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Finance Market and Management > Final-Term > Flashcards

Final-Term Flashcards

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1
Q

Value Investors

A

If you pick a stock based on the value of the underlying company that issues it

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2
Q

Growth investors

A

Seek companies that offer strong earnings-growth

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3
Q

The total market valuation of a company’s stock

A

Referred to its market cap/ market capitalization

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4
Q

Market cap

A

Share price (market value) X Total # of shares outstanding

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5
Q

Market valuation

A

Its not always a good indicator of a good investment.

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6
Q

Book Value (accounting Value)

A

Looks at a company from a balance sheet perspective
- assets - liabilities = net worth/ stockholders equity

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7
Q

Intrinsic value

A

The market price of a company’s assets minus sum of a company’s liabilities
- Directly tied to its ability to make money

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8
Q

The market-to-book
Price-to-book (PBR)

A

Measure of how highly valued the firm is.
- Stock price / BPS

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9
Q

Book value per share (BPS)

A

Divide the company’s book value by number of shares it has outstanding

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10
Q

Overvalued

A

The closer the stock’s market capitalization is to the book value, the safer the investment.

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11
Q

2 common barometers of value are expressed in ratios

A
  1. Price to sales ratio (PSR)
  2. Price to earnings ratio (PER)
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12
Q

Net worth/ net equity

A

Assets - Liabilities

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13
Q

Comparative analysis

A

Compare a company’s balance sheet at a recent point in time to the past

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14
Q

Income statement

A

Find out about what a company’s profit is

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15
Q

Net Profit (net earnings, Net income)

A

Sales - expenses

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16
Q

Sales

A

The money that a company receives as customers buy its good and/or services

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17
Q

Top line analysis

A

Analyzing a business by looking at its sales

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18
Q

Accounts receivable

A

Refers to money that is owned to the company for goods that customers have purchased on credit.

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19
Q

Financial Ratio

A

A helpful numerical tool that you can use to find out the relationshop between 2 or more figures found in company’s financial data

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20
Q

Price to earnings ratio (P/E)

A

Very important in analyzing a potential stock investment.
- Also known as the earnings multiple
- multiple

21
Q

Danger of with high P/E?

A

The company doesn’t achieve the hoped-for results, the stock price can fall

22
Q

TTM

A

Trailing P/E, Trailing Twelve Months
- Deals with existing data
- The most recent 12 months of earnings

23
Q

Forward P/E

A

Projections or expectations of earnings
- The upcoming 12 months period
- Looks into the near future

24
Q

Low P/E Ratio

A

Aren’t necessarily a sign of bargain
- But for many other reasons that seem positively, low P/E Ratio is a good sign.

25
Q

High P/E Ratio

A

Aren’t necessarily bad

26
Q

PSR

A

Price to Sales Ratio is a company’s stock price divided by it sales
- Total market value / total sales for the last 12 months
- Sales number is rarely expressed as per -share figure

27
Q

MegaTrend

A

A major development that has huge implications for much of society for a long time to come

28
Q

Growth stock

A

Company not only is growing, but also performing well with some consistency

29
Q

Fundamental

A

Financial condition and related data

30
Q

ROE

A

Return on Equity
- Dividing the earning by equity
- The higher the percentage, the better

31
Q

2 additional barometer of success

A
  • Company’s growth earnings
  • Growth of Equity
32
Q

Insider buying

A

The purchase of shares in a corporation by a director, officer or executive within the company
- Not a crime when buying is based on public information

33
Q

Insider trading

A

It can happen, when corporate officers, executives, or board members know new products, merger negotiations, or other reasons that could cause prices to move higher.
- Corporate insiders making illegal stock purchases based on non-public information

34
Q

Income stocks

A

Higher than average dividends
- Takes dual role that can not only appreciate, but provide regular income
- Tends to be among the least volatile stocks
○ Might view them as defensive stocks.

35
Q

Dividend

A

Money paid out to the owner of the stocks
- Payouts to owners
- Annual number

36
Q

Interest

A

Payment to creditors
- Bond holders
- Bank account holders

37
Q

Yield

A

The percentage rate of return paid on a stock in the form of dividends.

38
Q

Dividend yield

A

Dividend income/ stock investment

39
Q

Payout ratio

A

Dividend (per share) / earnings (per share)
- To figure out what percentage of a company’s earnings is being paid out in the form of dividends

40
Q

Junk bonds

A

Bs/ Cs indicate poor grade, considered very risky, non-investment grade

41
Q

Mutual fund

A

Inexpensive way to gain access to professional management

42
Q

Information

A

Plays a central role in the structure of financial markets and financial institutions

43
Q

Information Cost

A

Make the financial markets the worst functioning of all market

44
Q

Market of Lemons

A

Examines the qualilty of goods traded in a market can degrade in the presence of information asymmetry, leaving only the ‘lemons’ behind.

45
Q

Public Companies

A

Those that issue stocks and bonds that are traded in financial markets- are required to disclose large amounts of information

46
Q

Collateral

A

It is something of value pledged by a borrower to the lender in the event of the borrower’s default

47
Q

Net worth

A

Under many circumstances, net worth serves the same purpose as collateral
- If a firm defaults on load, lenders can make claim against firm’s net worth

48
Q

Down payment

A

The homeowner has a substantial stake in the house with a large down payment

49
Q

A principal-agent problem

A

The seperation of your ownership from their control, which can be more than a little costly to stockholders

Finance Market and Management (2 decks)

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