Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

SIE Exam 2024 > Chapter 3: Economic Factors > Flashcards

Chapter 3: Economic Factors Flashcards

You may prefer our related Brainscape-certified flashcards:
SIE Exam flashcards
1
Q

Boom

A

Period of rapid growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Recession

A

Period of economic decline or negative growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Four Stages of the Economic Cycle

A

-Expansion
-Peak
-Contraction
-Trough

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Expansion

A

Stage when businesses are prospering

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Peak

A

Stage when businesses have reached the pinnacle of their growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Contraction

A

Stage when economic growth is slow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Trough

A

Stage when economic growth is negative

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Economic Indicators

A

Signs that point to current and future economic performance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Examples of Economic Indicators

A

-Leading Indicators
-Building Permits
-Manufacturers’ New Orders, Consumer Goods, Non-defense Capital Goods
-S&P 500 Index
-Initial Claims for Unemployment Insurance
-Interest Rate Spreads

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Leading Indicators

A

Predict changes in economic performance before the economy starts to move in a particular direction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Coincident Indicators

A

Increase and decrease with current economy (coincide)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Examples of Coincident Indicators

A

-The Index of Industrial Production
-Employees on Nonagricultural Payrolls
-Disposable Personal Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Lagging Indicators

A

Factors observed to change after an economic shift in the business cycle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Examples of Lagging Indicators

A

-Change in Consumer Price Index (CPI)
-Average Prime Rate
-Average Duration of Unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Interest Rate

A

Represents the extra sum a lender levies on the borrower over and above the primary amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Prime Rate

A

Interest rate that banks charge most creditworthy customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Discount Rate

A

Interest rate that the central bank charges all other banks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Federal Funds Rate

A

Interest rate commercial banks charge each other for overnight lending and borrowing their extra reserves

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Call Money Rate

A

Interest rate banks charge brokers, who lend to investors to fund margin accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Cyclical Stocks

A

Move with the economy; perform well when the economy is good, decline when it’s weak

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Defensive Stocks

A

Least affected by the overall stock market; produce stable dividends throughout the year and are more reliable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Growth Stocks

A

Currently performing well in the stock market and expected to frow faster in the future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Value Stocks

A

Current share value is less than intrinsic value, get better with time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Nano-cap Stocks

A

Smallest stock by market cap, <$50 million

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Micro-cap Stocks

A

Market capitalization between $50 million-$300 million

26
Q

Small-cap Stocks

A

Market capitalization between $300 million-$2 billion, high growth potential

27
Q

Mid-cap Stocks

A

Market capitalization between $2 billion-$10 billion, produce consider profit and have potential to grow

28
Q

Large-cap Stocks

A

Market capitalization above $10 billion, long history of success, well established, low risk

29
Q

Monetary Policy

A

Measures implemented by the central bank to impact the quantity of credit and money circulating within an economy

30
Q

Fiscal Policy

A

Encompasses government’s actions concerning taxation and expenditure

31
Q

Regulation T

A

-Tool used to control extensions made by securities brokers and dealers
-Controls the margin requirements for stocks purchased on margin

32
Q

Discount Rate

A

Tool used to implement monetary policies by adjusting the interest rates it charges banks

33
Q

Reserve Requirement

A

-Regulation about the amount of money commercial banks can hold in their reserves as liquid assets
-Tool enables Fed to manage how much money the banks can lend

34
Q

Federal Open Market Committee (FOMC)

A

Committee of the Federal Reserve System to regulate the country’s open market operations

35
Q

International Economic Factors

A

-Balance of Payments
-GDP & GNP
-Exchange Rates

36
Q

Balance of Payments (BOP)

A

Records all international financial transactions made by a country’s residents, including government, businesses, and individuals

37
Q

Gross National Product (GNP)

A

Tracks all economic activity carried out by businesses and citizens of a nation, regardless of location

38
Q

Gross Domestic Product (GDP)

A

Measures productivity and economic activities withing a nation’s borders

39
Q

Exchange Rate

A

Rate at which one currency is exchanged for another

40
Q

Foreign Exchange

A

Trading one currency for another during the trade of goods or services between two countries

41
Q

Balance Sheet

A

Provides a snapshot of the company’s financial position at a specific moment

42
Q

What is the key idea of the balance sheet?

A

Total value of the assets should equal the combined value of the liabilities and shareholder’s equity

43
Q

Assets

A

Possessions of a company

44
Q

Fixed Asset

A

Tangible piece of property a company owns for the long term and used to generate wealth

45
Q

Long-term Liabilities

A

Debts of a company that are due beyond a year

46
Q

Intangibles

A

Non-physical assets

47
Q

Shareholders’’ Equity

A

Amount a company’s owners have invested in their business

48
Q

Income Statement

A

Financial document that summarizes a company’s revenue and expenses

49
Q

Income Statement includes:

A

-Revenue
-Gross Profit
-Operating Income
-Earnings Before Interest and Taxes
-Taxable Income
-Net Income/Loss

50
Q

Revenue

A

Money brought in by normal business operations

51
Q

Gross Profit

A

Amount obtained by subtracting the cost of production from the revenue

52
Q

Operating Income

A

Adjusted revenue of a business after subtracting all operating costs and depreciation

53
Q

Operating Expenses

A

Costs paid to maintain the operation of the business

54
Q

Earnings Before Interest & Taxes (EBIT)

A

Shows company’s profit and considers all revenues and costs without interest and income tax

55
Q

EBIT=

A

Revenue - Cost of Goods Sold (COGS) - Operating Expenses

56
Q

Taxable Income

A

Basis on which an income tax system charges tax aka the amount of income the government will tax

57
Q

Net Income/Loss

A

Calculated by subtracting all the expenses, interest, and taxes from revenue; if positive, profit! if negative, loss

58
Q

Consume Price Index (CPI)

A

Represents the average fluctuation in prices consumers pay for various goods and services

59
Q

The CPI is a key metric for measuring…

A

Inflation and evaluating the efficacy of government policies

60
Q

Inflation

A

Upward movement of prices for goods and services within a specific time frame, typically a year

61
Q

Deflation

A

Decline in the price of goods and services over a specific period

SIE Exam 2024 (20 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions