Progress 2 Flashcards
What are ENTs backed by?
credit of financial institution
Best hedge for a long stock position
buy a put, stock will be sold at strike price if market dips
Main difference between open-end and closed-end investment companies
open-ended companies determine share price once a day (NAV)
closed-ended price fluctuates over the day due to market supply and demand
What do you multiply coupon rate by to find out how much annual interest is?
par value
M=1000
Where is information about a mutual fund’s expense ratio found?
front of the prospectus
What is the latest you can be entitled to a dividend when purchasing?
if the transaction is on the business day before the ex-dividend date
What is the largest index?
Wilshire 5000 Index
To be entitled to a dividend on common stock, what date must the person’s name be on the corporate books?
record date (same as ex dividend)
What securities have risk-free rate of return?
T-bills, (treasury securities)
What is the cost basis of inherited shares?
market value on date of the original owner’s death
Sales Charge Formula
(POP-NAV)/POP
Why would an investor choose a sector fund? (specialized fund)
high growth potential
What is a breakpoint sale?
when mutual fund shares are sold just below level which investor would receive reduced sales charge, boosting agent commissions
What is ‘switching’ in terms of mutual funds?
when a customer uses proceeds from the sale of shares of one mutual funds to purchase shares of another one
RR would do this to change objectives or if fund is underperforming
**not taxable
**benefits to RR should not outweigh benefits to customer
How much money can be taken from a 529 plan annually to pay for K-12 tuition?
$10k annually
