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Series 65 > Investment Vehicles/Securities > Flashcards

Investment Vehicles/Securities Flashcards

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1
Q

C

What are Cash & Cash Equivalents (CCE)?

A

Firm’s Assets that are Cash or can be immediately converted into Cash

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2
Q

What’s an Insured Deposit?

A

Cash Deposits in a Financial Institution that are insured up to $250K by the FDIC

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3
Q

What’s the FDIC?

A

Federal Deposit Insurance Corporation

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4
Q

What are the 2 types of Insured Deposits?

A

Certificate of Deposit (CD)
Demand Deposit

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5
Q

What’s a CD?

Certificate of Deposit

A

An Insured Time Deposit issued by a Bank that may or may not be a negotiable instrument

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6
Q

What’s a Time Deposit?

A

Cash Deposits that can’t be withdrawn before an agreed upon Time Limit

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7
Q

What’s a Negotiable CD?

Certificate of Deposit

A

A Money Market Instrument traded on the Secondary Market

Jumbo CD

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8
Q

What are the 3 Characteristics of a Negotiable CD?

Certificate of Deposit

A

Min. $100,000 Denominations
Redeemed at Maturity (2 wks to 1 yr)
Typically traded by Institutional Investors

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9
Q

What’s a Demand Deposit?

A

Funds held within a Financial Institution that a Client may immediately liquidate

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10
Q

What are the 4 types of Demand Deposit Accounts?

A

Checking Account
Money Market Account
Negotiable Orders of Withdrawal (NOW) Accounts
Savings Account (one’s that aren’t Time Deposits)

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11
Q

What’s a Money Market Instrument?

A

A Short-Term (1- yr) Investment-Grade Debt Security traded on the Secondary Market

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12
Q

What are the 4 types of Money Market Instruments?

A

Banker’s Acceptances (BA’s)
Commercial Paper
Repurchase Agreements (Repos)
Treasury Bills (T-Bills)

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13
Q

What’s a Banker’s Acceptance (BA)?

Bills of Exchange

A

A post-dated Domestic or International payment guaranteed by a Bank

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14
Q

What’s Commercial Paper?

A

An Unsecured Discounted Promissory Note w/ a Maturity of 270- Days & is Exempt from SEC Registration

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15
Q

What’s a Repurchase Agreement (Repo)?

A

A Short-Term (Max 48 hrs) Agreement to sell Gov. Securities in order to buy them back at an ▲ Price

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16
Q

What’s a Reverse Repo?

Repurchase Agreement

A

A Short-Term (Max 48 hrs) Agreement to buy Gov. Securities in order to sell them back at an ▲ Price

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17
Q

What’s a Treasury Bill (T-Bill)?

A

A Treasury Security w/ a Maturity of 1- yr

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18
Q

What’s a Money Market Account (MMA)?

Money Market Deposit Account (MMDA)

A

An Interest bearing Checking or Savings Account offered by a Bank or Credit Union

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19
Q

Which Account generally pays ▲ I/R?
Money Market Account (MMA)
Savings Account

A

Money Market Account (MMA)

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20
Q

What’s a Money Market Fund?

A

A Mutual Fund that invests in Short-Term Debt Securities & CCE, SIPC Insured up to $500K

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21
Q

What’s a Fixed Income Security?

A

A Debt Instrument Issued by a Gov. or Corporation

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22
Q

What’s a Bond?

A

Fixed Income Security
Debt Instrument
Leverage Instrument

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23
Q

What’s the Face/Par Value of a Bond?

Nominal, Original, or Dollar Value

A

The Value of the Bond as stated by its Issuer

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24
Q

What are Investment-Grade Bonds?

A

Bonds Rated BBB- & Above

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25
Q

What’s a Callable Bond?

Redeemable

A

A Corporate Bond that the Issuer may Redeem before it reaches the stated Maturity Date

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26
Q

What’s the Benefit of a Callable Bond?

A

Firms can call (payoff) the Bond early if Market I/R ▼ allowing the Firm to re-borrow at a ▼ I/R

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27
Q

What’s a Redeemable Bond Catastrophe Clause?

A

A Bond Clause that allows an Issuer to Call Bonds before Maturity if certain specified events occur

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28
Q

What’s a Redeemable Bond Call Protection Period?

A

The period of time in which a Bond can’t be Called

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29
Q

What’s a Redeemable Bond Call Risk?

A

The Risk that a Bond may be called prior to Maturity

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30
Q

What’s Callable Bond Refunding?

A

The process of Calling Bonds when I/R ▼

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31
Q

What’s Redeemable Bond Reinvestment Risk?

A

The Risk that $$$ from a Called Bond can’t be Invested Favorably

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32
Q

What’s a Redeemable Bond Sinking Fund?

A

Issuer Funds that are set aside in advance of a Call

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33
Q

What’s a Discount Bond?

A

A Bond priced below Par Value

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34
Q

What’s a Zero-Coupon Bond?

A

A type of Discount Bond that pays 0 Interest

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35
Q

What’s a Coupon Bond?

Bearer Bond

A

A Bond that pays Semi-Annual I/R & is issued as a Book Entry Security or Paper Certificate

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36
Q

How are Coupon Bonds Issued in the US?

A

In Book Entry (Electronic) Form

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37
Q

What’s a Coupon Rate?

A

Nominal Yield

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38
Q

What’s a Debenture?

A

A Bond w/ no Collateral

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39
Q

What’s a type of Debenture?

A

Credit Card

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40
Q

What’s a Bond Maturity?

A

The Future Date in which a Bondholder receives the Principal

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41
Q

What’s a Bond Principal?

A

The value received when a Bond has Matured

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42
Q

What’s an Investment Principal?

A

The original value invested/borrowed

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43
Q

What’s a Bond Duration?

A

The measure of a Bond’s Expected Volatility in a changing I/R environment

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44
Q

What’s a Treasury Security?

A

An Exempt Debt Security issued by the U.S. Gov. & isn’t Callable

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45
Q

Where are Treasury Securities Purchased?

A

Treasury Direct or the Secondary Market via weekly/monthly Auctions of Competitive or Non-Competitive Bids

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46
Q

What’s a Bid?

A

The Highest Price at which a BD will buy Shares

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47
Q

What’s an Ask?

Offer

A

The Lowest Price at which a BD will sell Shares

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48
Q

What’s the Trading Spread Equation?

A

Bid - Ask

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49
Q

What’s a Treasury Security Competitive Bid?

A

When Investors specify the Yield they want, at the Risk that their Bid may not be approved

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50
Q

What’s a Treasury Security Non-Competitive Bid?

