Term
| How do you short a stock? |
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Definition
| By selling a stock you don't own to a third party and then returning it to the person you borrowed it from at it's new market value. Or you can take insurance out against a stock dropping beyond a certain point. |
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Term
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Definition
| The packaging of different types of contractual debt together into a bond. |
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Term
| What is the Jackson Hole conference? |
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Definition
| Annual conference for central bankers, finance ministers and academics. |
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Term
| What is a trade imbalance? |
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Definition
| When a country's economy is skewed too much towards imports or exports |
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Term
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Definition
| Government sponsored enterprise |
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Term
| What position did Greenspan hold? |
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Definition
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Term
| What is the Greenspan put |
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Definition
| Promising to offer aid when asset prices crash but not interfering when they skyrocket |
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Term
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Definition
| Making a bet that will pay off most of the time but can cause catastrophic risk in unlikely circumstances |
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Term
| What is a currency reserve? |
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Definition
| A currency nation states keep in reserve for foreign exchange. The euro and the dollar make up 90 per cent of reserve currnecies. |
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Term
| What is the benefit of having a reserve currency as your domestic currency? |
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Definition
| You can borrow more cheaply as the money doesn't have to be exchanged. |
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Term
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Definition
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Term
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Definition
| London inter-bank offered rate |
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Term
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Definition
| The simultaneous buying and selling of securities. |
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Term
| What does the service sector produce? |
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Definition
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Term
| Who is the president of the ECB? |
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Definition
|
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Term
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Definition
| collatorized debt obligation |
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Term
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Definition
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Term
| What does the Volker rule state? |
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Definition
| Deposit taking banks cannot trade on their own account. |
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Term
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Definition
| US Securities and Exchange Comission |
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Term
| what does Hyman Minsky's Financial Instability hypothesis suggest? |
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Definition
| It suggests an important link between market information flows ans crises. Financial markets have a self-generating. tendency towards periodic bubbles as confidence grows and prices become inflated.This confidence encourages cheap credit into the system, leveraged investments rely on asset prices to increase for them to be sustainable. |
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Term
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Definition
| A fraudulent investment scheme, whereby the operator pays returns to original investors with capital from new investors while the operator isn't actually making a profit. |
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Term
| Where do most trades in America happen? |
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Definition
| In New Jersey as this is where a lot of the algorithmic trading happens |
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Term
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Definition
| National stock exchange of India |
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Term
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Definition
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Term
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Definition
| the value of the total amount of a company's stock held by the public |
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Term
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Definition
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Term
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Definition
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Term
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Definition
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Term
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Definition
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Term
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Definition
| A company's profit based on core operations, excluding one off payments interest and tax etc. |
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Term
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Definition
| Weight average cost of capital |
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Term
| How do you calculate PE ratios? |
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Definition
| Market value per share divided by price per share |
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Term
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Definition
| The sum of all future discounted cash flows that the investment is expected to produce |
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Term
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Definition
| When a company's assets (say its property) has been devalued. |
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Term
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Definition
| When the dividend cover and the earnings per share are the same |
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Term
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Definition
| When a company tries to sell more shares to existing shareholders at a preferential rate. |
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Term
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Definition
| European equivalent of london interbank offered rate. |
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Term
| weighted average cost of capital |
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Definition
| A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. |
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Term
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Definition
| The relative number of new shares that will be given to existing shareholders of a company that has been acquired or merged with another. |
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Term
| why do companies often pay a premium for M&A? |
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Definition
| Because you pay for having control. You can cut costs at bigger organisations - economies of scale. |
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Term
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Definition
| A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. |
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Term
| What is the main sector represented in the Nsadaq? |
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Definition
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Term
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Definition
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Term
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Definition
| earnings before interest, tax, depreciation and amortisation. |
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Term
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Definition
| Total value of outstanding stock |
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Term
| What is the ECB interest rate? |
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Definition
|
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Term
| What is the BoE interest rate? |
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Definition
|
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Term
| What is the Fed interest rate? |
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Definition
|
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Term
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Definition
| The amount of debt they've got in relation to their assets. |
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Term
| Roughly what percentage of UK GDP comes from manufacturing? |
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Definition
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Term
| Roughly what percentage of UK GDP comes from the financial services sector? |
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Definition
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Term
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Definition
| Comparing sales from a given quarter to the same quarter the previous year |
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Term
| Give the definition of a derivative |
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Definition
| A financial instrument based on the performance of a financial asset. E.g you could bet on the price of oranges going up without ever paying for any oranges. |
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Term
| If a company goes bankrupt who gets bailed out first: bondholders or shareholders? |
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Definition
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Term
| When does the UK financial year end? |
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Definition
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Term
| Explain diluted earnings per share |
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Definition
| This is the earnings per share if all the companies outstanding shares were evoked e.g stock options or convertible bonds. The extra -as yet unclaimed shares - are factored into the diluted earnings per share results, |
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Term
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Definition
| The number of times over an organisation is able to pay its dividend to shareholders from its quarterly profits. |
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Term
| Give the formula for a dividend coverage ratio |
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Definition
| dividend coverage ratio= ( net profits - amount paid to irredeemable shareholders) รท dividend paid to ordinary shareholders |
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Term
| Explain the concept of weighted average cost of capital |
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Definition
| It is the average cost of the firm's capital from all its different sources of borrowing. For example, if it had a bond which it paid 5% interest on, a bank loan it paid 10% interest on and share which it had to pay 3% back to annually and all were worth the same then it's WACC would be 6%. |
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Term
| How do you calculate a company's pe ratio? |
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Definition
| Divide the company's stock price by its latest earnings per share |
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Term
| How might you calculate whether an MA deal is likely to be a good investment for the buyer? |
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Definition
| You take take away the premium they're paying for the smaller company's share from the synergy savings they project they will make. |
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Term
| What is 'enterprise value' |
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Definition
| The total amount of debt and capital in a business. Eg the amount of money you would need to acquire it. |
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Term
| What industries is UK manufacturing predominantly made up of? |
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Definition
| Car manufacturing and oil/ gas mining. |
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Term
| What is the average per capita income in the US? |
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Definition
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Term
| What is China's per capita income? |
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Definition
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Term
| Explain Propriety trading |
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Definition
| Banks trading on their own account |
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Term
| What date was Basel 2 introduced? |
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Definition
|
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Term
|
Definition
| It's a securities regulator. |
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Term
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Definition
| systematically important financial institution |
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Term
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Definition
| It's an act that separated investment and commercial banks. |
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Term
| Name one of Adam Smith's economic theories |
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Definition
| The division of labour: the workforce becomes ever more specialised |
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Term
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Definition
| A financial contract, typically shares or bonds |
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Term
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Definition
| When the option's strike price is below market value |
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Term
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Definition
| When the strike price of an option is above the market price |
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Term
| What's an in-the-money option? |
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Definition
| When the strike price of a stock option is such that you'd make a profit from selling it |
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Term
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Definition
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Term
| Wholesale funding/financing |
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Definition
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