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21 Cards in this Set

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Probability

This is the percentage of chance that an event will occur

Unk-unks or unknown-unknown

In finance, these are the things that can really wreak havoc in for costing

Havoc

Means not sure or the sources of information is undetermine

Breakeven

This is the point where we are not making money but we are also not losing money

Operating Leverage

Sometimes happen in business. This pertains to the degree to which cost are fixed

Risk premium

Describe an investor who invests in a common stocks and stands to earn more for accepting the higher risk

Capital budgeting

Is a process of planning for capital expenditure or long term investments

Discounted cash flow DCF analysis

Is a technique that translate cash flow extending from their future value into their present value

DCF model

Is described as discounted cash flow because cash in the future is worth less than cash today

DCF analysis

Is not suited to short term investment

Incremental cash flow

Provides basis for comparing projects with different benefits

Sunk cost

Is life history. There is nothing you can do to change it

Networking capital

Is the difference between the company's short term assets and liabilities

Scenario analysis

It is a process of analyzing possible future events by considering alternative possible outcome

Risk

Refers to the chance that some unfavorable event will occur

Variance

Is the average value of squared deviations from the mean

Standard deviation

Is a statistical measure for of the variability of a probability distribution around its expected value

Diversification

It means investing in more than one type of assets in order to reduce risk

Market risk

Stem from the existence of economy wide forces that threaten all business

Capital asset pricing model CAPM

It is a model based on the propositions that any stock has a required rate of return equal to the risk free rate of return + risk premium that reflects only the risk remaining of diversification

Comp. Capital structure

Combination of debt and equity