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24 Cards in this Set
- Front
- Back
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Why does the government inflate money? |
- to protect the country from deep recessions/depressions - take more taxes indirectly |
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What is the primary cause of inflation? |
The Fed increases money supply |
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What is the name of the ratio that Fed requires banks to do? |
Reserve ratio |
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With reserve ratio of 20%, $1000 will turn into how much? |
$1000 * (100/20%) = $5000 |
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With reserve ratio of 10%, $1000 will turn into what? |
$10000 |
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With reserve ratio of 10%, $1000 will turn into what? |
$10000 |
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How does inflation impact bonds? |
Actual bond yield = bond yield - inflation rate |
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What does TIPS stand for? |
Treasury inflation protected securities |
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How does inflation impact stock? |
not affected when there is no debt |
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Who are the three major credit rating agencies for stocks and bonds? |
- moody's - s&p - fitch |
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What grade are the safer bonds considered? |
Investment grade |
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What do less safe bonds are considered? |
Speculative |
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Credit rating is also useful for what? |
Stock investing |
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When analyzing stock, which has debt, what should you look up? |
Credit rating for second opinion |
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When analyzing stock, which has debt, what should you look up? |
Credit rating for second opinion |
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What are the three pointers regarding credit rating? |
- make your own research - understand the numbers behind the rating letters - your risk tolerance and knowledge should be your guidance |
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When analyzing stock, which has debt, what should you look up? |
Credit rating for second opinion |
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What are the three pointers regarding credit rating? |
- make your own research - understand the numbers behind the rating letters - your risk tolerance and knowledge should be your guidance |
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What do credit rating agencies do? |
Rate the safety of bonds |
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When analyzing stock, which has debt, what should you look up? |
Credit rating for second opinion |
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What are the three pointers regarding credit rating? |
- make your own research - understand the numbers behind the rating letters - your risk tolerance and knowledge should be your guidance |
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What do credit rating agencies do? |
Rate the safety of bonds |
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What is the highest credit rating called? |
Prime |
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Lowest credit rating is ? |
Default |
