SERIES 65 QUESTIONS AND ANSWERS SURE A+
✔✔coincident indicators - ✔✔economic indicators that usually change at the same time
as changes in overall business activity
✔✔Coincident Indicators Examples - ✔✔Nonag employment, Personal Income,
INdustrial products, Manufacturing and trade in constant dollars
✔✔lagging indicators - ✔✔indicators that seem to lag behind changes in overall
business activity
✔✔Lagging Indicator Examples - ✔✔Duration of unemployment Consumer debt to
income anufacturing / trade inventory, average prime rate,
✔✔Balance Sheet Equation - ✔✔Assets = Liabilities + Owner's Equity
✔✔Working Capital - ✔✔current assets - current liabilities
✔✔Current Ratio - ✔✔CA/CL
✔✔Quick Asset Ratio - ✔✔quick assets (cash and debtors) /current liabilities (share
premium account)
✔✔Capital Structure - ✔✔the mixture of debt and equity maintained by a firm
✔✔Debt to Equity Ratio - ✔✔Total Debt/Total Equity
✔✔book value per share - ✔✔(Tangible assets-liabilities-par value of preferred)/shares
of common stock outstanding
✔✔Dividend Yield - ✔✔dividends per share (annual) /market price per share
, ✔✔Dividend payout ratio - ✔✔Dividends per share (annual / Earnings per share
✔✔Form 8-K - ✔✔the report used by publicly traded companies to disclose any material
event not previously reported that is important to investors
✔✔Form 10-K - ✔✔the annual report that publicly traded companies must file with the
SEC
✔✔Form 10-Q Quarterly Report - ✔✔Due within 45 days of the end of the quarter.
Financial statements can be unaudited
✔✔Future Value - ✔✔the amount of money in the future that an amount of money today
will yield, given prevailing interest rates
✔✔Present Value - ✔✔the amount of money you would need to deposit now in order to
have a desired amount in the future
✔✔Rule of 72 - ✔✔The number of years it takes for a certain amount to double in value
is equal to 72 divided by its annual rate of interest.
✔✔Net Present Value (NPV) - ✔✔the sum of the present values of expected future cash
flows from an investment, minus the cost of that investment
✔✔Internal Rate of Return (IRR) - ✔✔the discount rate that makes the NPV of an
investment zero
✔✔Beta - ✔✔Variability in a stocks movement typically measured against the S&P 500
✔✔Alpha - ✔✔(total portfolio return - Risk free rate) - (Port. beta * ( market return - risk-
free rate)
✔✔standard deviation - ✔✔Measure of volatility of an investment's projected returns
computed by using historical performance
✔✔Price/Earnings (P/E) Ratio - ✔✔The ratio of the price per share to earnings per
share; shows the dollar amount investors will pay for $1 of current earnings.
✔✔Price to Book Ratio - ✔✔market value of a firms equity divided by the book value of
it's equity
✔✔Systematic Risk - ✔✔Associated with marcroeconomic factors that affect all assets;
non diversifiable; market risk, interest rate risk, purchasing power risk
✔✔coincident indicators - ✔✔economic indicators that usually change at the same time
as changes in overall business activity
✔✔Coincident Indicators Examples - ✔✔Nonag employment, Personal Income,
INdustrial products, Manufacturing and trade in constant dollars
✔✔lagging indicators - ✔✔indicators that seem to lag behind changes in overall
business activity
✔✔Lagging Indicator Examples - ✔✔Duration of unemployment Consumer debt to
income anufacturing / trade inventory, average prime rate,
✔✔Balance Sheet Equation - ✔✔Assets = Liabilities + Owner's Equity
✔✔Working Capital - ✔✔current assets - current liabilities
✔✔Current Ratio - ✔✔CA/CL
✔✔Quick Asset Ratio - ✔✔quick assets (cash and debtors) /current liabilities (share
premium account)
✔✔Capital Structure - ✔✔the mixture of debt and equity maintained by a firm
✔✔Debt to Equity Ratio - ✔✔Total Debt/Total Equity
✔✔book value per share - ✔✔(Tangible assets-liabilities-par value of preferred)/shares
of common stock outstanding
✔✔Dividend Yield - ✔✔dividends per share (annual) /market price per share
, ✔✔Dividend payout ratio - ✔✔Dividends per share (annual / Earnings per share
✔✔Form 8-K - ✔✔the report used by publicly traded companies to disclose any material
event not previously reported that is important to investors
✔✔Form 10-K - ✔✔the annual report that publicly traded companies must file with the
SEC
✔✔Form 10-Q Quarterly Report - ✔✔Due within 45 days of the end of the quarter.
Financial statements can be unaudited
✔✔Future Value - ✔✔the amount of money in the future that an amount of money today
will yield, given prevailing interest rates
✔✔Present Value - ✔✔the amount of money you would need to deposit now in order to
have a desired amount in the future
✔✔Rule of 72 - ✔✔The number of years it takes for a certain amount to double in value
is equal to 72 divided by its annual rate of interest.
✔✔Net Present Value (NPV) - ✔✔the sum of the present values of expected future cash
flows from an investment, minus the cost of that investment
✔✔Internal Rate of Return (IRR) - ✔✔the discount rate that makes the NPV of an
investment zero
✔✔Beta - ✔✔Variability in a stocks movement typically measured against the S&P 500
✔✔Alpha - ✔✔(total portfolio return - Risk free rate) - (Port. beta * ( market return - risk-
free rate)
✔✔standard deviation - ✔✔Measure of volatility of an investment's projected returns
computed by using historical performance
✔✔Price/Earnings (P/E) Ratio - ✔✔The ratio of the price per share to earnings per
share; shows the dollar amount investors will pay for $1 of current earnings.
✔✔Price to Book Ratio - ✔✔market value of a firms equity divided by the book value of
it's equity
✔✔Systematic Risk - ✔✔Associated with marcroeconomic factors that affect all assets;
non diversifiable; market risk, interest rate risk, purchasing power risk
