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Study Notes 3rd Year > Finance > Flashcards

Finance Flashcards

1
Q

Debt ratio

A

Liabilities/net worth

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2
Q

Current ratio

A

Liquid assets/ liabilities

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3
Q

Liquidity ratio

A

Liquid assets/month exp.

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4
Q

Net asset value

A

(Assets- liabilities)/ number of shares

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5
Q

Max rasp conte.

A

6,000 / year

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6
Q

Is rasp taxable?

A

No

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7
Q

Emergency fund is how much?

A

3 months of monthly expenses

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8
Q

What happens when market rates decrease?

A

Bond values increase

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9
Q

Annual shareholder return

A

[Eoy$+Div]-Boy$]]/boy$

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10
Q

Earnigs/share

A

After-tax earnings/#shares

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11
Q

Price - earnings ratio

A

Market value/earnings per share

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12
Q

Actual cash value

A

Og-[(OG/Lifespan)xage)

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13
Q

Income replacement method

A

Annual income x7x 0.70

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14
Q

Main financial benefit of @wning

A

Investment value growth

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15
Q

Who pays the real estates commission

A

The property seller

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16
Q

What is the purpose of the mortgage stress test

A

To ensure that borrowers could maintain their mortgage if interest rates rise

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17
Q

Gds

A

Monthly mortgage payments / gross monthly income

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18
Q

TDS

A

Monthly mortgage payments + outstanding debt / monthly income

19
Q

Recovering mortgage financing

A

Closing costs / reduction of mortgage costs

20
Q

Debt payments to income ratio

A

Debt:gross income-tax -cpp-ei_rrsp

21
Q

What is considered living within your means

A

.debt-payments ratio under 20%

22
Q

Rule of 72

A

72/interest is how will long it take for your investments to double

23
Q

What is included in taxable income

A

Gross + interest + dividend x 1.38 - union - moving expenses

24
Q

Two opportunity costs that might be considered in someone renting who spend lots of time with roommates

A

May have to delay getting a place, less time to socialize

25
Q

Pros about used cars

A

Less expensive, less depreciation, more info available about reliability.

26
Q

Pros of new cars

A

Manufacturswaranty, less likely to need repairs, better financing options, latest technology

27
Q

What is a good credit score above

A

740

28
Q

Advantages of leasing a vehicle

A

Lower monthly payments, you may walk away from the vehicle at the end of the lease term, may be a practical solution for those who regularit drive few miles

29
Q

Disadvantages of leasing a vehicle

A

Additional expenses for damage, no equity, interest rates higher

30
Q

What differentiates a certified pre owned car from others

A

Often vehicles that have been turned in at end of lease s come with original manufacturers guarantee of quality s they promoted going through inspection

31
Q

What is a great practise when shopping for used whiles

A

Check carfax report

32
Q

What are the main benefits of investing in muthalfunds

A

Diversification, professional management

33
Q

Diversification

A

Involves combining many assets in a portfolio to reduce risk

34
Q

Characteristics of managed funds

A

Manager chooses all securities and when to buy & sells fees >1%

35
Q

Characteristics of index fund

A

Manager buys & sells securities so that fund mirrors a desired indexs fees <1%

36
Q

Stocks to bonds ratio

A

70% in stocks, 30% in bonds

37
Q

Which stock mirrors the Tsx

A

Index fund

38
Q

Fund that automatically invests in increasingly conservative securities as investors get closer to retirement

A

Life-cycle/target-datefund

39
Q

Not good assets for retirement

A

Cars, home equity, checking account

40
Q

Good assets for income in retirement

A

Rasp, other liquid investments, Tfsa

41
Q

Withdrawal amount considered of ten referred to by financial planners

A

Safe withdrawal rate

42
Q

What income is gained after retirement

A

Oas, cpp, tfsa, non-registered investments, rrsp to rrif

43
Q

High risk

A

Also called speculative risk examples include hedge funds, precious metals and crypto

44
Q

Low risk

A

Sate investments such as Gl c’s treasury Bills index and ETFs

Study Notes 3rd Year (11 decks)

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