Interest rate (return)
How would you define the concept of "interest rate"?
the cost of borrowing money or the benefit or profit of lending or investing money
What are the main components of a Corporation BalanceSheet and their meaing
Short-term (current) and Long-term assets are the goods and rights a company owns (inventory, fixed assets, receivables, etc.) to run the business, while liabilities and equity are the sources of funds used to finance those assets. Equity represents the funds belonging to the owners, while liabilities are what the firm owes other parties.
What do you think is the market cap (or market capitalization) of a listed company and how do you calculate it?
It represents the market value of a company Equity and it is calculated by multiplying the price of the stock by the total number of outstanding shares of the company.
What is the difference between a stock and a bond?
Stocks represent partial ownership (equity) in a company while Bonds are loans companies (or governments) use to finance their projects, assets, investments, etc.
Do you think that (at least theoretically) the interest rate paid by an investment (in a stock or a bond) must compensate the risk of investing in them (one of which is insolvency of the firm) and the risk of inflation, or only one of both risks, and which one?
Yes, interest rates paid should compensate both type of risks
The book value of a firm's total assets is "equal to", "lower than", "higher than" the book value of its liabilities and equity together.
Equal to
Can you explain what is a mutual fund?
A mutual fund is a vehicle that pools money from many investors and invests the money in securities such as stocks and bonds.
The mutual fund prospectus contains information about the mutual fund’s investment objectives, risks, performance, and expenses.
How would you define what the financial system in an economy is?
The financial system is the set of instruments, markets and institutions in a country whose function is to move the flow of funds from suppliers to demanders.
Theoretically, in a world without risk and inflation, the interest rate should be zero.
No, it should be positive, due to the opportunity cost of not being able to use the money if it is lent.
Related to a company's equity, what is the difference between its market value and its book value?
Book value is based on a company's balance sheet and is the accounting value of the stockholders' equity, while market value is based on a company's stock (share) price, which changes often due to stock market sentiment.
Do you know what an ETF is?
An ETF is a Exchange-traded fund or investment product. Like mutual funds, ETFs offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets and, in return, to receive an interest in that investment pool. Unlike mutual funds, however, ETF shares are traded on a national stock exchange and at market prices that may or may not be the same as the net asset value (“NAV”) of the shares.
What is the supervisory body or institution of the US securities market? and what are its objectives related to investors, markets and corporations?
The SEC (Securities & Exchange Commission)
The U. S. Securities and Exchange Commission (SEC) has a three-part mission:
What is the difference between simple and compound interest rate?
Simple interest is calculated only on the initial principal, while compound interest is calculated on the principal and any previously earned interest.
What does it mean depreciation related to accounting principles?
Depreciation is an accounting method that spreads the cost of an asset over its expected useful life to give a more accurate view of the business’s profitability. As opposed to recording the entire cost of an asset on the income statement as soon as it’s bought, businesses record depreciation as a periodic expense on the income statement.
Can you explain what is an annuity?
An annuity is a contract between you and an insurance company that is designed to meet retirement and other long-range goals, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date.
What is a stock market index and what is it used for? Mention some of the most popular indices you know
Stock indices measure the price performance of a set of stocks listed on a market. They are commonly used as indicators of economic trends and benchmarks against which active portfolio management can be compared.
Some of the most popular are: Dow Jones Industrial Average, S&P 500, Nasdaq 100, Eurostoxx 50, DAX 30, CAC 40, IBEX 35, FTSE 100, Nikkei 225, SSE Composite, MSCI World, MSCI Emerging Markets, MSCI Latin America