Flashcard Set Preview
| Side A | Side B | ||
| 1 |
Capital Budgeting
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invest on projects that have greater return > WACC of company
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| 2 |
Efficient Frontier
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Get the best return possible for given level of risk
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| 3 |
Weak is like Random Walk ( no info)Semi strong is some info
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Strong is stock prices reflect all info
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| 4 |
Par bond
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coupon rate = required yield
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| 5 |
Discount
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Coupon < Market Yield
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| 6 |
Premium
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Coupon > market yield
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| 7 |
Zero Coupon Bonds
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duration = maturity
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| 8 |
Random Walk
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Stock prices are random and cannot be
predicted solely on the basis of past movements.
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| 9 |
Bond Yield
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Rf + Spread to Treasury + Bond Specific Spread
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| 10 |
Stocks with ____ p/e ratios outperform stocks with ____ p/e ratios
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low/high
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| 11 |
Default Risk
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risk that the bond will not pay interest or principal when due
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| 12 |
Reinvestment Risk
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unknown rate at which cash inflows may be reinvested
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| 13 |
Prepayment Risk
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when an issuer calls a bond prior to its maturity
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| 14 |
Interest Rate Risk
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risk that a change in market interest rates will affect the value of the bond
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| 15 |
The _____ the maturity of a bond, the higher the price volatility of bond price and the greater...
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LONGER
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