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Investments Flashcards

0
Q

What is P/FCF

A

Price/Free Cash Flow

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1
Q

How much growth does the stock market show annually ?

A

10% +

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2
Q

What is ROE ?

A

Efficiency of Business Operations

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3
Q

What is P/E ?

A

Price/Earnings Ratio- From the annual earnings per share, how pricey is the stock at it’s current price? E.G. 30X, 20X, etc.

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4
Q

How do you calculate EPS?

A

=Market Price / PE Ratio

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5
Q

What is EPS?

A

EPS = Current Price / (P/E) and is what the company has left over after expenses and taxes

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6
Q

What is Retained Earnings?

A

Retained Earnings = EPS - Dividends (Paid Out)

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7
Q

P/E Ratio is of use for…

A

Comparing stocks within the same industry

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8
Q

Current Yield =

A

Annual Dividend / Market Price

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9
Q

What is Volume ?

A

Number of shares traded in a particular period. Reported daily by exchanges for both individual issues trading and the total trading executed on the exchange.

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10
Q

Investment Variable You Can Control #1- Limit Downside Risk

A

It’s very rare for a company to fall in value below it’s Cash - Long Term Debt

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11
Q

Investment Variable You Can Control #2- The Company’s cash generation

A

You want your company to generate more cash over time - not less

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12
Q

Investment Variable You Can Control #3- Balance Sheet

A

Your company should have a strong Balance Sheet

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13
Q

Investment Variable You Can Control #4- Bet With The House

A

When management and insiders own significant stakes they will maximize shareholder value

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14
Q

REIT Warnings

A

REIT’s can feel pressure from Bonds if Interest Rates rise

Watch out if Valuations have zoomed

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15
Q

6 Market Sectors

A 
Computer Services
Semiconductors
Radio
Biotechnology
Recreation
Restaurants
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16
Q

The Value Investor’s Triumverate

A

The Company must have:

Strong Business Models
Solid Financials
Deep Moats against Competition

Especially good for investing if trading below try worth

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17
Q

Dividends & Drips- How to use them

A

Reinvest. Not to do so is to give away free money. This can be a powerful force for your portfolio. Over time reinvestment is the cure for poor timing.
Only keep the money if you need the income.

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18
Q

Rising Dividends are an indication of

A

Management Confidence

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19
Q

Efficient Market Theory

A

EMT suggests that all available information is know and factored into the price of a stock. Occasional pockets of inefficiency exist that an alert investor can profit from.

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21
Q

When making an offer on a house

A
  1. Make the offer contingent on your securing financing and the property being cleared
  2. Set a time limit of 24-48 hours
  3. Offer enticement by giving your agent 10% Ernest Money to be applied to the price
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21
Q

Credit Score Guidelines

A

Unflattering notations have a reduced effect with time and most drop after 7 years
Put a brief “Consumer Note” on the report by way of explanation
Many Lenders forgive the occasional slip up
If notations are not accurate see if it was reported to all 3 agencies otherwise keep quiet

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22
Q

When buying a house in a Seller’s Market

A
  1. Do not have too many contingencies
  2. Be pre-approved
  3. Put down a significant Deposit
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23
Q

What are the 3 Credit Agencies?

