Vocabulary
Share price divided by earnings per share
What is the P/E ratio?
What is Apple?
Revenue and profits are growing, debt is low, and the P/E is below its peers
What is to buy?
"People come to me with their savings and ask how to plan for retirement, buy a house, and pay for college. I help them build a plan"
What is a financial advisor?
If you buy a bond, the company or government that issued it is the borrower, and you are this
What is the creditor (lender)?
A market in which prices are rising or expected to rise
What is a bull market?
It started as an online bookstore run out of a garage in Seattle
What is Amazon?
One stock you own has doubled and is now 40%
What is to sell?
"I help companies go public and advise on mergers. I spend my nights building pitch books and Excel models"
What is an investment banker?
The regular interest payment a bond makes to its owner is called this, a word you might also associate with a discount you clip from a newspaper.
How easily an asset can be bought or sold without moving its price
What is liquidity?
This Atlanta company trades under the ticker KO and guards a secret formula
What is Coca-Cola?
You own a strong company, the price looks fairly valued, and there is no new information.
What is to hold?
"Think of me as someone who flips houses, but I flip entire companies. I buy one, fix it up, and sell it a few years later for a profit"
What is private equity?
Bonds issued by the U.S. government are considered among the safest investments in the world, and they go by this name
What are Treasuries?
Share price multiplied by shares outstanding
What is market capitalization?
Founded by John D. Rockefeller, this oil giant was broken up by the Supreme Court in 1911 into 34 separate companies
What is Standard Oil?
A strong company's, the price looks fairly valued, and there is no new information
What is to hold?
"I'm a lender, but I'm not a bank. Companies that want a big loan come to me, and I earn money from the interest they pay"
What is private credit?
When interest rates go up, the price of bonds you already own does this.
What is fall?
This measure of a company's total value includes market cap plus debt, minus cash, and is often used instead of market cap when comparing acquisition targets
What is enterprise value?
This Finnish company began in 1865 as a paper mill, later made rubber boots and cables, and then became famous for its mobile phones
What is Nokia?
A profitable company announces a big acquisition at a high premium, funded with debt that doubles its leverage, and the stock jumps 10%.
What is hold or sell?
"I manage money for wealthy investors, and I can profit when a stock goes down as well as when it goes up. I usually charge a fee on the money I manage plus a cut of the profits"
What is a hedge fund manager?
This measure, expressed in years, estimates a bond's price sensitivity to interest rate changes.
What is duration?