Unit 2 finance Flashcards


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1

Stocks are an ownership stake in a company also known as an equity

True 1

2

P/E Ratio or P/E Multiple stands for

Price/Earnings Per Share

3

Is calculated as a company's profit divided by the outstanding shares of its common stock

EPS This

4

1. Is a portion of a company's profit paid to common and preferred shareholders. Provides an incentive to own stock in stable companies even if they are not experiencing much growth.

DividendThis

5

2. Is the current yield of a common stock at its present dividend rate. If a stock is trading at $100 per share and pays out $5 in annual dividends, the dividend yield would be 5 percent. 

Dividend yield

6

3. Refers to an arrangement under which a mutual fund will apply dividends or capital gains distributions for its shareholders toward the purchase of additional shares.

Dividend Reinvestment Plan

7

c. The amount of return expected from an investment from its inherent value.

Alpha

8

1. The market capitalization of the stocks of companies with market values greater than $200 billion.

Mega Cap

9

2. The market capitalization of the stocks of companies with market values greater than $10 billion.

Large Cap

10

3. The market capitalization of the stocks of companies with market values between $3 to $10 billion

Mid Cap

11

4. The market capitalization of the stocks of companies with market values less than $3 billion.

Small Cap

12

Refers to how much a company is worth as determined by the stock market. It is defined as the total market value of all outstanding shares.

b. Market Cap

13

IPO Pop- An IPO pop occurs when a company’s stock price drops lower on its first day of trading.

False

14

A period of time when certain people—either executives, employees, or both—are prohibited from buying or selling shares in their company or making changes to their pension plan investments.

c. Blackout Period

15

1.&nbsp;<span>Long-term investment strategy<br></span>

A strategy that looks past the day-to-day fluctuations of the stock and bond markets and responds to fundamental changes in the financial markets or the economy.

16

2. Market timing

A risky investment strategy that calls for buying and selling securities in anticipation of market conditions.

17

3. Value investing

A strategy whereby investors purchase equity securities that they believe are selling below estimated true value. The investor can profit by buying these securities then selling them once they appreciate to their real value.

18

4. Growth investing

Is an investment style and strategy that is focused on increasing an investor's capital. Young or small companies whose earnings are expected to increase at an above-average rate compared to their industry sector or the overall market.

19

52 Week Range

b. Is the highest and lowest price at which a security, such as a stock, has traded during the time period that equates to one year.

20

Asset purchased with an investment life of less than a year. Taxed at your personal tax rate.

a. Short-term investment

21

Refers to the extended period of time that an asset is held. Depending on the type of security, asset can be held for as little as one year or for as long as 30 years or more Taxed at 0-20%

a. Long term investment

22

1. is a form of monetary policy in which a central bank, like the U.S. Federal Reserve, purchases securities from the open market to reduce interest rates and increase the money supply.

Quantitative Easing

23

2. is a form of monetary policy in which a central bank, like the U.S. Federal decreases the amount of liquidity or money supply in the economy which decreases asset prices and raises interest rates.

Quantitative Tightening

24

1. is the process of deciding where to put money to work in the market

Asset Allocation

25

2. is a long-term strategy in which investors buy and hold a diversified mix of assets in an effort to match, not beat, the market

Passive Investing

26

3. Refers to an investment strategy that involves ongoing buying and selling activity by the investor

Active Investing

27

4. A type of fund that invests primarily in stocks that are expected to increase in capital value rather than yield high income.

Growth Fund

28

5. A type of equity fund that seeks to invest in stocks that are deemed to be undervalued in price based on fundamental characteristics

Value Fund

29

6. A type of equity fund that includes a mix of both value and growth stocks

Blend fund

30

7. is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations

Asset Class

31

8. Is a group of public companies that share similar business activities, products and services, or characteristics

Sector

32

9. is the economy of a developing nation that is becoming more engaged with global markets as it grows.

Emerging Markets

33

10. is a country/region that is most developed in terms of its economy and capital markets. The country must be high income, but this also includes openness to foreign ownership, ease of capital movement, and efficiency of market institutions

Developed Markets

34

11. refers to the financial markets operating outside of the United States.

International

35

12. is a company that owns, operates, or finances income-generating real estate.

REIT

36

13. is a type of asset allocation mutual fund where the mix of securities and asset classes, equities, and fixed income for example, gradually shifts as the timed for needing the money (usually for retirement) draws near.

Target Date Funds

37

14. reflects how much a mutual fund or an ETF (exchange-traded fund) pays for portfolio management, administration, marketing, and distribution, among other expenses.

Expense Ratio

38

15. Hold securities in companies that adhere to certain social, moral, religious, or environmental beliefs. To ensure that the stocks or bonds chosen embody values that coincide with the fund's principles, company issuers undergo a careful screening process.

Socially Responsible Funds-

39

16. are fees paid to professionals entrusted with managing investments on a client's behalf

Management Fees

40

Volatility

c. The amount and frequency with which an investment fluctuates in value.

41

A measurement of volatility where 1 is neutral; above 1 is more volatile; and less than 1 is less volatile

a. Beta

42

IPO- Refers to the process of offering shares of a private corporation to the public in a new stock issuance for the first time

True