A

Equifax
Experian
TransUnion

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24
What is Channel Stuffing?
When a company ships out Inventory ahead of schedule with products that may never be sold and could be returned
25
How can you check for Channel Stuffing?
Calculate "Daily Sales Outstanding" by dividing last quarter's Revenues by 365. Divide A/R by this number to get how many days of sales is represented by the current A/R. 30-45 days is typical.
26
A low DSO company is:
Getting it"s money back quicker and hopefully putting it to good use
27
Invest in the future
You have to be in the game to see where it's going Everything matters We become committed to developments Your research and investment help you predict the future
28
Companies that attract the $ of well-heeled and well-regarded backers:
Are leaders in their fields and have phenomenal growth prospects over the next 5 years
29
A Mutual Fund Soft Closing is:
Current Shareholders will still be able to invest. These Shareholders may want to continue sending $. A Closure decision is made with Current Shareholders in mind. Good Funds Close for good reasons.
30
Why are Fund Closings usually a good idea?
A bloated Asset Base can make it difficult for the managers to execute strategy, particularly those that specialize in Small Caps. A Fund will close rather than letting Cash pile up or investing in 2nd tier picks. Another point of interest is the size if the Asset Base compared to the market in which it specializes.
31
Types of REIT's
``` Rental Generating REIT Mortgage REIT Property REIT Timber REIT Health Care REIT Storage REIT ```
32
Mortgage REIT's invest in:
Collateralized mortgages packaged by Fannie Mae, Ginnie Mae, and Freddie Mac and carry an actual or implied AAA rating. They exploit the difference between long and short term Interest Rates. They are proven to maintain double digit yields over time but can be very sensitive to Interest Rate speculation.
33
What is an advantage of Timber REIT's?
Very low risk and perform well when stocks and bonds may suffer. They move independently of other REIT's.
34
Loan Generation Fee + Loan Discount is limited by law to:
4%
35
Advantages of Bank American Financial Realty Trust
It buys Real Estate that bank branches are sitting on Allows banks to get rid of expenses associated with Real Estate Puts the savings back into their core operations Banks can sell surplus branches that other banks will lease Improves Liquidity Eliminate Depreciation Expense Increase Earnings and key financial ratios
36
Advantages of Lease-Options
``` You may be unable to immediately commit Bad Credit Uncertain Relationship Lack if Down Payment Want to give the house a Test Drive Price is usually locked in Buyer generally has instant Equity Buyer is not locked in-Seller is Landlord may skip a Credit Check Some Fees and Monies may credit to the Down Payment When you find a good L/O the Seller is usually desperate ``` Put the world on notice in the Public Record
37
Downsides to AFR (American Financial Realty Trust) could be?
A potential Conflict If Interest when a REIT us formed by purchasing property from it's own Principals Potential Short Term Risk if property is disposed of quickly in an unfavorable market or the REIT buys property in a bad area
38
Old Stock Certificates can be puzzling because:
Companies merge and split changing names along the way | Some firms go out if business
40
You can place a value on Old Stock Certificates by:
Checking newspaper and Internet Stock listings Calling a Broker Calling the Secretary If State where the Stock was issued Contacting the "Transfer Agent" listed on the Stock Certificate If out if business check if the Stock is valued as a Collectible
41
Common Stocks & Uncommon Profits- | Philip Fisher
1. Buy Stocks in companies with disciplined plans for long term growth in Revenue and Profit that are currently out of favor 2. Hold the Stock unless there has been a Fundamental Change in business or it can no longer keep pace with the Economy 3. Aim for 10-12 good companies and no more than 20. 4. If the goal is Long Term Appreciation of Capital, de-emphasize the importance of Dividends 5. Have more knowledge than others, and the Moral Courage to go against the crowd after thoroughly evaluating. Accept and understand mistakes. Success comes from work, intelligence, and honesty.
42
Capital Structure (Capitalization) is
The amount of debt or equity used to start the company.
43
Leverage Financing is
Raising capital through the sale of Bonds
44
What are the two types of Equity Securities?
Common Stock | Preferred Stock
45
What is Authorized Stock?
The maximum number of shares a corporation may issue under it's Charter or By-Laws. This number can only be changed with the approval of shareholders.
46
The Initial Public Offering (IPO) is:
The first time a company offers shares
47
A Primary Issue is:
When stock is sold and the company receives money
48
A Secondary or Non-Issuer transaction is:
The sale of Outstanding stock by holders
49
Treasury Stock is:
Issued stock repurchased by the company
50
Outstanding Stock is:
Issued Stock minus Treasury Stock
51
Stockholders will receive their proportionate share of dividends in one of two ways:
Cash or Additional Stock
52
"Growth Stocks" have low Yields because:
The company may elect to keep earnings for expansion
53
A Dividend Declaration Date is:
The date the Board Of Directors declares a quarterly dividend
54
The Record Date is:
Stockholders whose names appear on company records on this date will receive a dividend
55
The Ex-Dividend Date is:
The second business day prior to the Record Date
56
Why may an investor wish to consider whether to buy before, or after, the ex-dividend date?
The price of the stock is reduced by the amount of the dividend, however the dividend is taxable
57
The Payable Date is:
The date that dividends are sent out
58
Who sets the ex-dividend date on stocks?
FINRA, under it's Uniform Practice Code (UPC) sets the ex-dividend date
59
Who sets the ex-dividend date on Mutual Funds?
The Board Of Directors, and it is usually the day after the Record Date
60
Pre-Emptive Rights or Subscription Rights are:
the right of a shareholder to maintain a proportionate ownership in a company
61
A shareholder's pre-emptive rights are for a short period of time, usually
30 days, and shares may be bought at a discount. If rights are not exercised or sold prior to expiration they become worthless.
62
Rights Offerings are used to:
Raise additional capital from existing shareholders
63
Stand By Underwriters are used to:
sell shares to the public if Rights Offerings are unsuccessful
64
Shares vote not people means:
The shareholder has one vote for each common share owned also called statutory voting
65
Cumulative Voting is:
Directing all shares to vote for one candidate
66
The common shareholder has the greatest claim to management, and the last claim to:
Revenue Flow through dividends, and invested capital in the event of the company's liquidation
67
Preferred Stock has:
A fixed dividend and claim to company profits and assets senior to common stock. It is considered to be a Senior Security. It also has no voting rights.
68
Because preferred stock is paid a dividend before common stock, if profits are small,
preferred shareholders may be the only ones to receive a dividend
69
The dividend to preferred stock is fixed at the time of issue and stated in terms of:
A fixed dollar amount, e.g. $5, or a percentage, e.g. 6% of par value. It is paid in cash only
70
Besides Straight Preferred Stock, Cumulative Preferred Stock, Participating Preferred Stock and Convertible Preferred Stock describe:
Accumulation of unpaid dividends to be paid at a later date before common shares, the ability to share in dividends that are beyond the fixed guaranteed amount after Common Stock owners are paid, and the ability to convert to Common Stock at any time according to a ratio fixed at time of issue.
71
Market Sentiment is:
A measure of investor expectations
72
Realized Appreciation occurs when:
When you sell your stock for more than you paid for it and it then becomes taxed income Capital Gain
73
Unrealized Appreciation occurs when:
It is on paper only and is not taxable
74
Market Risk is:
The possibility that paper profits might disappear
75
Having been issued with a fixed dividend rate the price of Preferred Stock is dependent on interest rates and will seek a level:
where the dividend payment is roughly equal to similar interest bearing securities
76
An ADR (American Depository Receipt) is:
A negotiable receipt for a given number of shares in a non-American corporation
77
The rights of an ADR are;
The same as common stock, except pre-emptive rights
78
Current Yield=
Annual Dividend / Market Price
79
Earnings Per Share - Annual Dividend=
Retained Earnings, part of Shareholder's Equity
80
Warrants are
Stock purchase rights issued for long periods of time with a stated exercise price above the current market price

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