Risk and Reward
The inability of the firm to hold its
competitive position in the marketplace.
Business Risk
A debt instrument sold by a company in lieu of a bank loan
Bonds
N=
Number of periods
the return a company needs to achieve in order to justify the cost of a capital project.
The Cost of Capital
The tendency to search for, interpret, favor, and recall information in a way that confirms or supports one's prior beliefs or values.
Confirmation Bias
the inability of the firm to be able to meet
its debt obligations.
Financial Risk
Interest paid by a company to a bond holder is referred to by this thrifty shoppers' tool
Coupon Rate
FV=
Future Value
an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. In business this usually comes from a Bond or a Loan
Debt
We have always done it this way
Familiarity Bias
Those who expect greater reward when they take on a riskier investment
Investors
The face value of a bond is referred to by the name, THINK GOLF!!
Par Value
i/y=
interest per year.
Equity
Biases held that are beyond a subject's direct awareness
Unconscious Bias
Bonds created by companies at high risk for failure and bankruptcy but offer very high returns in the form of large coupon payments are referred to by this garbagey name.
Junk Bonds
A bond trading at a rate higher than the "Par value."
Premium
PMT=
Payment per period
a security that represents ownership in a company. This type allows the holder to vote on company leadership
Common Stock
Biases derived from following basic rules meant to make decision making easier.
Rule of Thumb Bias
Investors try to make money by balancing the trade-off between these two phenomena.
Risk and Return
A bond trading lower than Par Value
Discount
PV=
Present Value
A type of stock that receives dividend payments prior to payments issued to common stockholders
Preferred Stock
I am ALWAYS right! It is amazing how awesome I am!
Overconfidence Bias