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Business > Markets and investing > Flashcards

Markets and investing Flashcards

1
Q

a market is

A

an actual or nominal place where forces of supply and demand operate, where buyers and sellers interact to trade, services or contracts

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2
Q

financial market

A

markets where objects take value

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3
Q

a buyer is convinced what they bought will increase in value

A

Financial market

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4
Q

the seller is convinced what they sold will decrease in value

A

Financial Market

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5
Q

Compound interest

A

Getting interest on interest or in other words getting interest on money that has gained interest in the past.

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6
Q

Time value of money

A

the value of a dollar today is worth more than the value of a dollar in the future

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7
Q

Dollar-cost averaging

A

investing a fixed dollar amount on a regular basis, regardless of the share price

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8
Q

401(k) Plan

A

an employer-sponsored retirement savings plan that offers significant tax benefits while helping you plan for the future.

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9
Q

Individual Retirement Account (IRA)

A

a personal account for people who are employed that provides either a tax-deferred or tax-free way of saving for retirement

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10
Q

Diversification

A

the spreading of your investments both among and within different asset classes

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11
Q

Mutual Fund

A

a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt

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12
Q

Return on investment (ROI)

A

a performance measure used to evaluate the efficiency or profitability of an investment

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13
Q

Blue chip stock

A

a stock that comes from a well-known, established company

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14
Q

New York Stock Exchange

A

a stock exchange located in New York City that is the largest equities-based exchange in the world

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15
Q

Depreciating Asset

A

an asset used for generating income or profit and has a useful life of more than a year and gradually reduces in value over time

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16
Q

Little risk

A

means little return

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17
Q

The greater amount of risk

A

the more return

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18
Q

Represents a high risk, high reward approach to investing

A

Aggressive

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19
Q

perfect for those with a high tolerance for risk

A

Aggressive

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20
Q

best suited for younger people with a long investment horizon

A

Aggressive

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21
Q

A investment type with a high percentage of its value devoted to stocks, particularly “growth” stocks

A

Aggressive

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22
Q

Can include bonds and cash but they make up a minority of the total portfolio

A

Aggressive

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23
Q

represents a low - risk, low reward approach to investing

A

Conservative Strategy

24
Q

risk aversed (avoid)

A

Conservative Strategy

25
Q

perfect for someone who is more concerned with preserving wealth than growth

A

Conservative Strategy

26
Q

Very common for older people who need to preserve their ability to earn income from investments

A

Conservative Strategy

27
Q

A portfolio with an emphasis on bonds and cash and other fixed income securities

A

Conservative Strategy

28
Q

can include stocks but most stocks would be “blue chip” stocks that pay high dividends

A

Conservative Strategy

29
Q

represents a middle of the road approach to risk

A

Balanced Strategy

30
Q

Perfect for investors who are willing to accept some risk but who want a diversified portfolio

A

Balanced Strategy

31
Q

almost any age

A

Balanced Strategy

32
Q

seeks to minimize risk by balancing investments across all types - stocks, bonds cash, ect.

A

Balanced Strategy

33
Q

Invests in stocks, bonds, then cash

A

Balanced Strategy

34
Q

dividend

A

when a company takes their profits and share it with their stock buyers to get people to buy more shares

35
Q

Bull market

A

up 20% for a time

36
Q

Bear market

A

down 20% for a time

37
Q

P/E Ratio (p - price and E - earnings)

A

get market cap by multiplying share by total number of shares

38
Q

commodity

A

a basic good used in commerce that is interchangeable with other goods of the same type. (referred to as a raw material)

39
Q

it’s a loan that the bond purchaser makes to the bond issuer

A

Bond

40
Q

government, corporations, municipalities issue this when they need capital

A

Bond

41
Q

someone that buys a bond is

A

lending the government money

42
Q

they can be traded, bought, and sold in the “secondary market”

A

Bonds

43
Q

another word for coupon rate or interest rate

A

Yield

44
Q

if interest rates go up

A

prices fall

45
Q

if interest rates go down

A

prices rise

46
Q

the original price of a bond

A

Par

47
Q

issued in $1000s

A

Bonds

48
Q

Calculating Bonds

A

Face value (1000) X coupon rate (5%) X years to maturity (3) = interest earned ($150)

49
Q

fiduciary

A

a person or organization that makes financial decisions on behalf of another party who is legally obligated to act in their clients best interest.

50
Q

Positions with fiduciary duty

A
  • trustee of a trust
  • estate executor
  • lawyer
  • Directors of corporations
  • real estate agents
  • financial advisors
51
Q

YOU CAN NEGOTIATE A FUTURE CONTRACT

A

TRUE

52
Q

Events that influence commodities prices:

A
  • supply and demand
  • weather
  • political events (war)
  • economic changes - growth or recession
53
Q

corporations are able to “hedge” against the effects of increased commodity prices by

A

purchasing contracts for those commodities in the futures market

54
Q

if commodity prices go up the finished goods produced with them will become

A

more expensive

55
Q

If commodity prices go up this leads to

A

producer inflation and consumer inflation

56
Q

Rising prices will often lead to reduced

A

corporate profits because manufactures aren’t able to pass along 100% of their costs to consumers

57
Q

Examples of commodities

A
  • agricultural goods
  • metal
  • energy

Business (4 decks)

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