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| Question | Answer |
| Net Operating Income (NOI) | Revenue generated by property (rent, service machines, parking) - reasonably needed operating expanses (insurance, property managment fees, property taxes, repair, janitors) But b4 income taxes and interest |
| Market Share | The percentage of industry or market's total sales that is earned by a particular company over time period |
| Law Of Demand | Microeconomic law: the bigger price --> less demand |
| Systemic Risk | Risk inherent to entire market or market segment and not a particular stock/asset |
| Factors of Production | Recources required for generation of a good/service Land, labor, entrepreneurship, capital |
| Disposable Income | The amount of money that households have available for spending and saving after income taxes have been accounted for. |
| Payback Period | The length of time required to recover the cost of an investment. |
| Ratio Spread | An options strategy in which an investor simultaneously holds an unequal number of long and short positions. |
| Strategic Asset Allocation | A portfolio strategy that involves setting target allocations for various asset classes, and periodically rebalancing the portfolio back to the original allocations when they deviate significantly from the initial settings due to differing returns from various assets |
| Return On Capital Employed (ROCE) | A financial ratio that measures a company's profitability and the efficiency with which its capital is employed. Return on Capital Employed (ROCE) is calculated as: ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed “Capital Employed” as shown in the denominator is the sum of shareholders' equity and debt liabilities; it can be simplified as (Total Assets – Current Liabilities). Instead of using capital employed at an arbitrary point in time, analysts and investors often calculate ROCE based on “Average Capital Employed,” which takes the average of opening and closing capital employed for the time period. A higher ROCE indicates more efficient use of capital. ROCE should be higher than the company’s capital cost; otherwise it indicates that the company is not employing its capital effectively and is not generating shareholder value. |
| Macroeconomics | The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. |
| Cost Accounting | A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment. Cost accounting will first measure and record these costs individually, then compare input results to output or actual results to aid company management in measuring financial performance. |
| Gordon Growth Model | A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. Given a dividend per share that is payable in one year, and the assumption that the dividend grows at a constant rate in perpetuity, the model solves for the present value of the infinite series of future dividends. |
| Prepaid Expense | A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received in the near future. While prepaid expenses are initially recorded as assets, their value is expensed over time as the benefit is received onto the income statement, because unlike conventional expenses, the business will receive something of value in the near future |
| Sunk Cost | A cost that has already been incurred and thus cannot be recovered. |
| Subsidy | A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public. |
| Fixed Cost | A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company, independent of any business activity. It is one of the two components of the total cost of a good or service, along with variable cost. |
| Efficiency Ratio | Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios can calculate the turnover of receivables, the repayment of liabilities, the quantity and usage of equity and the general use of inventory and machinery. |
| Fixed-Charge Coverage Ratio | A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. |
| Expansionary Policy | A macroeconomic policy that seeks to expand the money supply to encourage economic growth or combat inflation (price increases). One form of expansionary policy is fiscal policy, which comes in the form of tax cuts, rebates and increased government spending. Expansionary policies can also come from central banks, which focus on increasing the money supply in the economy. |
| Producer Surplus | An economic measure of the difference between the amount that a producer of a good receives and the minimum amount that he or she would be willing to accept for the good. The difference, or surplus amount, is the benefit that the producer receives for selling the good in the market. |
| Deflation | A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. |
| Capitalization | 1. In accounting, it is where costs to acquire an asset are included in the price of the asset. 2. The sum of a corporation's stock, long-term debt and retained earnings. Also known as "invested capital". 3. A company's outstanding shares multiplied by its share price, better known as "market capitalization". |
| Deferred Tax Liability | An account on a company's balance sheet that is a result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year. This liability may or may not be realized during any given year, which makes the deferred status appropriate. |
| Monopolistic Market | A type of market that features one, if not all, of the traits of a monopoly such as high price levels, supply constraints, or excessive barriers to entry. Because this type of market would be comprised of one supplying firm, consumers would have no choice but to purchase solely from this firm. Without proper legislation or controls, this firm possesses the power to raise prices without adversely affecting demand for its products/services. This type of market stands in contrast to a perfectly competitive market. |
| Equity Financing | The process of raising capital through the sale of shares in an enterprise. |
| Fair Value | . The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies. 2. In the futures market, fair value is the equilibrium price for a futures contract. This is equal to the spot price after taking into account compounded interest (and dividends lost because the investor owns the futures contract rather than the physical stocks) over a certain period of time. |
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