Untitled Flashcards Set

What is a financial portfolio?

A collection of financial assets, such as stocks, bonds, cash, and other investments held by an individual or institution.

What is the difference between a private company and a public company?

A private company does not sell shares to the public, while a public company offers its shares for sale on stock exchanges.

What does IPO stand for?

Initial Public Offering, the process where a private company offers shares to the public for the first time.

What is meant by 'ticker symbol'?

A unique series of letters representing a publicly traded company's stock on an exchange.

Define liquidity in the context of the stock market.

Liquidity refers to how easily an asset can be converted into cash without affecting its market price.

What is market capitalization?

The total market value of a company's outstanding shares, calculated by multiplying the share price by the total number of shares.

What does EPS stand for, and why is it important?

Earnings Per Share; it indicates how much money a company makes for each share of its stock.

What is fundamental analysis?

A method of evaluating a security by examining related economic and financial factors.

What is a dividend yield?

A financial ratio that shows how much a company pays in dividends each year relative to its stock price.

What is meant by diversification?

The practice of spreading investments among various financial instruments, industries, and other categories to reduce risk.

What are high yield bonds?

Bonds that offer higher returns than standard bonds due to a higher risk of default.

Explain short selling.

A trading strategy that involves borrowing shares to sell them, hoping to buy them back at a lower price to profit.

What is a mutual fund?

An investment vehicle that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.

What does NAV stand for in relation to mutual funds?

Net Asset Value, representing the value per share of a mutual fund.

What is meant by 'buy and hold' strategy in investing?

An investment strategy where an investor buys stocks and holds them for a long period, regardless of market fluctuations.

What is a quarterly earnings report?

A financial report issued by a publicly traded company every three months to discuss its financial performance.

Define margin accounts. What are they used for?

Brokerage accounts that allow investors to borrow money from the brokerage to purchase securities, using the account balance as collateral.

What are subprime bonds?

Bonds that are rated below investment grade, indicating a higher risk of default.