Term

Question 1

Market Capitalization

Answer 1

Market-Value of shares: how much would it cost to purchase all shares of a company

Question 2

Market-Value of shares: how much would it cost to purchase all shares of a company

Answer 2

Market Capitalization

Question 3

Significance of Market Capitalization

Answer 3

higher price earning ratio => higher expectation of earnings growth

Question 4

higher price earning ratio => higher expectation of earnings growth

Answer 4

Significance of Market Capitalization

Question 5

Beta significance

Answer 5

measures the market-wide risk that cannot be eliminated through diversification

Question 6

measures the market-wide risk that cannot be eliminated through diversification

Answer 6

Beta significance

Question 7

Beta = 0

Answer 7

value not related to the market

Question 8

value not related to the market

Answer 8

Beta = 0

Question 9

Beta = 1

Answer 9

value fluctuates with the market directly

Question 10

value fluctuates with the market directly

Answer 10

Beta = 1

Question 11

Beta > 1

Answer 11

value is very sensitive to the market changes

Question 12

value is very sensitive to the market changes

Answer 12

Beta > 1

Question 13

Insight of CAPM

Answer 13

1. ) Investments return at least risk-free rate
2. ) Equity Invest should have higher rate of return
3. ) Beta represent risk that cannot be diversified away

Question 14

1. ) Investments return at least risk-free rate
2. ) Equity Invest should have higher rate of return
3. ) Beta represent risk that cannot be diversified away

Answer 14

Insight of CAPM

Question 15

Risk-Diversification

Answer 15

spreading out investments to overall reduce risk

Question 16

spreading out investments to overall reduce risk

Answer 16

Risk-Diversification

Question 17

Capital Budgeting

Answer 17

Making long-term financial decisions

Question 18

Making long-term financial decisions

Answer 18

Capital Budgeting

Question 19

Capital

Answer 19

Financing obtained by a business in order to buy assets it needs

Question 20

Financing obtained by a business in order to buy assets it needs

Answer 20

Capital

Question 21

Budgeting

Answer 21

Numerical Financial Planning

Question 22

Numerical Financial Planning

Answer 22

Budgeting

Question 23

Hedge Fund

Answer 23

Sophisticated mathematical models with rapid trading strategy, usually investors with a lot of money invest in it

Question 24

Sophisticated mathematical models with rapid trading strategy, usually investors with a lot of money invest in it

Answer 24

Hedge Fund

Question 25

Private Equity Fund

Answer 25

Investments in company not publicly traded, usually for large investments and hard to get in or out of

Question 26

Investments in company not publicly traded, usually for large investments and hard to get in or out of

Answer 26

Private Equity Fund

Question 27

Managed Fund

Answer 27

Analyst's research and strategy with higher management fee

Question 28

Analyst's research and strategy with higher management fee

Answer 28

Managed Fund

Question 29

Index Fund

Answer 29

Using simple mathematical rules with low management fees usually for long term investments

Question 30

Using simple mathematical rules with low management fees usually for long term investments

Answer 30

Index Fund