Investments

Question 1

Taxes on bills notes bonds

Answer 1

No state or local income tax on interest

Question 2

Bills
Notes
Bonds

Answer 2

Bills 3-12 $100-$1m
Notes 1-10yrs $1k-100k
Bonds 10-30 yrs 1k -1mil

Question 3

Strips

Answer 3

Direct obligation from govt
Discount-phantom

Question 4

REITS

Answer 4

75% income from real Estate
15 from securities (gnma)
90% distributed only 10% taxes
QBI

Question 5

Intrinsic value

Answer 5

Can’t be neg
Market price-exercise price
Call IV =mp-ep
Put iv=ep-mp

Question 6

Correlation coefficient

Answer 6

Determines how stocks relate to each other
+1=exactly the same
-1=exactly opposite

Question 7

Coefficient of variation

Answer 7

Risk per unit of expected return
Standard div of stock/avg mean of stock

Question 8

Calculating SD & Mean

Answer 8

E+
Gold 7=mean
Gold 8=SD

Question 9

Standard diviation

Answer 9

Measures variability in nondiversifed portfolio
TOTAL RISK
68% within 1 SD
95% within 2 SD
99% within 3 SD
START AT MEAN

Question 10

Beta

Answer 10

Volatility in diversified portfolio
Measures systematic risk
1=moves w/market
Less than 1, moves less than market
Greater than 1, moves more than market

Correlation coefficient x SD of stock
Divided by
Standard deviation of market

Question 11

Risk adjusted return

Answer 11

Return/beta

Question 12

Geometric mean

Answer 12

Time weighted
Add 1 & multiple each, that # is FV
-1 PV
# of years = N
Finding I

Question 13

Insured muni bonds assured by?

Answer 13

Assured gaursnty and Berkshire
AAA

Question 14

ADR dividend

Answer 14

Declared in foreign dollars pd in us
Exchange rate risk