Practice Quizzes Flashcards
(34 cards)
Form of technical analysis that utilizes advances and breadth of the market as an indicator
Price indicator
Intrinsic value of common stock (per fundamental analysis)
The discount value of future stream of cash flow (dividends)
Specific companies are researched and chosen as investments based on their outstanding investment possibilities by analyst who practice
Bottom up analysis
Next big undiscovered stock, start with a company, then industry, and finally economics…. top down is opposite
Bottom up equity managers included
Value managers and technicians
Top down equity managers include
Group rotation managers
Market timers
Dividend Discount model also known as
Intrinsic value
Constant growth dividend model
High risk bonds usually issued by financially troubled firms
Income bonds
Unsecured debt
Debentures
Lower quality than investment grade and cost the issuer more in interest payments
High yield bonds
Financing equipment that will be bond collateral
Equipment trust certificates
OID- Original Issue Discount bond
Basis increases at ser rate each year
Difference btw maturoty value and original issue discount price is OID
Bonds earnings treated as exempt interest income
Bond issued at discount to par
Ex. Zero coupon
Undiversifiable, market risk, economy based risk, beta
Systematic risk
Diversifiable, unique risk, company specific
Unsystematic risk
Systematic risk
PRIME Purchasing power Reinvestment Interest rate Market Exchange rate
Unsystematic risk
ABCDEFG Accounting Business Country Default Executive Financial Government/regulatory
Method of portfolio evaluation that allows the comparison of a portfolio managers performance to the over all market using just one calculation?
The Jensen model
In computing performance, Sharpe uses
Standard deviation
S—S
In computing performance Treynor uses
Beta
Determine total risk of an undiversified portfolio
Standard Deviation
68, 95, 99%
+/- 1,2,3 standard deviations away from average
Orange Sx,Sy (8) on calculator
Which investment has more relative risk when investments have different average returns.
Coefficient of Variation
CV=standard Deviation ÷ average return
How do mutual funds report returns?
Time weighted
Stocks that have both negative and positive returns over a period should use what method to determine true return?
Geometric average
Private placements
Stock sale to public pension fund
Entire issue to single investor
Single block to publicly traded mutual fund
Legislation of securities in secondary market, created SEC
Security exchange act of 1934
People act
