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Series 7 > Debt Securities > Flashcards

Debt Securities Flashcards

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Series 7 Top-off Exam flashcards
1
Q

Sinking fund

A

Stretch

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2
Q

Reverse REPO

A

Banks lending money to fed, t-bills collateral

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3
Q

T-bills

A

6 months or less, pays no interest, always issued at discount, Dutch auction, not quoted in 32nds

Money mkt instrument

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4
Q

How are govt bonds quoted

A

32nds

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5
Q

CDO

A

Collateralized debt obligation - backed by pool of loans, bonds, other debt, like credit cards or auto loans

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6
Q

Eurobond

A

Foreign issuer
Foreign currency
Foreign country
Long term

Not registered with SEC

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7
Q

YTM

A

(Annual interest + annual discount per year OR - annual premium per year)/ (purchase price + par value / 2)

Make sure to convert interest and annual disc/prem into dollars$$$

Also, the annual disc/prem is calculated from the purchase price

The bond could be bought at a prem or disc
The bond could be called at a prem or a disc

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8
Q

YTC

A

See YTM, except annual discount or premium per year is adjusted to reflect only up to the earliest call date

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9
Q

Term bonds

A

Issued same time, same maturity, quoted % of par, called randomly

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10
Q

Step coupon bond

A

Start at a low coupon and step up at specific intervals

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11
Q

Nominal yield

A

Quoted on bond, remains fixed, represents the fulcrum

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12
Q

Eurodollars

A

US money invested in foreign banks, traded in NY and London

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13
Q

GNMA

A

Ginni Mae - only direct obligation of Fed govt

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14
Q

T-notes

A

1 - 10 year maturities

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15
Q

Jumbo Cd

A

Min of $100k, $1mm common, negotiable, tradable, no fdic, has coupons and accrued interest

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16
Q

LIBOR

A

Equivalent of effective fed funds rate for foreign banks, US dollars

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17
Q

Convertible bond parity

A

Market price/conversion ratio

18
Q

T-bonds

A

10 - 30 year maturities

19
Q

Unsecured debt types

A

Debentures - standard full faith and credit

Income - no interest till company is profitable, think bankruptcy distressed debt

20
Q

Current yield

A

Annual interest/market price

21
Q

Refunding

A

Think refinancing of debt, new bonds issued to pay off old ones

22
Q

Balloon issue

A

Similar to serial, except more bonds mature in later years

23
Q

Eurodollar bond

A 
Foreign OR domestic issuer
Issued oversees
Domestic currency
Short term
Principal and interest paid in US dollars
Traded in both US and foreign mkts

Not registered with SEC

24
Q

REPO

A

Repurchase agreement - loans secured with t-bills, usually overnight, up to 90 days, usually btwn fed and banks

25
Q

Serial bonds

A

Issued same time, equal amounts mature each year, quoted YTM

26
Q

Pre funded

A

Stretch

27
Q

T-strips

A

Pay no interest, issued at discount, not quoted in 32nds

28
Q

Accrued interest

A

Corps and munis based on 30 day month and 360 day year

Govt bonds based on actual days in month and year

Calculated from previous coupon date, up to but NOT including the settlement date

29
Q

Bankers acceptance

A

Similar to post dated check, used for import/export, no interest, issued at discount, time draft

30
Q

Effective fed funds rate

A

Average fed funds rate computed daily

31
Q

Zero coupon

A

Stretch

32
Q

Commercial paper

A

Unfunded, unsecured short term corporate debt, maturity less than 270 days,

33
Q

Series bond

A

Issued successive years with one maturity date

34
Q

Secured bond types

A

Mortgage bonds
Equipment trusts
Collateral trusts - stocks and bonds
Guaranteed bonds - by parent company

35
Q

Describe the debt seesaw

A

Stretch

36
Q

Fed funds rate

A

Interest rate between BD’s, banks and financial institutions, most volatile

37
Q

Convertible bond conversion ratio

A

Par/conversion price

38
Q

Cmo ads

A

Can’t be compared to a any other security except cmo

39
Q

Auction rate securities

A

Stable prices

Variable rates

40
Q

Oid

A

Original issue discount

Like t-bills

Series 7 (13 decks)

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