Corporate
Company XYZ's stock is privately held and then chooses to issue new stocks trading publicly.
What is IPO?
The risk of an investment portfolio.
What is beta?
Prices increase while demand decreases.
What is Elasticity?
The 3 primary financial statements recorded in any firm.
What are the balance sheet, income statement, and statement of cash flows?
This bubble had a major influence in the markets in 2018 with high demand in cryptocurrencies.
What is the bitcoin bubble?
The discount rate that makes the present value of the expected incremental after-tax cash inflows just equal to the initial cost of the project.
What is IRR?
An investment team runs an analysis on company XYZ, and estimates that this company will decline in it's stock performance by 72% over the next 2 years; the team executes this strategy to capitalize gains while XYZ's stock declines.
What is shorting?
Taxes on imported goods.
What are tarriffs?
The accounting principles and standards that are followed in the U.S.?
What is US GAAP (Generally Accepted Accounting Principles)?
What US Financial Crisis occurred from 1995-2001?
What is the dot-come bubble?
Company XYZ signs a 30-year loan to rent out a facility for their production; 2 years later COVID hits and even though the company is out of business, they still have to payoff their the loan.
Risk that can be diversified, firm-specific, and unique.
What is Unsystematic Risk?
The policy that refers to a government use of spending and taxations to meet macroeconomic goals.
What is fiscal policy?
The cost flow method that firms with perishable goods will use when selling their products.
What is FIFO?
This was the primary cause of the US financial crisis in 2009.
What are mortgage backed securities?
The number of years it takes to recover the initial cost of an investment.
What is Payback Period?
The frontier that shows portfolios that have the greatest expected return for each level of given risk (standard deviation).
What is the Efficient Frontier?
The market structure in which there are few firms, high barriers to of entry, and substitutable products.
What is Oligopoly?
The equation that breaks out Return on Equity into 3 factors (Profit Margin, Asset Turnover, and Debt Ratio).
What is the DuPont equation?
This company leveraged financial gimmicks at the end of each quarter to make their financials appear less risky than they actually were. They then declared bankruptcy in 2008.
What is Lehman Brothers?
This formula takes into account the risk and cost of issuing new debt (after taxes), preferred stock, and common equity given the increase in a firms assets.
What is WACC (Weighted Average Cost of Capital)?
The line that represents possible combinations of risk-free assets and the optimal risky asset portfolio.
What is the Capital Allocation Line (CAL)?
XYZ company reaches the quantity of labor for which any additional unit of labor will then decrease the amount of output.
What is diminishing marginal return (or productivity)?
The bond yield of a corporate bond is less than the coupon rate.
What is a premium bond?
During the 'Dutch Golden Age', this bubble acted very similar to the cryptocurrency bubble; occurring in 1636.
What is the 'Tulip Mania'?