Flashcards in Business IV Deck (30)
The number of shares that trade hands (from buyer to seller) during a certain period.
The price a seller is willing to accept for a security.
"To catch a falling knife"
Trying to estimate where a retracement will stop.
Ratio of the trading volume of put options to call options.
If calls outpace puts: market sentiment is bullish
If puts outpace calls: sentiment is bearish
A volume number that is double or more the size of the volume of the preceding day.
Capital gains tax
Tax levied on capital gains incurred by people and corporations.
These taxes are only triggered when an investor sells a capital asset for a price that's more than the purchase price. This only happens when the capital gain is realized, not while it is being held.
An investor can own shares that appreciate every year, but not have to pay capital gains tax until they are sold.
Good effects of lower gas prices?
Money Americans save at the pump can be spent elsewhere, giving the economy a lift.
Bad effect of lower gas prices?
- Low prices can hurt energy firms that depend on higher prices to finance exploration and green energy innovation (most energy companies have a stake in alternative energy).
- cheap fuel promotes the use of larger, less gas-efficient vehicles and can delay investment in cleaner energy sources.
Loss incurred when a capital asset (investment or real estate) decreases in value.
The loss is not realized until the asset is sold for a price lower than the original price.
1). An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold.
2). Profit that results when the price of a security held by a mutual fund rises above its purchase price and the security is sold (realized gain). If the security continues to be held, the gain is unrealized.
A type of asset not sold in the regular course of business's operations and is generally owned for its role in contributing to a business's ability to generate profit.
It is expected that the benefits gained from the asset will extend beyond a time span of one year.
Examples are: land, buildings, machinery, etc.
S and P 400
An index of mid cap companies with market caps between $2 billion and $10 billion.
What happens to a bond's yield when the price rises?
A bond's yield goes down when the price goes up.
It goes up when the price goes down.
(A bond's yield and it's price are inversely related).
What securities move opposite of TBT's
REIT's, utilities, treasuries, and closed end funds.
Mirrors movement of interest rates (if TBT is down interest rates are down).
It mirrors the movements of 10-year treasuries.
TBT is a basket of JP Morgan bonds sold short.
A basic good used in commerce that is interchangeable with other commodities of the same type (oil, grains, gold, beef, etc).
What differentiates commodities from other goods (like electronics, for instance, which is not a commodity) is that there is little difference between a commodity that comes from one producer or another (a barrel of oil is a barrel of oil, no matter where it comes from).
Commodities are bought and sold through futures contracts on commodities exchanges.
A company with a market cap between $2 billion and $10 billion.
Blue chip company
A large cap company that is a leader in its sector and offers a dividend to shareholders.
a.k.a. Market index, market average
A measure of the overall health of a given portion of the market (sector, small cap, large cap, etc) as specified by a representative group of stocks from that portion.
A index is the sum of all the current values of stocks in the group divided by the total number of shares in the group.
S and P 500
Standard and Poor's index of 500 large cap companies that represent the leading industries in the US economy.
Tracks the ebb and flow of the large cap portion of the market.
The market where currencies are traded.
$1 trillion is traded there everyday
It is decentralized (has no central marketplace).
Variable interest rate
An interest rate on a loan or security that fluctuates because it is based on a benchmark or index that fluctuates.
To establish a fine or tax.
To put upon.
Ex: "taxes were levied"
Making an investment to reduce the risk of adverse price movement in the market (a way of reducing investment risk).
An example would be to do a put option for security, if you owned a stock you thought might go down.
Borrowed money used to purchase securities.
What is the world's most vital natural resource?
- when the price of gas rises it affects how people travel, budget, and how goods are shipped.
What is the main factor that affects gas prices?
Income from any non job related sources (investments, etc)
Unethical practice of a broker trading an equity based on information from the analyst department before his client has been given the information.
(the broker buys in at a lower price then gives the info. to the customer, who buys in, causing the price to increase, which benefits the broker).
- the broker knows that when his customer buys in, it will cause the price to increase.