Investments Flashcards
What is short selling?
Selling the stock at a higher price in the hopes of you buying it at a lower price
What are some of the characteristics of a short sell?
Investor must have margin account, Broker holds the sales proceeds, short seller covers the dividends that are usally paid by corporation, there is no time limit
What is the initial margin?
it’s the amount of equity (Money of their own) they must contribute to have a margin transaction (Usually 50%)
What is the maintenance margin?
This is the minimum amount of equity required before a margin call comes
“Margin Call Price” Formula (Not on Formula sheet)
(Loan / 1 - Maintenance Margin)
MF and Stock ratings: Value Line & MorningStar
Both have a scale from 1-5: Valueline - 1 is best // Morningstar - 5 is best
What is the ex-dividend date?
the day that you WONT get the dividend
At what date would you get the dividend?
1 day before Ex-dividend // 2 days before Date of record
Which is taxed: Qualified dividends / stock dividends?
Qualified dividends get capital gains treatment
What is a qualified dividend? Characteristics
1) Paid by American company or qualifying foreign company 2)Qualifies with IRS 3)Held on for a minimum amount of time (60 days during 120 day period)
Securities act of 1933
Regulates issuance of new securities (Primary Market)
Securities act of 1934
Regulates issuance of secondary market and trading of securities // Created SEC
investment company act f 1940
Regulates investment companies (Open, Closed, Unit Investment trusts)
Securities investors protection of 1970
Protects investors from broker firm failures that creates losses
Money Market Securities - Certificates of Deposit
Set interest rate and maturity date - deposit to bank
Money Market Securities - Tbills
Less than 1 yr // direct obligation of the government //denominations f $100
Money Market Securities - Commercial paper
Short term loans between corporations // Maturites are 270 days or less // denominations of $100,000
Money Market Securities - Bankers Acceptance
Facilitates imports/exports // Maturities of 9 months or less
Money Market Securities - Eurodollars
Foreign banks that are denominated with US dollars
What does the investment policy establish? What does it measure?
Client’s objectives (Not investment selection) & put Limitations on investment manager // Mesures the performance of manager
What are the objectives and constraints on the IPS? (RR TTLLU)
Objectives: Return requirements/Risk Tolerance /// Constraints: Time horizon/Liquidity/taxes/laws & regs/unique circumstances
(IPS Objectives) - Return requirements
Specific to a goal such as education or retirement
(IPS Objectives) - Risk tolerance
Defining this before making any recommendations
(IPS Constraints) - Time horizon
When the clients needs the money
(IPS Constraints) - liquidity
Tied to the time horizon // liquidity should be appropiate for when they need the money
(IPS Constraints) - Taxes
whether the account is taxable or non taxable
(IPS Constraints) - Laws & Regs
assets could be help in trust and terms of the trust
Difference between price weighted and value weighted averages
Price weighted - the higher the stock price –> the more weight // Value weighted - the bigger market cap –> the more weight
Dow Jones industrial average
30 stocks, price wieghted average
S&P 500, S&P 400, Russel 2000
All are value weighted indexed // 500(large cap), 400(mid cap), 2000(small cap)
What does standard deviation cover?
total risk
The bigger standard deviation is, the more ______
Risky
How do you calculate Standard deviation on calculator? Year 2) 8%, Year 2) 10%, Year 3) 12%
You hit 8Σ+, 10Σ+, 12Σ+ then ORANGE Sx,Sy
What are the percentages for +/- 1 Standard deviation, +/- 2 Standard deviation, +/- 3 Standard deviation
1) 68% 2) 95% 3) 99%
Coefficient of Variation formula (not on the CFP Sheet)
CV=Standard deviation/average return (you are using this when comparing assets)
The higher the coeffiecient of variation, the more _____
risky
The asset with a lower coefficient of variation, has a higher _____
risk adjusted return(Return/Risk)
Correlation / Correlation coefficient - What does this measure?
Measures movement of one security to another. (Ranges from 1+ to -1) 1 being perfectly aligned with one another
For correlation, when do diversification benefits begin?
0.99
What does covariance measure?
Relative risk that measures two securities combined risk
Beta - what does it measure? What type of portfolio is it good for?
systematic/market risk // good for a well diversified portfolio
The higher the beta, the more _____
Fluctuation! If the S&P 500 is 1, and DIS is 2 - DIS is more volatile (risky)
What does the Coefficient of determination (r-squared) measure?
