Review Q's Flashcards
What is Funded Debt?
CORPORATE debt considered part of a company’s permanent long term funding.
What are some features of Step-Down Certificates
Initial payments are made at an interest rate that is above the market rate
At a predetermined time, the interest rate is decreased to a rate that is at, or below, the market.
Stocks listed on the NYSE typically also trade on the NYSE also can trade on the _____?
Chicago Midwest Stock Exchange
Who would be most likely to purchase STRIPS?
Pension Fund
Overnight Repo’s
Seller loses control of the underlying securities for the duration of the agreement
Interest rate charged is most similar to the fed funds rate
The investment has interest rate risk
The investment has no liquidity risk
The nominal yield of a bond will
Increase as bond prices fall, and decrease as bond prices rise
Principal advantage of a Variable Rate Municipal Note is:
The Market Rate can be expected to remain fairly stable
What is true of adjustment (income) bonds?
Semi-annual payment of interest is not assured
AND
Repayment of principal at maturity is not assured
What is true of short term CD’s?
Trading occurs in the secondary market, they are issued by banks typically in 100k denominations. They are non-callable and trade in the secondary market.
How many days do treasury bonds pay accrued interest?
Actual day/Actual month - up to but not including the settlement date.
What is the yield to maturity on a premium bond?
Stated interest rate - annual capital loss /bond average value
What must be disclosed or available on an agency confirmation?
The remuneration earned by the firm in the transactions
The time of transaction
& The identity of the other part in the transaction
Which Risks apply to GNMA pass thru certs?
Purchasing power risk
Risk of early prepayment
Risk of loss of principal if interest rates rise
IF a customer hold a preferred stock and the company pays a common dividend what does the holder of the preferred stock receive?
They will keep the same amount of shared that they have in preferred stock and receive NO common dividend shares because they hold preferred stock NOT common!
What type of order is reduced on the ex date is an open _____?
Buy Limit Order
What would a customer purchase to protect a gain on a short stock position?
A Buy stop order - to avoid losing the gain on the short stock position
T-bills cannot be collateral for Treasury Receipts because…..
The maturity of a T-bill is too short.
Who are considered “creditors” of a corporation?
Convertible bondholders and non-convertible bondholders
Preferred stock has all of these features compared to common stock:
Fixed rate of return
Priority claim to dividends declared
Priority claim to assets upon dissolution
Preferred does NOT Have a fixed maturity - nor even a stated maturity
REIT’s are organized at what type of investment?
TRUST
Do warrants and right pay dividends?
NOOOO
Max 12b-1 fee
.75%
