Terms 1-17

Question 1

Withholding

Answer 1

Broker/dealers illegally holding back shares of a new issues from the public for gain.

Question 2

Stabilizing Bid

Answer 2

Allows the broker/dealer to prop up the price of a new issue that has dropped below the offering price.

Question 3

Shelf Registration

Answer 3

Allows a broker/dealer to maintain a registration of a new issue with the SEC for up to two years.

Question 4

Common Stock

Answer 4

Equity issue gives investor voting rights in the issuing company.

Question 5

Statutory Voting

Answer 5

Investor has one vote for each share owned.

Question 6

Cumulative Voting

Answer 6

One vote per share owned for each board member up for election; 1000 shares x two new board members = 2000 votes

Question 7

Right to transfer

Answer 7

Investor’s right to sell his equity securities to another investor.

Question 8

Par Value

Answer 8

Bonds that issue and mature at $1000 value.

Question 9

Yield

Answer 9

Coupon, nominal rate, face value of a bond, adjusting for price changes.

Question 10

Yield to Maturity

Answer 10

Rate of return on a bond issue, adjusting for price changes.

Question 11

Current Yield

Answer 11

Existing rate on the value of a bond, adjusting for price changes.

Question 12

Bond Rating:

Answer 12

Financial or credit rating on a bond issue given by rating agency, from the highest AAA to lowest D.

Question 13

Zero Coupon Bonds

Answer 13

Bonds that are sold at a deep discount and mature at par.

Question 14

Accrued Interest

Answer 14

Amount of interest a new bond owner owes to the existing bond holder.

Question 15

Commercial Paper

Answer 15

Short-term corporate issues under 270 days to maturity; not required to register with SEC.

Question 16

Repurchase Agreement

Answer 16

FRB injects money into supply by buying eligible securities from member banks.

Question 17

Reverse repurchase agreement

Answer 17

FRB sells eligible securities to member banks, tightening money supply.