Vocab Flashcards

Question

AMT - alternative minimum tax

Answer 1

an alternative tax computation that adds certain tax preference items back into adjusted gross income. If the AMT is > regular tax liability for the year, the regular tax and the amount by which the AMT exceeds the regular tax are paid. See - tax preference item

Answer 2

- a negotiable certificate representing a given number of shares in a foreign corporation. - It is issued by a domestic bank. - ADR are bought and sold in the American securities markets, and are traded in English and US dollars.

Answer 3

a protective clause found in most convertible issues (preferred stock or debentures) that adjusts the conversion rate for stock splits and/or stock dividends. This ensures that the holder of the convertible will not suffer a dilution in value.

Answer 4

the increase in an assets value

Answer 5

a legal strategy that generates guaranteed profit from a transaction. a common form is the simultaneous purchase and sale of the same security in different markets at different prices to lock in a profit. *This is not considered market manipulation

Answer 6

the average set of numbers, such as annual returns on an investment

Answer 7

an indication by a trader or a dealer of a willingness to sell a security or a commodity; the prices at which Han investor can buy from a broker dealer See -bid, public offering price, quotation

Answer 8

a stock that is issued below is par or stated value. The issue and/or creditors have the right to assess the shareholder for deficiency. *all stock issued today is non assessable

Answer 9

1) anything that an individual or a corporation owns | 2) a balance sheet item expressing what a corporation owns

Answer 10

dividing an investment portfolio among different asset categories, such as stocks, bonds, cash and tangible assets such as real estate and precious metals and other commodities.

Answer 11

a market in which buyers enter competitive bids and sellers enter competitive offers simultaneously. The NYSE is an auction market

Answer 12

financial statement of a program, corporation, or an issuer (including the profit and loss statement, cash for and source and application of revenues statement, and balance sheet) that has been examined and verified by an independent certified public accountant.

Answer 13

an accounting method used when an investor has made multiple purchases at different prices of the same security; the method averages the purchase prices to calculate an investors cost basis in shares being liquidated. The difference between the average cost basis and the selling price determines the investors tax liability See -FIFO, LIFO

Answer 14

a commission or sales fee that is charged when mutual fund shares or variable annuity contracts are redeemed. It declines annually, decreasing to zero over an extended holding period - up to 8 years - as described in the prospectus.

Answer 15

a mutual fund whose stated investment policy is to have at all times some portion of its investment assets in bonds and preferred stock, as well as in common stock, in an attempt to provide both growth and income. see - mutual fund

Answer 16

a method of portfolio allocation and management aimed at balancing risk and return. a balanced portfolio may combine stocks, bonds, packaged products such as investment companies, DPP's, REITs, and cash equivalents

Answer 17

an international accounting record of all transactions made by one particular country with others during a certain period; it compares the amount of foreign currency the country has taken in with the amount of its own currency it has paid out See - balance of trade

Answer 18

the largest component of a country's balance of payments; it concerns the export and import of merchandise (not services). debit items: imports, foreign aid, domestic spending abroad, domestic investments abroad credit items: exports, foreign spending in domestic economy, foreign investments in the domestic economy

Answer 19

a report of a corporations financial condition at a specific time

Answer 20

assets - liabilities = SE

Answer 21

a holding company whose primary asset is a commercial bank see - holding company

Answer 22

another term for yield to maturity ie. this bond is selling at 5.78 basis

Answer 23

a measure of a bonds yield, equal to 1/100 of 1% of yield. a bond whose yield increases from 5.00% to 5.50% is said to increase by 50 basis points. 100 basis points = 1% see - point

Answer 24

an investor who acts on the belief that a security or the market is falling or will fall see - bull

Answer 25

a market in which prices of certain group of securities are falling or expected to fall

Answer 26

a model portfolio of a large number of assets, such as the S&P 500, against which the performance of a fund or portfolio is measured

Answer 27

a means of measuring the co movement of the return of a security or a portfolio of securities to the return on the overall market. beta = 1 the securities returns will be expected to exceed those of the market beta > 1 securities securities returns will be expected to exceed those of the market beta < 1 returns will be expected to be lower than those of the market see - beta coefficient

Answer 28

an indication by an investor, a trader, or a dealer of a willingness to buy a security; the price at which an investor can sell to a broker dealer see - offer, public offering price, quotation

Answer 29

one of the most popular options pricing models. appears frequently on the exam as an incorrect choice

Answer 30

a large trading order, defined as an order that consists of 10,000 or more shares of a given stock or at a total market value of $200,000 or more

Answer 31

the nickname for the state regulations governing the securities industry. The term was coined in 1911 by a Kansas Supreme Court justice who wanted regulation to protect against "speculative schemes that have no more basis than so many feet of blue sky"

Answer 32

individuals elected by stockholders to establish corporate management policies. a board of directors decides, among other issues, if and when dividends will be paid to stockholders

Answer 33

"good faith" something that is genuine, authentic, real. ie bonafide quote

Answer 34

an issuing company or governments legal obligation to repay the principal of a loan to bond investors at a specified future date. Bonds are usually issued with par or face values of $1000, representing the amount of money borrowed the issuer promises to pay a percentage of the par value as interest on the borrowed funds. the interest payment is stated on the face of the bond at issue.