Measures how much of the return is do to the market (Systematic Risk) and how much is due to unsystematic risk?
When do we use beta and standard deviation for the Coefficient of determination (r-squared) number?
if r2≥.70 - Use beta // if r2<.70 -use standard deviation
When you are looking to find the most appropriate benchmark - what should he look for? (they will give you different options)
Look for the highest r2
Definition of systematic risk
you cannot diversify against this - everything has this risk
Definition of unsystematic risk
the risk that is specific to each company (you can diversify away this risk)
What are the different types of systematic risk? PRIME
Purchasing power, Reinvestment, Interest, Market, Exchange rate
What are the different types of unsystematic risk? ABCDEFG
Accounting, Business, Country, Default, Executive, Financial, Governmental/Regulation
What is Modern portfolio theory?
Acceptance of given risk for the maximising expected return
What do indiffernce curves say about an investor (indifference curves located on Modern portfolio theory?
Sharp curve - Risk averse // Wide curve - Less risk averse
What is an efficient portfolio? What does it mean if the point is below or above the curve?
When it is on the curve - efficient // When above the curve - unattainable // below the curve - inefficient
What risk measure does the CAPITAL MARKET LINE use?
Standard deviation
What is the Capital pricing model formula? (CAPM)
Required rate of return = Risk free rate (return of market - risk free rate)*Beta
What does the CAPM Formula calculate?
required rate of return for the level of risk it takes
What risk measure does the SECURITY MARKET LINE use?
Beta
What is the intersetion on the y axis of the Capital market line / security market line?
Risk free rate of return
How to find the portfolio risk? There is short cut instead of the formula? (securities with Return/deviation/weight)
You will all the deviations together and then divide by two (If there are two stocks) Then it will be a little less than the actual number // Be aware of the weightings 50%/50%
What is the information ratio about?
RELATIVE (compared to one another) // Measures the excess return/consistency of fund manager (Higher the better)
What is the information ratio formula? (On formula sheet)
(portfolio actual return - return of benchmark) / Tracking error of active return
Treynor Index - What risk measure does this use? (Formula is on formula sheet)
Beta
Treynor Index - What itype of measure is it?
Relative (Compared to one another) // Measures the reward achived by systmatic risk (Beta) // // the higher the better
Sharpe Index - What risk measure does this use? (Formula is on formula sheet)
Standard deviation
Sharpe Index - What itype of measure is it?
Relative (Compared to one another) // Measures the reward achived total risk (Standard deviation) // the higher the better
Jensen’s alpha - what is the formula?
.=Actual return - Expected return (CAPM)
Jensen’s alpha - What itype of measure is it?
Absolute performance // positive alpha (good), Negative alpha (Bad) // Managers performance
Which are relative measures and which are absolute?
Relative - Sharpe/treynor // Absolute - Jensen’s alpha
What perfomance measure do you take if they do not give you r-Squared?
Sharpe performance meaure
Arbitrage pricing theory - What is this?
Multifactor model and is sensitive to those factors (NOT STD DEV / BETA) // When attempting to take advantage of pricing imbalances
Arbitrage pricing theory - What are some inputs in the model? Which are not?
Which ARNT: Standard deviation & Beta // Which are: inflation, expected returns
What is the holding period return formula - for cash flows (Not on formula sheet)
(Selling price - Purchase price +/- Cash Flows) / (Initial Equity)
What is the holding period return formula - Periodic returns (ON formula sheet)
HPR = [(1+rate1) * (1+rate2) * (1+rateN) -1
What is the effective annual rate formula? (One formula sheet)
EAR = (1 + interest rated / Number of period) ^number of periods -1
Geometric average - how to find this?
N=Amount of returns // I = Solving for // PV = -1 ALWAYS // FV = 1.12 * 1.15 * 98 (Returns plus one times each other)
Net present value - When would you accept or reject it?
Positive NPV = yes // Negative NPV = No
NPV - How do you solve it? Explain what you would do on a calculator.
CF - initial would be negative // following would be cashflows // Last you would add in the sell // plug in discount rate // Find NPV
When the NPV is 0, what is the IRR?
IRR would be the same as the discount rate
IRR - How do you solve it? Explain what you would do on a calculator.
CF - initial would be negative // following would be cashflows // Last you would add in the sell // Find IRR
What is dollar weighted return? How to find it.
