Terminology
What is the definition of revenue?
Money generated from sales
A company has 10 million outstanding shares, each worth $20. What is their market capitalization?
$200 million ($10x$20)
What is a bull market?
A market that is generally rising.
What is diversification?
Spreading investments across various assets.
Which company is famous for its iPhones?
Apple
What does the P/E ratio stand for?
Price-to-earnings ratio
What is net income?
Income gained after expenses.
What is a bear market?
A market that is generally falling.
What is an index fund?
A fund tracking an index.
Which company operates the world's largest online retail marketplace?
Amazon
What does EPS stand for?
Earnings per share
What is market capitalization?
Total value of outstanding shares.
What is volatility?
How much prices fluctuate.
What is compound growth?
Earning returns on previous returns.
This company earns most of its revenue from subscriptions sold to consumers who stream movies and TV shows.
Netflix
A stock costs $120 and has an earnings per share of $6. What is itsP P/E ratio?
P/E = $20 (120/6)
A company earns $20 million on $100 million in revenue. What is it's profit margin?
Profit margin is 20%
Economic weakness, inflation, interest rates, or lack of investor confidence.
Why is diversification important?
Reduces exposure to individual investments.
This company generates revenue from search-engine advertising, video platforms, and digital services.
What's the difference between a growth stock and a value stock?
Growth stocks are companies that investors expect to grow. Value stocks are companies that trade at prices investors believe are low compared to their counterparts.
A company has $50 million in revenue, $35 million in expenses, and $5 million in outstanding shares. What is its EPS?
$3 per share. ($15 million net income/ $5 million shares)
Why might a stock fall after reporting positive earnings?
Investors expected better results, OR there is weak future guidance
Why might a 20-year-old investor have an advantage over a 50-year-old investor?
The 20-year-old will have more time to earn potential compounding growth.