Everything

Question 1

Capital Budgeting

Answer 1

the planning process used to determine whether an organization’s long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm’s capitalization structure

Question 2

Interest Only Loan

Answer 2

the borrower will pay the interest every period, but none of the principal will be repaid until the end of the loan

Question 3

Coupon (Bonds)

Answer 3

The stated interest payment

made on a bond.

Question 4

face value or par value

Answer 4

The principal amount of a
bond that is repaid at the
end of the term. Also called
par value .

Question 5

coupon rate

Answer 5

The annual coupon divided

by the face value of a bond.

Question 6

maturity

Answer 6

The specified date on
which the principal amount
of a bond is paid

Question 7

yield to maturity

Answer 7

The interest rate required in the

market on a bond.

Question 8

Interest Rate Risk: All other things being equal, the longer the time to maturity

Answer 8

the greater the interest

rate risk

Question 9

All other things being equal, the lower the coupon rate

Answer 9

the greater the interest rate risk

Question 10

indenture

Answer 10

The written agreement
between the corporation
and the lender detailing the
terms of the debt issue.
Secure bonds becuz there is collateral (car/house) given by browerer if he defaults

Question 11

debenture

Answer 11

An unsecured debt, usually
with a maturity of 10 years
or more.

Question 12

sinking fund

Answer 12

An account managed by
the bond trustee for early
bond redemption.

Question 13

call provision

Answer 13

An agreement giving the
corporation the option
to repurchase a bond at
a specified price prior to
maturity.

Question 14

call premium

Answer 14

Generally, the call price is above the bond’s stated value (that is, the par value). The difference
between the call price and the stated value is the call premium

Question 15

Real interest rate

Answer 15

Interest rates or rates of
return that have been
adjusted for infl ation.

Question 16

nominal rates

Answer 16

Interest rates or rates of
return that have not been
adjusted for infl ation.

Question 17

Call options

Answer 17

https://www.youtube.com/watch?v=EfmTWu2yn5Q

Question 18

Common Stock

Answer 18

right to vote for board of directors and get dividends; first people to buy shares if more are issued

Question 19

Preferred stock

Answer 19

stocks that given owners the preference in how they get paid through dividends.

i. These stocks could be callable, meaning stockholder is required to sell their shares back to corporation
ii. Can be converted to common stock but not other way around
iii. Cumulative meaning if dividend is not paid it gets added up.

Question 20

Bond

Answer 20

a corporate certificate indicating that an investor has lent money to a firm or govt

Question 21

US govt bond

Answer 21

safe investment and so have low interest rate

Question 22

Bull market

Answer 22

overall stock prices are going to rise

Question 23

Bear market

Answer 23

when stock prices drop

Question 24

Capital gains

Answer 24

the positive difference between the price at which you brought a stock and what you sell it for

Question 25

Blue- chip stocks

Answer 25

Stocks issued by higher quality companies like Coca-cola, JJ, and IBM

Question 26

Growth stocks

Answer 26

stocks of corp in emerging fields such as technology are expected to grow at a faster rate than other stocks

Question 27

Income stocks

Answer 27

stocks of public utilities that offer high dividend yield

Question 28

Penny Stocks

Answer 28

Ownership in companies that compete in high risk industries like oil companies

Question 29

Beta

Answer 29

degree of stock’s risk

Question 30

When central bank unexpectedly increases interest rates, the currency

Answer 30

strengthens

Question 31

When central bank unexpectedly increases interest rates bond yields

Answer 31

rise

Question 32

When yields are high, lenders are ______, borrower are _____

Answer 32

happy; borrowers are sad

Question 33

finance lingo: long

Answer 33

buying

Question 34

finance lingo: short

Answer 34

selling

Question 35

Market interest rates and bond prices move is

Answer 35

Opposite directions

Question 36

Exchange traded fund

Answer 36

A basket of assets that is traded like a common stock. You indirectly own the asset. Ex fidelity creates their own ETF where they include stock of J.P. Morgan, BofA, Goldman Sachs. And the price is the avg stock price.

Question 37

How to you buy stock?

Answer 37

You have to go to broker ex fidelity they give You access to open stock market. You can place market price or limit price

Question 38

Mutual fund

Answer 38

Managed portfolio of stock or bonds. No voting rights.

Question 39

Money market funds

Answer 39

Risk free rate of short term debt mostly gov treasury bills. The safest but not much returns

Question 40

S&P 500

Answer 40

Index of 500 large cap companies. It is a good gauge of the market becuz it takes into consideration of large portion of market

Question 41

Stock market index

Answer 41

A measurement of value of a stock market. Computed from price of selected stocks. It is used to describe the market. It cannot be invested in directly.

Question 42

Dow jones indu avg (DJIA)

Answer 42

Stocks of 30 of the largest and most influential companies using a price weighted index AKA avg of per share price of the 30 comps. But need to consider stock splits etc

Question 43

NASDAQ

Answer 43

Stock exchange that is all computer based. Mostly tech comps that are too small to be listed in NYSE.
HAS better returns but more risk bc companies are small

Question 44

NYSE

Answer 44

Stock exchange where there is human interaction and mantainance.
Only large companies that meet certain requirements can join