(the return of the INVESTOR) You are finding IRR by using the cash flow method (CF)
What is Time weighted return? How to find it.
(the return of the SECURITY) You are finding IRR by using the cash flow method (CF)
What type of weighted return do mutual funds report on?
Time weighted basis
Dividend Discount Model (Intrinsic Model) Formula (On formula sheet)
Value = DividendYear1 / Rate - growth
How to find Dividend (Year 1)
D1 = D0 (1 + growth)
If the required rate of return decreases, the stock price will _______
Increase
If the dividend is expected to increase, the stock price will ________
Increase
If the required rate of return increase, the stock price will _______
decrease
If the dividend is expected to decrease, the stock price will ________
decrease
Expected rate of return formula (On formula sheet)
Expected return = (DividendYear1 / Price) + Growth
Behavioral finanance terms - Affect Heuristic
Dealing with judging something based on non-financial issues
Behavioral finanance terms - Anchoring
Attaching to one reference point and staying with it with no logic
Behavioral finanance terms - Availability Heuristic
Relying upon knowledge that is readily available in their memory - maybe causing overweight to recent events and paying little attention to longer term trends
Behavioral finanance terms - Bounded rationality
knowledge Limits on what the investor can use. Investors often times make sure they can satisfy something in their portfolio instead of making the absolute best option.
Behavioral finanance terms - Confirmation bias
People tend to filter info that supports their opinions
Behavioral finanance terms - Cognitive dissonance
The tendency to misinterpret information that is different from their, hence they only pay attention to their own viewpoints
Behavioral finanance terms - Dispoistion effect (regret avoidance)
Investors making mental accounts on when they bought a stock and only view it as the original purchase price - even though the market has changed
Behavioral finanance terms - Familiarity Bias
Investors tend to overestimate/underestimate the risk of investments which they are unfamiliar/familiar with
Behavioral finanance terms - Gambler’s Fallacy
Having incorrect understandings which can lead to bad predictions
Behavioral finanance terms - Herding
Following the masses
Behavioral finanance terms - Hindsight bias
Looking back after the fact is known and thinking that they could have predicted it
Behavioral finanance terms - illusion of control bias
Investors tend to overestimate their ability to control events
Behavioral finanance terms - Overconfidence bias
Listens to themselves too much and too heavily rely on their skills and capilbilities - end up going too risky
Behavioral finanance terms - Overreation
Emotions at the recipt of news or information
Behavioral finanance terms - Prospect theory (Loss Aversion)
People treat gains and losses differently. Gains are not worth as much as losses // (Investors feel more pain from losses than enjoyment of gains)
Behavioral finanance terms - Recency
Giving too much weight to recent events
Behavioral finanance terms - Similarity Heuristic
Using the same decision on an event that appears to be a similar situation but the outcome is entirely different
Behavioral finanance terms - Representativeness
thinking that a good company is a good investment without regard to an analysis
Behavioral finanance terms - Familiarity (Not Familiarity Bias)
Investment in companies that you know of, like your employer
What is it asking you to calculate when “Which investment is most risky?”
Standard deviation
Kurtosis graph - What is a Leptokurtic and Platykurtic look like?
Lep - High peak and fat tails (Higher chance of extreme events) // Platy - low peak and thin tails (Lower chance of extreme events)
P/E ratios are a useful took used to value a stock if the firm ______
Does not pay any dividends
P/E Earnings Ratio Formula (There are 2 ways to answer this)
PE = Stock price / EPS
Dividend Payout ratio formula (Not on formula sheet)
Dividend Payout Ratio = Common Stock Dividend / EPS
What type of company would have a high dividend payout ratio?
More established company (If you have a higher ratio, bigger possiblility that the dividend will be reduced)
What does the Divident payout ratio tell you?
How much of the earnings of a stock are paid in the form of a dividend
Return on Equity Formula (Not on formula sheet)
ROE = EPS / Stockholders Equity per Share
What doe the return on equity tell you?
Measures the overall profitability of a company
Dividend Yield Formula (Not on formula sheet)
Dividend Yield = Dividend Per Share / Stock Price
Dollar cost averaging - How do you find this?
of shares you bought / Total amount of money you spent
Efficient Market hypothesis (Random Walk theory) - What does it state?
