Buiness final Flashcards
Understand basics of the securities exchange act of 1934
Supervises all national exchanges, investment companies, the OTC market, brokerage firm, and just about all other organisations involved in trading securities
Know what value line is
A professional advisory service that rates companies issue stocks and provides detailed information on mutual funds p. 599
What is barrens
Weekly newspaper founded 1921 that publishes news of economics
What is the concept of buying long
Buying stocks expected to increase in value, which can then can be sold at a profit
Understand what a distribution fee is
(aka 12b-1 fee, expense ratio) mutual funds charge distribution fees to defray the costs of advertising and marketing the mutual fund. They are calculated on the value of a fund’s assets and cannot exceed 1% of the fund’s assets. These fees are ongoing and are charged annually. p. 594
In the stock market you should understand no load trading
no load fund - a fund that does not charge any type of sales load.
Know contingent deferred sales fees
this fee ranges from 1-5% of the amount withdrawn during the first 5 to 7 years. Typically the amount of contingent deferred sales fee declines annually until there is no withdrawal fee.
What stocks are
Growth stocks vs. income stocks. Investing on the margin
What the relationship is between risk and return
risk- the chance that your original investment will not grow as expected or decline in value.
return- the amount you earn on your original investment.
What does a personal income statement list
lists your income and your expenses for a specific period of time. usually a month
What the typical denomination of corporate bonds
sold in 1000 dollar denominations
What is venture capital
money that is invested in small firms that have potential to become very successful
What is it when a loan is secured by inventory
Blanket inventory lien
The most commonly used collateral in short term financing includes... What?
accounts receivable and inventory
What are the characteristics of short term financing
cash flow - the movement of money into and out of an organization
speculative production- the time lag between the actual production of goods and when the good are sold.
What is the sale of assets
The sale of current assets such as accounts receivable (factoring) or long term assets such as real estate or equipment.
What does a budget show?
Budget- A financial statement that projects income and/or expenditures over a specified future period
Cash Budget- Projects cash receipts and expenditures over a specified period
Understand risk return ratio
what you could lose divided by what you could earn
Know what a convertible preferred stock is
Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date.
Convertible bond—a bond that can be exchanged, at the owner’s option, for a specified
What are short term obligations
are those scheduled to mature within one year after the date of an enterprise's balance or within an enterprise's normal operating cycle if longer than one year
What is the max amount your savings and checking accounts are insured for
Who insures those accounts
The FDIC (Federal Deposit Insurance Corporation)
What is a point of sale terminal
A point-of-sale (POS) terminal is a computerized replacement for a cash register.
Point of sale (also called POS or checkout) is the place where a retail transaction is completed. It is the point at which a customer makes a payment to the merchant in exchange for goods or services. At the point of sale the retailer would calculate the amount owed by the customer and provide options for the customer to make payment. The merchant will also normally issue a receipt for the transaction.
What is a now account
an interest paying checking account NOW (Negotiable Order of Withdrawal)
When the federal reserve system sets a new margin requirement, what is it regulating
Percentage of a security's value that may be used as a collateral for a loan to finance its purchase. In the US the margin requirement is 50 percent of the value of the bonds or shares, for options it varies between the premium plus10 to 20 percent of the underlying asset's value and iscalled option margin.
Know what open market operations are
An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market.
Know what demand deposits are
a deposit of money that can be withdrawn without prior notice
Who controls the federal reserve system
FED is created by congress, controlled by a seven member board of governors, each appointed by the president who serve for 4 years. President and vice president also appointed by the president and serve 14 year terms.
How long do the governors serve on the fed reserve system
full term is 14 years
How many district banks are in the federal reserve system
12 district banks
asset that can easily be converted into cash
the objects that serve money should be strong enough to last through reasonable use. to increase the life expectancy of paper money, nations use paper with high fiber content
standard unit of money, must be divisible into smaller units to accommodate small purchases and large ones in the US out standard is the dollar divided into half dollars quarter ect
money should retain its value over time, when it does not, people lose faith in their money . when money becomes extremely unstable people turn to other value such as gold jewels art and real estate.
money must be small enough and light enough to be carried easily. for this reason larger denominations are paper form like 5, 10, 20, 50, and 100 dollor bills
What is inventory turnover
the ratio showing how much inventory is sold and restocked over a period of time
Return on sales ratio
a financial ratio calculated by dividing net income after taxes by net sales
A ratio widely used to evaluate a company's operational efficiency.
Know what an income statement shows ( business)
a summary of a firm's revenues and expenses during a specified accounting period
amounts due to be paid to creditors within twelve months
Know how to figure out owners equity formula
liabilities + capital = assets
Know what a blog is
website that allows a company to share info in order to not only increase the customers knowledge on products and services, but also to build trust
Know percentage of US companies that use social media for marketing
Know what a pod cast is
digital audio or video file that people listen to or watch online on cpu or tablet
firms that use the internet mainly to conduct business with other businesses.
firms that focus on conducting business with individual buyers.
An examination of a company’s financial statements and accounting practices
A CPA- Certified Public Accountant
An examination of a company’s financial statements and accounting practices
the resources that a business owns (e.g., cash, inventory, equipment, and real estate)
A firms debt
Cash Flow statement—
Illustrates how the operating, investing, and financing activities of a company affect cash during an accounting period
Functions of Money
Medium of Exchange- Anything accepted as payment for products, services, and resources
Medium of Value- A single standard or “yardstick” used to assign values to and compare the values of products, services, and resources
Store of wealth- A means of retaining and accumulating wealth
Five C’s of credit
Character—the borrower’s attitude toward credit obligations
Capacity—the borrower’s financial ability to meet credit obligations
Capital—the extent of the borrower’s assets or net worth
Collateral—borrower assets that can be pledged as security for a loan
Conditions—general economic conditions that can affect a borrower’s ability to repay the loan
Money that will be used for longer than one year
Money that will be used for one year or less
Interest rates vary with each borrower’s credit rating.
Short-term promissory note issued by a large corporation
A firm that specializes in buying other firms’ accounts receivable. Buy account at less than face value, then sell for full price. Profit is based on the risk (probability that the accounts receivable will not be paid) the factor assumes
IPO- Initial Public Offering
When a corporation sells common stock to the general public for the first time.
A market for existing financial securities that are traded between investors
Stock whose owners may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others
Stock whose owners usually do not have voting rights, but whose claims on dividends and assets are paid before those of common-stock owners
Money received from the owners or from the sale of shares of ownership in the business; long-term financing
Financing extended by a seller who does not require immediate payment after the delivery of the merchandise
The portion of a corporation’s profits not distributed to stockholders
Money invested in small (and sometimes struggling) firms that have the potential to become very successful and extremely profitable
A corporation’s written pledge that it will repay a specified amount of money with interest
the date on which a corporation is to repay borrowed money
a bond registered in the owner’s name by the issuing company
a bond backed only by the reputation of the issuing corporation
a bond secured by various assets of issuing firm
bonds—issued in minimum units of $100 with a thirty year maturity
EE bonds) purchased for ½ their maturity value
A professionally managed investment vehicle that combines and invests the funds of many individual investors
Security that represents ownership in a corporation
A fund that is managed by somebody else