Random:

Question 1

TIPS

Answer 1

Treasury Inflation-Protected Securities

Question 2

Offer a stated coupon with interest paid semi-annually

Answer 2

TIPS

Principal adjusted for inflation and deflation, based on CPI

Question 3

T-STRIPS

Answer 3

Issued at a discount and mature at face value.

Forms of zero-coupon debt created from T-notes and T-bonds

Question 4

CMO’s

Answer 4

Mortgage backed bonds created by dividing mortgage pools into various bond classes.

Distribute the impact of prepayment risk to different tranches

interest is generally paid monthly (fully taxable) with principal paid sequentially.

Question 5

Types of CMO’s

Answer 5

Pac - Provides the most predictable cash flow and maturity

Companion Tranche - Provides the least predictable cash flow and maturity.

Z-Tranche - Last tranche to receive payments

Question 6

CDO’s

Answer 6

Colateralized Debt Obligations

Repackage individual fixed=income assets into product that can be separated into tranches and then sold in the secondary market.

Question 7

No Load Fund

Answer 7

No front end sales charge, no deferred sales charge (backend) No 12b-1 fee that exceeds .25% of the fund’s average net assets per year.

No-load fund may have a redemption fee.

Question 8

Closed End (publicly traded)

Answer 8

• one time issuance
• shares trade at a dis or prem to NAV with commission or markup added (supply and demand)
• secondary market
• sold short

Question 9

Open End (Mutual Fund)

Answer 9

• Issue new shares (common shares sold by prospectus)
• Sold at the NAV + sales charge (forward pricing)
• shares remain in the primary market
• cannot be sold short.

Question 10

Exchange Traded Fund (ETF)

Answer 10

• basket of securities which mirror an index
• trade in the secondary market; may be sold short
• commission is paid on trade
• intra day pricing
• leveraged and inverse ETFs exist

Question 11

Index Fund

Answer 11

• basket of securities which mirror an index (low expenses)
• Shares are redeemed by the fund; cannot be sold short
• Usually have no sales load
• Forward pricing; once daily
• Do not allow leverage

Question 12

Annuity phase

Answer 12

accumulation units are converted into fixed number of annuity units.

Question 13

Payout of variable annuity

Answer 13

multiplying the fixed number of annuity units by the fluctuating value

Question 14

Business Development Companies (BDCs)

Answer 14

Invest in both equity and debt of typically non-public companies:
small and developing companies
financially troubled companies
private companies

Income and net worth requirements are avoided since BDCs are public offerings
Most trade on exchanges providing liquidity