Shared Flashcard Set

Details

Financial Words
N/A
73
Economics
10th Grade
07/15/2010

Additional Economics Flashcards

 


 

Cards

Term
10-K
Definition
A company's annual report, filed with the SEC(Securities and Exchange Commission)
Term
10-Q
Definition
A company's quarterly report, filed with the SEC(Securities and Exchange Commission)
Term
12b-1 Fees
Definition
Annual fees charged by mutual funds, specifically used to pay for advertising and promotion. Sometimes called "hidden loads".
Term
401(k)
Definition
A retirement plan made available by a company to its employees, featuring tax-deferred contributions and growth. The plan may also include matching contributions by the company
Term
403(b)
Definition
A retirement plan available to employees of qualifying non-profit organizations, featuring tax-deferred contributions and growth.
Term
Adjusted Gross Income (AGI)
Definition
Income (including wages, interest, capital gains, income from retirement accounts, alimony paid to you) adjusted downward by specific deductions (including contributions to deductible retirement accounts, alimony paid by you); but not including standard and itemized deductions.
Term
Annual Report
Definition
Document detailing the business activity of a company over the previous year, and containing the three main financial statements:

Income Statement
Cash Flow Statement
Balance Sheet
Term
Annuity
Definition
Any investment product that pays on a scheduled basis over a set amount of time. In particular, a retirement investment that offers tax deferral on growth, but not on contributions.
Term
Asset
Definition
Anything on a company's books considered as having a positive monetary value.

Assets include holdings of obvious market value (cash, real estate), harder-to-measure value (inventory, aging equipment), and other quantities (pre-paid expenses, goodwill) considered an asset by accounting conventions but possibly having no market value at all.
Term
Balance Sheet
Definition
A document detailing a company's assets and liabilities. The two quantities that have to "balance" or equal each other are (1) assets and (2) the sum of liabilities and shareholders' equity; ie the total amount of assets the company controls is equal to what they own plus what they've borrowed.
Term
Balanced Fund
Definition
A mutual fund combining bonds (for income) and stocks (for growth). These funds are typically designed for people like young retirees, who want regular income plus enough growth of principal to beat inflation.
Term
Book Value
Definition
Per-share value of shareholders' equity, excluding goodwill and other intangible assets.
Term
Call
Definition
The repurchase of a bond by its issuer before its date of maturity, without requiring the holder's consent.
Term
Capital Gain
Definition
A profit made from buying something (property, shares of stock, etc) and reselling it at a higher price.
Term
Capital Gains Tax
Definition
Tax assessed on a capital gain. For most people, the capital gains tax rate is currently 15% for an elapsed time between purchase and sale of more than one year, and your normal tax rate for an elapsed time of 1 year or less.
Term
Capital Spending
Definition
Spending on items with a useful life of more than one year. The price of these items affects the "investing" section of the cash flow statement in the year purchased, and then gets expensed over many years on the income statement via depreciation.
Term
Cash Flow
Definition
you start with earnings, add depreciation and possibly other expenses back in, and possibly subtract some sources of income out, to arrive at a number that you think gives a better indication of a company's profitability than earnings does
Term
Cash Flow Statement
Definition
Financial document detailing the exchange of cash between a business and the outside world. The flow is categorized as:

* flow "in" from Operations
(cash the company made by selling goods and services)
* flow "in" from Financing
(cash the company raised by selling stocks and bonds)
* flow "out" to Investing
(cash the company spent investing in its future growth)
Term
Cash and Equivalents
Definition
Actual cash plus investments that are "as good as cash" and can be cashed in within three months; eg checking accounts, CDs, money market accounts, Treasury bills.
Term
Charge
Definition
An expense; typically an unusual expense, as opposed to an ongoing and predictable cost of doing business. Management often uses adjectives like "non-recurring" and "cashless" to imply that a charge is harmless and that investors shouldn't worry about it.
Term
Compound Annual Growth Rate (CAGR)
Definition
Interest rate at which a given present value would "grow" to a given future value in a given amount of time. The formula is

