Lesson 1 Chapter 1 Flashcards
How does a dealer acting as a principal handle an underwriting?
Buy the issue and attempt to resell it immediately at a higher price.
An important company sells to customer mostly on credit. The company has accumulated a high level of account receivables that would like to sell in order to receive needed cash. What type of intermediary is likely to purchase the receivables?
Sales finance company
Maria is an inexperienced investor who seeks capital gains. She is uncomfortable choosing individual stocks. What type of investment best suits her objective?
Mutual funds
What does not apply to institutional investors?
Act as agents on behalf of retail investors and charge a commission
Andrew is a small business owner who would like a dedicated professional advice in managing a growing cash flow stream by someone who go knows his business well. What type of investment dealer is most suitable for him?
Full Service firm
What is an example of direct investment?
Staring a business
Buying a house
What are the type of securities can preserve capital and prevent loss?
T-bills
Certificate of deposits
High-yield savings account
Money market accounts
What type investments are for income?
Savings account
Savings bonds
GICs
Annuities
Preferred stocks - may provide income through dividends
What type of investments are for growth?
Equity mutual fund
Stocks
ETFs (exchange traded funds)
Preferred stocks - may provide growth if the stocks increase in value
What are the important characteristics of capital?
Mobility
Sensitivity
Scarcity
What is an agent?
An investment dealer who acts on behalf of a buyer and a seller without taking ownership of the security in the process of completing the transaction
What is CDS (clearing and depository services inc)?
Provides dealers with clearing and settlement services
What are self-directed brokers?
Offer discounted commissions but do not provide advice.
What is Fintech?
Companies that implement computer technology to provide efficient financial products and services
What is a Robo-advisor?
An online investment service that provides clients with automated investment advice
