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SLAMCI Phase 1 > Equities and Fixed Income > Flashcards

Equities and Fixed Income Flashcards

1
Q

Are stocks and shares the same?

A

Yes, for all intents and purposes, stocks and shares refer to the same thing.

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2
Q

What is a stock/equity?

A

A form of security that indicates the holder has proportionate ownership in the issuing corporation.

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3
Q

What are the two main types of stock?

A

Common stock and preferred stock.

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4
Q

What are the characteristics of common stock?

A

With voting rights, reason for buying is tradability.

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5
Q

What are the characteristics of preferred stock?

A

Without voting rights, reason for buying is dividends.

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6
Q

What are the different sectors in the stock market?

A

Financials, Industrial, Holding Firms, Property, Services, Mining and Oil.

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7
Q

What are blue-chip stocks?

A

Well-established companies with a proven track record and high trading volume.

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8
Q

What are income stocks?

A

Stocks that pay regular dividends and offer a high yield.

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9
Q

What are growth stocks?

A

Companies growing earnings and/or revenue faster than their industry or the overall market.

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10
Q

What are cyclical stocks?

A

Stocks sensitive to business conditions and strongly tied to the economy’s performance.

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11
Q

What are defensive stocks?

A

Stocks that remain stable during the various stages of the business cycle.

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12
Q

What are speculative stocks?

A

Stocks with high risk relative to any potential positive returns.

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13
Q

Who are the market participants in the stock market?

A

Stock market investors, trading participants, listed companies, clearing house.

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14
Q

What is the Securities Clearing Corporation of the Philippines (SCCP)?

A

A subsidiary of the PSE that acts as a clearing and settlement agency for all exchange trades.

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15
Q

What is the equities settlement cycle?

A

T+3 (Transaction date + 3 business days).

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16
Q

What are the types of order validity?

A

Day order (DAY), good till cancelled (GTC), good till date (GTD), good till week (GTW), sliding validity (SLIDING), fill-and-kill (FAK), fill-or-kill (FOK).

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17
Q

What is a fill-and-kill order (FAK)?

A

An order where partial matching is allowed.

18
Q

What is a fill-or-kill order (FOK)?

A

An order where no partial matching is allowed, it needs an exact match.

19
Q

What is a national stock exchange?

A

A securities exchange registered with the SEC, e.g., Philippine Stock Exchange, New York Stock Exchange.

20
Q

What is a regional stock exchange?

A

A stock exchange outside a country’s primary financial center, trading publicly held equity for companies not meeting national exchange listing requirements.

21
Q

What is the PSEi?

A

The Philippine Stock Exchange Index, composed of the top 30 companies in the Philippine stock market.

22
Q

What is a bond?

A

A fixed-income instrument representing a loan made by an investor to a borrower.

23
Q

What are the characteristics of a bond?

A

Maturity date, term or tenor, coupon rate, coupon dates, face value (principal, maturity value, par value).

24
Q

What is the relationship between bond price and interest rates/bond yields?

A

Inverse relationship - when interest rates rise, bond prices fall, and vice versa.

25
Q

What are the different types of yield curves?

A

Normal yield curve, inverted yield curve, flat yield curve.

26
Q

What is a normal yield curve?

A

Short-term bonds have lower yields, long-term bonds have higher yields.

27
Q

What is an inverted yield curve?

A

Short-term bonds have higher yields, long-term bonds have lower yields.

28
Q

What is a flat yield curve?

A

Short-term and long-term bonds have similar yields.

29
Q

How often are interests on bonds usually paid?

A

Semi-annually.

30
Q

What are the different types of interest rates?

A

Zero-coupon bonds, step-up notes, deferred coupon bonds, accrued interest, floating rate securities.

31
Q

What are the options embedded in bonds?

A

Call provision, put provision.

32
Q

What is a call provision?

A

The right of the issuer to redeem the bond before maturity.

33
Q

What is a put provision?

A

The right of the bondholder to sell the bond back to the issuer at a specified price.

34
Q

What is interest rate risk?

A

The risk that arises due to variability in interest rates, affecting bond prices.

35
Q

What bond features affect interest rate risk?

A

Maturity and coupon rate.

36
Q

What are the different types of debt securities?

A

Corporate bonds (secured and unsecured) and government bonds.

37
Q

What are the types of corporate bonds?

A

Secured: mortgage bond, equipment trust certificate, collateral trust bond. Unsecured: subordinate debenture, convertible debenture, commercial paper.

38
Q

What are the types of government bonds?

A

Treasury bills, treasury notes, treasury bonds, agency bonds, municipal bonds, banker’s acceptances, repurchase agreements (repos).

39
Q

What is the liquidation order of assets?

A

Secured, unsecured, preferred, common.

40
Q

What are the taxes on investments?

A

Final withholding tax (20% on interest income) and documentary stamp tax (DST).

SLAMCI Phase 1 (7 decks)

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