Book 3 Pages 1-51 Flashcards
1
Q
what are the different maturities of T-bills?
A
4, 13, 26, 52
2
Q
what is the minimum purchase amount in regards to T-bills?
A
$100
3
Q
do T-bills have default risk?
A
no
4
Q
are T-bills subject to original issue discount rules?
A
no
5
Q
when is interest income paid under T-bills?
A
at maturity
6
Q
is interest income taxed at the federal level in regards to T-bills?
A
Yes
7
Q
is interest income taxed at the state level in regards to T-bills?
A
no
8
Q
publicly traded, short term, unsecured promissory notes issued by companies to raise cash to finance accounts receivable and inventories
A
commercial paper
9
Q
true or false?
commercial paper is issued in denominations of $100k
A
true
10
Q
what is the average maturity length of commercial paper?
A
30 days
11
Q
what is the maturity range for commercial paper?
A
1 to 270 days
12
Q
true or false?
commercial paper has a high default risk
A
false, it is low
13
Q
true or false?
commercial paper usually has higher yields than T-bills and CDs
A
true
14
Q
true or false?
commercial paper interest income is taxed at federal but not state levels
A
false, it is taxed at both
15
Q
when is commercial paper interest income taxed?
A
in the year it is earned
16
Q
deposits placed with commercial banks at a specified interest rate for specified time period
A
CDs
17
Q
Do CDs have high or low default risk?
A
low
18
Q
is interest income from CDs taxed at state, federal, or both levels?
A
both levels
19
Q
are money market accounts subject to a limited amount of withdrawals per month?
A
yes
20
Q
when is money market interest income taxed?
A
in the year earned
21
Q
true or false?
interest income from a money market account is taxed at federal and state levels
A
true
22
Q
used by securities dealers to finance large inventories of marketable securities
A
repurchase agreements
23
Q
true or false?
repurchase agreements have a short term to maturity
A
true
24
Q
true or false?
repurchase agreements have high risk
A
false
25
under a repurchase agreement, the repurchase price is ___ than the selling price
greater
26
securities that act as a line of credit issued from a bank
banker's acceptance
27
calculate the dollar interest based on the below info:
Assume a portfolio manager use a repurchase agreement to finance a $5million position. Assuming the repo term is one day and the repo rate is 4%
$5million * 4% * (1/360) = $555.55
28
debt security obligating the issuer to make payments of interest and principal on specified dates to the owner
individual bonds
29
if the market interest rate is greater than a bonds coupon rate the bond will be issued at a ___
discount
30
if the market interest rate is less than a bonds coupon rate the bond will be issued at a ___
premium
31
A 5% coupon bond will pay $___ per $1,000 bond
$50
32
true or false?
| zero coupon bonds sell at a discount
true
33
do zero coupon bonds have reinvestment rate risk?
no
34
bonds registered with the issuing company and payments are made to the owner of record
registered bonds
35
unregistered bonds in which payments are made to the bondholder
bearer bonds
36
record of ownership held electronically in a central depository allowing for greater efficiency in bond transactions
book-entry form
37
established and funded each year by the bond issuer to accumulate sufficient funds to pay off the debt upon maturity, held by a trustee
sinking funds
38
issued in terms up to 10 years and have a $100 minimum purchase
treasury notes
39
issued in terms of 30 years and have $100 minimum purchase
treasury bonds
40
are treasury notes/bonds exempt from state income tax?
yes
41
marketable securities whose principal is adjusted by changes in the CPI (consumer price index)
treasury inflation protected securities (TIPS)
42
what are the different maturities available under TIPS?
5, 10, 30 years
43
calculate the semiannual inflation rate based off the below info:
a TIPS has a 4.5% coupon rate and the annual inflation rate is 4%. On January 1st an investor purchases $100,000 of par value.
$4% / 2 = 2%
44
calculate the inflation adjusted principal at the end of a 6 month period:
a TIPS has a 4.5% coupon rate and the annual inflation rate is 4%. On January 1st an investor purchases $100,000 of par value.
$100k x [1 + (4%/2)] = $102,000
45
calculate the inflation adjusted coupon payment at the end of a 6 month period:
a TIPS has a 4.5% coupon rate and the annual inflation rate is 4%. On January 1st an investor purchases $100,000 of par value.
