basic shit Flashcards
(15 cards)
What is the main purpose of investing?
To grow wealth over time and beat inflation by putting money into assets like stocks, mutual funds, etc.
What does a P&L (Profit & Loss) Statement show?
It shows a company’s revenue, expenses, and net profit or loss over a specific period.
What is the basic formula for a Balance Sheet?
Assets = Liabilities + Shareholder’s Equity
What are the three types of cash flows in a Cash Flow Statement?
Operating, Investing, and Financing cash flows.
What is Fundamental Analysis?
Evaluating a company’s financial health and performance using financial statements and ratios.
Name 3 common financial ratios.
Current Ratio = Current Assets / Current Liabilities
ROE = Net Income / Shareholder’s Equity
P/E Ratio = Market Price / Earnings per Share
What is Technical Analysis?
Analyzing stock price movements using charts, patterns, and indicators (not financial data).
What is a Candlestick Chart used for?
To visualize a stock’s open, close, high, and low prices in a given time frame.
Define Support and Resistance in stock trading.
Support: A price level where a stock tends to stop falling.
Resistance: A level where it tends to stop rising.
What is the idea behind diversification in investing?
Spreading investments across assets to reduce risk.
What is an IPO (Initial Public Offering)?
When a private company sells its shares to the public for the first time.
What is Value at Risk (VaR)?
A measure of how much an investment might lose in a worst-case scenario.
What does DCF (Discounted Cash Flow) analysis do?
Estimates the present value of future cash flows to assess investment value.
What is Portfolio Optimization?
Balancing different assets in a portfolio to maximize return and minimize risk.
What is Position Sizing?
Deciding how much money to invest in a single trade to manage risk.
