Financial Market Players
A financial institution that accepts deposits and writes loans. This entity makes money on the interest of their loans- called Net Interest Income
What is a commercial bank?
According to Ray Dalio there are three main forces that control the economy. This is the most important factor. In todays economy one might consider Artificial Intelligence to be an example of this.
When is productivity growth?
This financial statement shows the money a company receives as well as their expenses. It shows the company's profitability over time.
What is the income statement?
This valuation method utilizes different financial metrics and ratios from comparable companies to value a target company.
What is multiples analysis?
This is a high yield bond and is rated below investment grade.
What is a junk bond?
There are two sides of wall street. This side is known for helping corporations raise capital through debt or equity issuances.
What is the sell side?
a monetary measure of the market value of all the final goods and services produced and rendered in a specific time period by a country or countries.
What is GDP?
On the balance sheet, this is the formula for assets.
What is Assets = Liabilities + Stockholders Equity?
In a DCF, this is the component that refers to the estimated value of a company or investment at the end of a specified forecast period, typically beyond the 5-year forecast period.
What is the terminal value?
This is calculated by multiplying shares outstanding by the market price of a single share.
What is market capitalization?
This "side" of wall street is known for its ability to connect investors with ownership of corporations. They will collect a fee on the AUM of their clients.
What is the buy side?
The central bank of the United States
What is the federal reserve?
This refers to the funds a company invests in acquiring, upgrading, or maintaining assets like PP&E.
What is capex or capital expenditures?
This is the valuation method used to estimate the current value of a company's future cash flow.
What is discounted cash flow?
This is a financial instrument that represents ownership in a foreign company's shares. It allows investors to trade shares of foreign companies on a local stock exchange without having to directly own the underlying shares.
What is depository receipt?
This type of firm will purchase ownership of private companies and hold them for 3-10 years with the goal to sell them for a higher price. They will then return the capital to their Limited Partners.
What is Private Equity?
The rate at which banks lend to each other to meet capital requirements. This rate sets the tone for all other rates in the market. The Federal Open Market Committee meets 8 times a year to set the rate.
What is the Fed Funds rate?
On the cash flow statement, liabilities have a ______ impact on cash, and assets have a ________ impact on cash.
What is liabilities have a positive impact, and assets have a negative impact?
This method of valuation is concerned with looking inward at the company itself. This includes the DCF valuation method.
What is intrinsic valuation?
This drives down the cost of an individual share in a company while maintaining the ownership percentage each stockholder has in the company.
What is a stock split?
This investment vehicle will match the performance of an index or an industry. It has a low cost of entry in that anyone can access these. They are listed on an exchange and thus are extremely liquid.
what is an exchange traded fund?
This index measures the monthly change in prices paid by US Consumers. It is calculated by the weighted average of prices for a basket of goods and services
What is Consumer Price Index (CPI)?
These are the annual and quarterly filings that a public company files with the SEC.
What is a 10-K (annual) and 10-Q (quarterly)?
This ratio is not commonly used in valuation because it does not provide a comprehensive assessment of a company's value. It does not consider other financial metrics such as cash flow, revenue, or EBITDA.
Bonus: These ratios are often used instead because they provide a more comprehensive understanding of a company's financial health and growth potential.
What is TEV/Net Income?
Bonus: What is P/E, TEV/EBITDA, TEV/Revenue, and Market Cap/EBT?
This is the overall percentage change in the value of an investment over a specific period, taking into account both price appreciation and any dividends or other income generated by the investment.
What is total return?