Buiness final Flashcards


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1

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

2

Know what value line is

A professional advisory service that rates companies issue stocks and provides detailed information on mutual funds p. 599

3

What is barrens

Weekly newspaper founded 1921 that publishes news of economics

4

What is the concept of buying long

Buying stocks expected to increase in value, which can then can be sold at a profit

5

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

6

In the stock market you should understand no load trading

no load fund - a fund that does not charge any type of sales load.

7

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this fee ranges from 1-5% of the amount withdrawn during the first 5 to 7 years.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.

8

What stocks are

Growth stocks vs. income stocks. Investing on the margin

9

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.

10

What does a personal income statement list

lists your income and your expenses for a specific period of time. usually a month

11

What the typical denomination of corporate bonds

sold in 1000 dollar denominations

12

What is venture capital

money that is invested in small firms that have potential to become very successful

13

What is it when a loan is secured by inventory

Blanket inventory lien

14

The most commonly used collateral in short term financing includes... What?

accounts receivable and inventory

15

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.
increase inventory

16

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.

17

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

18

Understand risk return ratio

what you could lose divided by what you could earn

19

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

20

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

21

What is the max amount your savings and checking accounts are insured for

$250,000

22

Who insures those accounts

The FDIC (Federal Deposit Insurance Corporation)

23

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.

24

What is a now account

an interest paying checking account NOW (Negotiable Order of Withdrawal)

25

When the federal reserve system sets a new margin requirement, what is it regulating

Margin Requirement
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.

26

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.

27

Know what demand deposits are

a deposit of money that can be withdrawn without prior notice

28

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.

29

How long do the governors serve on the fed reserve system

full term is 14 years

30

How many district banks are in the federal reserve system

12 district banks

31

Liquidity.

asset that can easily be converted into cash

32

durability

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

33

divisibility

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

34

Stability

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.

35

Portability

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

36

What is inventory turnover

the ratio showing how much inventory is sold and restocked over a period of time

37

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.

38

Know what an income statement shows ( business)

a summary of a firm's revenues and expenses during a specified accounting period

39

Current liabilities

amounts due to be paid to creditors within twelve months

40

Know how to figure out owners equity formula

formula
liabilities + capital = assets

A=L+C

41

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

42

Know percentage of US companies that use social media for marketing

80%

43

Know what a pod cast is

digital audio or video file that people listen to or watch online on cpu or tablet

44

Business-to-business model

firms that use the internet mainly to conduct business with other businesses.

45

Business-to-consumer model

firms that focus on conducting business with individual buyers.

46

An audit

An examination of a company’s financial statements and accounting practices

47

A CPA- Certified Public Accountant

An examination of a company’s financial statements and accounting practices

48

Assets

the resources that a business owns (e.g., cash, inventory, equipment, and real estate)

49

Liabilities

A firms debt

50

Cash Flow statement—

Illustrates how the operating, investing, and financing activities of a company affect cash during an accounting period

51

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

52

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

53

Long term

Money that will be used for longer than one year

54

Short Term

Money that will be used for one year or less

55

Unsecured loan

Interest rates vary with each borrower’s credit rating.

56

Commercial paper

Short-term promissory note issued by a large corporation

57

Factoring-

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

58

IPO- Initial Public Offering

When a corporation sells common stock to the general public for the first time.

59

Secondary Market

A market for existing financial securities that are traded between investors

60

Common Stock

Stock whose owners may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others

61

Preferred Stock

Stock whose owners usually do not have voting rights, but whose claims on dividends and assets are paid before those of common-stock owners

62

Equity capital

Money received from the owners or from the sale of shares of ownership in the business; long-term financing

63

Trade credit

Financing extended by a seller who does not require immediate payment after the delivery of the merchandise

64

Retained earnings

The portion of a corporation’s profits not distributed to stockholders

65

Venture Capital

Money invested in small (and sometimes struggling) firms that have the potential to become very successful and extremely profitable

66

Corporate bond

A corporation’s written pledge that it will repay a specified amount of money with interest

67

Maturity Date

the date on which a corporation is to repay borrowed money

68

Registered bond

a bond registered in the owner’s name by the issuing company

69

Debenture bond

a bond backed only by the reputation of the issuing corporation

70

Mortgage bond

a bond secured by various assets of issuing firm

71

Treasury Bonds

bonds—issued in minimum units of $100 with a thirty year maturity

72

Savings bonds

EE bonds) purchased for ½ their maturity value

73

Mutual fund

A professionally managed investment vehicle that combines and invests the funds of many individual investors

74

Common Stock

Security that represents ownership in a corporation

75

Managed funds

A fund that is managed by somebody else