CAGR = (FV/PV)1/n - 1

where FV is the future value, PV is the present value, and n is the number of years.
Term
Consolidated Financial Statement
Definition
Financial statement combining the activities of a business and its subsidiaries.
Term
Consumer Confidence
Definition
One of two numbers expressing consumers' feelings about the economy and plans to make purchases
Term
Consumer Spending
Definition
Purchase of goods and services by U.S. individuals, accounting for about 2/3 of the GDP. (News commentators like to say that "consumer spending makes up two-thirds of the economy.") This number includes products of both domestic and foreign origin.
Term
Convertible Bond
Definition
A bond which the holder may convert to a set number of shares of common stock.
Term
Coupon
Definition
Annual interest rate paid by a bond, expressed as a percentage of its par value.
Term
Covariance
Definition
A statistical measure of correlation of the fluctuations of two different quantities. In finance, covariance is applied to the annual rates of return of different investments, to measure the correlation of their year-to-year fluctuations in performance
Cov(r1, r2) = 1/n * (r1 i - r1 ave) * (r2 i - r2 ave)

where the terms r1 i and r2 i are actual values of the annual rates of return of two investments, taken over several years, n is the total number of values of r1 i and r2 i used, and r1 ave and r2 ave are the average values of r1 i and r2 i.
Term
Current Assets
Definition
Assets that are expected to be converted to cash within one year. These include cash, accounts receivable, and inventory.
Term
Current Liabilities
Definition
Liabilities that must be paid within one year.
Term
Current Ratio
Definition
Ratio of a company's current assets to its short-term debt. Used as a measure of a company's ability to survive over the near term, by being able to meet obligations with available funds. A current ratio of 1.0 means that the company could theoretically survive for one year, even if it made no sales.
Term
Current Yield
Definition
Annual interest rate paid by a bond, expressed as a percentage of its current market price
Term
Currently Taxable Investment
Definition
An investment on which taxes are not deferred. In other words, a normal investment, on which you pay income taxes the same year you realize income.
Term
Debt-to-Equity Ratio
Definition
A company's debt divided by its equity
Term
Default
Definition
The failure of a bond issuer to meet a payment obligation, either on interest or redemption.
Term
Deficit Spending
Definition
Government spending in excess of what they take in as tax revenue.
Term
Depreciation
Definition
Method to account for assets whose value is considered to decrease over time.
Term
Dilution
Definition
An increase in the number of shares of a company's stock, causing the value of each share to decrease.
Term
Discount Bond
Definition
A bond selling at a market price below its par value.
Term
Discount Rate (Federal Reserve rate)
Definition
Interest rate at which the Federal Reserve lends money to commercial banks.
Term
Discount Rate (present value)
Definition
Term for the annual growth rate of an investment, used when a future value is assumed and you are trying to find the required present value.
Term
Distribution
Definition
Withdrawal from an investment. In particular, distribution is used to refer to withdrawals from a tax-sheltered account like an IRA or annuity, which often have IRS regulations about when you can, can't, or must make withdrawals without incurring a penalty.
Term
Dividend Discount Model
Definition
Valuation model popularized by John Burr Williams in the 1930s, holding that the value of a share of common stock is equal to the present value of all of its future dividends. This model does apply to "growth" companies not yet paying dividends, but only theoretically. The preferred model today is that stock is worth the present value of its future earnings (or more accurately, of its future free cash flows).
Term
EBIT
Definition
Earnings Before Interest and Taxes; intended to be a measure of the amount of cash generated by a company's operations
Term
EBITDA
Definition
Earnings Before Interest, Taxes, Depreciation, and Amortization; intended to be a measure of the amount of cash generated by a company's operations
Term
EVA
Definition
Economic Value Added, a measure of the superiority of the return a company is able to realize on invested capital above the baseline return expected by the investment community. The formula is