Answer 35

a mutual fund whose investment objective is to provide stable income with minimal capital risk it invests in income producing instruments, which may include corporate, government, or municipal bonds see - mutual funds

Answer 36

one of a number of quotations listed in the financial press and most daily newspapers that provide representative bid prices from the previous days bond market. Quotes for corporate and government bonds are percentages of the bonds face values (usually 1000). corporate bonds are quoted in increments of 1/8 government bonds are quoted in increments of 1/32 municipal bonds may be quoted on a dollar basis or on a yield to maturity basis see - quotation, stock quote

Answer 37

an evaluation of the possibility of a bond issuers default, based on an analysis of the issuers financial condition and profit potential. Standard & Poors, Moody's Investor Service, Fitch Investors Service, among others provide bond rating services

Answer 38

one of the several tools used by bond analysts to asses the degree of safety offered by a corporations bonds. It measures the percentage of the corporations capitalization that is provided by long term debt financing calculated by dividing the total face value of the outsanding bonds by the total capitalization.

Answer 39

the annual rate of return on a bond investment. types of yield include nominal, current, yield to maturity, yield to call their relationships vary depending on if the bond in question is at a discount, at a premium, or at par

Answer 40

a security sold without delivery of a certificate. evidence of ownership is maintained on records kept by a central agency; ie. the treasury keeps records of treasury bill purchasers. transfer of ownership is recorded by entering the change on the books or electronic files

Answer 41

a measure of the net worth of each share of common stock is calculated by ``` = (total net worth - intangible assets - preferred stock) / # of shares of common outstanding ```

Answer 42

debt instruments, generally from 3rd world countries, that may have US treasury bond as collateral

Answer 43

technical analysis theory that predicts the strength of the market according to the number of issues that advance or decline in a particular trading day

Answer 44

acronyms referring to investments in Brazil, Russia, India and China

Answer 45

a short term loan made to bridge the gap until permanent financing is arranged

Answer 46

a written disclosure statement that investment advisers must provide to most clients and prospective clients Form ADV part 2A may be used for this purpose

Answer 47

a written disclosure statement containing information about certain of an investment advisers supervised persons this disclosure is usually accomplished by the delivery of Form ADV part 2B to most clients and prospective clients

Answer 48

1) an individual or a firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm 2) the role of a firm when it acts as an agent for a customer and charges the customer a commission for its services

Answer 49

a person in the business of buying and selling securities. a firm may act as both broker (agency) and dealer (principal), but not in the same transaction. broker dealers normally must register with the SEC. appropriate SRO's, and any state in which they do business see - broker, dealer, principal

Answer 50

an investor who act on the belief that a security or the market is rising or will rise

Answer 51

see OTC bulletin board

Answer 52

a market in which prices of a certain group of securities or rising or will rise

Answer 53

a predictable long term pattern of alternating periods of economic growth and decline. the cycle passes through 4 stages: expansion, peak, contraction, trough

Answer 54

the risk inherent in equity securities that poor management decisions will have a negative impact on the stocks performance. can be reduced through diversification

Answer 55

an order to buy a security that is entered at a price above the current offering price and that is triggered when the market price touches or goes through the buy stop price

Answer 56

a trust that is funded with a property in an amount equal to the exemption equivalent of the transfer tax credit amount applicable to the decedent (11.4 million in 2019); thus, the property is not subject to federal estate tax see - generation skipping trust

Answer 57

for accounting purposes, a year that ends on December 31 see - fiscal year - accounting year ends any other time

Answer 58

1) an option contract giving the owner the right to buy a specified amount of an underlying security at a specified price within a specified time 2) the act of exercising a call option

Answer 59

a type of bond issued with a provision allowing the issuer to redeem the bond before maturity at a predetermined price

Answer 60

a type of preferred stock issued with a provision allowing the corporation to call in the stock at a certain price and retire it

Answer 61

an investor who pays a premium for an option contract and receives, for a specified time, the right to buy the underlying security at a specified price

Answer 62

the date, specified in the prospectus of every callable security, after which the securities issuer has the option to redeem the issue at par or at par plus a premium

Answer 63

see call provision

Answer 64

a provision in a bond indenture stating that the issue is a noncallable for a certain period (ie 5 years, 10 years) after the original issue date

Answer 65

the written agreement between an issuer and its bondholders or preferred stockholders giving the issuer the option to redeem its senior securities at a specified price before maturity under certain conditions

Answer 66

the potential for a bond to be called before maturity, leaving the investor without the bonds current income. because this is more likely to occur during times of falling interest rates, the investor may not be able to reinvest his principal at a comparable rate of return

Answer 67

an investor who receive a premium and takes on, for a specified time, the obligation to sell the underlying security at a specified price at the call buyers discretion

Answer 68

an increase in an assets market price

Answer 69

all tangible property, including securities, real estate, and other property, help for the long term

Answer 70

a securities market investment theory that attempts to derive the expected return on an asset on the basis of the assets systematic risk