A

When Investors accept whatever Yield is determined at Auction

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51
Q

What are the 6 types of U.S. Treasury Securities?

A

Treasury Bills (T-Bills)
Treasury Notes (T-Notes)
Treasury Bonds (T-Bonds)
Treasury Inflation-Protected Securities (TIPS)
Separate Trading of Registered Interest & Principal of Securities (STRIPS)
Treasury Receipts (TR)

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52
Q

What’s a Treasury Note?

A

A Treasury Security w/ a Maturity of 1-10 yrs

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53
Q

What’s a Treasury Bond (T-Bond)?

A

A Treasury Security w/ a Maturity of 10-30 yrs

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54
Q

What are TIPS?

Treasury Inflation-Protected Securities

A

A Treasury Security that protects Investors from Inflation & has a Maturity of 5, 10, or 30 Yrs

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55
Q

How do TIPS work?

Treasury Inflation-Protected Securities

A

As Inflation ▲ the Principal & I/R Payments ▲

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56
Q

What’s Phantom Income as it relates to TIPS?

A

When the IRS Taxes TIPS on the Principal & I/R Payment ▲ Annually even before Maturity is reached

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57
Q

What’s a STRIP?

Separate Trading of Registered Interest & Principal of Securities

A

A Treasury Security where the Coupon is sold separately from the Bond

Stripped Bond or Z-Bond

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58
Q

What’s a Treasury Receipt?

A

A Zero-Coupon Treasury Security issued by a BD

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59
Q

What are Gov. Agency Securities?

A

Securities offered by the U.S. Gov. that are Exempt from Registration under the 33’ Act

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60
Q

What’s a Gov. Owned Organization?

A

A Gov. Organization that is backed by the full faith & credit of the U.S. Gov.

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61
Q

What’s a Gov. Sponsored Enterprise (GSE)?

A

A Quasi-Gov. Organization that has a line of credit from the U.S. Treasury, but not full backing

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62
Q

What are the 4 types of U.S. Mortgage Agencies?

A

Federal Home Loan Bank System (FHLBank System)
Federal Home Loan Mortgage Corporation (FHLMC) (Freddie Mac)
Federal National Mortgage Association (FNMA) (Fannie Mae)
Government National Mortgage Association (GNMA) (Ginnie Mae)

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63
Q

What’s the Federal Home Loan Bank System (FHLBank System)?

FHLBank

A

A GSE that issues Loans to Participating Financial Institutions via Short-Term Bonds w/ Semi-Annual I/R & $10K+ Par Value

Government Sponsored Enterprise

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64
Q

What’s the Federal Home Loan Mortgage Corporation (FHLMC)

Freddie Mac

A

A GSE that buys Conventional Residential Mortgages from Financial Institutions & sells them as Participation Certificates or Pass-Through Securities w/ Semi-Annual I/R & $25K+ Par Value

Government Sponsored Enterprise

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65
Q

What’s the Federal National Mortgage Association (FNMA)

Fannie Mae

A

A GSE that buys Guaranteed, Insured, & Conventional Mortgages from Banks & sells them as Short-Term Discount Bonds w/ Semi-Annual I/R & $10K+ Par Value

Government Sponsored Enterprise

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66
Q

What’s the Government National Mortgage Association (GNMA)

Ginnie Mae

A

A Gov. Owned Organization that buys Farmers Home Administration (FHA) & VA Insured Mortgages & sells them via Modified Mortgage-Backed Pass-Through Securities w/ Monthly I/R & $25K+ Par Value

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67
Q

What’s the Student Loan Marketing Association (SLM)

Sallie Mae

A

A GSE owned by Shareholders that issues Private Education Loans

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68
Q

What’s a Book Entry Security?

A

A Security represented via Electronic Format & not a Physical Certificate

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69
Q

What’s a Convertible Bond?

A

A Corporate Bond that can be Converted into Equity

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70
Q

What’s the Bond Conversion Ratio Equation?

A
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71
Q

What’s Bond Conversion Parity?

A

The point at which there is neither Profit or Loss in a Bond Conversion

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72
Q

What’s a Corporate Bond?

A

A Bond issued by a Corporation that is typically BB+ Rated

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73
Q

How are Corporate Bonds Taxed?

A

The Bond Interest & Capital Gains are Taxed at every level (Federal, State, & Local Taxes)

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74
Q

What’s a Municipal Bond?

A

A Bond issued by a Municipality that is typically A Rating

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75
Q

Are Municipal Bonds Tax-Free?

A

Yes, if you live in the Municipality. If you live outside the Municipality, but in the same State, then the Interest is Tax-Free. If you live Out-of-State, then everything is Taxed.

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76
Q

What’s a General Obligation (GO) Bond?

A

A Municipal Bond backed by Full Faith & Credit of the Issuer

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77
Q

What does Full Faith & Credit in a GO Bond mean?

General Obligation

A

The Bond is paid for by Municipal Income, Sales, & Ad Valorem (Property) Taxes

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78
Q

What’s Double-Barrelled Debt in a GO Bond?

General Obligation

A

GO Debt that’s 1st backed by Revenue Collections, then Taxes

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79
Q

What’s a Revenue Bond?

A

A Municipal Bond backed by Fees, Revenues, or Special Assessments collected from a Facility or Project

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80
Q

What’s a Moral Obligation Bond?

A

A Revenue Bond where the State Legislative Authority has a moral (not Legal) obligation to appropriate $$$ to pay off the Bond

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81
Q

What’s an Industrial Revenue Bond?

A

A Revenue Bond that is instead backed by Corporations to pay for a Facility or Project

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82
Q

Are Industrial Revenue Bonds Tax-Exempt?

A

No, they Incur Federal Taxes & Alternative Min. Tax (AMT) since they are backed by a Corporation

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83
Q

What’s a Bond Indenture?

Trusted Indenture

A

A list of Covenants or Rules between the Issuer & the Trustee (who acts on behalf of the Bondholders)

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84
Q

What’s a Bond Indenture Rate Covenant?

A

The Issuer promises to provide competitive I/R

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85
Q

What’s a Bond Indenture Closed/Open-End Covenant?

A

Determines the Liquidation Seniority of new Bonds

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86
Q

What’s a Bond Indenture Maintenance Covenant?

A

The Issuer promises to maintain the Facility/Project so that Revenues continue to pay the Bondholder(s)

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87
Q

What’s a Bond Indenture Catastrophe Covenant?

A

The Issuer collects on an Insurance Policy to pay Bondholders if a Catastrophe strikes the Facility/Project

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88
Q

What’s a Bond Indenture Sinking Fund Covenant?

A

An Issuer Escrow Account that pays the Bond at Maturity or Calls the Bond early

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89
Q

What’s a Bond Indenture Net Revenue Pledge?

