Financial Planning 1 - 3.02 Terms
Fundamental Analysis - answer Studying all aspects of a company to understand its
intrinsic value
Risk Tolerance - answer a measure of how much risk you're willing to accept in
exchange for potentially higher returns
Short-term time horizon - answerless than five years
Intermediate-term time horizon - answer between 5 and 15 years from now
Long-term time horizon - answer at least 10-15 years and possibly as long as 40-50
years.
Liquidity - answerthe ease with which you can convert your investment dollars back into
cash.
Tax-deferred retirement plans - answerallow you to deposit money into an investment
account and hold off on paying the taxes on it until you start using the money
401(k) - answeremployer offered tax-deferred retirement plans. As an employee, you
can contribute your pre-tax income to the account
Individual Retirement Accounts (IRAs). - answertax-deferred retirement plans, usually
for people who are not covered by an employer-sponsored plan
Roth IRA - answerretirement plan where contributions are made with after-tax dollars.
Do not pay taxes upon distribution.
Market Value - answerwhat people are willing to pay for a stock
Book Value - answerWhat a company is worth from an accounting point of view
Intrinsic Value - answerA company's actual, fair worth
Qualitative measure - answersubjective, include an assessment of the company's
product mix, the level of competition, management, strategy, and the strength of its
brand
Quantitative measure - answera thorough examination of a company's financial
statements, using comparisons and ratios to determine financial health
Fundamental Analysis - answer Studying all aspects of a company to understand its
intrinsic value
Risk Tolerance - answer a measure of how much risk you're willing to accept in
exchange for potentially higher returns
Short-term time horizon - answerless than five years
Intermediate-term time horizon - answer between 5 and 15 years from now
Long-term time horizon - answer at least 10-15 years and possibly as long as 40-50
years.
Liquidity - answerthe ease with which you can convert your investment dollars back into
cash.
Tax-deferred retirement plans - answerallow you to deposit money into an investment
account and hold off on paying the taxes on it until you start using the money
401(k) - answeremployer offered tax-deferred retirement plans. As an employee, you
can contribute your pre-tax income to the account
Individual Retirement Accounts (IRAs). - answertax-deferred retirement plans, usually
for people who are not covered by an employer-sponsored plan
Roth IRA - answerretirement plan where contributions are made with after-tax dollars.
Do not pay taxes upon distribution.
Market Value - answerwhat people are willing to pay for a stock
Book Value - answerWhat a company is worth from an accounting point of view
Intrinsic Value - answerA company's actual, fair worth
Qualitative measure - answersubjective, include an assessment of the company's
product mix, the level of competition, management, strategy, and the strength of its
brand
Quantitative measure - answera thorough examination of a company's financial
statements, using comparisons and ratios to determine financial health
