Financial literacy

Question 1

How do you calculate the market cap of a company?

Answer 1

Multiply the price of a stock by its total # of outstanding shares

Question 2

Why is market cap so important?

Answer 2

It allows investors to understand the relative size of one company vs another

Question 3

Any person, company, or institution that owns shares in a company’s stock

Answer 3

What is a shareholder?

Question 4

The process of offering shares of a private corporation to the public in a new stock issuance

Answer 4

What is an IPO

Question 5

Any emerging technology that helps consumers or financial institutions deliver financial services in newer, faster ways than was traditionally available.

Answer 5

Combination of the words financial and technology.

Fintech

Question 6

What type of work does Nonfarm Payroll exclude?

Answer 6

Farm workers
Some government workers
Private households
Proprietors
Non profit employees

Question 7

What is Nonfarm payroll?

Answer 7

The measure of the # of workers in the US

Question 8

Represents a company’s annualised net profit divided by the number of common shares of stock or has outstanding.

Answer 8

Earnings per share

(A calculation that shows how profitable a company is, per share.)

Question 9

What do investors use EPS to measure?

Answer 9

A company’s value

Question 10

How would you explain EPS in simple terms?

Answer 10

The amount of money each share of stock would receive if a company’s profit was distributed to shareholders at the end of the year

Question 11

A frequently used financial comparison for looking at two or more measurable events on an annualised basis.

Answer 11

YoY

Question 12

What is YOY used for?

Answer 12

The financial performance of a company

Question 13

What does CPI measure?

Answer 13

The monthly change in prices paid by U.S. consumers

Question 14

What does CPI stand for?

Answer 14

Consumer Price Index

Question 15

What is CPI used to measure?

Answer 15

Inflation

Question 16

What does PPI stand for?

Answer 16

Producer Price Index

Question 17

What does PPI measure?

Answer 17

It measures change in the prices paid to U.S. producers of goods and services

Question 18

What is PPI a measure of?

Answer 18

Wholesale inflation

Question 19

What does GDP track?

Answer 19

The health of a country’s economy

Question 20

How can you determine whether an economy is growing or experiencing a recession?

Answer 20

Looking at the GDP

Question 21

According to one popular rule of thumb, what constitutes as a recession?

Answer 21

Two consecutive quarters of decline in a country’s GDP

Question 22

An economy that is experiencing a simultaneous increase in inflation and stagnation of economic output.

Answer 22

Stagflation

Question 23

A business combination that occurs when one company buys most or all of another company’s shares.

Answer 23

An acquisition

Question 24

An agreement that unites two existing companies into one new company.

Answer 24

Merger

Question 25

Why are MAs commonly done?

Answer 25

To expand a company’s reach, expand into new segments, or gain market share.

Question 26

What are the five major types of mergers?

Answer 26

Conglomerate,
congeneric,
market extension,
horizontal,
vertical