$100k x [1 + (4%/2)] = $102,000
$102,000 * (4.5% / 2) = $2,295
46
does TIPS interest income get taxed at the state level?
no
47
does TIPS increase in principal get taxed at the state level?
no
48
does TIPS increase in principal get taxed at the federal level?
yes
49
permit investors to hold and trade the individual interest and principal components of eligible treasury notes and bonds as separate securities
treasury strips (Separate trading of registered interest and principal of securities)
50
true or false?
| Savings EE bonds must be held for at least 12 months
true
51
what is the penalty for redeeming Savings EE bonds within 5 years of issue?
3 month interest penalty
52
true or false?
| Savings EE bonds are subject to state income tax
false
53
is interest tax deferred under a Savings EE bond?
yes
54
is interest income from Series HH bonds taxed at state levels?
no
55
true or false?
| Series HH bonds have been discontinued
true
56
offer a fixed interest rate that can earn interest up to 20 years
Series HH bonds
57
represents an ownership claim on a pool of mortgages, most commonly on residential property
mortgage backed securities
58
mortgage backed securities that have no default and are government backed
Ginnie Mae (GNMA)
59
what risks are mortgage backed securities subject to?
interest rate risk
prepayment risk
reinvestment rate risk
60
mortgage derivatives created by private investment firms
collateralized mortgage obligations (CMO)
61
what are the three types of payments received under a mortgage backed security?
scheduled interest
scheduled principal
unscheduled principal
62
what risks are collateralized mortgage obligations subject to?
market risk
prepayment risk
liquidity risk
interest rate risk
63
bonds that are repaid from the revenue generated from the financed project
revenue bonds
64
bonds that are backed by the full faith and credit of the municipality issuing the debt
general obligation bonds
65
issued to finance community capital improvements
general obligation bonds
66
issued by municipalities to finance specific projects
revenue bonds
67
true or false?
| revenue bonds are less risky than general obligation bonds
false, revenue bonds are more risky
68
bonds where more than 10% of the proceeds of the issue are used for private business and more than 10% of the payment of the principal and interest is secured by an interest in property to be used for private business or derived from payments for property used for private business
Private activity bonds
69
a specified series of bonds that mature each year until the final year of maturity
Serial Bonds
70
what is the tax equivalent yield of the following municipal bond:
yield of muni bond = 5% and the tax payer is in the 25% tax bracket
5% / (1 - 25%) = 6.67%
71
a legal document that sets forth repayment schedule, redemption rights, and amount of issue
indenture agreement
72
bonds that have a legal claim to specific assets in the event of default, insolvency, or liquidation
Secured bonds
73
true or false?
| secured bonds generally have lower yields than unsecured bonds
true
74
bonds that are backed by real estate, land, or property
mortgage bonds
75
bonds secured by stocks and bonds of other companies held in trust
collateral trust bonds
76
bonds not backed by collateral
debentures
77
true or false?
| subordinate debentures have high yield than secured bonds and regular debentures
true
78
bonds that have a high probability of payment of interest and repayment of principal
investment grade bonds
79
what agencies rate bonds?
standard and poors
Fitch
Moody's
80
what ratings are considered investment grade?
anything BBB or higher
81
bonds that have a significant risk of defaul
non-investment grade bonds
82
what ratings are considered non-investment graded?`
anything BB+ or lower
83
what other names do non-investment grade bonds go by?
junk or high yield
84
what is the lowest bond rating by Standard and Poor's?
D
85
allows the issuer to redeem a bond issue before its maturity date, either in whole or in part
callable bond
86
corporate bonds that may be exchanged for a fixed number of shares of the issuing company's common stock
convertible bond
87
true or false?
| convertible bonds usually have a lower yield than regular bonds
true
88
the price that is paid for each share of common stock that is acquired through the conversion of the security
conversion price
89
the number of shares of the issuing company's common stock that can be acquired by exchanging the convertible security
conversion ratio
90
how do you calculate the conversion ratio?
par value of convertible security / conversion price
91
represents the cost of each share of stock obtained through the conversion
market conversion price
92
calculate the market conversion price based off the following info:
if the market price of the convertible bond is $1,100 and 50 shares of common stock can be obtained
$1,100 / 50 = $22
93
represents the value of the bond if it were converted based on current market conditions
conversion value
94
calculate the conversion value based on the following info:
| if ABC company was trading at $70 per share and its convertible bond had a conversion ratio of $15
$70 x $15 = $1,050
95
true or false?
| you have pay taxes on the conversion of a security into common stock
false
96
true or false?
| corporate bonds offer high yields than government bonds
true
97
true or false?
| Yankee bonds are traded in the United States on exchanges or OTC markets
true
98
true or false?
| Eurodollar bonds are traded in the United States
false
99
true or false?
| Eurodollar bonds are registered with the SEC?
false
100
true or false?
| Yankee bonds are registered with the SEC
True
101
true or false?
| Foreign pay bonds are registered with the SEC
False
102
True or false?
| Foreign pay bonds are issued and traded overseas
true
103
are foreign pay bonds subject to exchange rate risk?
