Fixed Income Basics Flashcards
What 3 things must go on an order ticket?
- Size of trade
- Desired execution price
- Customer Identification
What is global investing?
The spreading of portfolio investments in a weighted manner in both domestic and foreign securities
What does it mean if an order ticket is marked (short) sell?
A short sale is a sale of borrowed shares. The customer does not own the shares that he or she is selling; and borrows the shares from another person to make delivery on settlement
What is the “spread”?
The DIFFERENCE between a bid and ask quote
What is the formula for total return?
Dividend yield + Growth / Original investment
When computing standard deviation of returns against the mean, the measure used for the mean is:
Arithmetic mean
Fixed income portfolios are subject to what 4 risks?
I. Credit risk
II. Purchasing power risk
III. Opportunity cost
IV. Interest rate risk
A money manager that employs momentum investing makes investment decisions based on the:
Reported earnings of the company as compared to the “whisper” number
What are 2 good things to invest in when inflation rates are getting very high?
- Money market instruments (best option)
2. Tangible assets
An investor has a broadly diversified portfolio of blue chip stocks. The use of index options to hedge the portfolio reduces what type of risk?
Systematic risk (market risk)
The sharpe ratio is a measure of _________ return
Risk adjusted
Regulation T controls credit on securities from:
Broker to customer