A

Operation & Maintenance Exp. of the Facility/Project are paid 1st, then the Bond I/R Payments & Principal

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90
Q

What’s a Bond Indenture Gross Revenue Pledge?

A

Bond I/R Payments & Principal are paid 1st, then the Operation & Maintenance Exp. of the Facility/Project

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91
Q

What’s a Foreign Bond?

A

Bonds issued by Foreign Gov. or Firm

Sovereign Debt

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92
Q

What’s a Brady Bond?

A

A Bond issued in U.S. Dollars (USD) by 3rd World Nations that are collateralized by U.S. Treasury Zero-Coupon Bonds

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93
Q

What’s a Bond Rating?

A

The Riskiness of a Bond measured by Standard & Poor (S&P) or Moody

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94
Q

What’s a Municipal Bond Insurer?

A

An Insurance Firm that guarantees payment of a Municipal Bond Interest & Principal

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95
Q

Who are the 3 U.S. Municipal Bond Insurance Firms?

A

Assured Guaranty
Build America Mutual
National Public Finance Guarantee Corp.

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96
Q

What’s the Current Yield Equation of a Bond?

A

A Bond’s ROI

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97
Q

What’s a Bond’s Yield-to-Maturity (YTM)?

A

The Yield of a Bond held to Maturity

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98
Q

What’s the Bond YTM Equation?

A
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99
Q

What’s a Bond’s Yield-to-Call (YTC)?

A

The Yield of a Bond held to Call

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100
Q

Which Bond Yield is the highest for a Par Bond?

A

Current Yield, Nominal Yield, & YTM are the same

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101
Q

Which Bond Yield is the highest for a Discount Bond?

A

YTM, Current Yield, then Nominal Yield

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102
Q

If I/R ▲, what happens to Yields & Prices?

A

Yields ▲
Prices ▼

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103
Q

What’s Anti-Dilution?

A

When the # of Shares & Stock or Strike Price are adjusted to counteract the effect of Convertible Bonds & Options

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104
Q

What are Authorized Shares?

A

The # of Shares Authorized to be Issued in a Corporate Charter

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105
Q

What are Issued Shares?

A

The # of Authorized Shares sold to Investors

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106
Q

What are Unissued Shares?

A

The # of Authorized Shares that haven’t been sold to Investors

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107
Q

What’s Treasury Stock?

A

Issued Shares that have been repurchased by the Firm

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108
Q

What’s the Outstanding Shares Equation?

A

Issued Shares - Treasury Stock

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109
Q

What’s an Equity Security?

A

A Security that represents Ownership in a Firm

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110
Q

What’s Common Stock?

Junior Security

A

An Equity Security that grants Voting Rights, but has the lowest Liquidation Priority

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111
Q

What’s a Blue Chip Firm/Stock?

A

A large, matured Firm w/ ▲ Brand Recognition & Loyalty

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112
Q

What’s the Market Cap Equation?

Capitalization

A
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113
Q

What are the 6 Shareholder Rights?

A

Inspect Firm Financial Statements
Claim to Firm Assets during Liquidation
Preemptive Right
Receive Dividends once Declared
Transfer Ownership
Vote through Proxy

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114
Q

What’s a Shareholder Preemptive Right?

Anti-Dilution Right

A

The Right to maintain the same % of Ownership in a Firm when New Shares are Issued by purchasing New Shares at a Subscription Price

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115
Q

What’s a Stocks Subscription Price or Right?

A

A Short-Term Exercise Price that is less than the POP

Public Offering Price (POP)

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116
Q

What’s a Shareholder Right to Vote through Proxy?

A

Granting another Individual the Power of Attorney to Vote on your behalf

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117
Q

What are the 4 Voting Rights?

A

Decisions about changes in Firm Operations
Election of Board of Directors (BoD)
Issuance of Additional Securities
Stock Splits

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118
Q

What are the 2 Types of Voting Processes?

A

Cumulative Voting
Statutory Voting

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119
Q

What’s Cumulative Voting?

A

Shareholders are permitted 1 Vote per Share per Vacancy & can distribute the Shares however they want between the Vacancies

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120
Q

What’s Statutory Voting?

A

Shareholders are permitted 1 Vote per Share per Vacancy & must distribute the Shares evenly between the Vacancies

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121
Q

How do you calculate the Total Votes Permitted for Voting Rights?

A
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122
Q

What’s Preferred Stock?

A

An Equity Security that grants Superior Shareholder Rights, specifically ▲ Liquidation Priority, but no Voting Rights

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123
Q

What’s Adjustable Rate Preferred Stock?

Floating Rate or Variable Rate Preferred Stock

A

Preferred Stock in which the Dividend is reset at specified Intervals

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124
Q

What’s Convertible Preferred Stock?

A

Preferred Stock that can be Converted into Common Stock

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125
Q

What’s an American Depositary Receipt (ADR)?

A

Certificates issued by U.S. Commercial Banks representing Ownership in Foreign Firm Shares

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126
Q

What’s a Sponsored ADR?

American Depositary Receipt

A

An ADR where the Issuer provides all SEC mandated Stock info, Dividends are paid in USD, & the Investor is granted Voting Rights

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127
Q

What’s an Unsponsored ADR?

American Depositary Receipt

A

An ADR where the Issuer doesn’t provide SEC mandated Stock info, the Stock is traded OTC, & the Investor isn’t granted Voting Rights

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128
Q

What’s Restricted Stock?

Unregistered or Letter Stock

A

Unregistered Shares of Ownership in a Firm acquired through an ESOP or through Private Placement (Reg D Offering)

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129
Q

What are the 2 types of Restricted Stock?

A

Restricted Stock Awards
Restricted Stock Units (RSU)

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130
Q

What’s a Restricted Stock Award?

A

Restricted Stock that grants Employees immediate Shares upon meeting particular goals

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131
Q

What are Restricted Stock Units (RSU)

A

Restricted Stock that grants Employees Vested Shares or Cash upon meeting particular Goals

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132
Q

What’s SEC Rule 144?

A

A form that must be filed before selling Restricted Stock & reported after the Transaction is made

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133
Q

What’s an Investment Holding Period?

A

The Time an Investment is held by an Investor between the Trade Date of Purchase & Sale of a Security

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134
Q

What’s the Holding Period for Restricted Stock?

A

6+ Months:
Before Selling
Before an RIA can solicit business

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135
Q

How much Restricted Stock can you sell at a time?

A

1% of Outstanding Shares
Avg. 4wk Trading Volume

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136
Q

What’s an Employee Ownership Plan (EOP)?