Yes
104
true or false?
| if the exchange rate goes from 1.50 per 1.00 to 1.40 per 1.00 you will lose principal on a foreign pay bond
true
105
a promise to pay a certain sum of money at a prescribed time or to make a series of payments over a certain period
promissory notes
106
type of investment that has a guaranteed rate of return for a fixed time period and is primarily sold to pension plans
Guaranteed Investment Contract
107
true or false?
| guaranteed investment contracts have low default risk
true
108
states that one share of common stock permits one vote for each vacant position on the board of directors
statutory
109
states that a shareholder can cast votes equal to the number of vacant positions on the board of directors multiplied by the number of shares owned
cumulative
110
give an example of statutory voting
shareholder has 100 shares, there are two vacant positions.... this means the shareholder can put 100 votes towards each vacant position
111
give an example of cumulative voting
shareholder has 300 shares, there are three positions vacant...this means the shareholder can cast 300 total votes combined between the 3 vacant spots
112
true or false?
| cumulative voting protects minority shareholders
true
113
entitles existing common stockholders the right to maintain ownership percentage
preemptive right
114
allows stockholders to purchase common stock below the current market price
rights offering
115
stock held by brokers on behalf of investors
street name stock
116
the date the board of directors approves and declares that a dividend will be paid
declaration date
117
the date on which the stock begins trading without the dividend; investors who held the stock on the day before this date will receive the dividend
ex-dividend date
118
the date by which stock trades must be settled for shareholders to receive the dividend
record date
119
when is the record date for common stock?
two business days after the ex-dividend date
120
the date the company actually pays the dividend to the shareholders
payable date
121
true or false?
| the corporation paying the dividend receives a tax deduction
false
122
if a company is worth $11million with 1 million shares outstanding and issues a 10% stock dividend, what will the stock price of the company be?
1 million x 10% = 100,000 new shares
| $11 million / 1.1 million shares = $10 per share
123
```
true or false?
stock dividends (different than regular dividends) received by the investor are taxable
```
false
124
commonly used to reduce the market price per share of the stock
stock splits
125
if an investor owns 100 shares of a company that trades at $150 per share and the company declares a 3 to 1 stock split how many shares will the investor own and at what price?
300 shares at $50 per share
| $150/3 = $50) (100 x 3 = 300
126
used to reduce the total number of shares outstanding
reverse stock split
127
an investor owns 500 shares of stock with a price of $2 per share. The company declares a reverse stock split of 5 for 1, how many shares will the investor own and at what price?
100 shares at $10
| 500/5 = 100) ($2 x 5 = $10
128
true or false?
| Blue chip stocks are represented by the DJIA
true
129
issued by highly regarded, cash flow stable companies
blue-chip stocks
130
true or false?
| blue chip stocks usually don't pay dividends
false, they usually do
131
issued by companies with sales, earnings, and market share growth rates exceeding those typical of the industry
growth stocks
132
true or false?
| growth stocks usually pay a dividend
false, they don't usually pay dividends
133
true or false?
| growth stocks usually have high price to earnings ratios
true
134
stocks that tend to prosper during economic expansion and perform poorly during contractions
cyclical stocks
135
what industries will you typically find cyclical stocks in?
automobile, construction, air travel
136
stocks currently trading at prices that are low considering their historical earnings and asset values
value stocks
137
true or false?
| value stocks usually have low price to earnings ratios
true
138
stocks relatively unaffected by economic fluctuations
defensive stocks
139
stocks affected by changes in market interest rates
interest sensitive stocks
140
what industries are you most likely to find interest sensitive stocks?
insurance
financials
construction
real estate
141
preferred stock is an example of a ____, there is no fixed maturity date
perpetuity
142
true or false?