Behavior of stocks are in a random walk and unpredicatable // State that you cannot predict with consistency or accuracy // Prices fully incorporate all available info // Prices are in equilibrium
Efficient Market hypothesis (Weak) - What does it reject and accept?
REJECTS: (1) Technical Analysis (Based on Historical info) // ACCEPTS: (2) Fundamental analysis (Based on public info) AND (3) Private insider trading
Efficient Market hypothesis (Semi-Strong) - What does it reject and accept?
REJECTS: (1) Technical Analysis (Based on Historical info) AND (2) Fundamental analysis (Based on public info) // ACCEPTS: (3)Private insider trading
Efficient Market hypothesis (Strong) - What does it reject and accept?
REJECTS: (1) Technical Analysis (Based on Historical info) AND (2) Fundamental analysis (Based on public info) AND (3) Private insider trading
If EMH is correct, why do we see anomalies in the marketplace?
Market anomalies do not support EMH or any of the three forms
Investment Strategies - Active = What do they belive in?
Inefficient Markets and can achive above average market returns
Investment Strategies - Passive = What do they belive in?
Efficient Markets and will do the buy and hold strategy
(Nonmarketable Treasury Issues) Series E & EE Bonds - When do they pay interest?
Do not pay interest periodically
(Nonmarketable Treasury Issues) Series H & HH Bonds - When do they pay interest?
Pays interest semiannually (Different than EE Bonds)
(Nonmarketable Treasury Issues) Series I Bonds - How does it have inflation protection?
Fixed Rate (4%) + Variable rate (Depends)
(Nonmarketable Treasury Issues) Series I Bonds - When do they pay interest?
Do not pay interest periodically
US Treasury Bills (Maturity length)
Maturities <1
US Treasury Notes (Maturity length)
2-10 Years
US Treasury Bonds (Maturity length)
Greater than 10 years
What are US treasuries taxable at? And non taxable at?
Taxable at the federal level BUT not taxable at the state and Local
Treasury inflation protected securities - How does it have inflation protection?
Principal adjusts for inflation and the existing coupon rate will apply to the new principal amount
STRIPS - What is this?
Separate trading of the coupon payments and the prinicipal // This makes a lot of zero coupon bonds
What federal agency security is backed by full faith and credit of US government?
GNMA - Ginnie Mae
(Secured Bond) Mortgage Bonds - What is this?
pool of mortgages which are backed by home // Payment consists of both principal and interest
What are the biggest risks of Mortgage bonds?
Default risk - 2008 crisis // Prepayment Risk - Interest rates lower and people pay their mortgages off quicker
(Secured Bond) Collateral trust bonds - What is this?
Backed by an asset that the company owns
(Secured Bond) Collateralized Mortgage Obligations - What is this?
Investors divided into different “tranches” (A-Z) - Short term tranch (A) received prinicipal before long term tranch (Z) (this gets rid of prepayment risk)
Unsecured bond - how should the return differ from a secured bond?
Should be higher because of the more risk (Unsecured is not backed by anything)
(Unsecured bonds) Debenture vs Subordinated Debentures
Both are unsecured but Debenture in higher in line to receive their money back
(Unsecured bonds) Income bonds
This is based off of the revenues of the revenues tied to a project
(Municipal bonds) General obligation bonds - What is important about these?
Safest - Backed by full faith, creditand taxing authority of the municpality that issued the bond
(Municipal bonds) Revenue Bonds - What is important about these?
think TOLL ROAD (Specific project) // Not backed by full faith and credit of taxing authority
(Municipal bonds) Insured Municipal Bonds - which companies insure?
American Municipal Bond Assurance, Municipal Bond Insurance Assoc. Corp
(Municipal bonds) Private activity bonds - what are these used for?
Construction of Stadiums
Municipal bonds - when are you elligble for the triple tax exemption?
Non taxable at federal, state and local level if you live in the issuring state
TEY (Tax equivalent yield) Formula (On Formula Sheet)
TEY = Tax Exempt Yield / (1-Marginal Tax Rate)
Coupon Rate - What is this?
Stated rate - Annual payment in dollars divided by par value
Current Yield - What is this?
Rate that changes based on the price of the bonds // Annual payment amount divided by current price
How to find the price of the bond using the current yield formula?