A

A Qualified Defined Benefit Retirement Plan that provides Employees w/ Ownership of a Firm

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137
Q

What’s a Qualified Defined Benefit Plan?

A

A Qualified Retirement Plan where an Employer guarantees a set mthly payment for Life or a lump sum payment at Retirement

Federally Insured up to a Limit 🗸

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138
Q

What’s an Employee Stock Option (ESO)?

A

An EOP that provides Employees the opportunity to buy Vested Shares at a Fixed Price for a Set Period

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139
Q

What are the 2 types of ESOs?

Employee Stock Options

A

Incentive Stock Options (ISO)
Non-Qualified Stock Options (NSO)

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140
Q

What’s an Incentive Stock Option (ISO)?

Statutory or Qualified Stock Options

A

ESOs offered to Top Management & Key Employees that are Taxed when Sold & may incur Alternative Min. Tax (AMT)

Employee Stock Option

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141
Q

What’s a Non-Qualified Stock Option (NSO)?

Non-Statutory Stock Option

A

An ESO offered to any Employee (incl. Board Members & Consultants) that are Taxed when the Options are Exercised

Employee Stock Option

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142
Q

What’s a Dividend?

A

The distribution of a Firm’s earnings to its Shareholders as determined by the BoD, but approved by Shareholders via Voting Rights

143
Q

What are the 2 types of Dividends?

A

Ordinary Dividends
Qualified Dividends

144
Q

What are Ordinary Dividends?

Non-Qualified Dividends

A

Dividends Taxed as Ordinary Income

145
Q

What’s a Qualified Dividend?

A

Dividends reported to the IRS that are Taxed as a Capital Gain (▼ Rate) rather than Income

146
Q

What format are Dividends Issued?

A

Cash
Stock Shares

147
Q

What are the 4 Dividend Dates?

A

Declaration Date
Ex-Dividend Date
Record Date
Payment Date

148
Q

What’s a Dividend Declaration Date?

Announcement Date

A

The Date in which a Firm’s Management Announces/Declares the distribution of a Dividend

149
Q

What’s an Ex-Dividend Date?

Ex-Date

A

The date in which the Dividend eligibility expires

Typically 1 Day before the Record Date

150
Q

What’s a Dividend Record Date?

Cutoff Date

A

The Date in which Shareholders are eligible to receive a Dividend or Distribution

151
Q

What’s a Dividend Payment Date?

A

The Date in which the Firm distributes the Dividend payments

152
Q

What’s the required Holding Period to qualify for Common Stock Dividends?

A

You must have Owned the Stock for 60+ days before the Ex-Dividend Date

153
Q

What’s the required Holding Period to qualify for Preferred Stock Dividends?

A

You must have Owned the Stock for 90+ days before the Ex-Dividend Date

154
Q

What’s the required Holding Period to qualify for Mutual Fund Dividends?

A

You must have Owned the Stock for 60+ days before the Ex-Dividend Date

155
Q

Does a Dividend Record Date come 1 day before or after the Ex-Dividend date for a Mutual Fund?

A

1 day before

Unlike Common & Preferred Stock, in which it is after

156
Q

What’s Fundamental Analysis?

A

The measurement of the Value of a Firm

157
Q

What’s Technical Analysis?

A

The measurement of the changes in Prices & Timing of Investments

158
Q

What’s a Dividend Model?

A

The measurement of the Value of an Equity Position based on Present & Future Dividend Payments

159
Q

What are the 2 types of Dividend Models?

A

Dividend Discount Model (DDM)
Dividend Growth Model (DGM)

160
Q

What’s the Dividend Discount Model (DDM)?

A

The Price of a Stock is worth the sum of all its future Dividend Payments when discounted back to their PV

161
Q

What’s the Dividend Growth Model (DGM)?

Gordon Growth Model (GGM)

A

Applying a Growth Rate to the present Dividend to predict future Income

162
Q

What’s a Pooled Investment?

A

A Financial Instrument that pools Shareholder Assets together to invest in Securities

163
Q

What are the 2 categories of Pooled Investment Funds?

A

Closed-End Fund
Open-End Fund

164
Q

What’s a Closed-End Fund?

A

A Pooled Investment Fund that Issues a limited # of Shares onetime via an IPO & trades on the Secondary Market

165
Q

How is a Closed-End Fund Traded?

A

At Market Price, which is a Premium or Discount to NAV

Net Asset Value

166
Q

What’s an Open-End Fund?

A

A Pooled Investment Fund that issues an unlimited # of Redeemable Shares

167
Q

How is an Open-End Fund Traded?

A

Shares are Redeemable w/ the Issuer at NAV & Purchased at POP

Net Asset Value & Public Offering Price

168
Q

What’s a Mutual Fund?

A

A Pooled Investment operated by Professional Money Managers that only Trades Once a Day after the Market Closes

169
Q

What are the 9 types of Mutual Funds?

A

Balanced Funds
Bond Funds
Income Funds
Index Funds
International/Global Funds
Money Market Funds
Real Estate Mutual Funds
Specialty Funds
Stock Funds

170
Q

What’s a Balanced Fund?

Asset Allocation Fund

A

A Mutual Fund that invests in a Hybrid of Asset Classes

171
Q

What’s a Bond Fund?

Fixed-Income Mutual Fund

A

A Mutual Fund that invests in Securities that pay a set RoR

172
Q

What’s an Income Fund?

A

A Mutual Fund that provides Income to Investors on a steady basis

173
Q

What’s an Index Fund?

A

A Mutual Fund that invests in Stocks corresponding to a major market Index (e.g. S&P 500 or DJIA)

174
Q

What’s an International Fund

Foreign Fund

A

A Mutual Fund that invests in Assets located outside an Investor’s home Country

175
Q

What’s a Global Fund?

A

A Mutual Fund that invests anywhere around the world

176
Q

What’s a Money Market Fund?

A

A Mutual Fund that invests in Short-Term Debt Securities & CCE, SIPC Insured up to $500K

177
Q

What’s a Real Estate Mutual Fund?

A

A Mutual Fund that invests in REITs & Real Estate Firms

178
Q

What are the 3 types of Specialty Funds?

A

Regional Fund
Sector Fund
Socially-Responsible Fund

179
Q

What’s a Regional Fund?

A

A Mutual Fund that invests in a specific geographical area of the world

180
Q

What’s a Sector Fund?

A

A Mutual Fund that invests in specific Sectors of the Economy

181
Q

What’s a Socially-Responsible Fund?

Ethical Funds

A

A Mutual Fund that invests in Firms that meet the Socially-Responsible Guidelines or Beliefs of the Fund

182
Q

What’s a Stock Fund?

