Basic Vocab
What is Market Cap, and how is it calculated?
The total equity of a company
Share price x number of shares
What is a bond?
An IOU from a company/government that is returned at a fixed rate
What is the 4 word phrase used to describe shorting?
Sell high, buy low
Assets=
Liabilities + Shareholders’ equity
The general income of a company, usually through the form of sales
Revenue
What is a P/E ratio
The ratio of the price of the shares in a company to the earnings made off of the shares
Why is a bond considered safer than a stock?
A bond is a guaranteed return, but there are no promises for making money off of a stock.
What actually happens when you sell the stock that you are shorting? Do you actually own it?
The stock is originally borrowed from a broker, which is re-bought at the lower price to give back.
The time period a balance sheet shows for a company
Exact Moment
What is the total revenue minus the cost of goods sold equal to?
Gross profit
A specific grouping of companies used to analyze the performance of the market
Index
What is the rate of return/interest on a bond called?
Yield
Is shorting riskier or safer than regular investment?
Riskier
Goods available for sale
Inventory
What is the final value on an income statement after subtracting all expenses from the total revenue, also known as the bottom line?
Net income
Place in the market where securities are traded.
What is an exchange?
What is a period of bond purchase called?
Maturity
What makes the risk of shorting infinitely high while the reward has a maximum possible value?
The price of the stock can only go down so much to 0, but it can rise infinitely high, making the possible loss infinite.
Securities that will not or cannot be liquidated in the next year
Long-term investments
What timeframe is represented in an income statement?
A period of time, typically annually
What are assets that don’t involve actual physical things, but instead ideas: brand names, trademarks, patents, etc.?
Intangible assets
What does the yield curve a bonds show us?
The amount of yield for the given maturity of a bond
What does shorting to do the volatility of the market?
It decreases the volatility
the money a company is required to pay into its employees' retirement accounts
Pension fund liability
What does D&A stand for on an income statement?
Depreciation and amortization