Module 12 Study Note Flashcard

Equity market, debt market, derivatives market, and Islamic capital market.

Actions such as insider trading, market manipulation, fraud, and any other activities that compromise market integrity and investor protection.

The core principles and concepts that form the foundation of economic analysis, including GDP, inflation, interest rates, and employment data.

Profitability, growth, risk management, dividend policy, and cost of capital.

The value delivered to shareholders due to management's ability to grow earnings, dividends, and share price.

Corporate finance deals with funding and investment decisions, strategic management involves long-term planning, and both aim to maximize shareholder value.

The idea that a specific amount of money has different values over time due to potential earning capacity.

The difference between the market value of a company and the capital contributed by investors.

A measure of a company's financial performance that shows the net profit after deducting the cost of capital from operating profit.

It helps in assessing a company’s performance, financial health, and making informed investment decisions using various financial ratios.

Higher risk is typically associated with higher potential returns, reflecting the risk-return tradeoff in investments.

The discount rate that makes the NPV of an investment zero, indicating the project's potential rate of return.

A method that evaluates the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

By comparing the returns of a chosen investment to the returns of the best alternative investment of equivalent risk.

If markets are efficient, technical analysis would not provide any advantage as past price movements and patterns are already reflected in current prices.

A market is efficient if asset prices fully reflect all available information at any point in time.

Beta measures a stock's volatility relative to the overall market, indicating its systematic risk.

It involves diversifying investments to reduce risk while aiming for maximum return, based on the mean-variance optimization.

Setting investment objectives, asset allocation, security selection, portfolio execution, and performance evaluation.

Cost of capital, financial flexibility, risk, control considerations, and market conditions.

Debt financing, equity financing, and hybrid financing (convertibles, preferred stock).

Using metrics such as Sharpe ratio, Treynor ratio, Jensen's alpha, and tracking error.

Sensitivity to assumptions, market conditions, and availability of comparable data.

Discounted Cash Flow (DCF), Comparable Company Analysis (CCA), and Precedent Transactions.

The actual worth of an asset based on underlying perception of its true value including all aspects of the business.

It determines the division of earnings between payouts to shareholders and reinvestment in the company, impacting shareholder value and capital structure.

By entering into contracts that offset potential losses in the underlying asset, such as using futures, options, or swaps.

A financial instrument whose value is derived from the value of an underlying asset, index, or rate.

The consolidation of companies or assets, where mergers combine two entities, and acquisitions involve one entity purchasing another.

The process of significantly changing a company's business model, management team, or financial structure to increase value.