Module 8 Flashcards
(7 cards)
1
Q
What is Risk-Adjusted Return?
A
The difference between the Total Return and Risk-free return. This is backward looking.
2
Q
What is the Real Rate of Return?
A
Total return minus the inflation rate.
This is also called the Inflation-Adjusted Return
3
Q
What measures inflation?
A
CPI
PPI
GDP
4
Q
What is cash flow?
A
The amount of cash available to a company after the deduction of taxes plus depreciation.
Cash Flow = Net Income (after taxes) + Depreciation
5
Q
What is formula for the double-entry balance sheet?
A
Total Assets = Total Liabilities + Net Worth
6
Q
What is the Debt/Equity Ratio?
A
Total Long-term Debt (Bonds) / Total Net Worth
7
Q
What is Risk Premium?
A
The difference between expected return and risk-free return. This is forward looking.
