Asset Allocation
Spreading of portfolio funds among different asset classes with different risk-and-return characteristics
What is diversification?
A measure of portfolio return.
What is Alpha?
The amount of money a corporation has available to work with if it liquidates its current assets and pays off all of its current liabilities
What is working capital?
Total Assets - Total Liabilites
What is shareholder equity or net worth?
A reversal of a down trend
What is a head and shoulders top position
An active asset allocation strategy
What is tactical asset allocation?
This market attitude would seek a negative beta.
Measures the proportion of earnings paid to stockholders as dividends
What is Dividend Payout Ratio?
(Current Assets - Inventory)/Current Liabilities
What is the Quick Ratio or Acid Test?
When a stock falls past its support level.
What is a bearish breakout?
Manages risk through allocation and diversification
What is Modern Portfolio Theory
A growth stock would have this type of beta.
What is high beta?
The P/E ratio that cyclical companies tend to have
What is a low P/E ratio?
Long Term Debt / Total Capitalization
What is the Debt to Equity Ratio?
What is a bearish outlook?
Helps decrease portfolio risk
What is negative correlation?
Beta coefficient for a portfolio is 0.65, and the overall market declined by 10%
A highly leveraged company has this as the smallest percentage of its capitalization
What is common stock?
Current Market Value / Earnings Per Share
What is Price to Earnings Ratio?
The belief that small time traders are usually incorrect
What is odd lot theory?
Calculates the return of investment should achieve based on the risk that is taken.
What is capital asset pricing model?
An investor buys a stock with a beta of 1.8. The S&P 500 has a 10% rate of return for the year, and the stock’s rate of return is 15%.
What is the alpha of -3%
Total assets and total liabilities when a cash dividend is paid
What are things that do not affect the balance sheet?
Earnings Available to Common Shares / Number of Common Shares Outstanding
What is Earnings per Share?
Market indexes are increasing & more stocks are declining than rising stocks
What is overbought?