Chapter 15
An annual report contains
Standardized financial information that can be used to analyze a firm's performance
Inflation is
An increase in the general level of prices of products and services over a specific period
If the us government's fiscal policy involves raising taxes, corporate earnings will
Be negatively affected
A limit order
Can be good for a day or until canceled
Inflation is measured by the
Consumer Price Index (CPI)
Economic growth is measured using
Gross Domestic Product gdp
Stock prices tend to
Decrease when inflation i expected to increase
What types of services do full-services brokers provide?
Full service brokerage firms give investment advice and execute orders
An analysis of the firm is
Important because there are variations in management skills and firm performance
How do investors use this information to make buy or sell decisions
Investors analyze all relevant information about a firm and its prospects and then decides how this information will impact demand and supply and therefore price
What other exchange trades stocks in a similar manner to the New York Stock Exchange?
NYSE MKT LLC
What are some popular indicators of economic growth?
New home sales, personal income level, and the level of employment
The price of a stock is determined by
The interaction of supply and demand for that stock
When placing an order to buy or sell stock, you must provide:
The name of the stock, whether the order is to buy or sell, the number of shares, and whether it is a market order or a limit order.
What is one main disadvantage of using a full service broker?
They usually charge a much higher fee. Although recently, many full service brokerage firms have begun offering lower commissions for investors who simply want their transactions executed
Stock exchanges are facilities that:
allow investors to purchase or sell existing stocks.
Floor traders
execute trades on the floor for themselves or someone else
higher economic growth
increases stock prices
Top managers of a firm may be tempted to use misleading estimates of revenues and expenses because:
reported earnings influence the stock value and the firm value, and this is a component of managers' evaluation and compensation.
Stock exchanges facilitate:
the trading of stocks in the secondary market by providing a physical location for trading.
The abbreviated term that is used to identify the stock for trading purposes is called the:
ticker symbol
Managers may be able to boost the reported earnings of their firm by:
using a specific accounting method.
