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65 Flashcards

1
Q

Small Companies
1 State
Not eligible for any other registration

A

Regostration by Qualification

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2
Q

BD who assumes risk of holding shares of specified security to facilitate trading.

They will always buy and sell that security.

Will post Ask and Buy prices

A

Market Makers

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3
Q

The governments ability to tax its constituency and spend that revenue to affect the economy.

The government is abke to change the various stages of the business cycle.

Determined by the President or Congress.

A

Fiscal Policy

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4
Q

Stocks and bonds of companies expected to have higher than average growth.

Generally smaller companies, not always.

A

Growth Securities

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5
Q

Municipal bond backed by a specific revenue stream.

Examoles incluse hospitals, sewage, plants, and toll roads.

A

Revenue Bonds

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6
Q

Economic indicators that predict future economic changes.

Workers average work week hours.

Building Permits.

Stock Prices

Money supply

Index of consumer expectations

A

Leading Indicators

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7
Q

Not an investment Company, but it is a pooled investment.

Pools real estate investments

Equity REITs invest in Commercial Property.

Mortgage REITs invest in Mortgages.

Avoids corporate taxes if 75% of income comes from real estate and distributes 90% or more.

Trade on exchange

A

Real Estate Investment Trusts (REITs)

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8
Q

May be removed due to diversification.

Includes risk such as: business, credit, regulatory, legislative, liquidity, and sovereign risks.

A

Unsystematic/Nonsystematic Risk

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9
Q

The assumption that money held today is worth more than money received tomorrow.

A

Time value of money concept

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10
Q

Many factors are important to be considered.

The clients goals are very important.

Time horizon is one of the more important facts.

Personality and financial status are also important.

A

Clients risk tolerance

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11
Q

Asset class

Ownership

Generally less secure

Generally higher return

Generally more aggressive

A

Equities

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12
Q

Basically the risk/reward theory

The greater the risk the greater the reward you should expect.

Usually compared to a “risk free return” which generally is US treasuries.

A

Capital asset pricing model

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13
Q

Must be filed by anyone acquiring ownership of 5% or more of any class of publicly traded security.

Must be submitted within 10 days of acquisition that puts them over 5%.

A

Schedule 13D

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14
Q

The theory that the only way to benefit in the market is with insider information.

All other information is immediately factored into the price of the security.

Only insider information would be a benefit.

A

Semi-strong market efficiency

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15
Q

Stocks with low price/earnings ratios.

Generally pays dividends

Generally lower beta

A

Value stocks

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16
Q

The RoR that makes the net present value of the investment equal to zero.

It is the rate of expected growth.

The discount rates by which investors determine viability of investment.

Minimally tested

A

Internal rate of return

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17
Q

Not illegal to own

You all go to sell without informing SEC and complying with regulations.

Stock that is held in the company that wasn’t offered as part of an IPO.

Has not gone through vetting process of SEC so restricted.

A

Restricted stock

18
Q

Restricted shares of stock held by an insider of the corporation.

A

Control stock

19
Q

Annual report required by SEC for companies with AUM > $10 M and equity securities held by more than 500 owners.

It is due 90 days after your end

Gives comprehensive summary of financial performance and info about the company.

A

Form 10-K

20
Q

Risk intrinsic to whole market

Cannot be diversified away

3 types: market, interest rate, and inflation.

A

Systematic risk

21
Q

The potential benefit one could get from an alternative investment than the one chosen.

Every choice has Opportunity Cost, what could happen if you choose something else.

A

Opportunity cost

22
Q

Collection of debt (or mortgages in CMOs) that pay interest that is pulled and distributed to investors.

Has Tranches based on risk and stated returns.

Suffers Prepayment risk.

A

Collateralized debt obligation (CDO)

23
Q

Economic indicators that lag behind the actual economy.

Unemployment rates and claims.

Business spending.

Changes in CPI from previous months.

A

Lagging indicators

24
Q

Total return on assets are portfolio over. During which the investment was held.

Calculator by taking the difference between start and in values, divided by initial value.

(End Value - Initial Value)/(Initial Value)

A

Holding Period Return

25
Q

Difference between the highest return in Lois return.

Statistic that helps investor determine potential gains and losses in the future.

A

Range

26
Q

Business venture designed to let investors participate directly in the cash flow in tax benefits of the investment.

Generally passive investments in real estate or energy related.

Usually organized as a limited partnership.

S-Corps Or general partnerships.

A

Direct participation program (DPP)

27
Q

Complicated equation

Calculation that shows the value of a dollar today compared to the value of the same dollar in the future.

Takes into account inflation and returns

Found by applying a discount rate that needs to be achieved to justify the investment.

A

Net present value

28
Q

United States government debt.

They are inflation protected and that’s do not have purchase power wrist.

The principal is adjusted semiannually index by the consumer price index (CPI).

The fixed rate stays the same, but the interest payments are based on the principle and increase semi annually as well.

A

Treasury inflation protected securities (TIPs)

29
Q

One of the most important tools of the federal reserve board to impact monetary policy.

A

Federal discount rate

30
Q

The Gatoror loss of an investment over some period.

That. Could be annually, lifetime, holding period, or any other period.

A

Rate of return (Rate of Return)

31
Q

Possibility that an investment may lose value due to changes in the overall interest rates.

A large increase in interest rates can adversely affect bond portfolios.

A

Interest rate risk

32
Q

What you could do if you believe a stock is going to be going down.

It is borrowing and selling high and then later buying low to repay the loan.

Extremely risky, investor responsible for later buying security, if security increases, invest you could lose a lot of money.

Simply it is betting against the security, betting it will go down.

A

Short sale

33
Q

Most often occurring value in the list.

Can be multiple

A

Mode

34
Q

The capital gains/losses on securities help greater than one year.

Gains cancel losses dollar for dollar

Excess gains receive lower tax rate than ordinary income.

Excess losses can be carried forth and definitely, and $3000 per year written off against ordinary income each year.

A

Long-Term Capital Gains

35
Q

Document containing assets and liabilities of the individual or company.

Has net worth (Assets-Liabilities)

Does not have income or expenditures

A

Balance sheet

36
Q

The title a 65 license let you use.

A person who must act in the best interest of the clients by law.

As a fiduciary basically give the advice you would expect to be given if the position were reversed.

A

Fiduciary

37
Q

Statistic used to give expected return based on the risk for the security.

Better compares a security to unknown and understood benchmark.

Positive beta means the security moves in the same direction as the investment.

Multiply better by 100% to determine percentage movement of benchmark used as an expected return on the security.

Measures systematic risk

A

Beta

38
Q

The means by which the monetary Authority (central bank, currency board, etc.) regulate the money supply.

Controlled by the federal reserve (FRB).

FRB sets discount rate, changes the reserve requirements, or have the FOMC buyer sell treasureses.

A

Monetary policy

39
Q

Risk from potential political upheaval, instability, unrest, or some other issue.

Present in for securities

A

Political risk / Sovereign risk

40
Q

Business structure by which the company itself is made into a legal person and assumes all legal and financial liabilities.

Revenues are taxed to the corporation

A

C - Corporation

41
Q

Tries to provide a method investors can use to maximize return while minimizing the wrist through descriptive statistics like beta and correlation.

The higher the risk the higher the expected return it should be.

A

Modern portfolio theory

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