Final Review Intro to Business

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1

Securities and Exchange Act of 1934

created by the Securities and exchange act. Enforces federal securities regulations, supervises all national exchanges, investment companies, the OTC market, brokerage firms and just about every other organization involved with trading securities

2

demand deposit

an amount on deposit in a checking account

3

Return on Sales Ratio

a financial ratio calculated by dividing net income after taxes by net sales
ex. net income after taxes/net sales

4

What percentage of U.S companies use social media?

80 percent of companies with more than 100 employees

5

open-market operations

the buying and selling of U.S government securities by the Federal Reserve System for the purpose of controlling the supply of money

6

liquidity

the ease with which an asset can be converted into cash

7

portability

money must be small and light enough to carry, therefore paper currency is is issued in larger denominations

8

Divisibility

the standard unit of money must be divisible into smaller units to accommodate small purchases and large ones. the standard is the dollar, is divided into pennies, nickels, dimes, etc

9

Stability

money should retain its value over time. when it does not, people tend to lose faith in their money and put their storing value in somewhere else, i.e. gold, real estate, etc

10

Liability

the firm's debts- borrowed money it owes to others that must be repaid

11

Owner's equity

the difference between total assets and total liabilities- what would be left for the owners if the firm's assets were sold and the money used to pay off its liabilities

12

Short-term obligations

could be current liabilities, accounts payable, notes payable, salaries payable and taxes payable. will be repaid in a year or less

13

income statement

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

14

risk return ratio

a ratio based on the principle that a high-risk decision should generate higher financial returns for a business and more conservative decisions often generate lower returns

15

retained earnings

the portion of a business's profits not distributed to stock-holders

16

current liabilities

debts that will be repaid in one year or less

17

what makes up a budget?

projects income, expenditures, or both over a specified future period

18

Who controls the Federal Reserve System

seven member board of governors, who meet in Washington D.C . Each governor is appointed by the president and confirmed by the Senate for a 14-year term. there is also a chairman and vice chairman of the board that is chosen from the existing members.

19

How many district banks are in the Federal Reserve System

12 district banks, as well as 24 branch banks

20

NOW account

an interest-paying checking account. stands for negotiable order of withdrawal. interest rate is 0.05 to 0.5 percent

21

How much does the FDIC insure depositors accounts for?

ranging from 0.5 to 2 percent, basic deposit insurance of 250,000

22

Buying long

buying a stock with the expectation that it will increase in value and then can be sold at a profit

23

Point of Sale Terminal

computerized cash register located in a retail store and connected to a bank's computer. swipe your card through the reader, central processing center notifies the bank you are making a purchase

24

What is the margin requirement for the Federal Reserve System?

sets the portion that cannot be borrowed

25

12b-1 (distribution fee)

defrays the costs of advertising and marketing the mutual fund. calculated on the value of a fund's assets and cannot exceed 1 percent of the fund's assets. ongoing fees charged each year

26

Short-term financing

is money that will be used for one year or less. Cash flow, speculative production.

27

How do you calculate inventory turnover?

cost of goods sold/ average inventory

28

Advantages of Employer-Sponsered retirement programs

many employers will match pert or all of the contributions you make to a 401k or 403b retirement account

29

Contingent deferred sales fee

1 to 5 percent of the amount withdrawn during hte first five to seven years. typically they decline each year until there is not withdrawal fee.

30

no-load fund

no sales charges. offer same type of investment as load funds

31

Frequency of Barron's publication?

once a week. devoted to financial and economic news

32

Venture Capital Firms invest in?

firms that have potential to become extremely profitable. ie Zynga

33

In general the relationship between risk and return is?

return should be directly related to the assumed risk. greater risk, higher potential money.

34

Reinvestment of profits in the business

retained earning are reinvested for R&D, expansion, or funding of projects. Usually increases the value of the firm's stock

35

What is the typical denomination of most corporate bonds?

usually 1,000, but can go up to 5,000

36

Federal Board of Governors for FRS serve for how many years?

14

37

Forms of demand deposit

made-out check, withdrawing cash from an ATM, or transferring money b/w accounts.

38

What percentage of Consumers trust online computer opinions

70 percent

39

3 accepted investors services

Moody's, Standard and Poors, and Fitch Ratings.

40

accounts receivable

money owed to a company by its debtors

41

negotiable instruments

a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. Examples of include promissory notes, bills of exchange, bank notes and cheques.