Pillar 1: Fundamental Analysis

Question 1

sovereign analysis

Answer 1

fundamental analysis for countries

Question 2

income for countries

Answer 2

taxes

Question 3

expenses for countries

Answer 3

social welfare, healthcare, defense spending

Question 4

assets for countries

Answer 4

GDP

Question 5

liabilities for countries

Answer 5

debt

Question 6

debt/ GDP ratio

Answer 6

assesses the strength of a country’s GDP so that it can collect enough taxes to pay its debt

Question 7

Federal Reserve

Answer 7

central bank that has the power to adjust the discount rate (interest rate) and buy bonds/ other securities [stay up to date]

Question 8

corporate analysis

Answer 8

fundamental analysis for companies

Question 9

corporate value

Answer 9

factor in the debt to asset ratio

Question 10

Price/ earnings ratio [PE ratio]

Answer 10

the lower a P/E ratio is, the better (although there are exceptions)

Question 11

Price/ earnings to growth ratio [PEG ratio]

Answer 11

P/E divided by growth (%)]; gives us information on three variables: the share prices, the company earnings, and the growth of the company earnings
the lower a PEG ratio, the better

Question 12

Price/ book ratio

Answer 12

AKA price/ equity ratio: stock price divided by total assets less intangible assets and liabilities (how much I’m paying for equity)

Question 13

Price/ sales ratio

Answer 13

stock price per share divided by net sales (revenue) per share

Question 14

Market capitalization

Answer 14

share price multiplied by number of shares outstanding; to find the total dollar value of a company to determine whether it is small ($300 million to $2 billion), medium ($2 billion to $10 billion), or large ($10+ billion)

Question 15

EBITDA

Answer 15

measures the value of a company in relation to its earnings before interest, tax, depreciation, and amortization