Equity Fund

A

A Mutual Fund that invests in Equity or Stocks

183
Q

What are the 3 types of Stock Funds?

A

Blend Fund
Growth Fund
Value Fund

184
Q

What’s a Blend Fund?

A

A Mutual Fund that invests in a combination of Growth & Value Stocks

185
Q

What’s a Growth Fund?

A

A Mutual Fund that invests in Growth Stocks

186
Q

What’s a Value Fund?

A

A Mutual Fund that invests in Stocks that appear to be trading for less than their Instrinsic or Book Value

187
Q

What’s the Net Asset Value Equation of a Mutual Fund?

Bid Price

A

Mutual Fund Assets - Liabilities

188
Q

What’s the NAVPS Equation of a Mutual Fund?

Net Asset Value Per Share

A
189
Q

What’s the POP Equation of a Mutual Fund?

Public Offering Price or Ask Price

A

NAV + SC

Net Asset Value + Sales Charge

190
Q

What’s Mutual Fund Forward Pricing?

A

The fact that the Investor’s Bid or Ask Price for a Mutual Fund is calculated at the end of each Trading day (thus it can change)

191
Q

What are the 4 types of Shareholder Fees charged by a Mutual Fund?

A

12b-1 Fees
Annual Fees
Commissions
Expense Ratios

192
Q

What’s a typical Mutual Fund Commission?

Sales Charge or Load

A

8.5% of the POP & not an Expense

193
Q

What’s a Mutual Fund Commission Breakpoint?

Bracket

A

The Commissions determined for each Investment Bracket (Amount)

194
Q

What’s a Mutual Fund Letter of Intent (LOI)?

A

When an Investor Qualifies for a ▲ Breakpoint by promising (non-binding) to Invest more $$$ within 13 mths

195
Q

What’s a Mutual Fund Contingent Deferred Sales Charge (CDSC)?

A

An ▲ Commission charged if Shares are Redeemed early

196
Q

What’s the Expense Ratio Equation for a Mutual Fund?

A
Total Expenses incl. Management & Ongoing Distribution Fees
197
Q

What are the 2 types of 12b-1 Mutual Fund Fees?

A

Management Fees
Ongoing Distribution Fees

198
Q

How much can a 12b-1 Mutual Fund Fee charge?

A

0.75%- of Assets Annually & 0.25%- of Assets Annually if a No-Load Fund

199
Q

What are the 4 Loads/Points of Sale for Mutual Fund Shareholder Fees?

A

Back-End Load
Front-End Load
Level-Load
No-Load

200
Q

What’s a Mutual Fund Back-End Load?

A

Shareholder Fees charged when an Investor Sells Shares

201
Q

What’s a Mutual Fund Front-End Load?

A

Shareholder Fees charged when an Investor Buys Shares

202
Q

What’s a Mutual Fund Level-Load?

A

Shareholder Fees charged Quarterly throughout the Investment Lifetime typically for Class C Shares

203
Q

What’s a Mutual Fund No-Load?

A

When Shares are originally provided to an Investor at NAV w/out a Commission

204
Q

What’s the Composition of a Mutual Funds BoD?

Board of Directors

A

40% External Directors
60% Internal Employees, Underwriters, or IA’s

205
Q

What are the 3 Responsibilities of a Mutual Fund BoD?

Board of Directors

A

Appoint & Oversee IA’s, Transfer Agents, & Custodians
Establish Dividend & Capital Gains Policy
Establish Investment Policy

206
Q

What are the 7 Shareholder Rights for a Mutual Fund?

A

Approving changes in Investment Objectives & Policies
Approving IA Agreements
Approving changes in Fees
Electing Directors
Ratifying Selection of Independent Auditors
Right of Accumulation
Voting Rights/Proxies

207
Q

What’s a Shareholder Right of Accumulation?

A

When an Investor Qualifies for a ▼ Fee since their Investment Amount reaches an ▲ Investment Breakpoint

Family Members, Dependents, & Businesses Qualify

208
Q

What’s the Function of an IA for a Mutual Fund?

Investment Advisor

A

To Manage the Fund

The Management Fee is the Largest Operating Expense

209
Q

What are the 3 Functions of a Custodian for a Mutual Fund?

A

Performs Payable & Receivable Functions for Securities Transactions
Registers the Receipt of Interest & Dividends for the Fund
Safeguards the Physical Assets of the Fund

210
Q

What are the 4 Functions of a Transfer Agent for a Mutual Fund?

A

Customer Name & Address Changes
Deliverance & Redemption of Shares
Disbursement of Dividends & Capital Gains
Investor Mailings

211
Q

What’s the Function of an Underwriter for a Mutual Fund?

Sponsor, Distributor, or Wholesaler

A

To Purchase a Funds Shares at NAV & Sell them to a Dealer or directly to Investors

212
Q

What are Class A Mutual Fund Shares?

A

Large, Long-Term Investments w/ Front-End Load

213
Q

What are Class B Mutual Fund Shares?

A

Small, Long-Term Investments w/ Back-End Load & ▲ Expense Ratio

214
Q

What are Class C Mutual Fund Shares?

A

Small or Large, Short-Term Investments w/ Level-Load & ▲ Expense Ratio

215
Q

How many Days does a Mutual Fund have to deliver $$$ to an Investor who Sells Shares?

A

7 Calendar Days

216
Q

How often is a Mutual Fund NAVPS calculated?

Net Asset Value per Share

A

Once per Day at 4PM EST

217
Q

What’s Dollar-Cost Averaging?

Costant Dollar Plan

A

Systematically investing equal amounts of $$$ in a Security at regular intervals regardless of Stock Price

218
Q

What are the 3 Benefits of Dollar-Cost Averaging?

A

May ▼ Avg. Cost/Share
May ▼ Portfolio Volatility
▼ Reliance on Market Timing of Lump-Sum Investments

219
Q

What’s IRS Regulation M?

Subchapter M (Title 26 §851)

A

Allows Regulated Investment Firms to pass Taxes from Capital Gains, Dividend, & Interest Distributions to Investors if 90%+ of that Income is Distributed

220
Q

What’s the Net Investment Income Equation of a Mutual Fund?

A
221
Q

What Income is Taxed to a Mutual Fund Firm if less than 90% of the Net Investment Income is Distributed to the Investors?

A

100% of the Income is Taxed to the Mutual Fund

222
Q

What Income is Taxed to a Mutual Fund Firm if more than 90% of the Net Investment Income is Distributed to the Investors?

A

Only the remaining Undistributed Net Investment income is Taxed to the Mutual Fund. So 10% or less.

223
Q

What’s a Unit Investment Trust (UIT)?

