Chapter 15

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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.


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