Unit 11 Flashcards
A security that pays a fixed amount on a quarterly basis, and also allows the holder to profit if the common stock rises, is known as a
convertible preferred stock
The terms of a __________ contract are standardized and typically trade on an exchange. _____________ contracts are privately negotiated between two counter parties and the terms are customized.
futures; forward
The pricing of preferred stock will most closely follow the pricing of:
debt instruments, such as T-bonds (a long-term debt instrument)
In a __________ contract, the investor may offset the position at any time before the contract is assigned. However, in a _________ contract, the agreement between the two parties may not be assigned without permission of the other party.
futures; forward
A _____ is a form of derivative whereby two parties agree to exchange two different cash flows. One of the cash flows is fixed and the other will vary based on interest rates, foreign currency prices, or even other securities (e.g., stocks or bonds).
swap
A buy limit order can be executed at:
The limit price or lower
The S&P 500 is a ___________-weighted index.
capitalization
The Dow Jones Industrial Average (DJIA) is a _____-weighted index.
price
The possibility that changes in exchange rates will undermine the value of foreign investments for U.S. investors is……
currency risk
Which security is given to shareholders as a part of an issuer’s anti-dilution policy when it intends to raise additional capital?
Preemptive rights
In a declining market, the type of order that would potentially contribute to the decline is a:
Sell stop
Quotes for non-Nasdaq, over-the-counter traded equities can be found in the __________.
Pink Open Market
There is no secondary market for _________ contracts
forward
A person who considers herself a contrarian investor would follow the:
Short interest theory
A contract between two parties to exchange a sequence of cash flows, one of which has a fluctuating value for a predetermined period, is a _____
swap
