Economic Factors and Business Information

Question 1

business cycle

Answer 1

A predictable long-term pattern of alternating periods of economic growth and decline. Four stages: 1) expansion, 2) peak, 3) contraction, 4) trough.

Question 2

balance sheet

Answer 2

A report of a corporation’s financial condition at a specific time.

Question 3

bull

Answer 3

An investor who acts on the belief that a security or the market is rising or will rise.

Question 4

Consumer Price Index (CPI)

Answer 4

A measure of price changes in a market changes in a “market basket” of consumer goods and services used to identify periods of inflation or deflation.

Question 5

retained earnings

Answer 5

The amount of a corporation’s net income that remains after all dividends have been paid to preferred and common stockholders.

Question 6

regulatory risk

Answer 6

The risk that changes in regulations may negatively affect the operations of a company.

Question 7

recession

Answer 7

A general economic decline lasting from six to 18 months (at least two consecutive quarters of declining or negative GDP growth).

Question 8

Sharpe ratio

Answer 8

Measures the risk adjusted return of an investment. Calculated by dividing the excess return of an asset over the 91-day Treasury bill rate by its standard deviation.

Question 9

internal rate of return (IRR)

Answer 9

The discount rate that sets the net present value of an investment equal to zero.

Question 10

income statement

Answer 10

The summary of a corporation’s revenues and expenses for a specific fiscal period.