Stock Valuation Flashcards
American Depositary Receipt
Receipt for shares in a foreign company’s stock
Held is vault of US corporation
Common Stock
Units of ownership in a public company
Pay dividends and allow voting
Potential for appreciation is high but in the event of liquidation not a priority payout
Enterprise Value
Take on a company’s debt but pocket its cash
market cap + debt + PS - cash and cash equivalents
Exchange traded fund
Similar to open ended MF but is traded on exchange like a stock
NAV of ETF is updated throughout the trading day, trade intraday
Can be bond and stock (market)
Performance varies by industry, moves relative to an index
ETF advantages over MF
Price updated more frequently
Option for limit / stop orders
ETF disadvantages
Commission associated with each transaction, can add up
Growth stock
Above average increases in revenue / earnings but firm will retain more of this growth for reinvestment
Retention leads to smaller dividends being paid
Limit order
Buy / sell at that price or better
Buy - buy at this price or lower
Sell - sell at this price or higher
Long position
- a security you own and can gift to someone else
2. brokerage firm holds ownership
Margin
A markup on security price, to protect broker if the price jumps during a short sale
Short Sale
Borrow stock and sell them, then go buy them back.
If the stock losses value short seller wins because the buy back price will be less than they sold it for
Value Stock
Stock that is priced low relative to its estimated value
Low P:E / P:book ratios but better returns
Stop order
order to buy / sell at a certain price, at that price it becomes a market order
sells at the next best price after the stop price
A-B over treasury
A-B basis points that bond yields over treasury yield
JNK
Portfolio of bonds outside of the top 4 investment grade ranking
