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CFA L1 Study Plan Material > Equity > Flashcards

Equity Flashcards

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CFA flashcards
1
Q

quote driven markets

A

trade with dealers

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2
Q

order driven markets

A

order matching run by exchange, broker, or ATS

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3
Q

brokered market

A

unique instruments, real estate

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4
Q

order precedence hierarchy

A
  1. price priority
  2. display precedence
  3. time precedence
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5
Q

uniform pricing rule

A

all trades execute at same price i.e. call markets

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6
Q

discriminatory pricing rule

A

limit order/quote that first arrived determines trade price

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7
Q

derivative pricing rule

A

price is derived from another market

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8
Q

complete market

A

well developed markets that trade what people need

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9
Q

operationally efficient market

A

liquid, low cost

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10
Q

informationally efficient market

A

timely financial disclosures, and pricing reflects fundamental value and not just demands for liquidity

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11
Q

allocationally efficient market

A

economies use resources where they are most valuable

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12
Q

leverage ratio on margin

A

= value of the position / value of the equity supporting it

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13
Q

price return index reflects only

A

the prices of the constituent securities

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14
Q

total return index reflects

A

prices of the constituent securities and the reinvestment of all income received since the inception of the index

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15
Q

5 stages of industry life cycle

A
  1. embryonic
  2. growth
  3. shakeout
  4. mature
  5. decline
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16
Q

present value models estimate value as…

A

the present value of expected future benefits

17
Q

multiplier models estimate…

A

intrinsic value based on a multiple of some fundamental variable

18
Q

asset-based valuation models estimate…

A

value based on the estimated value of assets and liabilities

19
Q

DDM calculation

A

=D1/(r-g)

20
Q

2 stage DDM process

A
  1. estimate value as the same of the present values of dividends over a short-term period of high growth
  2. the present value of the terminal value at the end of the period of high growth (using DDM)
21
Q

leverage ratio on margin indicates

A

how many times larger a position is than the equity that supports it

22
Q

maximum leverage ratio calculation

A

=1/MM

where MM is minimum margin

CFA L1 Study Plan Material (7 decks)

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