Financial Markets & Investment Analysis

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Author:
dcwalker865
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185918
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Financial Markets & Investment Analysis
Updated:
2012-12-09 10:35:47
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Financial Markets Investment Analysis
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Financial Markets & Investment Analysis
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  1. Financial Markets
    how money gets from one person/entity that would like to loan excess funds to another person/entity
  2. Options for Corporations to Raise Money
    • 1. Retained Earnings - earnings saved from prior periods
    • 2. Borrow from bank or lender (interest must be paid)
    • 3. Sell ownership in business (shares)
  3. Difference Between Stocks and Bonds 
    • Bond: legal agreement between lender and borrower when business firms borrow from the public
    • Stock: clain of partial ownership of a business firm
  4. Difference Between Primary and Secondary Market
    • Primary: company issues a stock/bond
    • Secondary: company's stock/bond is traded
  5. 2 Stock Markets
    • NYSE - New York Stock Exchange
    • NASDAQ - National Association of Securities Dealers Automated Quotations
  6. Describe Structure of Publically Owned Corporation
    consisted of shareholders who elect a Board of Governors to represent interests which can hire/fire CEOs
  7. Initial Public Offering (IPO)
    where a company switches from private ownership to a publically traded corporation
  8. IPO Steps
    • 1.Value the Company
    • 2. Roadshow to Generate Interest
    • 3. Register with the Securities Exchange Commision (SEC)
    • 4. Issue Stock 
  9. Tombstone
    announcement that a corporation is selling shares of it's stock to the public
  10. Underwriters
    financial firms that buy newly issued stock from corporations in wholesale and sell to public, collect the difference between retail and wholesale
  11. Arbitrage 
    practice of simultaneously buying and selling single product on two different markets to profit from price differential between the two markets
  12. Difference Between Bid and Ask Prices of Stock
    • Bid: highest current offer to buy stock
    • Ask: lowest current offer to buy stock
  13. Market Order
    instruction for broker to buy or sell stock at the best price possible
  14. Limit Order
    instruction for broker to buy at no more or sell at no less than some specified price  
  15. Day Order
    a limit order that is cancelled at the end of the day if not executed
  16. Good 'til Cancelled Order (GTC)
    a limit order that stands untill executed or cancelled
  17. Stop Loss Order
    instruction for a broker to sell a stock if the price falls below a specified level
  18. Difference Between Investors and Speculators
    • Investors: buyer of stock with long-run objective of capital appreciation and/or dividends
    • Speculators: buyer/seller of stock with short-run objectives of making a quick profit by buying low and selling high
  19. Mutual Fund 
    professionally managed investment company that accepts funds from investors and invests those funds on behalf of the investors
  20. Family of Funds
    several different mutual funds with different investment objectives managed by a single manager
  21. Portfolio
    listing of the items currently held by a mutual fund on behalf of the investors 
  22. Net Asset Value (NAV)
    current value of a mutual fund's portfolio divided by number of shares of the mutual fund
  23. Open-End Fund
    mutual fund that will issue additional shares of the fund whenever additional investment funds are recieved; number of shares of fund is unlimited
  24. Closed-End Fund
    mutual fund with a fixed number of shares such that when one investor buys shares another must sell.
  25. What Kind of Index is Dow Jones, S&P 500
    • DJIA - price-weighted index
    • S&P 500 - market-value weighted
  26. Bubble
    when expectations for a stock start to deviate and cause price jumps and falls with stocks
  27. Difference Between Technical and Fundamental Analysis
    • Technical - don't care why moving up or down with stock just that its moving
    • Fundamental - derive a value for the company based on financial facts

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