44%of Test Investment Products And Their Risks Flashcards
Which the following is true for debt instruments issued by the US treasury
All are issued in book entry form
- Hedge funds
Or non-regulated with no SEC registration required
- Once a dividend is initially declared by the Board of Directors any future dividend payments
Carry no guarantee of payment in any amount
- US government securities are
Issued by the US treasury inbook entry form
- And investor owns a bond purchased several years ago during 3%, which at the time was considered a fair return however he’s fixed 3% interest payments have not kept up with inflation rate the situation presents the investor with
Purchasing power risk
- Limited partnership programs are categorized as direct participation programs the term direct participation refers to the
Flow through profits and losses of the partnership to the individual limited partners
- A change to tax rate on dividends would be an example of
Legislative risk
- Investors face many different risks which of the following would be factors of systematic risk
War
And
Global security threats
- An investor anticipates that a fall in interest rates is eminent this investor not wanting to purchase bonds in order to lock in an interest income would likely buy
Non callable bonds
- Are purchased at a discount
T-bills
Purchased as a percentage of par
T-bonds
A municipality wants to issue GO bonds that will put it over it statutory limit they may do so as long as they have
Voter approval
T-notes pay interest
Semi annually
Penny stocks need what without what?
Risk disclosure
Without Suitability statement
- Bond prices have an inverse relationship to
Interest rates
A mutual fund has been in existence for 25 years . The prospectus must disclose the funds performance
Over the last 1, 5, and 10 years
LGIPs
Are not required to register with the SEC
Need no prospectus
What do you provide information statements which include details of the management fees
In bankruptcy proceedings courts protect both
Corporate and individual filers from creditors
- LGIPs are
Local government investment pools
Securities that are established for states to provide other government entities and short term investment
- The time to maturity for debt instruments
Can be any length of time
- A call or put that can be exercise before expiration is a
American style option
Federal funds may be loaned from
One FRB MEMBER BANK TO ANOTHER
- Intangible drilling costs are
Cost for those items that would have no salvage value at the end of the program
- When investing in overseas markets in foreign securities investors should be aware of and understand
Currency risk
- A restricted person would be allowed to purchase new shares at public offering price if only
The interest does not exceed 10%
- Collateral trust bond
Corporate bonds back by the securities of other corporations
- An income bond is
And adjustment bond and is unsecured
- An individual owning shares of the corporation common stock would not be allowed to
Declare dividends
- Serial maturity bonds
Are issued at one time and mature in successive years
Is fixed at the time of a bond is issued
Nominal yield
- A Shareholder owns preferred shares that allow for the possibility of receiving more than the stated dividend
Participating
- If an investor is long an option contract and wishes to exercise the contract
Then the investor must notify the BD, then the BD must notify the OCC
The decision to pay a dividend rests with
The BOD but is not guaranteed
When a bond is priced at par value
It is trading at a premium
- What two risks is an investor avoiding if their portfolio is made up of U.S. securities only
Political and currency
- Revenue bonds are
Self supporting
- GO Bonds are
Backed by the municipality’s good faith and credit
Priority at dissolution for preferred shareholders means
After all creditors
And
Before common shareholders
- Order of payment at the time of a corporate liquidation
- Employee wages and taxes owed
- Secured debt holders
- Subordinated debentures
- Preferred stock
When a corporation issues a mortgage bond, the issues total value
Should be less than that of the real estate it is backed by
Commercial paper is
Unsecured debt with a maximum maturity of 9 months
For restricted stock or unregistered stock held by an affiliate or inside her which the following applies
Six month holding period With volume limits there after
- When an investor purchases a corporate bond the investor it is
Lending money to and becoming a creditor of the corporation
- A hedge fund portfolio has been characterized as being highly leveraged(borrowing to purchase) this means??
There is substantial borrowing or purchasing on margin
- The coupon payable on a bond may also be referred to as
The stated or nominal yield
- Yield to call (YTC) calculations reflected early redemption date and
Acceleration of the discount gain if the bond was originally purchased at a discount
&
Accelerated premium loss if the bond is originally purchased at a premium
- Corporate Debentures are what?
Unsecured bonds backed by the good faith and credit of the issuing corporation
&
They are not secured by any underlying collateral
- Under the provisional rule of 144, what percentage of outstanding stock may a control person sell every 90 days??
1%
- Open-end investment companies trade new shares how much how often??
Unlimited
&
Continuously
- Closed-end investment companies trade new shares how much how often?
Number of shares are fixed and once the IPO is over, the only way to acquire shares is in the secondary market
- Both types of funds may operate as regulated investment companies and avoid taxation, both may choose to be diversified or not, and both offer a wide variety of investment objectives. What two types of funds fit this description??
Closed-end and Open-end