EVA = NOPAT - ( C x Kc )

where C is the amount of capital a company plans to invest in a project, and Kc is the cost of capital, i.e. the return rate expected by investors. Positive EVA means the project will add value for shareholders; negative EVA means they would be better off if management just gave them the money as a dividend.
Term
Earnings
Definition
Total income minus total expenses; synonymous with profit.
Term
Earnings Yield
Definition
The ratio of a company's annual earnings per share to its stock price;The earnings yield is an estimate of the inflation-adjusted growth you can reasonably expect from a stock investment; in a normal market it should be at least equal to the T-Bill rate, minus the inflation rate, plus a risk premium of about 3 or 4 percent
Term
Enterprise Value
Definition
Total market value that all investors (equity and debt) have placed on a company's operations; equal to

Market Capitalization+Debt-Cash and Equivalents
Term
Equity
Definition
The portion of a company's assets that the shareholders own, as opposed to what they've borrowed: equal to total assets minus liabilities
Term
Equivalent Yield
Definition
Pro-rated annual interest rate paid by a short-term bond, expressed as a percentage of its current market price.
Term
Exchange Traded Fund (ETF)
Definition
Logically similar to an index fund - somebody somewhere is managing a stock portfolio that tracks an index - but it's traded on a stock exchange and you buy shares through a broker.
Term
Federal Reserve
Definition
System of federal banks, charged with regulating the US money supply, mainly by

1. buying and selling US securities; and
2. setting the discount interest rate.
Term
Fiscal Policy
Definition
All policy by the government involving the collection and spending of revenue;refers to efforts by the government to stimulate the economy directly, through spending
Term
Float
Definition
Number of shares of a stock available to the public.
Term
Free Cash Flow
Definition
Similar to earnings, but omitting purely "paper only" expenses, and accounting for capital spending when it actually occurs rather than depreciating it over many years.
Term
Fundamental
Definition
A quantity used to relate a stock price with the underlying company's financial strength, performance, or growth potential
Term
Fundamental Analysis
Definition
An attempt to predict the performance of a stock through the study of its company's financial situation and prospects
Term
Goodwill
Definition
A class of intangible assets such as a company's name and reputation
Term
Gordon Growth Model
Definition
Valuation formula holding that the total return of a stock investment will equal its dividend yield plus its dividend growth rate:

R = D/P + G

where

D is next year's annual dividend;

P is the current share price;

G is the growth rate.
Term
Government Spending
Definition
Spending by the federal, state, and local governments, accounting for about 20% of the GDP.
Term
Gross Domestic Product (GDP)
Definition
Total annual output of the U.S. economy, measured by its final purchase price.
Term
Gross Margin
Definition
Ratio of gross profit to sales revenue.
Term
Gross National Product (GNP)
Definition
Total output of the U.S. economy;measures the production of all Americans, wherever they happen to be working
Term
Gross Profit
Definition
Sales revenue minus sales costs.
Term
Gross Revenue
Definition
"Raw" sales income; the amount customers actually pay the company when they make their purchases.
Term
Growth Stock
Definition
A stock that appears attractive because of potential earnings growth by its company.
Term
IRA
Definition
Individual Retirement Account. One of several specific retirement accounts allowed by the IRS to provide tax-deferral or other tax advantage
Term
Income Statement
Definition
Financial document showing a company's income and expenses over a given period
Term
Index Fund
Definition
Mutual fund holding a portfolio of securities that closely matches an established index
Term
Inflation
Definition
The tendency for prices and wages to become more expensive.
Term
Inventory
Definition
Finished product that's ready for sale, but hasn't been sold yet.
Term
Investment
Definition
On the cash flow statement and in economics, investment means spending that results in an increase in assets
Term
Investment Grade
Definition
A bond judged likely enough to meet payment obligations that banks are allowed to invest in it.
Supporting users have an ad free experience!