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Question 1

Employer-Sponsored Retirement Plans

Answer 1

also called a “qualifies plan” is a retirment investment account established by an employer for the benefits of the firm’s employees, in which contributions are typically not taxed until withdrawn in retirement.

Question 2

Pros of Employer-Sponsored Retirement Plans

Answer 2

Extreamely easy to set up, employer matching, tax deductions on savings, tax deferred growth

Question 3

Cons of Employer-Sponsored Retirement Plans

Answer 3

Not available to everyone, cap on max contributions, early-withdrawal penality, limited investment options.

Question 4

Investment Company

Answer 4

a business that manages and sells investments funds to the public in addition to frequently offering a variety of other investment services

Question 5

Brokerage Account

Answer 5

an arrangement with an investment company that allows the owner/funder to trade and hold securites within the account

Question 6

Street Name

Answer 6

listing a brokerage firm as the owner of securites and the actual owner is recored as a “beneficial owner”

Question 7

Fee-Only financial planner

Answer 7

a “no commission” financial advisor who charges a flat fee for investment and general financial planning advice

Question 8

Full-Service broker

Answer 8

a broker who provides a variety of investment services for clients including research and advice, and typically earns commissions that are significantly higher than a “discount” broker

Question 9

What are some things you need to consider when picking a financial advisor?

Answer 9

Compensation, experience, licenses, education, reputation

Question 10

Benefits of “street name”

Answer 10

makes it more covenient for the broker and less risk. can consolidate your investments into one statement making it easier to track investments, returns, and taxes.

Question 11

Wire Funds

Answer 11

typically faster than electronic funds transfer. a wire transfer occures between banks on an individual basis

Question 12

Electronic Funds Transfer

Answer 12

slower and less expensive than a wire fund. uses automated clearing house (ACH) to process a transfer in aggregated (as a batch) at the end of the day

Question 13

Cash Account

Answer 13

a regular brokerage account in which the investor must

Question 14

Margin Account

Answer 14

a special type of brokerage account in which the broker is willing to lend cash to the investor for the purchase of securities

Question 15

Cash Management Account

Answer 15

a type of account offered by brokerage comapnies for cash deposits

Question 16

Sweep Account

Answer 16

Another name for a cash management account within a brokerage account - a cash account in which income is actomatically “swept” or deposited

Question 17

Leverage

Answer 17

using borrowed capital to increase the potential return on an investment

Question 18

Call money Rate

Answer 18

the rate at which banks are willing to lend to the investment company=

Question 19

Hypothecation Agreemnt

Answer 19

states the lender has the right to seize the asset of a borrower if the borrower fails to service the loan as stipulated under the terms of the loan agreement

Question 20

Regulation T

Answer 20

regulation set by the Federal Reserve Board that governs the amount of credit that a brokerage firm may lend to customers to purchase securities

Question 21

Initial Margin Requirement (IMR)

Answer 21

the minimum amount of equity an investor put up to purchase stocks (currently 50% set by Regulation T)

Question 22

Equity (In margin trading)

Answer 22

refers to the values of the asset minus the amount borrowed to pay for the asset.

Question 23

Maintenance Margin Requirement (MMR)

Answer 23

the minimum amount of equity that a margin account may have.

Question 24

Margin Call

Answer 24

communication from the broker that the equity in a margined position has dropped below the maintenance margin requirment and that more cash must be deposited into the account

Question 25

Short Selling

Answer 25

the sale of stock that is now owned by the seller; motivated by the belief that the stocks price will decline enabling the seller to buy it back at a lower price in the future

Question 26

Covering

Answer 26

a short position - when a short seller purchases the stock that was previously sold short to close out the short position

Question 27

Market Order

Answer 27

order that executes immediately at the best price

Question 28

Limit Order

Answer 28

order to buy or sell at a specified price or better

Question 29

Stop loss order

Answer 29

becomes a market sell order when the trigger price is encountered

Question 30

stop buy order

Answer 30

becomes a market buy order when the trigger price is encountered

Question 31

Discretionary Order

Answer 31

gives the broker the power to buy and sell for an investors account at the brokers discretion

Question 32

401(k)

Answer 32

employer-sponsored retirement plan offered by some for profit companies

Question 33

403(b)

Answer 33

employer-sponsored retirement plan offered by some not-for profit companies

Question 34

457

Answer 34

employer-sponsored plan offered by some government employers

Question 35

Employer sponsored plan is also known as

Answer 35

qualified plan

Question 36

Qualified Plan is also

Answer 36

employer sponsored plan

Question 37

Certified Financial Planner (CFP) has at least…

Answer 37

a bachelors, passed several required financial planning cources, completed a challenging two-day exam, and has a least three years of expirence in the profession.

Question 38

Maintenance Margin Requirement (MMR) is also called what becuase

Answer 38

House Margin because it is set by the broker

Question 39

Do limit orders allow you to go on the offensive? Why or why not?

Answer 39

Yes. because you can set the terms to your liking

Question 40

Short positions will benefit from a what in the stock price? Why?

Answer 40

Decrease because you can buy back the stock at a lower prive and pocket the difference (this is called covering your position)

Question 41

Time Dimensions

Answer 41

when you place a stop or limit order you have the option to specify the duration of the order.

Question 42

Limit Order

Answer 42

Order to buy or sell at a specified price or better