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.
Internal Liquidity Ratios
It is intended to indicate the ability of the firm to meet future short-term financial obligation
Exchange Listing
A significant economic event for a firm is listing its stock on a national ex-change, especially the NYSE.
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-
Individual Securities
CAPM is most famous for its prediction concerning the relationship between risk and expected return for
Variance
It is a statistical measure of the dispersion of returns around the expected valuewhereby a larger variance or standard deviation indicates greater dispersion.
Random walk hypothesis
Contended that changes in stock prices occurred randomly
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.
Fair game model
Fama presented the efficient market theory in terms of a ______________, contending that investors can be confident that a current market price fully reflects all available information about a security.
January Effect
Gultekin and Gultekin (1987) tested the ability of the APT model to account for the anomaly were returns.
Harry Markowitz
He developed the basic portfolio model.
Fama
He divided the overall efficient market hypothesis (EMH) and the empirical tests of the hypothesis into three sub hypotheses.
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.
Efficient Frontier
Represents that set of portfolios that has the maximum rate of return for every given level of risk or the minimum risk for every level of return.
Correlation coefficient
Standardizing the covariance by the product of the individual standards deviation yields the
EBITDA
The measure of Cash flow is extremely liberal
Income Statement
This contains information on the operating performance of the firm during some period of time.
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.
Autocorrelation Tests of Independence
This measures the significance of positive or negative correlation in returns over time.
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
Covariance
is a measure of the degree to which two variables move together relative to their individual mean values over time.
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.