Test 1 Flashcards
(19 cards)
What is the equation to calculate total dollar return
Total Dollar return = dividend income + capital gain/loss
What are dividends?
Dividends are payout that a company gives to shareholders or bond holders
What is dividend yield?
a dividend expressed as a percentage of current share price
What is ROI?
Return on Investment is a ratio that valuates the efficiency of a investment in comparison to other similar shares in the market.
What is EAR?
Effective Annual Return is a ratio that expresses overall investment return on a annual basis
What is the equation for Risk premium?
Risk Premium = Average return - risk free return
What is CPI?
Consumer Price Index
What is Real rate of return?
Real Rate = Nominal Rate - CPI
What is variance?
fact or quality being different, variance increases in portfolio so does the risk
What is asset allocation?
A investment strategy along with diversification, means to balance risk and return to the level of comfort and goal of the investor
If a stock is Bullish what does it mean? Bearish?
Bullish means it is believed the stocks are going up, Bearish means it is believed stocks are going down
What is ETF?
Exchange Traded Funds is a traded fund that is a marketable security, they are popular because they call for quick selling and not so much holding onto securities for long periods of time, purchase small amounts and make quick profit unlike stocks or mutual funds
One are some considerations when purchasing an asset
Risk and reward, resources, market timing, liquidity, taxes, others (corporate responsibility, market changes, life changes)
What are some types of investment accounts
cash accounts (trades made on cash basis), margin account (trades made suing credit from broker), margin (not borrowed)
What is short selling?
“borrowing” shares that is believed to decrease in value and selling them quickly at a high price and repaying borrowed share, Price sold at - borrowed price = profits
What is Market order vs. Limit order?
Market order is buying and selling immediately at best available price, profits not guaranteed. Limit order sets a max and min price your’e willing to buy and sell
What is Stop Loss order?
unlike market and limit orders which is active when entered, stop loss is stalled until price is passed then become activated
What are interest bearing securities?
Money Market, short term debt obligations of large corporations or government less than a year, promise to make one future payment
EX. T-Bills, CDs
Fixed income securities: long term debt obligations of large corporations or government, exceeds one year or more, promises fixed payments in a schedule
What are equity securities?
Common and Preferred Stock
