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Question 1

Warrants

Answer 1

Warrants are generally issued with bond offerings to make the bonds more attractive.

Warrants are long-term options to buy stock.

Because they are equity securities, warrants, as investments, are considered less safe than bonds.

Question 2

If an over the count stock is quoted at 32.25-32.50 the bid price is 32.25

Answer 2

If an over the count stock is quoted at 32.25-32.50 the bid price is 32.25

Question 3

Mutual Fund Investors Cost Base

Answer 3

A mutual fund investor’s cost base is the total of all investments including reinvested distributions.

Question 4

Under what circumstances may an open-end investment company act as it’s own distributor?

Answer 4

Mutual funds may not act as distributors for their own fund shares EXCEPT under Section 12b-1 of the Investment Company Act

Question 5

Ex-Dividend Date for mutual fund’s vs. corporate stocks

Answer 5

Corporate stocks in the secondary market are the one’s 2 biz days before the record date.

A mutual funds board of directors set’s the ex dividend date which is normally the day following the record date.

Question 6

AMT(alternative minimum tax)

Answer 6

The AMT was enacted to ensure that high income taxpayers do not escape federal income taxes.

Certain tax-preferenced items that receive favorable tax treatment such as private purpose municipal bonds(also known as industrial development revenue bonds) must be added back into taxable income for the AMT

Question 7

High-yield bonds

Answer 7

High-yield bonds carry high credit risk

Question 8

Interest Rate Risk

Answer 8

Interest Rate Risk is the danger that interest rates will rise and adversely affect a bond’s price. The risk is greatest for long-term bonds; short-term debt securities are affected the least if interest rates change