Investment & Portfolio Midterms (Identification)

Cash Ratio

It is the most conservative liquidity ratio, which relates the firm's cash and short-term marketable securities to its current liabilities.

Receivables Turnover

It is useful to analyze the quality of the accounts receivable by calculating how often the firm's receivable turnover.

Free Cash Flow

It modifies cash flow operations to recognize that some investing and financing activities arecritical to the firm.

JOBSON (1982)

Alternative Techniques for testing the APT using a multifactor linear regression model.

Security Market Line

Beta measures the security's sensitivity to market movements-

Cash Conversion Cycle

It is a very useful measure of overall internal liquidity, it combines information from the receivable turnover, the inventory turnover, and the accounts payable turnover.

BROWN AND WEINSTEIN (1983)

Estimating and testing assets pricing models using bilinear paradigm.

January Effect

Gultekin and Gultekin (1987) tested the ability of the APT model to account for the anomaly were returns.

MULTIFACTOR MODEL

In a ___ investor chooses the exact number and identity of risk factors

Market Portfolio

In which each risky asset I has the following weight = (market. capitalization of security i/total market capitalization)

MICROECONOMIC BASED RISK FACTOR MODELS

It focus on relevant characteristics of the securities themselves, such as the size of the firm in question or someone of its financial ratios.

Quick Ratio

Observers question using total current assets to gauge the ability of a firm to meet its current obligation.

Statement of Cash Flows

This integrates the affects on the firm's cash flow of income flows and changes on the balancesheet.

Risk

This means the uncertainty of future outcomes. An alternative definition might be the probability of an adverse outcome.

Balance Sheet

This shows what resources the firm controls and how it has financed these assets.

Arbitrage

Two assets with identical cash flows trading at different prices

William Sharpe

Who founded the Capital Asset Pricing

Optimal Portfolio

is the efficient portfolio that has the highest utility for a given investor.

Estimation Risk

is the potential source of error that arises from these approximations.