Price = Coupon Payment / Current Yield (Ex. 900=90/.10) COMES FROM CY=C/P
(Yield Summary) Premium (High to Low)
CR-CY-YTM-YTC
(Yield Summary) Discount (High to Low)
YTC-YTM-CY-CR
Yield Ladder - When you go shopping, if you see a discount “Call Mom’s Cell Now!”
Highest to lowest - Call, YTM, CY, NY
Accrued Interest - What is this?
Buyer of the bond pays the seller of the bond the interest that the seller accrued since the last coupon payment
What is the buyer of the bond entitled to for paying accrued interest to the seller?
Deduction for the accrued interest paid
How to find the accrued interest?
(Coupon interest * (# of bonds bought * $1,000) * Months that Seller had it for since last coupon payment)
Original Issue Discount (OID) - What is this?
Zero Coupon bonds (Buys bond at $600 and grows to Par) and pays interest on phantom income each year
Liquidity Preference theory - What is this?
Yield curve displays People prefer liquidity - so if I am going to give you $1 for 10 years vs $1 for 100 years - I am going to demand more return for the 100 year bond
Market segmentation theory - What is this?
Yield curve displays Supply and demand for each maturity (ST/MT/LT)
Expectations theory - What is this?
Yield curve displays investors have inflation expectations - most people think inflation is going to grow over the long term, hence that they will want higher yields for longer amount of time
Unbiased Expectation Theory (UET) - How to solve this? (Cheat calculator way)
N=Amount of returns (Years) // I = Solving for // PV = -1 ALWAYS // FV = (1.04)*(1.045) (Returns plus one times each other)
What does duration indicate?
The price sensitivity for a bond when the interest rate changes (The higher the duration, the more volitile the interest rate changes
What does it meant to have an immunized bond portfolio?
The duration is equal to the investors time horizon to be effectively immunized
The ______ the duration, the more volatile the bonds price
Higher
The ______ the duration, the higher the duration
Longer
The ______ the duration, the shorter the duration
Higher
The higher the YTM, the _______ the duration
Shorter
What is the relationship between coupon/YTM and duration is…..
Inverse (INterest rates)
Duration direct/inverse relationships -
Direct - Term of bond // Inverse - Interest rates
A zero coupon’s duration is
Equal to its maturity
Which has higher duration - 30 Year 5% coupon or 30 Year 10% coupon?
30 Year 5% coupon (REMEMBER - YTM/Coupon inverse with duration)
Duration formula - what inputs do you need?
Yield to maturity, coupon rate, # number of periods to maturity
% Change in price of bond Formula (On Formula Sheet)
(% Change of Price in Bond / Price of bond) = - Duration * (-OR+ interest rate change / 1 + Yield to Maturity)
If interest rates were going to increase, (High/Low) duration is best
LOW
What is the dividend difference between Preferred stock and common stk?
Dividends for preferred stock do not fluctuate (Slated % of par) // Common stock do
Difference between preferred stock and bond?
No maturity date AND Preferred stock has an equity component
What tax advantage do preferred stock get?
Deductions for dividends
Convertible Bond Formula (Not on formula sheet)
Convertible Value = (Par - $1,000 / Conversion Price) * Market Price of Common Stock
Property Valuation Formula (Finding Value)
Value = Net Operating Income (NOI)
Net Operating Income Formula
Gross Income (Make sure to reduce gross income by Vacany rate) MINUS Operating Expenses (DO NOT ADD Depreciation or Interest Expense)
Investment Companies - Closed - Key Traits?
Fixed Initial Market cap // Shares trade on exchange // May trade at a premium or discount to NAV
Investment Companies - Open - Key Traits?
Unlimited initial Market cap // Shares are bought from fund family // Shares trade at NAV
Investment Companies - Unit Investment Trust - Key Traits?
Passive Management // Self liquidating // UNITS, not shares // Can be equity or fixed income unit investment trust
Mutual Funds - Index Funds
Tracks performance of various market indexes, passive approach
Mutual Funds - Growth Funds
Equities with usually a high PE and objective for high capital appreciation
Mutual Funds - Growth and index Funds
Invests in equities and income producing assets // Primary objective is to create balance of capital appreciation and income
Mutual Funds - Balanced Funds
Invests in more bonds than typical equity fund
Mutual Funds - Global Funds
International and US securities
Mutual Funds - International Funds
International WITHOUT US SECURITIES
You should always recommend the most _____ portfolio of mutual funds
most diversified
What is the most tax efficient mutual fund?
