Understaning Products And Their Risks 2

Question 1

From latin for according to value a tax the amount of which is based on the value of a transaction or of a property

Answer 1

Ad valorem tax

Question 2

Securities issued only as electronic records without physical certificates of ownership

Answer 2

Book entry

Question 3

A bond that can be redeemed or paid off by the issuer prior to its maturity date

Answer 3

Callable bond

Question 4

An agreement a guarantee a warrant

Answer 4

Covenant

Question 5

Securities that derive their value from an underlying security include options rights warrants CMOs and futures

Answer 5

Derivative securities

Question 6

A formal legal agreement contract or document

Answer 6

Indenture

Question 7

Securities that can be purchased by banks

Answer 7

Investment grade bonds

Question 8

The rate or a coupon stated on the face of a bond certificate

Answer 8

Nominal yield

Question 9

The face value of a bond ($1,000) or preferred stock ($100)

Answer 9

Par value