A

A Registered Investment Company (RIC) or Trust that offers Fixed Portfolios (of Stocks & Bonds) as Redeemable Units to Investors for a specific period of time

224
Q

What’s a Regulated Investment Corporation (RIC)?

A

A Corporation where Investors are Joint Owners

225
Q

What happens to the Redeemable Units of a UIT?

Unit Investment Trust

A

The Units are Sold back to the UIT

Unit Investment Trust

226
Q

What are the 3 Benefits of a UIT?

Unit Investment Trust

A

Investors can Redeem Units at anytime
No Management Fees 🗸 The Portfolio is typically Supervised, not Managed
Pass-Through Taxes 🗸

227
Q

What 2 SEC Regulations apply specifically to UITs?

Unit Investment Trust

A

Security Substitutions can only be made w/ written notice to the SEC & Investors must be notified within 5 Days
SEC can Liquidate the UIT at Anytime; If the UIT is Ineffective or it’s in the Best Interest of the Investors

228
Q

What’s an Exchange Traded Fund (ETF)?

A

A Pooled Investment that can be Traded throughout the Day

229
Q

What are the 3 Benefits of an ETF?

Exchange Traded Fund

A

▼ Broker Commissions Compared to Individual Stock Purchases
▼ Expense Ratios
▲ Liquidity Compared to Mutual Funds

230
Q

What’s an Inverse ETF?

Exchange Traded Fund

A

ETFs that attempt to earn Gains by Shorting Stocks

231
Q

What’s a Leveraged ETF?

Exchange Traded Fund

A

ETFs that utilize Derivative Securities to achieve Earnings

232
Q

What’s a Real Estate Investment Trust (REIT)?

A

A Pooled Investment Trust in a Firm that owns, operates, or finances income-generating Real Estate

233
Q

What are the 3 Classifications of REITS?

Real Estate Investment Trust

A

Public
Non-Public
Private

234
Q

What’s a Public REIT?

Real Estate Investment Trust

A

Publicly Traded REITs registered w/ the SEC

235
Q

What’s a Non-Public REIT?

Real Estate Investment Trust

A

Privately Traded REITs registered w/ the SEC

236
Q

What’s a Private REIT?

Real Estate Investment Trust

A

Privately Traded REITs not registered w/ the SEC & typically only sold to Institutional Investors

237
Q

How does a Trust Qualify as a REIT? (7 Qualifications)

A

Must be an Entity that’s Taxable as a Corporation
Must be managed by a Board of Directors or Trustees
Have 100+ Shareholders after the 1st Year of Existence
Have no more than 50% of Shares held by 5- Individuals
Invest 75%+ of Total Assets in Real Estate, Cash, or U.S. Treasuries
Derive 75%+ of Gross Income from Rent, Interest on Mortgages that Finance Real Property, or Real Estate Sales
Pay 90%+ of Taxable Income through Shareholder Dividends annually

238
Q

What are the 3 Types of REITS?

Real Estate Investment Trust

A

Equity REIT
Mortgage REIT
Hybrid REIT

239
Q

What’s an Equity REIT?

Real Estate Investment Trust

A

A REIT that owns & manages income-generating Real Estate typically through Rents

240
Q

What’s a Mortgage REIT?

Real Estate Investment Trust

A

A REIT that lends $$$ to Real Estate Owners & Operators directly or indirectly

241
Q

What’s a Hybrid REIT?

Real Estate Investment Trust

A

REITs that’re a combination of an Equity & Mortgage REIT

242
Q

What’s a Derivative Security?

A

A Contract between 2+ Parties that can Trade on an Exchange or Over-the-Counter (OTC) whose value is dependent on an underlying Asset(s) or Benchmark

243
Q

Why are Derivative Securities utilized?

A

Hedging — To mitigate Risk
Speculation — Assuming Risk w/ the expectation of Reward

244
Q

What are the 5 types of Derivative Securities?

A

Forwards
Futures
Options
Swaps
Warrants

245
Q

What’s an Option?

A

A Derivative Contract to buy or sell Stocks at a Preset Price (Strike Price) prior to or on the Expiration Date

246
Q

Define an Option Buyer.

A

A Person w/ the Right, but not the Obligation to buy or sell a Security at the Strike Price

247
Q

Define an Option Seller.

Writer

A

A Person w/ the Obligation to Transact their side of the Trade if a Buyer decides to Execute the Option

248
Q

What are the 2 types of Options?

A

Call
Put

249
Q

What’s a Call Option?

A

Buying an Option from a Seller at a Premium as a Leveraged Bet on the Appreciation of a Security

250
Q

What’s a Put Option?

A

Buying an Option from a Seller at a Premium as a Leveraged Bet on the Depreciation of a Security

251
Q

What’s Hedging?

A

A Short-Term Strategy employed to take an offsetting position in an Asset or Investment that ▼ the Price Risk of an existing position

252
Q

What’s an Options Straddle Strategy?

A

Buying or Selling a Call & a Put on the same Security w/ the same Strike Price & Expiration Date

253
Q

What’s an Options Horizontal Spread Strategy?

Time or Calendar Spread

A

Buying or Selling 2 Calls or 2 Puts on the same Security w/ different Strike Prices, but the same Expiration Date

254
Q

What’s an Options Vertical Spread Strategy?

Price Spread

A

Buying or Selling 2 Calls or 2 Puts on the same Security w/ the same Strike Price, but different Expiration Dates

255
Q

What’s a Futures Contract?

A

A Derivative Standardized Contract to buy or sell an Asset (that isn’t Stock) at a Preset Price (Strike Price) prior to or on the Expiration Date

256
Q

What’s a Forward Contract?

A

A Derivative OTC Contract to buy or sell an Asset (that isn’t Stock) at a Preset Price (Strike Price) prior to or on the Expiration Date

257
Q

What’s a Warrant?

A

A Derivative OTC Contract between a Firm & an Investor to buy or sell the Firm’s Asset(s) at a Preset Price (Strike Price) prior to or on the Expiration Date

258
Q

What are the 5 types of Warrants?

A

Traditional
Covered
Detachable
Naked
Wedded

259
Q

What’s a Traditional Warrant?

Warrant-Linked Security

A

Warrants issued in conjunction w/ New Shares of Bonds or Preferred Stock

260
Q

What’s a Covered Warrant?

A

Warrants issued by a Financial Institution that already own existing Shares

261
Q

What are Detachable Warrants?

A

Warrants that can be separated from the Bond & sold on Secondary Markets before Expiration

262
Q

What’s a Naked Warrant?

A

A Warrant issued w/out accompanying Bonds or Preferred Stock

263
Q

What’s a Structured Product?

