ex1 Flashcards
is an accounting technique used to periodically lower the book value of a loan or an intangible asset over a set period of time
Amortization
The restatement of an interest rate (e.g., continuously compounded) in terms of an annualized simple interest rate.
Annual Percentage Rate (APR):
a contract between you and another party in which one of you receives regular payments over a fixed period of time, either beginning immediately or at some point in the future.
Annuity
is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole
Beta
The price at which a dealer is willing to buy securities from a customer.
Bid price:
The debt issued by a borrower who promises both to pay interest on the borrowing and to repay the principal borrowed at some future date.
Bond or fixed-income security:
The return earned on a bond if held until maturity. Same as Yield-to-Maturity.
Bond-equivalent yield
A financial intermediary who matches buyers and sellers and earns commissions for this service.
Broker:
Inflation intended to keep up with both a growing money supply and growing population. This kind of inflation is important and necessary as it grows at a sustainable pace.
Built-In Inflation
describes the relationship between systematic risk and expected return for assets, particularly stocks
Capital Asset Pricing Model (CAPM)
Profit/loss realized by selling an asset at a price higher/lower than the purchase price.
Capital gain or loss
When buy and sell orders are matched, the trade is officially recognized, and the trade is recorded by the exchange’s clearinghouse.
Clearing (a trade)
An entity associated with or part of an exchange that clears trades.
Clearinghouse:
The end of a day’s trading session.
Close (markets)
) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
Consumer Price Index:
occurs when overall prices increase due to increases in the cost of wages and raw materials.
Cost-Push Inflation
Trader who tries to profit from daily price movements, opening trading positions in the morning and closing them out at night.
Day trader
A financial intermediary who posts prices at which she buys (wholesale or bid price) or sells (retail or ask price) securities.
Dealer
A failure to pay a promised payment on a financial contract at the promised time
Default
inflation is the upward pressure on prices that follows a shortage in supply, a condition that economists describe as “too many dollars chasing too few goods.”
Demand-Pull Inflation
A risk that can be eliminated in a portfolio of securities via diversification.
Diversifiable risk
is a risk management strategy that mixes a wide variety of investments within a portfolio.
Diversification:
Payment in the form of cash or stocks made to existing stockholders.
Dividend:
the quantitative application of statistical and mathematical models using data to develop theories or test existing hypotheses in economics and to forecast future trends from historical data.
Econometrics