Answer 71

the profit realized when a capital asset is sold for a higher price than the purchase price

Answer 72

the sum of a corporations long term debt, stock, and surpluses

Answer 73

a measure of an issuers financial status that calculates the value of its bonds, preferred stock, or common stock as a percentage of its total capitalization

Answer 74

the loss incurred when a capital asset is sold for a price lower than the purchase price

Answer 75

the segment of the securities market that deals in instruments with more than 1 year to maturity - long term debt and equity securities in contrast, the money market is the raising of short term capital such as treasury bills and commercial paper

Answer 76

all of a corporations outstanding preferred stock and common stock, listed at par value

Answer 77

the composition of long term funds (equity and debt) a corporation has as a source for financing

Answer 78

the money a corporation receives in excess of the stated value of stock at the time of first sale

Answer 79

an illegal form of market manipulation that attempts to keep the price of a subject security from rising. it is used by those with a short position see - pegging

Answer 80

an account in which the customer is required by the SEC's regulation T to pay in full for securities purchased not later than two days after the standard payment period set by industry practice codes

Answer 81

money paid to a corporations stockholders out of the corporations current earnings or accumulated profits. the board of directors must declare all dividends

Answer 82

a security that can be readily converted into cash. ie. treasury bills, certificates of deposit, money market instruments and funds

Answer 83

the money received by a business minus the money paid out CF = net income + depreciation

Answer 84

Chicago board operations exchange

Answer 85

certificate of deposit

Answer 86

used by the admin when it appears that a registered person has or is about to commit a violation. may be issued with or without a prior hearing

Answer 87

a traditional cd pays a fixed interest rate over a specific period of time. When that term ends you can withdraw your money or roll it into another cd. these are insured up to 250k by the FDIC and are considered the best method of preservation of capital

Answer 88

a securities analyst who uses charts and graphs of the past price movements of a security to predict its future movements

Answer 89

the self regulatory organization with jurisdiction over all writing and trading of standardized options and related contracts listed on that exchange also the first national securities exchange for the trading of listed options

Answer 90

registered stock exchange located in Chicagos downtown loop. referred to with the initials CHX

Answer 91

a descriptive name for the devision within a brokerage firm that prevents insider information from passing from corporate advisers to investment traders, who could make use of the information to reap illicit profits

Answer 92

a descriptive name for the devision within a brokerage firm that prevents insider information from passing from corporate advisers to investment traders, who could make use of the information to reap illicit profits the preferred term today is information barriers

Answer 93

excessive trading in a customers account by an agent who ignores the customers interests and seeks only to increase commissions violates NASAA policies on unethical business practices

Answer 94

chicago stock exchange

Answer 95

a class of mutual fund shares issued with a front end sales load. a mutual fund offers different classes of shares to allow investors to choose the type of sales charge they will pay

Answer 96

a class of mutual fund share issued with a back end load

Answer 97

a class of mutual fund shares issued with a level load

Answer 98

an investment company that issues a fixed number of shares in an actively managed portfolio of securities. the shares may be of several classes; they are traded in the secondary marketplace, either on a stock exchange or over the counter. the market price of the shares is determined by supply and demand, and not by net asset value (NAV)

Answer 99

an options transaction in which the seller buys back an option in the same series; the 2 transactions effectively cancel each other out and the position is liquidated

Answer 100

collateralized mortgage obligation

Answer 101

a measurable economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy ie. non agricultural employment, personal income, industrial production

Answer 102

certain assets set aside and pledged to a lender for the duration of the loan. if the borrower fails to meet obligations to pay principal or interest, the lender has claim to the assets

Answer 103

a mortgage backed corporate security. these issues attempt to return interest and principal at a predetermined rate

Answer 104

a secured bond backed by stocks or bonds of another issuer. the collateral is held by a trustee for safekeeping

Answer 105

see collateral trust bond

Answer 106

a benefit offered by a mutual fund whereby the investor may qualify for a sales charge breakpoint by combining separate investments in two or more mutual funds under the same management

Answer 107

unsecured, short term promissory note issued by a corporation for financing accounts receivable and inventories usually issued at a discount reflecting prevailing market interest rates maturity is up to 9 months or 270 days

Answer 108

the combining by a brokerage firm of one customers securities with another customers securities and pledging them as joint collateral for a bank loan unless authorized by the customers, this violates SEC rule 15c2-1

Answer 109

a service charge an agent assesses in return for arranging a securities purchase or sale a commission must be fair and reasonable, considering all the relevant factors of the transaction

Answer 110

security that represents ownership in a corporation. holders of common stock exercise control by electing a board of directors and voting on corporate policy.

Answer 111

a trust that accumulates income over time and is NOT required to make scheduled distributions to its beneficiaries

Answer 112

a means for an investment company to avoid taxation on net investment income distributed to shareholders if a mutual fund acts as a conduit for the distribution of net investment income, it may qualify as a regulated investment company and be taxed only on the income the fund retains

Answer 113

a printed document that states the trade date, settlement date, and money due from or owed to a customer. it is sent or given to the customer on or before the settlement date