| preferred stock usually has a fixed dividend
true
143
a hybrid security with features of both equity and debt securities
preferred stock
144
what is the value of the dividend that would be paid under the following preferred stock:
A $100 par 5.5% issue
$5.50 annually per share
145
states that unpaid preferred stock dividends from prior years must be paid before dividends are paid to common stockholders
cumulative preferred
146
states that shareholders are not paid missed dividends
straight preferred
147
states that shareholders are paid a regular fixed dividend plus an additional dividend if common stock dividend exceeds a specified amount
participating preferred
148
stock issued with the right to convert the preferred shares into a specified number of common shares
convertible preferred
149
stock issued that gives the company to repurchase preferred shares from investors at a stated call price after a specified date
callable preferred
150
trust receipts issued by a US bank for shares of a foreign company purchased and held by a foreign branch of the bank
ADR (american depository receipts)
151
true or false?
| exchange rate risk is completely eliminated with ADR's
false
152
corporation or trust that pools investors' money and uses proceeds to invest in a portfolio of securities
investment companies
153
to be classified as an investment company what four characteristics must be present?
1. at least 90% of income derived from interest, dividends, and capital gains
2. at least 90% of taxable income distributed to shareholders
3. 25% or less of the value of a fund's assets invested in the securities of one issuer
4. for 50% of the portfolio, investment in any one issuer limited to 5% of the total assets of the fund and 10% of the outstanding voting securities of such issuer
154
true or false?
| unit investment trust (UIT's) are self liquidating
true
155
true or false?
| unit investment trusts are actively managed
false
156
true or false?
| shares of a close end investment company are traded in the secondary market
true
157
true or false?
| close end investment companies usually have a fixed capitalization
true
158
true or false?
| open end investment companies are mutual funds
true
159
true or false?
| mutual funds are not traded in the secondary market
true
160
true or false?
| mutual funds have a fixed market cap
false, it varies
161
funds that focus on capital appreciation
aggressive growth stock funds
162
true or false?
| aggressive growth stock funds have higher risk
true
163
true or false?
| aggressive growth stock funds have lower turnover
false
164
____ funds are similar to aggressive growth funds but have less volatile stocks
growth
165
funds that focus on capital appreciation and current income
growth and income funds
166
funds that invest in domestic and foreign securities
global fund
167
funds that invest in companies outside the US
international funds
168
funds that invest in foreign markets of developing countries
emerging markets fund
169
bond funds that focus on tax-free income
municipal funds
170
investment in junk bonds or higher level income bonds
high yield funds
171
funds that invest in a fixed percentage of stock and bonds or money market securities
balanced funds
172
true or false?
| money market funds are used as an emergency fund
true
173
if a client is concerned with maximizing current income which type of fund suits them?
corporate bond fund
174
if a client is concerned with growth what type of fund suits them?
stock fund
175
if a client is concerned with income (current or not) what type of fund suits them?
bond fund
176
if a client is concerned with immediate liquidity what type of fund suits them?
money market fund
177
if a client is concerned with tax relief what type of fund suits them?
muni bond fund
178
a sales charge that is deducted from the initial investment
front-end sales charge
179
a sales charge that is deducted upon withdrawal from the fund
back-end sales charge
180
fees for marketing and advertising expenses
12b-1 fees
181
pays for general operating expenses of the mutual fund
admin and management fees
182
what type of share class has a front end load
Class A Shares
183
what type of share class has a back end load
Class B Shares
184
generally speaking B shares have a ___ 12b-1 fee than A shares
higher
185
what share class has a back end load for the first year only?
Class C Shares
186
if a fund has a turnover rate of 100% or more, the fund is generally holding its securities for ___ than a year
less
187
higher turnover results in ___ transaction costs
higher
188
higher turnover can lead to ___ taxable income for the investor
more
189
changes in fund's investment style affect the investor's asset allocation
style drift
190
calculate the investors adjusted basis and capital gain in the following scenario:
tommy invested $10k into a mutual fund two years ago. He elected to reinvest all his capital gains and dividends. Last year he received dividends of $500 and cap gains of $200. This year he received $700 of dividends and $300 of cap gains. He sold his shares at the end of this year for $20,000
his adjusted basis = ($10k + 200 + 500 + 700 + 300) = $11,700
his capital gain from sale = $20k - $11,700 = $8,300
191
private partnerships that use advanced investment strategies in an effort to achieve higher returns
hedge funds
192
what risks are associated with hedge funds?
leverage
short selling
riskier investment options
lack of transparency (don't disclose a lot of info)
193
true or false?
| a hedge fund manager charges a performance based fee
true
194
what is difference between the trading strategies of an investment company and a hedge fund?
hedge fund managers usually makes use of derivatives, leveraging, short selling
195
true or false?
| hedge funds generally do not have daily liguidity
TRUE
196
security whose value is derived from the value of an underlying secuirty or asset
derivative
197
contracts between two parties to make or take delivery of a specific commodity or financial asset of a specified quality at a future time, place, and unit price
Futures
198
futures that involve currency and interest rates
financial futures
199
futures that involve wheat, sugar, and lumber
agricultural futures
200
futures that involve oil and gas
mineral futures
201
what are three examples of future contract exchanges?
