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Series 7 > Securities Analysis > Flashcards

Securities Analysis Flashcards

(59 cards)

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1
Q

Fundamental analysis

A

What to buy

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2
Q

Technical analysis

A

When to buy

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3
Q

Types of risk

A

Market/systematic, business/nonsystematic, credit, call risk, liquidity, interest rate, reinvestment, inflationary, capital, regulatory, currency, political, prepayment, timing

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4
Q

10k and 10q include:

A

Balance sheet, income statement, cash flows

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5
Q

Balance sheet equation

A

Assets = liabilities + stockholders equity

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6
Q

Current assets

A

Convertible into cash w/in 1 yr, cash, securities, accts rec, prepaid expenses, inventory

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7
Q

Fixed assets

A

Not easily converted into cash, land, machinery, equipment

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8
Q

Intangible assets

A

Non physical, reputation, trademarks, goodwill, patents

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9
Q

Current liabilities

A

Debt obligations owed w/in 1 yr: accts payable, wages, notes payable, taxes, dividends, interest, bonds maturing,

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10
Q

Balance sheet formula

Working capital

A

Current assets - current liabilities

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11
Q

Balance sheet formula

Current ratio

A

Current assets/current liabilities

Should be at least 2 to 1 to be liquid

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12
Q

Balance sheet formula

Quick ratio

A

All current assets (less inventory and prepaid expenses)/current liabilities

Measures liquidity of company w/in 3-5 mos, should be at least 1 to 1 to be liquid

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13
Q

Balance sheet formula

Net worth

A

Total assets - total liabilities

Same as stock holders equity

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14
Q

Paid in capital

A

The amount over par value that a company receives for issuing stock

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15
Q

Retained earnings

A

Amount of money a company has after paying all expenses, interest, taxes, and dividends.

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16
Q

Inventory T/O

A

Sales compared to value of inventory measured annually

Sales/avg inventory

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17
Q

Bond (debt) ratio

A

LT liabilities/total capitalization

i.e. Bonds/stocks

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18
Q

Income statement

EPS

A

Net income - pref divs/# of common shares outstanding

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19
Q

Income statement

PE

A

Price earnings ratio

Mkt price/eps

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20
Q

Income statement

Div payout ratio

A

Annual div per common share/ eps

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21
Q

Income statement

Gross profit margin

A

Net sales - cost of goods sold - operating expenses/ net sales

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22
Q

Income statement

Cash flow

A

Net income+depreciation +depletion+amortization

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23
Q

Income statement

Depreciation

A

Tax write off, considered operating expense

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24
Q

Income statement

Current stock yield

Study These Flashcards
A

Annual div/mkt price

Use the ask

25
Income statement Bond interest coverage
EBIT/bond interest How much money to cover expenses
26
Income statement Net profit margin
Net income/net sales
27
Interest rate indicators 5
1. Reserve requirements - can't be loaned to customers 2. Discount rate - fed rate for member banks 3. Fed funds rate - Rates btwn banks, b/d's, institutions, lowest, most volatile 4. Call loan rate - rates on margin accounts 5. Prime rate - rate for best customers
28
M1
Currency in circulation, checking accts
29
M2
M1 + savings deposits, money mkt, short term debt
30
M3
M2 + jumbo cd's
31
Balance of payments
Reflects the amount of money coming into country vs out
32
Interbank mkt
Unregulated decentralized for foreign currency transactions
33
Spot mkt
Interbank transactions, 2 parties agree to trade foreign currencies, delivery 1 to 2 days
34
Forward mkt
Same as spot mkt but longer time frame, usually several months
35
Floating exchange rate
Values based in supply and demand vs other currencies
36
Recession
Mild 6 month/2 qtr in biz activity and stock prices
37
Depression
6 qtr/18 month economic decline
38
Cpi
Measures changes in the price of goods, in certain cities each month
39
Stagflation
Inflation increases in a slow economy (particularly w/raw materials)
40
Gdp
Sum of all goods and services produced, measured in constant dollars (considers inflation)
41
Disintermediation
Movement of money from savings to money mkt/short term bonds Occurs during periods of tight money
42
Fiscal policy
Taxes and govt spending (controlled by congress)
43
Keynesian
Governments should be active through spending to foster economic growth
44
Supply side
Belief the government should be passive and economy will grow by itself
45
Monetarist
Belief money supply needs to be properly controlled for economy to prosper
46
Moral suasion
Chairman of the fed asks banks to expand or contract lending
47
Leading indicators
- Money supply M1, M2, M3 - stocks - fed funds - discount rate - reserve req't - housing (permits/new starts) - unemployment - avg hrs worked - durable goods orders - consumer sentiment - yield curve
48
Lagging indicators
- prime rate - industrial/commercial loans - Corp profits - consumer credit - personal income - duration of unemployment - unemployment rate - inventories - sales
49
Coincidental indicators
- industrial production - personal income - gasp - retail sales
50
Breakout
Technical indicator when prices break out of normal trading rang by more than 3% above resistance or below support
51
Odd lot theory
Small investor is usually wrong, small investor is usually wrong
52
Random walk
Assumes mkt is perfectly efficient, aka efficient mkt theory
53
CAPM
Shows relationship btwn expected risk and expected return T-Bill return + [(s&p 500 expected return - T-Bill) x beta]
54
Mkt weighted index
Positions in index calculated by mkt cap Most common
55
Price weighted index
The higher the price, the greater the weight
56
Non weighted index
All stocks equally weighted Value line
57
Circuit breakers
Level 1 - 7% decline, 15 min halt Level 2 - 13% decline 15 min halt Level 3 - 20% decline closed rest of day
58
The rate controlled directly by the FED?
Discount rate
59
Most common tool used by the FED to control money supply
Once

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