Stock Market Basics
This exchange, founded in 1792 under a buttonwood tree, is the world's largest by market cap.
What is the NYSE (New York Stock Exchange)?
This is the annual interest rate paid on a bond, expressed as a percentage of face value.
What is the coupon rate?
This ratio compares a company's stock price to its earnings per share.
What is the Price-to-Earnings (P/E) ratio?
This financial crisis, triggered partly by subprime mortgage failures, began in 2007–2008.
What is the Global Financial Crisis (GFC)?
This valuation method calculates a stock's intrinsic value by discounting future cash flows to the present.
What is Discounted Cash Flow (DCF) analysis?
This term describes shares of a company's stock that have been bought back by the company itself.
What is treasury stock?
This U.S. government agency issues Treasury bonds, notes, and bills.
What is the U.S. Department of the Treasury?
A P/B ratio below this number may indicate a stock is trading at a discount to its book value.
What is 1.0?
The dot-com bubble peaked in this year before bursting.
What is 2000?
EBITDA stands for earnings before interest, taxes, depreciation, and this.
What is amortization?
The S&P 500 is weighted by this metric, giving larger companies more influence on the index.
What is market capitalization?
This bond rating, just below investment grade, is colloquially called 'junk.'
What is BB (or Ba) — high-yield / speculative grade?
This ratio divides operating income by revenue to show operational profitability.
What is the operating margin?
This 1929 event triggered the Great Depression and saw the Dow lose nearly 90% of its value over 3 years.
What is the Stock Market Crash of 1929?
This approach values a company by comparing its multiples to those of similar public companies.
What is comparable company analysis (comps)?
This type of order executes a trade immediately at the best available price, with no price guarantee.
What is a market order?
This measure tells you how long, in years, it takes to recover a bond's price through its cash flows.
What is duration?
ROE stands for this, measuring how efficiently a company generates profit from shareholders' equity.
What is Return on Equity?
In this year did the Dow Jones suffer its largest single-day point drop at the time, known as 'Black Monday.'
What is 1987?
In an LBO model, this financial structure allows buyers to amplify returns by using debt to finance the acquisition.
What is leverage (leveraged buyout structure)?
A stock trading below its 52-week high by 20% or more has entered what technical threshold?
What is a bear market correction?
This occurs when a bond's yield equals its coupon rate, meaning the bond is trading at exactly this price.
What is par value — the bond is trading at par ($1,000)?
A current ratio below 1.0 suggests a company may struggle to cover these with its current assets.
What are current liabilities (short-term obligations)?
Warren Buffett's famous quote: 'Be fearful when others are _____, and greedy when others are fearful.'
What is 'greedy'?
The terminal value in a DCF typically uses this formula, dividing final-year FCF by the difference between WACC and growth rate.
What is the Gordon Growth Model (perpetuity growth formula)?