A

An Alternative Investment (typically unsecured Debt) w/ payoffs linked to a variety of Assets

264
Q

What’s a Hedge Fund?

A

The General Partner of a Limited Partnership (LP) that deploys Leveraging & Trading of Non-Traditional Assets to earn above-average Investment Returns

265
Q

What’s a Blank Check Firm?

A

A developing Firm that has no specific Business Plan

266
Q

What’s a Special Purpose Acquisition Company (SPAC)?

A

A Blank Check Firm that generates Funds (via IPOs) to Finance Mergers & Acquisitions (M&A)

267
Q

What’s an Exchange Traded Note (ETN)?

A

A Bond that tracks an underlying Index of Securities, pays the Return of the Index it tracks at Maturity (less Fees) & doesn’t pay Interest

268
Q

What are the 2 Limitations of ETNs?

Exchange Traded Note

A

Earnings are only realized if the Index Return (-Fees) is Positive
▲ Default/Credit Risk since they are backed by the Credit of the Issuing Bank

269
Q

What’s a Reverse Convertible?

A

A Short-Term, High-Yield Bond that’s associated w/ the performance of a Stock

270
Q

What’s an Annuity?

A

A Hedged Insurance Contract that provides Fixed, Indexed, or Variable Income Immediately or Deferred for the Life of a Client

271
Q

Who’s an Annuitant within an Annuity?

A

The Client

272
Q

What’s a Fixed Annuity?

A

An Annuity that provides Guaranteed Fixed Periodic I/R Payments to a Client Funded by a General Account w/ Tax-Deferred Earnings

273
Q

Are Fixed Annuities an Exempt Security?

A

No, they aren’t a Security at all

274
Q

What’s an Indexed Annuity

A

An Annuity that provides Periodic Payments to a Client based on a Fixed or Indexed RoR Funded by a General Account & Tax-Deferred Earnings

275
Q

What’s a General Account for an Insurance Product?

A

A Firm’s Primary Investment Account that the Firm holds all of the Investment Risk in

276
Q

How are General Accounts for Insurance Products Regulated?

A

They require only a State Insurance License to sell & don’t need to accompany a Prospectus

277
Q

What’s a Variable Annuity?

A

An Annuity that provides Variable Periodic I/R Payments to a Client Funded by a Separated Account w/ Tax-Deferred Earnings

278
Q

Are Annuity Earnings Guaranteed?

A

No

279
Q

What’s a Separated Account for an Insurance Product?

A

A Pooled Investment Account that a Client holds all of the Investment Risk in

280
Q

How are Separated Accounts for Insurance Products Regulated?

A

They require a State Insurance License & Securities License to sell, along w/ a Prospectus

281
Q

How do Fixed & Variable Annuities react to Inflation?

A

Fixed Annuities are Vulnerable to Inflation
Variable Annuities are Resistant to Inflation

282
Q

What Expenses does the Pooled Investment Account within a Variable Annuity charge?

A

All of the same Shareholder Fees as a Mutual Fund & More:
Expense Risk Fee
Mortality Risk Fee
Premium Taxes

283
Q

What are Accumulation Units for a Variable Annuity?

A

The # of Units of Interest a Client has in the Pooled Investment Account

284
Q

What’s an Immediate Annuity?

A

An Annuity that begins Immediately (1 period) after a Lump-Sum Deposit from the Client

285
Q

What’s a Deferred Annuity?

A

An Annuity where the Client specifies an Age at which they’ll begin receiving disbursements

286
Q

How is a Deferred Annuity Taxed?

A

Deferred Gains are Taxed as Ordinary Income using LIFO

287
Q

What’s an Annuity Settlement Option?

A

How an Annuity pays the Client, which is determined at the beginning of the Payout Period & can’t be changed

288
Q

What are the 4 types of Annuity Settlement Options?

A

Fixed Period Life Annuity
Joint & Last Survivor Life Annuity
Straight-Life Annuity
Unit Refund Life Annuity

289
Q

What’s a Fixed Period Life Annuity?

A

An Annuity w/ Periodic Payments for a specified # of Years (typically 10-15) where a Beneficiary can be named & payments continue after the Clients death

290
Q

What’s a Joint & Last Survivor Life Annuity?

A

An Annuity that pays 2 Individuals periodically & ends when both Individuals die

291
Q

What’s a Straight-Life Annuity?

A

An Annuity w/ the Highest Periodic Payment, but a Beneficiary can’t be named

292
Q

What’s a Unit Refund Life Annuity?

A

An Annuity w/ Periodic Payments, where a Beneficiary can be named & payments continue after the Clients death

293
Q

What are the 2 Phases of Annuities?

A

Accumulation Phase
Annuitization Phase

294
Q

What’s the Annuity Accumulation Phase?

A

When an Annuity is being Funded

295
Q

What’s the Annuity Annuitization Phase?

A

When Annuity Payments commence

296
Q

What are the 5 Contractual Guarantees in an Annuity?

A

1035 Exchange
Death Benefit
Expense Guarantee
Mortality Guarantee
Surrender Value

297
Q

What’s a 1035 Exchange for an Annuity?

A

Allows a Client to Rollover the Value of an Insurance Product (- Surrender Charges) to Another

298
Q

What are Qualifying Rollovers in a 1035 Exchange for an Annuity?

A

Annuity to Annuity
Endowment Contract to Annuity
Life Insurance Contract to Life Insurance Contract
Life Insurance Contract to Annuity

299
Q

What’s a Death Benefit in an Annuity?

A

A Guarantee that if the Client dies during the Accumulation Phase the Accumulation Units will be paid to a Beneficiary

300
Q

What’s an Exchange Guarantee in an Annuity?

A

A Guarantee of the Max the Contract can charge for an Operating Expense Risk Fee

301
Q

What’s a Mortality Guarantee in an Annuity?

A

A Guarantee of Payments for the Life of the Client at the expense of a Mortality Risk Fee

302
Q

What’s a Surrender Guarantee in an Annuity?

A

A Guarantee that the Annuity can be Terminated during the Accumulation Phase for its Surrender Value

303
Q

What’s Life Insurance?

A

A Contract where a Policyholder pays Premiums to an Insurer to guarantee a Death Benefit for a Beneficiary(s)

304
Q

What are the 2 types of Life Insurance?

A

Permanent Life Insurance
Term Life Insurance

305
Q

What’s Permanent Life Insurance?

A

Life Insurance Policies that remain Active until the Policyholder dies, stops paying Premiums, or surrenders the policy

306
Q

What’s Term Life Insurance?

A

Life Insurance Policies that remain Active for a set period of time that don’t accumulate a Cash Value

307
Q

What are the 3 types of Term Life Insurance?

