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Finance Market and Management > Mid-term > Flashcards

Mid-term Flashcards

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1
Q

Investment

A

Put your money in an asset that generates value or a return

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2
Q

Speculation

A

Don’t generate wealth or return, involve much higher level of risk in hope of high return

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3
Q

Short-term

A

Within 1 year period

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4
Q

Intermediate-term

A

Between 1 and 10 year period

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5
Q

Long-term

A

More than 10 year period

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6
Q

Lending investment

A

Saving accounts/ bonds
- Debt instruments issued by corporations and government

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7
Q

Ownership investment

A

Preferred Stocks/ Common Stocks
- Ownership in a corporation along with income-producing real estate

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8
Q

Saving accounts

A

pays you interest

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9
Q

Bond

A

Return is generally fixed and known ahead of time

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10
Q

Default

A

Failure to repay dept
- on a loan or security
- Can occur when borrower is unable to make timely payments
- Everyone can default when you fail to pay the debt on time

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11
Q

Nominal Rate of Return

A

Rate of return earned on investment WITHOUT inflation

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12
Q

Real Rate of Return

A

Nominal rate of return - inflation rate

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13
Q

Diversification

A

MIx a wide variety of investments to reduce. minimize portfolio’s risk

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14
Q

Portfolio

A

Combined holdings of all your investments

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15
Q

Systematic Risk

A

Risk that CAN’T be elimintaed through diversification

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16
Q

Unsystematic Risk

A

Risk that CAN be elimintaed through diversification

17
Q

Asset allocation

A

Investment term that deals with how money should be divided among stocks, bonds, and others.
- time dimension of investing
- NOT a one-time decision

18
Q

Efficient markets

A

The speed at which new information is reflected in prices

19
Q

Efficient market hypothesis (EMH)

A

Efficient market theory - a hypothesis that states that share prices reflect all information

20
Q

Dividend

A

Company’s distribution of profits to its stockholders
- Cash
- More company stocks

21
Q

Capital appreciation

A

An increase in the selling price of your share of stock
- Can’t benefit from this until you sell the stock

22
Q

EX-dividend date

A

The stock begins trading ‘Without dividend’ that is, if you buy it on/ after the ex-dividend rate, you don’t get the dividend for the year

23
Q

Payment Date

A

Corporation sends out dividend check to stockholders

24
Q

Proxy

A
  • Legal aggreement to allow a designated party to vote for stockholder at meeting
  • Gives your buddy the right to make a decision for you
25
Q

Proxy Fights

A

In financial distress or when management takeovers are threatened
- Battle for proxy votes between rivalgroups/ shareholders who wants to take control of the company or aim it in new direction

26
Q

Stock repurchases

A

Buy back their own issued shares of common stocks
- Consolidate ownership
- Remaining sockholders owns larger proportion of the firm

27
Q

Bull market (Bullish)

A

The market price rises

28
Q

Bear market Bearish)

A

The market price are falling

29
Q

Blue chip stocks

A

Common stocks issued by LARGE, NATIONALLY known companies with sound financial histories of solid dividend and growth records

30
Q

Growth Stocks

A

Issued by companies that exhibited sales and earnings growth well ABOVE their industry average
- Smaller comapnies
- Newly Formed
- Pay very low or no dividend

31
Q

Income stocks

A

More mature firms that pay relatively high dividens, with little increase in earnings
- Most utilities companies
- Don’t experience much growth in earnings anymore

32
Q

Speculative stocks

A

More risk and variability, big potential to grow
- Generally difficult to forecast with precision the direction of the issuing company’s future profits

33
Q

Cyclical stocks

A

Earnings tend to move with the economic situation
- Auto company
- Steel company
- Housing industry company

34
Q

Defensive stocks

A

Aren’t nearly as affected by swings in the economy
- Perform better during downturns
- Tend not to be hurt by downturns
- Insurance industry companies

35
Q

Technical Analysis

A

Focus on supply/demand
- Charts, computer programs to identify price tends for stocks or market
- Interpretation of charts and graph
- Mathematical calculations of trading patterns all aimed at spotting trends/ directions for stock
- Prive level like resistance/ support levels

36
Q

Fundamental analysis

A

Focus on fundamental determinats as future earnings, expected levels of interest rates, and the firm’s risk

Finance Market and Management (2 decks)

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