Stocks Flashcards
Ex Dividend
Regular way - 1 business day before record date.
Need to buy shares T+2 from record date
Rights Agent
Hired to handle mechanics of a rights offering
Convertible preferred shareholders
Benefit when market price of common stock rises above conversion price.
They would then have an opportunity to buy under market value
Performance preferred
Issued by growth company.
Also called participating preferred
Participating preferred
Receives fixed dividend
Cumulative preferred stock
If company misses its dividends, holder accumulates all dividends and get payment before any common shareholders
Right
Allows common stockholder to maintain their same percentage of ownership of company that is issuing new stock.
Right lets existing shareholder subscribe to the new shares before they’re offered to the public.
Exercise price of warrant
Set at a premium to market price of common stock
Treasury stock
Issued shares minus outstanding shares
Issued stock that’s been repurchased
Wrap Accounts
All customer services wrapped into one
Annual fee based on total assets
Advisory product, so person selling must be registered as both sales representatives and investment advisors in most states
Coincident economic indicator
Indicates economy’s current position in business cycle
Leading indicator
Measures consumer confidence levels and likely future consumer spending levels
Lagging economic indicator
Shows where economy was in the business cycle during the past 12 months
Corporate profit levels, ratio of consumer credit to incomr
Flow of funds
Found in trust indenture
Order in which revenue bond is to be collected and disbursed
Open interest
Opening purchases/sales increase open interest; closing purchases/sales decrease
Greater open interest, greater the likely trading volume in the issue
Good faith checks
Specified in official notice of sale
Submitted with bid to municipality
Amount determined by the issuer
Typically 1% or 2% of par value of the bonds
Variable annuities
Tax deferred; unattractive to low tax bracket
Professionally managed
Have investment risk
Variable annuities
Tax deferred; unattractive to low tax bracket
Professionally managed
Have investment risk
Fixed annuities
No prospectus or registration
Debt service coverage ratio
Net revenues / debt service
Not held order
Investor gives floor broker discretion on time and price at which order should be executed
Cannot be completed by Specialists
Pure interest rate
Free of investment risk
T Bills
Accrued interest
Not included in cost basis
Cost basis
Price paid for bond plus any mark-up or commission
Quick ratio
Acid test
Current assets - inventories and prepaid expenses
Most stringent liquidity measure
VIX option
Measure of market volatility
Higher index value, higher volatility
Volatile price movements (high VIX) are bearish
Trust Indenture Act of 1939
Only applies to Corporate Bonds of more than $50,000,000
Protect bond holders from harmful actions of issuer
Variable rate demand note
Provides investors with stated maturity date, floating interest rate, and option to put back to financial intermediary on daily/weekly basis
Currency Transaction Report
Filed when a firm receives more than $10k in cash in a day
Bank Secrecy Act
Safeguard financial system from abuses of financial crime, including terrorist financing and money laundering
Warrant
Attached to new bond or preferred stock issue
Right to buy stated amount of common stock at specified price
Letter of Intent
Valid for maximum of 13 months
Recession
Decline in GDP for 2 quarters
No-load fund
Not permitted to charge a 12b-1 fee greater than 25 basis points
Redemption value of open-ended investment company
Based on NAV computed after the order is received
Preemptive Right
Right to maintain proportionate ownership if issuer offers new shares
ADR
American Depository Receipts
Redeemable shares of stock of foreign company
Value Investing
Selection of quality investments based on finding securities that are fundamentally undervalued in the market
Interval Fund
Continuously offers shares to investors. They don’t trade on an exchange, and can be sold monthly, quarterly, or semiannually. They are illiquid investments. They have very high fees