Stock index fund
A Shares
Front end load, small 12b-1 fee, no redemption fee
C Shares
No Front end load, Usually small back end load, max 12b-1 fee of 1%
Exchange Traded funds
Tax efficient // Low cost of ownership // traded on exchnage similar to stocks // When you trade it, you don’t have to trade it blindly, unlike mutual funds
REITS - why is this attractive to investors?
Low correlation with the stock market
REITS - What % must it distibute of investment income to share holders to maintain tax exempt status?
90%
REITS - Equity reits - What is this?
Invests in real estate with the objective for capital appreciation (Income comes from rental income and appreciation)
REITS - Mortgage reits - What is this?
Invest mostly in mortgages and construction loans
REITS - Hybrid reits - What is this?
Combo of both equity and mortgage reits
ADR (American Depository Receipts) - what is this?
Foreign stock held in domestic bank’s foreign branch that is traded on the US exchanges and denominated in US Dollars
ADR - Which risk does ADR NOT eliminate? *Key risk to this term
Exchange rate risk
Crytocurriencies - what is this?
Virtual currency not associated with any country or central bank (High risk)
Options Trading - where are all of the options transactions handled through?
Option clearing house
What are the two types of options?
Call and put options
What are the two sides of options trading?
Seller and buyer
If you think the stock is going to rise, you would want to ________
Buy Call
If you think the stock is going to fall or stay the same, you would want to ________
Sell Call
If you think the stock is going to Fall, you would want to ________
Buy Put
If you think the stock is going to rise or stay the same, you would want to ________
Sell Put
For purchasing options, you have the obligation or right?
Right
Intrinsic value formula (Call option)
Call Option = Stock price - strike price
Intrinsic value formula (Put option)
Put Option = Strike price - Stock price
What is the lowest the intrinsic value can be?
0
Time Value formula (Both call and put option)
Time Value = Premium - Intrinsic value
Portfolio insurance - what is this?
Buying put options on an index to lock in portfolio gains (For a well diversified portfolio, this would mean that you would buy S&P puts)
Long straddle - what does the instructor do?
Buys a put and call option - expects that there is going to be volatility but not sure which direction
Short straddle - what does the instructor do?
Sells a put and call option - does not expect volatility, just in hopes to get the income from premiums
Black/Scholes Pricing Model - what is this used for?
To find out the value of the call option
Black/Scholes Pricing Model- what variables are inversely and directly related to this? *IMPORTANT
INVERSE - Strike price // DIRECT - Current price of asset, time until expiration, risk free rate of return, volatility of asset
Put/Call Parity Pricing Model- what does this calculate the value of?
Puts the value of a PUT Option based on the value of a CALL option
Binomial Pricing Model
Attempts to value an option based on the idea that a stock can only move two directions (up or down)
Warrants - what is this?
Call options that are issued by the corporation
Warrants - what is the time period?
5-10 years
Warrants and options - what are 3 differences?
1) Warrants are not standardized (Options are), 2) Warrants are usually 5-10 years (Options are 9mo), 3) Warrants are issued by corporations (Options - individuals)
Which option has the maximum loss potential?
Naked Call options
Futures contracts - what are examples of commodities contracts?
Copper, wheat, pork bellies, oil
Futures contracts - what are examples of Financial contracts?
Currency, interest rates and stock indexes
What are differences between futures and options contracts? *Important
1) options give you the right to do something vs futures - obligation 2) futures contacts do not state the per unit price of the underlying asset
If you are an orange grower, you will ______ the _________
Long the commodity, short the contract (Because they have the orange, long what you have!)
If you are a manufacturer of orange juice , you will ______ the _________
Short the commodity, long the contract (because they don’t have the commodity they will short it)
Tools of technicians - Charting
Looking at historical prices and checking out the moving average
Tools of technicians - Market Volume
About investor sentiment - If market goes up and volume is high - sentiment is high
Tools of technicians - Odd lot trading
Trading less than 100 shares
Tools of technicians - Dow theory
signals an end or a bull or bear market
Tools of technicians - Breadth of the market
Shows the number of stocks that increase in value vs the ones that decline in value
What does fundamental analysis consider? (2 things)
Financial statement analysis and economic data
Primary difference between Corporate Bond risk and US Gov Risk
US gov bonds are not subject to default risk
When there is a question about “protectin profits” or “locking in gains” - you should
always buy a put