New York Mercantile Exchange
Chicago Mercantile Exchange
Chicago Board of Trade
202
true or false?
| derivatives require a margin account
true
203
what is the initial margin of a derivative equal to?
initial deposit
204
the current price of the commodity
spot rate
205
maximum change in a commodity's price that is permitted during the trading day
daily limit
206
the number of contracts outstanding for a particular futures contract
open interest
207
price specified in the contract for future delivery of the commodity
futures price
208
the required minimum balance of a derivative
maintenance margin
209
what is the purpose of hedging?
to reduce risk associated with fluctuating commodity prices
210
give an example of a short hedge?
farmer is long in wheat, he could go short in a wheat futures contract
211
if September wheat contract is currently selling for $3.10 per bushel and a farmer locks in his future wheat price at $3.10 what happens in September of next year when the wheat price is $4 per bushel
the farmer is locked into his $3.10 price so he will lose $0.90 per bushel
212
how are gains or losses treated in regards to futures contracts?
60% long term and 40% short term regardless of holding period
213
the right to purchase the underlying security for a specified price within a specified period
call option
214
when the writer of the option owns the underlying security
covered call option
215
when the writer of the option does not own the underlying secuirty
naked call option
216
true or false?
| naked call options are not risky
fasle
217
the right to sell the underlying security for a specified price within a specified period
put option
218
purchase of a put index option, reflective of the portfolio, to protect an investor's portfolio against a market downturn
portfolio insurance
219
options where the underlying security is a market index or average
index option
220
options where the underlying security is an individual stock
equity option
221
one option contact covers ___ shares of the underlying security
100
222
the price per share cost of the option
premium
223
a call option trading for $4 would cost the investor ___
$400
224
the price at which the underlying security in an option can be bought or sold
exercise price
225
minimum price at which an option will trade
intrinsic value
226
true or false?
| intrinsic value can be less than zero
false
227
the difference between market price and the exercise price
intrinsic value
228
the intrinsic value of a call option = _______
greater of the market price minus the exercise price
| or zero
229
the intrinsic value of a put option = _____
greater of the exercise price minus the market price
| or zero
230
what is the intrinsic value of the following put option:
exercise price = $25
market price = $28
zero
231
what is the intrinsic value of the following call option:
exercise price = $72
market price = $78
$6
232
what is the intrinsic value of the following put option:
exercise price = $30
market price = $29
$1
233
what is the intrinsic value of the following call option:
exercise price = $50
market price = $45
$0
234
the greater an option's time to expiration the ____ it's time value
greater
235
the greater an option's volatility the ___ it's time value
greater
236
what is the time value of the following put:
put option selling for $5
exercise price is $60
current price is $67
$5 (premium - intrinsic value)
237
what is the time value of the following call:
call option selling for $7
exercise price is $38
current price is $42
$3 (premium - intrinsic value)
238
how do you calculate an option's time value?
premium - intrinsic value
239
if you are buying a call option you are expecting the price of the stock to ___
rise
240
if you are buying a put option you are expecting the price of the stock to ___
drop
241
if you are selling a call option you are hoping the price of the stock will ___
drop
242
if you are selling a put option you are hoping the price of the stock will ___
rise
243
clears option transactions and acts a guarantor for option contracts
Options Clearing Corporation
244
number of outstanding option contracts in the market
open interest
245
options that are exercisable at anytime during the contract period
american options
246
options that are exercisable only on the expiration date
european options
247
when are you "in the money" for a call option?
when the exercise price is less than the market price
248
when are you "in the money" for a put option?
when the exercise price is greater than the market price
249
term used to describe when the exercise price equals the market price
at the money
250
when are you "out of the money" for a call option?
when the exercise price is greater than the market price
251
when are "out of the money" for a put option?
when the exercise price is less than the market price
252
what is the maximum gain when you buy a call option?
unlimited
253
what is the maximum gain when you buy a put option?
exercise price minus the premium paid
254
what is the maximum gain when you sell a call option?
the premium received
255
what is the maximum gain when you sell a put option?
