Financial Products Quick Definitions

Question 1

Common Stock

Answer 1

A security representing ownership in a corporation with voting rights and potential dividends

Question 2

Preferred Stock

Answer 2

A hybrid security that combines features of equity and debt, typically paying fixed dividends with priority over common stock.

Question 3

ADR (American Depositary Receipt)

Answer 3

A negotiable certificate issued by a U.S. bank representing a specified number of shares of a foreign stock traded on U.S. financial markets.

Question 4

Rights

Answer 4

Short-term instruments giving stockholders the right to purchase new shares at a discount before they’re offered to the public.

Question 5

Warrants

Answer 5

Long-term instruments giving holders the right to buy shares directly from a company at a fixed price.

Question 6

Common Stock (type)

Answer 6

Equity Security

Question 7

Preferred Stock (type)

Answer 7

Equity Security

Question 8

ADR (American Depository Receipt) (type)

Answer 8

Equity Security

Question 9

Warrants (type)

Answer 9

Equity Security

Question 10

Corporate Bonds

Answer 10

Debt instruments issued by corporations to raise capital, promising to repay principal with interest.

Question 11

Corporate Bonds (type)

Answer 11

Debt Securities

Question 12

Treasury Bills

Answer 12

Short-term U.S. government debt securities with maturities of one year or less.

Question 13

Treasury Bills (type)

Answer 13

Debt Security

Question 14

Treasury Notes

Answer 14

Medium-term U.S. government debt securities with maturities between 2-10 years.

Question 15

Treasury Notes (type)

Answer 15

Debt Security

Question 16

Treasury Bonds

Answer 16

Long-term U.S. government debt securities with maturities greater than 10 years.

Question 17

Treasury Bonds (type)

Answer 17

Debt Security

Question 18

Municipal Bonds

Answer 18

Debt securities issued by states, cities, or counties to fund public projects.

Question 19

Municipal Bonds (type)

Answer 19

Debt Security

Question 20

Zero-Coupon Bonds

Answer 20

Bonds sold at a discount that make no periodic interest payments but pay full face value at maturity.

Question 21

Zero-Coupon Bonds (type)

Answer 21

Debt Security

Question 22

TIPS (Treasury Inflation-Protected Securities)

Answer 22

Government bonds that protect against inflation by adjusting principal based on CPI changes.

Question 23

TIPS (type)

Answer 23

Debt Security

Question 24

Agency Bonds

Answer 24

Debt securities issued by government-sponsored enterprises or federal government agencies.

Question 25

Agency Bonds (type)

Answer 25

Debt Security

Question 26

High-Yield Bonds

Answer 26

Corporate bonds with lower credit ratings offering higher yields to compensate for greater risk.

Question 27

High-Yield Bonds (type)

Answer 27

Debt Security

Question 28

Variable Rate Demand Notes

Answer 28

Floating rate bonds with a put option allowing holders to sell back to the issuer at par value.

Question 29

Variable Rate Demand Notes (type)

Answer 29

Debt Security

Question 30

Mutual Funds

Answer 30

Investment vehicles pooling money from multiple investors to purchase a diversified portfolio of securities.

Question 31

Mutual Funds (type)

Answer 31

Investment Company Product

Question 32

ETFs (Exchange-Traded Funds)

Answer 32

Investment funds traded like stocks that typically track an index, sector, or commodity.

Question 33

ETFs (type)

Answer 33

Investment Company Product

Question 34

Unit Investment Trusts (UITs)

Answer 34

Investment companies offering a fixed portfolio of stocks or bonds for a specific period.

Question 35

Unit Investment Trusts (UITs) (type)

Answer 35

Investment Company Product

Question 36

Closed-End Funds

Answer 36

Investment companies with a fixed number of shares traded on exchanges like stocks.

Question 37

Closed-End Funds (type)

Answer 37

Investment Company Product

Question 38

Money Market Funds

Answer 38

Mutual funds investing in short-term, high-quality debt instruments.

Question 39

Money Market Funds (type)

Answer 39

Investment Company Product

Question 40

Index Funds

Answer 40

Mutual funds or ETFs designed to track a specific market index.

Question 41

Index Funds (type)

Answer 41

Investment Company Product

Question 42

Call Options

Answer 42

Contracts giving the right to buy an asset at a specific price within a set time period.

Question 43

Call Options (type)

Answer 43

Option/Derivative

Question 44

Put Options

Answer 44

Contracts giving the right to sell an asset at a specific price within a set time period.

Question 45

Put Options (type)

Answer 45

Option/Derivative

Question 46

Futures

Answer 46

Standardized contracts to buy or sell an asset at a predetermined price on a specific future date.

Question 47

Futures (type)

Answer 47

Option/Derivative

Question 48

LEAPS (Long-term Equity Anticipation Securities)

Answer 48

Options with expiration dates longer than one year.

Question 49

LEAPS (type)

Answer 49

Option/Derivative

Question 50

Index Options

Answer 50

Options contracts based on a market index rather than individual securities.

Question 51

Inde Options (type)

Answer 51

Option/Derivative

Question 52

REITs (Real Estate Investment Trusts)

Answer 52

Companies that own, operate, or finance income-producing real estate.

Question 53

REITs (type)

Answer 53

Alt. Investment

Question 54

Limited Partnerships

Answer 54

Business organizations where partners' liability is limited to their investment amount.

Question 55

Limited Partnership (type)

Answer 55

Alt. Investment

Question 56

Direct Participation Programs (DPPs)

Answer 56

Investments offering tax benefits through direct participation in business ventures.

Question 57

Direct Participation Programs (DPPs) (type)

Answer 57

Alt. Investment

Question 58

Hedge Funds

Answer 58

Private investment partnerships using various strategies to generate active return.

Question 59

Hedge Funds (type)

Answer 59

Alt. Investment

Question 60

Market-Linked Notes

Answer 60

Debt securities with returns tied to an underlying market index or asset.

Question 61

Market-Linked Notes (type)

Answer 61

Structured Products

Question 62

Principal-Protected Notes

Answer 62

Structured products guaranteeing return of principal at maturity while offering potential market returns.

Question 63

Principal-Protected Notes (type)

Answer 63

Structured Products

Question 64

Reverse Convertibles

Answer 64

Short-term notes paying high coupon rates with potential conversion to underlying stock.

Question 65

Reverse Convertibles (type)

Answer 65

Structured Products

Question 66

Certificates of Deposit (CDs)

Answer 66

Time deposits offering fixed interest rates for specific terms.

Question 67

CDs (type)

Answer 67

Bank Products

Question 68

Bankers' Acceptances

Answer 68

Short-term debt instruments guaranteed by a bank.

Question 69

Bankers' Acceptances (type)

Answer 69

Bank Product

Question 70

Commercial Paper

Answer 70

Short-term, unsecured debt issued by corporations for immediate financing needs.

Question 71

Commercial Paper (type)

Answer 71

Bank Products

Question 72

Eurodollar Deposits

Answer 72

U.S. dollar deposits held in foreign banks.

Question 73

Variable Annuities

Answer 73

Insurance contracts offering tax-deferred investment growth and lifetime income options.

Question 74

Variable Annuities (type)

Answer 74

Insurance Product

Question 75

Fixed Annuities

Answer 75

Insurance products providing guaranteed fixed payments for a specified period.

Question 76

Fixed Annuities (type)

Answer 76

Insurance Products

Question 77

Equity-Indexed Annuities

Answer 77

Insurance products combining features of fixed annuities with returns linked to an equity index.

Question 78

Equity-Indexed Annuities (type)

Answer 78

Insurance Products