| What is the model that determines the current price of a stock as its dividend next period divided by the discount rate less the dividend growth rate | Dividend Growth Model |
| What is a stocks expected cash dividend divided by its current price? | Dividend Yield |
| What is the dividend growth rate or the rate at which the value of an investment grows called? | Capital Gains Yield |
| What is equity without priority for dividends or in bankruptcy called? | Common Stock |
| What is a produced in which a shareholder may cast all votes for each member of the board of directors called? | Cumulative Voting |
| What is a procedure in which a shareholder allowing another individual to vote his or her shares called? | Straight Voting |
| A grant of authority by a shareholder allowing another individual to vote his or her shares is called what? | Proxy |
| What is a payment made out of a firms earnings to its owners in the form of either cash or stock called? | Dividend |
| What is a stock with dividend priority over common stock, normally with a fixed dividend rate, sometimes without voting rights called? | Preferred Stock |
| What is the market in which new securities are originally sold to investors called? | Primary Market |
| What is the market in which previously issued securities are traded among investors called? | Secondary Market |
| What is an agent who buys and sells securities from inventory called? | Dealer |
| What is an agent who arranges security transactions among investors called? | Broker |
| What is the owner of a trading license on the New York Stock Exchange called? | Member |
| What is an NYSE member acting as a dealer in a small number of securities on the exchange floor; formerly known as a specialist called? | Designed Market Maker (DMM) |
| What are NYSE members who execute customer buy and sell orders; sometimes called $2 brokers called? | Floor Brokers |
| Investment firms that are active participants in stocks assigned to them. Their job is to make a one sided market i.e. offering to either buy or sell. They trade purely for their own accounts. These people are called? | Supplemental Liquidity Providers (SLPs) |
| The flow of customer orders to buy and sell securities is called? | Order Flow |
| A fixed place on the exchange floor where the DMM operates is called? | DMM’s Post |
| The highest bid quotes and the lowest ask quotes for a security is called? | Inside Quote |
| Websites that allow investors to trade directly with one another are called? | Electronic Comminications Networks (ECNs) |
| The difference between an investments market value an its cost is called what? | Net Present Value |
| A valuation calculating the present value of a future cash flow to determine is value today and the process of valuing an investment by discounting its future cash flow is called what? | Discounted Cash Flow Valuation |
| The amount of time required for an investment to generate cash flows sufficient to recover its initial cost is called what? | Payback Period |
| An investments average net income divided by its average book value is called what? | Average Accounting Return (AAR) |
| The discount rate that makes the net present value of an investment zero is called what? | Internal Rate of Return (IRR) |
| A graphical representation of the relationship between an investments net present values and various discount rates is called what? | Net Present Value Profile |
| The possibility that more than one discount rate will make the net present value of an investment zero is called what? | Multiple Rates of Return |
| A situation where taking one investment prevents the taking of another is called what? | Mutually Exclusive Investment Decisions |
| The present value of an investments future cash flows divided by its initial cost. Also called “benefit-cost ratio” | Profitability Index (PI) |
| The difference between a firms future cash flows with a project and those without the project is called what? | Incremental Cash Flows |
| The assumption that evaluation of a project may be based on the projects incremental cash flows is called what? | Stand-Alone Principle |
| A cost that has already been incurred and can’t be recouped and therefore should not be considered in an investment decision is called what? | Sunk Cost |
| The most valuable alternative that is given up if a particular investment is undertaken is called what? | Opportunity Cost |
| The cash flows of a new project that come at the expense of a firms existing project is called what? | Erosion |
| Financial statements projecting future years operations is called what? | Pro Forma Financial Statements |
| The tax saving that results from the depreciation deduction, calculated as depreciation multiplied by the corporate tax rate is called what? | Depreciation Tax Shield |
| The depreciation method under US tax law allowing for the accelerated write-off of property under various classifications is called what? | Accelerated Cost Recovery System (ACRS) |
| The possibility that errors in projected cash flows will lead to incorrect decisions also called an “estimation risk” is called what? | Forecasting Risk |
| The determination of what happens to net present value estimates when we ask what-if questions is called what? | Scenario Analysis |
| Investigation of what happens to net present value when only one variable is changed is called what? | Sensitivity Analysis |
| Opportunities that managers can exploit if certain things happen in the future also known as “real” options is called what? | Managerial Options |
| Taking into account the managerial options implicit in a project is called what? | Contingency PLanning |
| Options for future related business products or strategies is called what? | Strategic Options |
| The situation that exists if a firm has positive net present value projects but can’t obtain the necessary financings is called what? | Capital Rationing |
| The situation that occurs when units in a business are allocated a certain amount of financing for capital budgeting is called what? | Soft Rationing |
| The situation that occurs when a business can’t raise financing for a project under any circumstances is called what? | Hard Rationing |
