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32 Cards in this Set
- Front
- Back
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List some publicly traded companies |
- Nike - Under Armour - Addidas - IntraWest - Cabella's |
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Define initial public offering (IPO) - aka going public |
The first sale of stock by a private company to the public - often smaller, younger companies |
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Why can IPO's be a risky investment? |
If the market crashes it can hurt their image & how they are perceived by both other investors & entire market |
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What are some advantages of going public? |
- owners can diversify - liquid assets created - raise new capital - value established |
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What are some disadvantages of going public? |
- operating costs increase - disclosure of information - nepotism is not allowed - risk of falling stock price could impact the business |
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Define bull |
Market or stock going up (positive) |
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Define bear |
Market or stock going down (negative) |
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When can you make money on your investment? |
- Buy low, sell high - Short sale |
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Explain making money on your investment in the long term |
When you buy a security such as a stock or commodity with the expectation that it will rise in value - buy low now, thinking it will go high |
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Explain short selling |
Selling a stock that the seller doesn't own but that is promised to be delivered (bought) - if you think something will tank, sell it & buy it back later at a lower price |
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Explain short selling |
Selling a stock that the seller doesn't own but that is promised to be delivered (bought) - if you think something will tank, sell it & buy it back later at a lower price |
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What is market capitalization? |
The dollar value of all outstanding shares - price changes throughout the day, number of shares does not |
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Define liquidity/volume |
How much the stock trades; usually more volume = more liquidity |
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What is a portfolio? |
A basket of stocks; the returns of each weighted position produces overall return. Have diversification! |
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What are the two types of analysis comparisons? |
1. Common size - figure % of 100 2. Year over Year - change in % YOY |
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Explain bonds & who they are used by |
They are debt instruments & essentially big loans used by companies, pro teams, athletic departments, countries... |
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What are the three types of bond yields? |
- coupon yield - current yield - yield to maturity |
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What are the 3 different ways to grow a business? Explain. |
1. Organically - increasing turnover of existing business 2. Acquisitions - purchase an established company 3. Both |
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Define Mergers & Aquisitions |
The assets of two companies are brought together for one company; one of the two original companies of a newly formed company |
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What are the 3 type of mergers & acquisitions? |
1. Takeover (Hostile) 2. Acquisition 3. Merger |
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Define takeover |
The transfer of control from one ownership group to another |
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Explain hostile takeover |
A takeover in which the target has no desire to be squired & actively rebuffs the acquirer & refuses to provide any confidential information - difficult to do with private company |
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Define acquisition |
Purchase of one firm by another |
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Define merger |
Combination of two firms into a new legal entity - new company created |
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What are the 3 classifications of M&A? Explain. |
1. Horizontal - a merger in which 2 firms in same industry combine 2. Vertical - a merger in which one firm acquires another in its supply chain 3. Conglomerate - a merger in which two firms in unrelated businesses combine |
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What are the 2 goals of an M&A? |
- increase size - increase market value |
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What are the 4 operating synergies derived from M&A's? |
1. Economies of sale (volume) 2. Economies of scope (variety) 3. Geographic synergies 4. Complementary strengths |
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What motivations may managers have to M&A? |
1. Increase the size of the firm (more assets) 2. Reduces firm risk through diversification 3. Personal interest/EGO |
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What should be the primary motivation of an M&A? |
Creation of Synergy |
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What are the three ways we an value firms? |
1. Direct comparison 2. Income approach 3. Cost approach |
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How should we set financial goals? |
- have a clear time frame - be specific - be realistic - help decide what action to take |
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What are the 2 basic sides to financial planning? |
1. What is coming in? 2. What is going out? |