A

Convertible Term Life Insurance
Decreasing Term Life Insurance
Renewable Term Life Insurance

308
Q

What’s Convertible Term Life Insurance?

A

Term Life Insurance that can be converted into a Permanent Life Insurance Policy

309
Q

What’s Decreasing Term Life Insurance?

A

Renewable Term Life Insurance w/ coverage decreasing over the Life of the Policy at a predetermined rate

310
Q

What’s Renewable Term Life Insurance?

A

Term Life Insurance that provides a Quote for the Year the Policy is purchased and can be Renewed annually

311
Q

What are the 2 types of Permanent Life Insurance?

A

Variable Life Insurance
Whole Life Insurance

312
Q

What’s Variable Life Insurance?

A

Permanent Life Insurance that accumulates a Cash Value to last the Lifetime of the Policyholder within a Separated Account

313
Q

What’s Whole Life Insurance?

Cash-Value Life Insurance

A

Permanent Life Insurance that accumulates a Cash Value to last the Lifetime of the Policyholder within a General Account

314
Q

What’s UL Insurance?

Universal Life

A

A combination of Renewable Term Life Insurance & Whole Life Insurance

315
Q

What are the 2 types of UL Insurance?

Universal Life

A

Indexed UL insurance
Variable UL Insurance

316
Q

What are the 2 Benefits of a UL Insurance Policy?

Universal Life

A

Flexible Premiums Adjusted over Time
▲ Death Benefit

317
Q

What Life Insurance is the most Expensive for Young Policyholders?

A

Permanent Life Insurance

318
Q

What Life Insurance is the most Expensive for Older Policyholders?

A

Permanent & Term Life Insurance are roughly the same price once you get Older

319
Q

What’s a Life Settlement?

A

When an Individual sells their Life Insurance Policy at a Discount from its Face Value for Cash

320
Q

What’s a Viatical Life Settlement?

A

A Life Settlement, but for Terminally or Chronically Ill Individual Policyholders w/ 2- Years to live

321
Q

What are the 4 types of Persons involved in a Viatical Life Settlement?

A

Seller (Viator)
Provider — Any Person, other than a Viator, that enters into a Viatical Life Settlement Contract
Producer — The Firm that represents the Provider
Broker — The Firm that represents the Viator

322
Q

What does the Seller of a Life Settlement Receive & Relinquish?

A

They receive Cash for the Life Insurance Policy they are Selling
They Relinquish the entire Death Benefit & the Obligation to pay the remaining Premiums

323
Q

What does the Buyer of a Life Settlement Receive & Pay?

A

They receive the entire Death Benefit of the Life Insurance Policy
They must pay the Sale Price + all Future Premiums

324
Q

What are the Risks of a Life Settlement?

A

Legal Challenge — The Settlement may be challenged by the Insurance Company
Liquidity Risk — Each Contract is Unique, which means illiquid
Mortality Risk — The Death of the Seller can be difficult to predict

325
Q

What are Commodities?

A

Raw Materials that are used for Living, Trading, & Storing

326
Q

What are the 3 Classes of Commodities?

A

Agricultural Goods
Energy
Metals

327
Q

What are Precious Metals?

A

Rare Metals that have an ▲ Economic Value

328
Q

What are the 8 Precious Metals?

A

Gold (#1)
Iridium
Osmium
Palladium
Platinum (#3)
Rhodium
Ruthenium
Silver (#2)

329
Q

What’s a Digital Asset?

A

Any Asset that exists entirely in a Digital Form that you can acquire the Right to use

330
Q

What are the 3 types of Digital Assets?

A

Cryptocurrency
Non-Fungible Token (NFT)
Stablecoin

331
Q

What’s Cryptocurrency?

A

A Digital Currency that uses Cryptography to secure its Transactions

332
Q

How does Cryptocurrency utilize Cryptography?

A

It uses a sophisticated Encryption Technique to Anonymously Store & Share Info on a Decentralized Network

333
Q

What’s a Non-Fungible Token (NFT)?

A

A Unique Digital Certificate created by Blockchain Technology that represents Ownership in a Digital Collectible

334
Q

What does Non-Fungible mean for an NFT?

A

An Item that can’t be Traded, Replaced, or Exchanged for one another

335
Q

What’s a Stablecoin?

A

A Digital Currency that matches the Value of a Non-Digital Currency or Commodity

336
Q

What are the Risks of Digital Assets?

A

▲ Cybersecurity Threat
▲ Fraud
▼ Liquidity
▲ Volatility

337
Q

What’s an Investment Order?

A

The Execution & Actual Purchase/Sale of a Security

338
Q

What are Day Orders?

A

The Default Order type in which Orders are placed during a Day & can be Executed

339
Q

What happens if an Order is placed during a Day, but isn’t Executed?

A

It’s Automatically Cancelled

340
Q

What’s a Good Till Canceled (GTC) Order?

A

An Order that will be Executed at a specific time or earliest convenience, unless it is Cancelled

341
Q

What’s a Not-Held Order?

A

Orders that grant a Floor Broker the ability to fill the Order at any time during the Day that they think is best

342
Q

What are the 4 types of Orders?

A

Market Order
Limit Order
Stop Order
Stop Limit Order

343
Q

What’s a Market Order?

A

A live Order to immediately execute a purchase/sale of a Security

344
Q

What’s a Limit Order?

A

A live Order to buy/sell a Security at a given Price or beyond

345
Q

What’s a Stop Order?

A

A suspended Order that becomes a live Order when a Security reaches a Target Price, and then executes a purchase/sale of a Security at the Current Market Price

346
Q

What’s a Stop Limit Order?

A

A suspended Order that becomes a live Order when a Security reaches a Target Price, and then purchases/sells the Security at a specific Price

347
Q

What’s a Short-Sale?

Shorting or Selling Short

A

Borrowing $$$ within a Margin Account to Sell a Security that the Investor doesn’t own but is committed to Repurchasing

348
Q

What Order Type is used to limit losses on a Short-Sale?

A

Buy Stop

349
Q

Which 3 Order types are place Above the Current Market Price?

A

Buy Stop
Buy Stop Limit
Sell Limit

350
Q

Which 3 Order types are place Below the Current Market Price?

A

Buy Limit
Sell Stop
Sell Stop Limit

351
Q

What happens to a Stock Price when a Dividend is Paid?

A

It’s ▼ by the amount of the Dividend on the Ex-Dividend Date

352
Q

Which 3 Order Types are Adjusted for a Dividend Payment?

A

Buy Limit
Sell Stop
Sell Stop Limit

353
Q

What’s the Total Return Equation?

A
354
Q

What’s the RoR Equation?

A

Series 65 (5 decks)

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