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International Trade Tenz > FINAL EXAM > Flashcards

FINAL EXAM Flashcards

1
Q

includes the assessment of how the global economy affects

A

Fundamental analysis

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2
Q

the study of past market data of prices and volume to predict future price movements

A

Technical analysis,

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3
Q

considers the company’s earnings, management, economic outlook, competition, market condition, and other factors in the determination of a firm’s intrinsic value.

A

Fundamental Analysis

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4
Q

focuses directly on a company’s fundamentals,

A

Bottom-up Approach

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5
Q

it is the
combination of traditional economic and business concepts that
determine the value of the investment. The examination of these
variables is called the

A

Valuation Process

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6
Q

analyst or investors look at
how economic factors, both global and local, and how the
overall market can affect the value of the stock prices.

A

Top Down Approach

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7
Q

macroeconomic indicators:

A

GNP/GDP growth rates;
foreign exchange rates (FOREX);
Tbill rates (91-day),
and inflation rate.

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8
Q

A company that
follows the rise and fall of the GNP is sensitive to business
cycles, while those which are less or are not affected are called

A

Defensive companies

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9
Q

The main
objective of the fundamental analysis is to arrive at the

A

Intrinsic Value

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10
Q

The concept of intrinsic value distinguishes it being based on

A

assets
earnings
prospects
management

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11
Q

If intrinsic value is less than market price, the firm is

A

Overvalued

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12
Q

Valuation Methods

A

Net Asset Value Method
Capitalized Earning Method
Enterprise Multiple
Discounted Cash Flow Model

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13
Q

This method uses the company’s balance sheet as basis for
valuation.

A

Net Asset Value Method

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14
Q

adopts the viewpoint of a
potential investor who considers anticipated earnings as the
fundamental source of common equity value.

A

Capitalized Earning Method

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15
Q

An earnings based approach

A

Capitalized Earning Method

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16
Q

This approach assumes that the company will be worth some
multiple of its future earnings in the continuing period

A

Capitalized Earning Method

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17
Q

NAV Meaning

A

Net Asset value

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18
Q

CEM Meaning

A

Capitalized Earning Method

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19
Q

P/E ratio maening

A

Price- Earnings ratio

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20
Q

which is the
average price-earnings of stock of representative companies in
the sector where the company belongs to.

A

Price-Earnings Ratio

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21
Q

EPS meaning

A

Earnings Per Share

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22
Q

There are two critical factors in obtaining the value of a
company’s common stock through the capitalized earnings
approach:

A

the company’s earnings power and the appropriate P/E ratio.

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23
Q

To obtain the value of a company’s stocks on the basis of
earnings, an analysis of its past earnings performance should
be performed.

A

Historical Earnings

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24
Q

EV Meaning

A

Enterprise Value

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25
Q

EM Meaning

A

Enterprise Multiple

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26
Q

EBITDA Meaning

A

Earnings Before Interest, Taxes, Depreciation and Amortization

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27
Q

is the sum of the values of debt and
equity, net of cash.

A

Enterprise value

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28
Q

is a firm value multiple that measures the
actual economic value of a company at any given moment.

A

Enterprise Value

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29
Q

number of shares outstanding times
current share price while debt and cash are included in the books
which the acquirer assumes.

A

Market Capitalization

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30
Q

is considered as a firm measure similar to Free Cash Flow

A

EBITDA

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31
Q

use the cash flow statements
as basis for valuation.

A

Discounted Cash Flow Model

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32
Q

DCF Meaning

A

Discounted Cash Flow

33
Q

Application of the DCF method

A

Excess Cash Flow
Terminal Value
Discount Rate

34
Q

are based on the company’s net operating
cash flows for the forecast/projection period.

A

Excess Cash Flows

35
Q

is the value of an investment at the end of a period, taking
into account the discount rate and the method used in computing
it.

A

Terminal Value

36
Q

The two methods used in determining the company’s terminal Values are

A

Residual Asset Method
Perpetuity of Earnings Method

37
Q

assumes that
the company’s residual assets

A

Residual Asset Method

38
Q

is the rate of expected return that the market requires for investments that are comparable in terms of risk and
other characteristics.

