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65 Cards Flashcards

1
Q

Common stocks

A

Equity security representing ownership
Benefits :
Capital appreciation/growth
(Dividend from some issuers)

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2
Q

Common stock risks

A

Systematic
Market risk, inflation (short term risk)
Non Systematic
Business, financial, legislative, regulatory, political (foreign), liquidity

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3
Q

Common stock typical investor

A

Young, more aggressive
Seeks capital appreciation,
May seek divided income from value stocks

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4
Q

Common stock, growth stocks

A

Growing companies,
Maybe minimally or unprofitable,
Low or no divided payouts, high P/E ratios

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5
Q

Common stock value (undervalue) stocks

A

Large, well established companies,
Typically pay divided,
High dividends payout ratio, low P/E

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6
Q

Preferred stocks

A

Equity security representing ownership,
Pays fixed dividend rate based on par

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7
Q

Preferred stocks, Potential features

A

Cumulative vs straight - skipped dividend,
Callable - maybe bought back by issuer,
Convertible- into common stock of same issuer,
Participating-extra dividends if company preforms

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8
Q

Preferred stocks benefits

A

Dividend income,
Lower tax rates on income

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9
Q

Preferred stocks risks

A

Systematic risks:
Interest, ,
Inflation,
Reinvestment
Non systematic riska:
Business or financial (threatens dividends,
Liquidity risk

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10
Q

Debt securities

A

Represent debt obligations of issues (loans),
Pays fixed interest rates based on par value (1,000)

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11
Q

Debt securities potential features

A

Callable, may be bought back by issuer,
*call premium = amount above par to be paid if called
*call protection = amount of time before callable,
Convertible- into common stock of same issuer,
Zero coupon - sold at discount, matures at par

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12
Q

Debt securities Benefits

A

Interest income,
Capital appreciation if convertible ,
Variety of choices in the market

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13
Q

Debt securities risks

A

Systematic risks:
Interest rate risk= long maturity and low coupon,
Inflation risk= long maturity,
Reinvestment risk=except zero coupon code

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14
Q

Debt securities Non systematic risks

A

Default credit risk=
Interest grade (bbb or above)
Speculative (junk) is bb below,
Liquidity
Legislative
Regulative
Political (foreign only)

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15
Q

Debt securities typical investor

A

Older, more conservative (except junk bonds),
Seeks income, especially in retirement

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16
Q

Corporate debt securities

A

*Commercial paper - short term (270 days or fewer), zero coupon,
*Debentures- long term, unsecured bond
*mortgage bond- secured by real estate or property
*collateral trust cert - secured by securities or subsidiary

17
Q

US gov securities

A

*Treasury bills= 1 yr or less, zero coupon
*Treasury notes - 2-10 yrs. Pays semi annual interest
*Treasury bonds- up to 30 yrs, Pays semi annual interest

18
Q

US goc debt securities cont

A

*STRIPS- long term up to 30 yrs zero coupon
*TIPS- Long term, pays semi annual interest
** Par value adjustments to emplation rate every 6 months
** Greater of original or adjusted par paid at maturity

19
Q

Municipal securities General obligation bonds

A

General obligation bonds,
* Non self supporting debt,
* Funds public parks, schools, roads, comma et cetera
* Is backed by property (ad valorem) taxes
* Subject to debt limits and voter approval

20
Q

Municipal Securities, revenue bonds

A
  • Self supporting debt
  • Funds toll roads, stadium’s, airport’s, etc
  • Backed by user charges
  • Not subject to debt limits or voter approval
21
Q

Municipal securities, not subject to taxes if purchased by residents

A

Most suitable for high tax brackets
Not suitable for low tax brackets or retirement plans

22
Q

Investment companies classifications

A

.Management companies open and closed end
. Unit investment trusts - UITs
. Face amount certificates

23
Q

Investment companies continued

A
  • Offer pool investment opportunities
    *Most suitable for investors seeking, instant diversification, professional management (Except fixed UITs)
24
Q

Open end management companies, Mutual funds

A

*redeemable pulled portfolios of managed securities
*active management
Attempting to “beat the market
*intends to beat benchmark (S&P 500)
*Higher expense ratios

25
Q

Open end mgmt companies
Passive mgmt

A

Attempts to *match the market
Intends to provide returns of benchmark, lower expense ratios

26
Q

Open end mgmt companies cont.

A

*Offered to investors at POP if front end sales charge exists offered
*offered to investors at NAV if no load, no sales charge
NAV is minimum price

27
Q

Open end mgmt companies continued

A

NAV influenced by:
* Value of securities in portfolio, distributions to investors like dividends or capital gains
* NAV not influenced by demand for mutual fund shares
*May not be sold short or bought on margin

28
Q

Closed end management companies, publicly traded

A
  • Negotiable pulled portfolios of managed securities,
    *NAV report’s book value of shares, shares traded in market at the going market price
    ** may be purchased above, below or at NAV
  • Maybe sold short or bought on margin
29
Q

Exchange traded funds or etfs

A

*Structured as open end management companies, *typically are passively managed in match index,
*may be sold short or bought on margin,
* leveraged and inverse ETFs
** leveraged = track index at 2x or 3x rate
** inverse = tracks opposite index returns
** Only suitable for aggressive and risk tolerant investors

30
Q

Types of funds, growth funds

A

Growth funds invest in growth common stocks, seek growth

31
Q

Types of funds, value funds

A

Value funds invest in valuable common stocks, seek growth and income

32
Q

Types of funds, balanced funds

A

Balanced funds invest in common and preferred stocks plus bonds
Seek growth and income

33
Q

Types of funds income funds

A

Types
Equity
Corporate debt funds
Government debt funds
Municipal debt funds
High yield, junk, bond funds
GNMA/FNMA/FHLMC funds
Money market funds - $1 NAV at all times

34
Q

Types of buns continue

A

Asset allocation funds - seek fixed or variable asset allocation mix
Life cycle funds - adjust risk tolerance overtime
Sector/specialized funds - invest in specific sectors or regions of the world
Is index funds - track a specified index

35
Q

Broker - dealers definition

A

Broker dealers are person or persons engaged in business of effecting transactions and securities for the account of others or for his own account

36
Q

Broker - dealer’s registration form: Form BD

A

Exclusions from registration
Agents, issuers in banks
Vacation rule
Institution rule
Canadian, limited registration

37
Q

Agents definition

A

Agents are individuals representing a broker - dealer or issuer an effecting security transfer is security transactions

38
Q

Agents use registration form form U4

A

Exclusions from registration:
Vacation rule
Institution rule
Clerical
Representing an issuer while offering exempt securities or performing exempt transactions

65 (1 decks)

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