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Definition
| examination of a firm's accounting statementsand other financial and economic information to assess the economic value of a company's stock |
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Definition
| method of estimating the value of a share of a stock as the present value of all expected dividend payments |
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Term
| constant perpetual growht model |
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Definition
| a version of the dividend discount model in which dividends grow forever at a constant rate and the growht rate is strictly less than the discount rate |
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Term
| geometric average dividend growth rate |
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Definition
| dividend growth rate based on a geometric average of historical dividends |
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Term
| rithmetic averdividend growht rate |
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Definition
| dividend growth rate based on an arithmetic average of historual dividends |
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Definition
| dividend growth rate that can be sustained by a company's earnings |
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Definition
| earnings retained within the firm to finance growth |
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Term
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Definition
| proportion of earnings paid out as dividends |
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Definition
| proportion of earnings retained for reinvestment |
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Term
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Definition
| decomposition. ROE=Net inc/sales X Sales/assets X assets/equity |
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Term
| two stage dividend growth model |
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Definition
| dividend discount growth model that assumes a firm will temporarily grow at a rate different from its long term growth rate |
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Term
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Definition
(capital asset pricing model) calculates discount rate formula on 195
DR=US T Bill rate +(betaXmarket risk premium) |
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Term
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Definition
measure of a stock
s riskive to the stock market average |
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Term
| Ecnomic value added or EVA |
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Definition
| financial performance measure based on the difference between a firm's actual earnings and required earnings |
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Term
| RIM (residual income model) |
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Definition
| method of valuing stock in a company that does not pay dividends |
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Term
| CSR Clean surplus relationship |
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Definition
| accounting relationship in which earnings minus dividends equals thechange in book value per share |
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Definition
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Term
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Definition
| high P/E stock higher expected growth |
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Term
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Definition
| stocks with low P/E ratio cheap compared to earnings |
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Term
| when cash flow is higher then earnings, good growth is realized |
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Definition
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Term
| high P/S ratio indicated high sales growth |
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Definition
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Term
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Definition
| market value of a company's common stock divided by its book or accounting value of equity |
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Term
| high price to book means it is worth more today than what it did cost |
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Definition
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Term
| efficient markets hypothesis EMH |
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Definition
| hypothesis stating that as a practical matter, investors cannot consistently beat the market |
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Definition
| a return in excess of that earned by other investments having the same risk |
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Definition
| no discernible pattern to the path that a stock price follows through time |
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Definition
| research method designed to help study the effects of news on stock prices |
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Definition
| remaining return on a stock after overall market returns have been removed |
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Term
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Definition
| an investor who makes a buy or sell decision based on a public information and analysis |
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Term
| material onpublic information |
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Definition
| private knowledge that can substantially influence the share price of a stock |
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Term
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Definition
| tendency for small stocks to have large returns in January |
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Term
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Definition
| rules that tick in to slow or stop trading when the DJIA declines by more than a preset amount in a trading session |
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Term
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Definition
| the area of finance dealing with the implications of investor reasoning errors on investment decisions and market prices |
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Term
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Definition
| an alternative theory to classical rational economic desicion making, which emphasizes, amoung other htings, that investors tend to behave differently when they face porspective gains and losses |
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Term
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Definition
| theory that simply how a problem is described that is framed matters to people |
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Term
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Definition
| reluctance to sell investments after they have fallen in value. also known as the break even or disposition effect |
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Term
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Definition
| tendency to fixate on a reference point |
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Definition
| tendency to segment money into mental buckets |
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| representativeness heuristic |
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Definition
| concluding that casual factors are at work behind random sequences |
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Term
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Definition
| human belief that random events that occur in clusters are not really random |
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Definition
| notion that the price of an asset may not equal its correct value because of barriers to arbitrage |
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Definition
| trader whose trades are not based on meaningful analysis |
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Definition
| source of risk to investors above and beoynd firm specific risk and overall market risk |
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Definition
| using past price data and other nonfincial data to identify future trading opportunities |
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Definition
| method for predicting market direction that relies on the Dow industrial and the Dow Transportation averages |
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Term
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Definition
| method for predicting market direction that relies on a series of past market price swings |
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Definition
| price or level below which a stock or the market as a whole is unlikely to fall |
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Term
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Definition
| price or level above which a stock or the market as a whole is unlikely to rise |
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Definition
| average return on a risky asset expected in the future |
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Term
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Definition
| group of assets such as stocks and bonds held by an investor |
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Term
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Definition
| percentage of a portfolio's total value investe in a particular asset |
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Term
| investment opportunity set |
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Definition
| collection of possible risk-return combinations available from portfolios of individual assets |
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Definition
| a portfolio that offers the highest return for its level of risk |
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Term
| Markowitz efficient frontier |
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Definition
| set of portfolios with the maximum return for a given standard deviation |
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Definition
| risk that influences a large number of assets (market risk) |
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Term
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Definition
| risk that influences a single company or group of companies |
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Term
| systematic risk principle |
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Definition
| reward for bearing risk depends only on the systematic risk of an investment |
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Term
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Definition
| measure of the relative systematic risk of an asset. |
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Term
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Definition
| must be the same for all assets in a competitive financial market |
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Term
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Definition
| graphical representation of the linear relationship between systematic risk and expected return in financial markets |
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Definition
| risk premium on a market portfolio |
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Term
| CAPM capital asset pricing model |
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Definition
| theory of risk and return for securities in a competitive market |
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Term
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Definition
| maeaure of the tendency of two things to move or vary together |
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Definition
| assessment of how well a money manager achieves a balance between high returns and acceptable risks |
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Definition
| total percentage return on an investment with no adjustment for risk or comparison to any benchmark |
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Definition
| measures invesment performance as the ratio of portfolio risk premium over portfolio return standard deviation |
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Definition
| measures investment performance as the ratio of portfolio risk premium over portfolio beta |
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Term
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Definition
| measures investment performance as the raw portfolio return less the return predicted by the capital asset pricing model |
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Term
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Definition
| portfolio or security's squared correlation to the market or benchmark |
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Term
| investment risk management |
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Definition
| concerns a money manager's control over investment risks, usually with respect to potential short-run losses |
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Term
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Definition
| assesses risk by stating the probabliity of a loss a portfolio might experience within a fixed time horizon with a specified probability |
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Term
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Definition
| statistical model for assesing probabilities realted to many phenomena, including security returns |
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