A

Discount Rate

39
Q

ROE Meaning

A

Return on Equity

40
Q

WACC Meaning

A

Weighted Average Cost of Capital

41
Q

is composed of the weighted costs of the various components of financing a company’s capital structure which are debt and equity.

A

WACC

42
Q

The rate of return on treasury bills issued by the
government

A

Risk Free Rate

43
Q

is the rate given to preferred
companies by banks

A

Prime Lending Rate

44
Q

Is a method of securities analysis that makes use of historical price patterns to determine an optimal entry and exit

A

Technical Analysis

45
Q

Technical analysis is driven by three underlying major premises

A

Market Action Discounts everything
Prices move in trends
History Repeats itself

46
Q

it is the major premise of technical analysis.

A

Market action Discounts everything

47
Q

prices over a period of time move in a particular direction until it is reversed.

A

Prices move in trends

48
Q

as prices move in trends, recognizable patterns unfold along the way. Over the long run, these are repeated.

A

History Repeats Itself

49
Q

These computer-generated maps driven by sophisticated algorithms are dynamic and are updated real time whenever there are movements in the securities it track.

A

Surface Maps

50
Q

One particular advantage that technical analysis seems to
have over fundamental analysis is its

A

Universality

51
Q

which are based on the prices, are used in conjunction with the charts to fine-tune the investment decision.

A

Oscillators

52
Q

is constructed by connecting with a line the security’s daily closing prices over a particular period

A

Line CHart

53
Q

It is the simplest form of a price chart

A

Line chart

54
Q

also known as the American bamboo chart,

A

Bar Chart

55
Q

is a general direction in which prices, or the market, are moving.

A

Trend

56
Q

is represented by higher highs and lows

A

Uptrend

57
Q

Is represented by lower highs and low

A

Downtrend

58
Q

As prices are collection of trends, these are broken down into
three classifications, namely;

A

Major term
intermediate term
short term

59
Q

is one that lasts for at least six
months and may continue for years

A

Major Trend

60
Q

is one that lasts for a few weeks to several months

A

Intermediate Trend

61
Q

is one that lasts for a few minutes to a few days.

A

Short Trend

62
Q

is a price level wherein
there are more sellers than buyers

A

Resistance

63
Q

is a price level wherein there are more buyers than sellers

A

Support

64
Q

is one in which the trend line’s angle of rise or fall is gradual or up to about 45 degrees from the horizontal.

A

Sustainable Trend

65
Q

are those that signal or identify a change in the direction of the trend.

A

Reversal Pattern

66
Q

are those that identify minor countertrends or corrections within an unfolding trend.

A

Consolidation Patterns

67
Q

The basic reversal patterns are:

A

V or spike, reversal days,
exhaustion gap, island reversal, double or triple tops/bottoms,
head-and-shoulders, and the saucer or rounding top/bottom.

68
Q

is a one-day reversal pattern.

A

V or Spike

69
Q

Selected Technical Indicators

A

Moving Averages
Bollinger Bands
Oscillators
Volume
Volume Oscillators

70
Q

is a trend following tool. It is the average of a set of closing prices

A

Moving Averages

71
Q

Three types of moving averages are used:

A

Simple, weighted and exponential Moving Average

72
Q

is the arithmetic mean of
the data set.

A

Simple Moving Average

73
Q

assigns weight values
to the data set.

A

Weighted Moving Average

74
Q

is a more complex form of the weighted average designed to further correct the weighing problem for a data set.

A

Exponintial Average

75
Q

are mathematical or statistical measures of the velocity of price movements.

A

Oscillators

76
Q

The objectives of the use of oscillators are:

A

a) to identify divergence with the price; and b) overextended readings.

77
Q

occurs when the market price and the oscillator’s trend head in opposite directions.

A

Divergence

78
Q

give hints as to the continuity and/or reversal of a trend, and hints of price support and resistance.

A

Turnover Dynamics

International Trade Tenz (5 decks)

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