Random #4

Question 1

In the event of a bankruptcy who is paid first, fixed income investors or common stock holders?

Answer 1

Fixed income investors

Question 2

When are coupon payments made?

Answer 2

Monthly, Qtrly and Semi-annually

Question 3

When do T-Notes mature?

Answer 3

Between 2-10 years

Question 4

Does the Uniform Securities Act address law at state or federal level?

Answer 4

State

Question 5

What are each states security laws called?

Answer 5

Blue Sky Laws

Question 6

What is the Sarbanes Oxley Act?

Answer 6

Prevent fraudulent financial reporting by corporations

Question 7

How many people can a private placement be offered to?

Answer 7

Up to 10 for a 12 month period

Question 8

Are futures contracts considered securitites?

Answer 8

No

Question 9

when are testimonials in advertising allowed and not allowed?

Answer 9

B/D= allowed
IA- no allowed

Question 10

Rule 4370?

Answer 10

Each member must create and maintain a written business continuity plan identifying procedures relating to an emergency or significant business disruption.

Question 11

Debt to Equity Ration?

Answer 11

Assets - Liabilities = Equity. Liabilities / Equity = Debt-to-equity Ratio.

Question 12

Standard Deviation?

Answer 12

Standard deviation risk measure determines the average rate of return and how this average rate varies.

Question 13

Discounted payback period for a business:

Answer 13

4 + (34,902 / 37,452). where 4 is the last negative year and 34902 is the negative cash flow in that year divided by the projected positive cash flow. In this example the # is 4.93 years to breakeven and recoup investment.

Question 14

What 3 things are used to calculate the Dividend Growth Model to determine a stocks value (only used for cos that pay dividends):

Answer 14

The three main inputs include the expected annual dividend per share, the required rate of return, and the dividend’s expected growth rate.

Question 15

What is used to measure benchmark correlation or how closely a change in price of one asset correlates to a benchmark (how closely a mutual fund correlates to it’s benchmark of say the S&P 500) or

Answer 15

R-Squared

Question 16

What is used to measure volatility or sensitivity of a fund or stock to the benchmark (like the S&P 500)?

Answer 16

Beta (Above one is more sensitive, below one is less sensitive, one is exactly as sensitive)

Question 17

What measures the money manager or investors ability to profit when the benchmark is profiting?

Answer 17

Alpha (Greater than one is better performance than the benchmark) Must compare same asset classes

Question 18

What is a private placement?

Answer 18

private private companies wishing to acquire a few select investors or by publicly traded companies as a secondary stock offering. Private placement is also referred to as an unregistered offering.

Question 19

Does a private placement require a prospectus?

Answer 19

No