Economics & Analysis Flashcards

1
Q

Small businesses and individuals typically use the _______ accounting method

A

cash

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2
Q

Cash accounting records transactions on the date _______ is actually received

A

payment

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3
Q

Accrual accounting recognizes expenses based on the date the ______ is incurred

A

liability

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4
Q

Cash accounting recognizes revenue/expenses _____ than accrual accounting

A

later

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5
Q

Both sides of the balance sheet are arranged in order of _______

A

liquidity

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6
Q

CA/CL are due within ______

A

within 1 year

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7
Q

Accounts payable include:

A

AP, Wages, Taxes, and Interest (payable)

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8
Q

Long term capital =

A

LT liabilities + OE

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9
Q

D/E =

A

LT debt / total OE

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10
Q

10Ks are filed anywhere from ____ to ____ after year end

A

60 to 90 (larger companies with over $700m public float file within 60 days, smaller companies at 90 days)

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11
Q

10Qs are ______ and are filed anywhere from ____ to ______ after qarter-end

A

unaudited; filed anywhere from 40 to 45 days (bigger @ 40, smaller at 45)

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12
Q

Earned surplus is another name for _____

A

retained earnings

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13
Q

Falling inflation (measured via the CPI) will result in higher ____ prices and _____ prices

A

stock AND bond prices

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14
Q

Emerging growth stocks are brand new ventures that have high potential reward but NO _____ and typically can’t pay _____

A

track record; typically can’t pay dividends

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15
Q

A typical example of an income security is a ______ stock

A

utility

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16
Q

Counter-cyclical stocks include ______ and _____

A

food producers and gold mining stocks

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17
Q

Speculative stocks include _____ and ____ companies, they are ones that fly high during business cycle upturns

A

airplane manufacturers and toy companies

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18
Q

ROI is the ________ cash flow divided by the ______

A

average annual cash flow divided by the initial investment outlay

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19
Q

Total Return on an investment is =

A

income + growth

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20
Q

The Risk Free Rate is the expected return on _____

A

treasuries

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21
Q

The Sharpe Ratio =

A

(Total Return - RF) / Portfolio STdev

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22
Q

The higher the Sharpe ratio, the greater incremental reward for assuming _____

23
Q

The geometric mean takes into account ______ (when the ______ mean does not)

A

takes into account compounding, while the arithmetic mean does not

24
Q

Expected Return is simply the _______ average of different scenarios

A

weighted average of different outcome scenarios

25
The shorter the holding period, the greater the _______
variability of returns (STdev)
26
Capital gains on munis are _____ taxable
fully (at Fed level too)
27
An active manager's "active return" is the % by which they ______ the index
outperform/underperform
28
Time-weighted returns are used by ______ and show the growth of a _____ investment over a fixed period of time
used by mutual funds, show growth of a 1-time investment over a fixed time period
29
Time-weighted return is the same as ______
total return
30
An investor's specific performance in a fund is the _______ return
dollar-weighted return
31
Dollar-weighted average return is the same thing as the ______
IRR
32
Often, _____ return is lower than _____
dollar-weighted return is lower than time-weighted
33
FV (for compounding) =
P * (1 + r)^n
34
Non-systematic risk is also known as _______
selection risk
35
Monte Carlo simulations are used to find a portfolio's _______
value at risk
36
Examples of high beta companies would be _____ and _____
airlines and toy companies
37
Examples of low beta stocks would be ____ and _____
drug companies and utilities
38
If beta = 1, then portfolio only has _____ risk; if beta > 1, then portfolio has ______
= 1, has only systematic risk, if greater than 1 has non-systematic risk
39
Price volatility of options is measured using ____
delta
40
Weak form EMT states that you cannot predict future returns based on _____
historical data
41
Semi-strong EMT states that public information is already _______ stock prices
baked into
42
Strong form EMT states that stock prices reflect ______
all information (public or private)
43
The main risk of investing in a muni bond is ______
legislative risk (since the income isn't subject to fed taxes)
44
What is the biggest risk for holding a zero coupon bond to maturity?
purchasing power risk (market risk goes away since you'll get par back at maturity)
45
Tangible assets tend to keep pace with _______
inflation
46
During a time when the yield curve is inverted, issuers will likely sell ______ bonds
callable (since when it goes inverted typically all rates are higher)
47
Do corporate bonds have some level of marketability risk?
YES - more so than preferred stock
48
A way to hedge against systematic risk is to _______
buy puts
49
ROI =
Average annual cash returns / initial investment
50
LT bond PRICES are always more _____ than short term bond prices
MORE VOLATILE
51
For calculating Total Return, do you take the actual total of all the income and capital gains or do you annualize them?
ANNUALIZE them
52
The coupon on a TIPS is ALWAYS the _____
real rate of return (inflation adjusted)
53
Does business risk take fraud into account?
NO
54
Business risk, most simply, is the risk of buying _____
a single stock