Knowledge of Capital Markets

Question 1

The gradual reduction in the value of an intangible asset

Answer 1

Amortization

Question 2

A firm that effects securities transactions for its own account or for the account of others

Answer 2

Broker/dealer

Question 3

A security that is backed by a specific asset or pool of assets

Answer 3

Collateralized Securities

Question 4

Large organizations that invest including insurance companies banks pension funds investment companies mutual funds and endowment

Answer 4

Institutional investors

Question 5

Accounts or securities that can be easily and quickly converted to cash with little or no loss in value

Answer 5

Liquid assets

Question 6

The date a term or dollar bond pays par value plus the last semi annual interest payment. On a serial bond the date the last payment is received

Answer 6

Maturity date

Question 7

Price to earnings ratio computed by dividing the price per share of a stock by its earnings per share. Used to gauge the value of a stock

Answer 7

P/E ratio

Question 8

Also known as repo a form of short term borrowing for dealers in government securities

Answer 8

Repurchase agreement

Question 9

A market weighted index of the 500 largest U.S. companies providing a general measure of stock market performance

Answer 9

S&P (Standard & Poors) 500 index

Question 10

Also called treasuries long term U.S. government bonds with maturities ranging from 10-30 years. Interest is paid semi annually and is exempt from the state and local taxes

Answer 10

Treasury Bond

Question 11

A graph depicting the relationship between yields on short term and yields on long term bonds

Answer 11

Yield curve