FIN Exam 2 vocab

Question 1

subscriptions

Answer 1

agreement to buy a new issue of security before it’s actually issued, agreement to provide funds, net new subscribers for Netflix

Question 2

churn

Answer 2

rate at which customers terminate their relationships w/ company over a given time period

Question 3

cost per click

Answer 3

cost to advertiser for many times person clicks on ad, decr for Google

Question 4

anchoring

Answer 4

use of irrelevant info as a reference for evaluating or estimating some unknown value or info

Question 5

crowdfunding

Answer 5

access capital from investors

Question 6

Warren Buffet

Answer 6

value investor, “sage of omaha”

Question 7

Hostile takeover

Answer 7

acquisition of 1 firm not through agreement but by going through its shareholders or fighting to replace mgt, proxy fight or tender offer

Question 8

Jamie Dimon

Answer 8

CEO JPMorgan, London whale $6B trading CDS (credit default swaps)

Question 9

Insider trading

Answer 9

trade on material, nonpublic info, illegal

Question 10

Martha Stewart

Answer 10

imprisoned for obstruction of justice

Question 11

IPO pop

Answer 11

stock has quickly traded higher after a being made available to public

Question 12

Representative heuristic

Answer 12

events that are more representative are regarded as more probable
Ex. way more fin reps vs. athletes, go with base rate

Question 13

401K

Answer 13

retirement fund, interest earned is tax exempt

Question 14

Regression/reversion to mean

Answer 14

pilots who flew worse will fly better next time regardless of punishment

Question 15

passive investing

Answer 15

not attempt to make excess returns, believe LT the investment will be profitable

Question 16

passively managed portfolio

Answer 16

try mimic return to index

Question 17

index fund

Answer 17

passively managed mutual fund that tries to mirror performance of a specific index such as S&P500