the premium received
256
what is the maximum loss when you buy a call option?
the premium paid
257
what is the maximum loss when you buy a put option?
the premium paid
258
what is the maximum loss when you sell a call option?
unlimited (naked)
259
what is the maximum loss when you sell a put option?
exercise price minus the premium received
260
used to estimate the price of a call option
binomial option pricing
261
assumes the price of the option will change in discrete increments on the basis of movements in the price of the underlying stock
binomial option pricing
262
estimates the price of a european call option
black-scholes option valuation method
263
states that the underlying security price movement is assumed to follow a geometric pattern
black-scholes option valuation method
264
a call option price will increase if the current market price ___
increases
265
a call option price will increase if the exercise price ___
decreases
266
a call option price will increase if the time to expiration ___
increases
267
a call option price will increase if the volatility of returns ___
increases
268
a call option will increase if the risk free rate ___
increases
269
used to protect a gain in a long position with no cash outlay
zero cost collar
270
involves an investor giving up stock price appreciation above the exercise price of the call option
zero cost collar
271
what three aspects does a zero cost collar include?
a long stock position
a long put position
a short call option
272
what is the maximum profit, maximum loss and breakeven price given the following info:
an investor purchases a stock for $29 and a put on the same stock for $0.20 with an exercise price of $27.50. The investor also sells a call on this stock for $0.20 with an exercise price of $30
max profit = $30 - $29
max loss = $29 - $27.50 +0 = $1.50
breakeven = $29 + $0 = $29
273
term used to describe outs and call with lengthy expirations
LEAPS
| long term equity anticipation securities
274
right to purchase a specified number of common shares for a specified price within a specified period
warrants
275
what is the profit on the following transaction:
Stewart purchases a warrant for $1 per share that gives him the right to buy 50 shares of KRF stock at $10 per share for a period of 5 years from date of purchase. Assume that KRF stock goes up to $14 per share after 3 years and Stewart exercises the warrant.
profit = (gain on stock - cost of warrant) x # of shares
profit= ($4 - $1) x 50 =$150
276
attached to a bond or preferred stock issue and is offered as an inducement to make securites more attractive
warrant
277
true or false?
| A warrant will reduce the interest rate or dividend required by an investor
true
278
true or false?
| investors buy warrants when they are bearish on a stock
false
279
partner who controls business activities
general partner
280
person who determines when distributions are made to limited partners
general partner
281
true or false?
| general partners have unlimited liability
true
282
partners who do no participate in management
limited partner
283
limited partners have ___ liability
limited
284
are private limited partnerships registered with the SEC?
no
285
true or false?
| limited partnerships are usually riskier investments than bonds or exchange traded funds
true
286
true or false?
| limited partnerships may offer periodic income payments to investors
true
287
true or false?
| warrants have long expiration dates, typically up to 5 years
true
288
a warrants exercise price is set ____ the current market price
above (Well above)
289
a managed, diversified portfolio of real estate or real estate mortgages and construction loans
Real Estate Investment Trust (REIT)
290
invest in income producing properties
equity trusts
291
make loans to develop property and/or finance construction
mortgage trusts
292
manage real estate and transact mortgages
hybrid trusts
293
true or false?
| real estate capital gain distributions are treated as long term capital gain regardless of holding period
true
294
a self liquidating, flow through entity that invests exclusively in real estate mortgages or mortgage backed securities
real estate mortgage investment conduits (REMICs)
295
do holders of REMICs have to report taxable income received from the underlying mortgages?
yes
296
are willing to take significant risks and lose their entire investment in several ventures, in hopes of cashing in on a few highly profitable ventures
venture capitalists
297
true or false?
| venture capitalists have a high correlation with equities
false
298
funding for the purpose of research and development of an idea
seed financing
299
funding for product development and marketing
start-up financing
300
funding for initial manufacturing and sales
first-stage financing
301
funding for expansion of an existing company
second-stage financing
302
funding for major expansion
third-stage financing
303
funding for companies that expect to go public within the year
mezzanine or bridge financing
304
individual investment accounts offered by financial consultants who provide advisory services and are managed by independent money managers using an asset based fee structure
separately managed accounts
305
what is the key difference between a mutual fund and a separately managed account?
with a separately managed account the money manager is purchasing securities for the investor not the fund
306
true or false?
| in a separately managed account, the investor directly owns the underlying security
true
307
true or false?
| in a mutual fund, the investor directly owns the underlying secuirty
false
