance.
company analysis
An off-exchange, private, electronic network that discreetly and directly matches buyers and sellers, requiring no intermediaries.
alternative trading system
It is the study of graphical representations of stock or stock index price movements over a defined period.
chart analysis
It involves studying investor views or opinions, or data that reflect those opinions, to determine their degree of bullishness or bearishness about a particular stock or stock index.
sentiment analysis
It involves researching, analyzing, and forecasting the factors that contribute to or detract from the success of all companies within the industry.
industry analysis
It provides a link between the statement of comprehensive income and the statement of financial position at a specified time.
statement of changes in equity
This approach begins with an analysis of macro factors.
top-down approach
This type of analysis combines historical fundamental data with statistical analyses.
quantitative analysis
They use fundamental analysis to estimate the return and risk from an investment in the common shares of the companies in their coverage universe.
equity analysts
These approaches focus on a particular set of stocks that have similar fundamental characteristics and performance patterns.
style-based approaches
These approaches do not focus on a particular group of stocks but involve a search for stocks with the best chance of meeting particular objectives.
non-style-based approaches
It shows the company’s revenue and expenses over a specified period.
statement of comprehensive income
This lists a company’s assets, equity, and liabilities at a specified time.
statement of financial position
It outlines the cash inflow and outflow for the company over a specified period.
statement of cash flows
This type of analysis of a company’s business considers how well the firm competes within its industry, which, in turn, depends on its sustained competitive advantage.
qualitative analysis
Does a companies management team usually prefer dividends or share buybacks and why?
A company’s management usually prefers share repurchase payouts because they reduce the number of shares outstanding, and therefore increase the companies earnings per share which can help management hit certain bonus targets
Canada has six stock exchanges, three of which are owned by the TMX Group:
Toronto Stock Exchange (TSX)
TSX Venture Exchange, including NEX
TSX Alpha Exchange
Securities of junior issuers are listed on the
TSX Venture Exchange
This exchange positions itself as a low-cost alternative to so-called traditional stock exchanges
Canadian Securities Exchange
owned by the TMX Group, trades TSX and TSX Venture Exchange listed securities
Alpha Exchange
This exchange provides listing services and facilitates trading in securities listed on Aequitas NEO, TSX, and TSX Venture Exchanges.
NEO Exchange
Listing shares on exchanges in US and CAD is called
interlist
These ratios are used to determine how well the company deals with its debt obligations. The debt-to-equity ratio is a common measure of debt capacity.
Risk Analysis Ratios
These ratios measure a company’s ability to meet its short-term obligations. Common measures of liquidity include the current ratio and the quick ratio.
Liquidity
These ratios help determine a company’s long-term growth and survival prospects
Operating performance ratios
These ratios gauge the market’s perception of the value of a company’s shares relative to its dividends, earnings, or other measures, such as the equity value (or book value) per common share. Common value ratios include price-to-earnings ratio (P/E) and dividend yield.
Value Ratios
These models determine a precise value (called a point estimate) for the intrinsic value of a stock based on a set of forecast company fundamentals
Absolute valuation models
In the securities industry, the two most widely used absolute valuation models are the
dividend discount model (DDM) and discounted cash flow model
These models determine the intrinsic value by comparing one or more of the stock’s value ratios or price multiples to a benchmark value for the price multiple
Relative valuation models
There are three broad areas of analysis within the larger discipline of technical analysis:
chart analysis, statistical analysis, and sentiment analysis.
A form of technical analysis made possible by the increased sophistication of computers. Analysts use several indicators to confirm the existence of trends identified through chart analysis
Statistical Analysis
To become licensed as an advisor to trade in options, you must have successfully completed the
Derivatives Fundamentals Course and the Options Licensing Course
If a company has securities listed on the TSX, it must file these audited annual financial statements within ____days of the end of its financial year-end. If a company has securities listed only on the TSX Venture Exchange or CSE, it must file the statements within _____days of the end of its fiscal year.
90 days
120 days
Listed companies must also file interim unaudited financial statements. For companies with securities listed on the
TSX, the statements must be filed through SEDAR within _____ days of the end of the interim period. If securities are listed only on the TSX Venture Exchange or CSE, the filing period is within ____ days of the end of the interim period.
45 days
60 days
Usually refers to important financial statement items that influence many other financial statement items
Key Drivers
give shareholders limited voting rights or full voting rights under certain circumstances.
Non-voting shares
The only difference between technical and fundamental analysis is that
The technical analyst studies the effects of changing fundamentals – that is, price movements – while the fundamental analyst studies the causes of price movements.
