Equities: Investing and Trading Flashcards
“The difference between a company’s current assets and current liabilities”?
Working capital
“The ownership interest that shareholders hold in a company’s assets and earnings”?
Equity
What are the conditions or restrictions that a company must adhere to when issuing debt securities known as?
Debt covenants/conditions
“The general trend of the Philippine Stock Exchange”?
PSEI (Philippine Stock Exchange Index)
“A type of stock offering where existing shareholders are given the option to purchase new shares at a lower price than the market price”?
Stock Rights Offering (SRO)
“The total value of a company’s outstanding shares of stock, calculated by multiplying the stock’s current market price by the total number of outstanding shares”?
Market Capitalization
“A date when a company announces its intention to pay dividends to shareholders”?
Dividend Declaration Date
What type of stock offers voting rights to shareholders and is last in line to claim assets and dividends in case of liquidation?
Common Stocks
What type of order in stock trading specifies the maximum or minimum price at which you are willing to buy or sell shares?
Limit Order
Identify the term for “Income from a stock, given once a year.”
Cash Dividend
“A professional who facilitates stock trading transactions on behalf of investors”?
Stock Broker
“The date when a company verifies who are entitled to receive dividends”?
Record Date
“The maximum and minimum price of the stock for the day”?
Trading Threshold
“A competitive business plan for a company”?
Sensible business plan
“A protective measure to avoid price manipulation in stock trading”?
Trading Threshold
“Frequent buying and selling in stock trading”?
Scalp Trading
“A rise in the price of a stock, offering potential return.”
Capital Appreciation
“An organized market for tradable stocks where brokers buy and sell stocks”?
The Stock Exchange
“Shares of the company’s subsidiary as dividends”?
Property Dividends
“Determining the amount on your account that you are willing to risk in trading.”
Position Sizing
Enumerate the three primary reasons why companies need funds.
- Capital expenditures
- working capital
- paying off/refinancing existing debt
Enumerate the key components of a company’s balance sheet equation
Assets = Liabilities + Equity.
List the types of interest rates that can be associated with debt securities
Fixed, variable, or both
Name the two locations of the Philippine Stock Exchange (PSE).
Makati and Ortigas
List the key features of the Philippine Stock Exchange (PSE).
One price policy for both floors, double-auction market, fully automated.
List the six sector indices of the Philippine Stock Exchange (PSE)
Financial
Industrial
Holding Firms
Property
Services
Mining & Oil
What steps must a person who wants to buy stocks go through? Enumerate them.
Pass through a broker and have a statement of account.
Enumerate the qualifications for a company to be included in the PSEI.
Public float, liquidity, and market capitalization
Enumerate the four types of stock classification based on their claim on revenues
Common Stocks
Preferred Stocks
Warrants
List the three types of dividends
Cash Dividend
Stock Dividend
Property Dividend
income from a stock
Cash Dividend
additional shares issued
Stock Dividend
dividends in kind
Property Dividend
Enumerate the key dates involved in the payment of dividends
Dividend Declaration Date
Ex-Dividend Date
Record Date
Payment Date
Enumerate the two main segments of the stock market.
Primary Market
Secondary Market
List the the types of stock trading orders
Market Order
Limit Order
Day Order
Good ‘Till Cancelled (GTC)
Stop Loss Order
Enumerate the four trading styles in the stock market.
Position Traders
Swing Traders
Day Traders
Scalp Traders.
Name the three criteria for company analysis
Sensible business plan
Solid Management
Financial Analysis
Enumerate the steps in determining position sizing in trading
Determine the amount willing to risk
Consider diversification
List the types of stock offerings, including their abbreviations
IPO (Initial Public Offering)
2PO (Secondary Public Offering)
SRO (Stock Rights Offering)
Enumerate the components of the settlement date (T+2) process in stock trading
Transaction Date + 2 days (Settlement Date)
Sellers receive funds after 2 days
What are the three primary reasons why companies need funds?
Financial capital expenditures
working capital
paying off/refinancing existing debt
Enumerate the factors that stock traders should consider in a trading plan
Goals
Risk tolerance
Realistic expectations
epresents the general trend of the Philippine Stock Exchange and is composed of the 30 most active companies in the market.
PSEI
Companies need funds for financial capital expenditures, working capital, and maintaining a certain level of equity
True
In the equation “Assets = Liabilities + Equity,” assets represent what a company owes to others.
False
Debt securities issued by companies can have either fixed or variable interest rates, but not both
False
The Philippine Stock Exchange (PSE) operates with a one-price policy for both its branches in Makati and Ortigas.
True
The PSEI represents the 30 most active companies in the Philippine Stock Exchange, and its composition remains constant.
False
High inflation tends to increase purchasing power, making it a favorable time to invest in stocks
False
Preferred stocks grant shareholders voting rights and are the first to claim assets and dividends in case of liquidation.
False
True or False: Stock traders should have an aggressive profile to succeed in the market.
True
The Stock Rights Offering (SPO) is typically offered to the public before existing shareholders.
False
Scalp trading involves frequent buying and selling of stocks within a single trading day.
True
Day traders aim to hold positions for the medium to long term.
False
In an IPO (Initial Public Offering), shares of a company are first offered to the existing shareholders before the public.
False
Dividend Declaration Date is the date when dividends are credited to shareholders’ accounts.
False
Sensible business plan, solid management, and financial analysis are key components of company analysis.
True
Record Date is the date when a company announces its intention to pay dividends.
False
Good ‘Till Cancelled (GTC) orders remain open in succeeding trading days until they are executed or cancelled
True
Stop Loss Order is used to limit an investor’s losses on a position
True
Diversification involves concentrating all investments in a single asset to maximize returns
False
Property dividends can include shares of the company’s subsidiary or physical assets
True
Position sizing involves determining the amount you are willing to risk in trading.
True
