Term
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Definition
| Real returns refer to total returns (income and realized capital gains) adjusted for inflation. So, if an investment had total returns of 12% and the inflation rate during that time was 3%, the real return would be 9%. |
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Term
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Definition
| 10,000 or more shares of common stock or securities with a value of $200,000, whichever is greater. There are more dark pools than public exchanges. Execute at midpoint of bid and ask price. Allow trading of large blocks without moving the price of the stock being traded. |
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| Corporate tax return deadline |
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Term
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| A blotter is like a daily log of activities. A temporary record until transferred to permanent record books. Shows purchase and sales, cash activity, securitieis received and delivered. |
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Definition
| Always an "after tax" deduction because they are a "want to" |
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| Arbs make trading markets more efficient. Takes advantage of price disparities that are momentary. |
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Definition
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| Bond interest pretax deduction? |
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Definition
| Bond interest is always a pre-tax expense on an income statement |
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Term
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Definition
| Brokers are agents who bring together buyers and sellers and charge a commission for both - they bring the buyer and seller together and both customers are charged a commission. Agent-Broker-Commission. |
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Term
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Definition
| Caluclated recent earnings 12 month |
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Term
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Definition
| Caluclated using projected 12 months |
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Term
| T/F - Administrator must administer written exams. |
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Definition
| Can be oral or written. Does not have to be written. |
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Term
| True or false - companies that issue gas and mining securities are considered issuers. |
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Definition
| Certificates of interest in oil gas and mining are securities, but the corporations that issue them are not considered issuers. So the answer is false. |
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Term
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Definition
| Creates a frequency distribution table based on a wide range of potential outcomes. |
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Term
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Definition
| Current Assets / Current Liabilities - should always be 2:1. It only describes liquidity. Trick: Cackle like a witch except CA/CL. |
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Term
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Definition
| Current Assets Less Inventory / current liabilities. Standard minimum is 1:1. The most stringent measure of corporate liquidity. |
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Term
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Definition
| Dark pools are e platforms run by large investment banks for institutional investors. Anonymous. Lots of liquidity for block trades. |
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Term
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Definition
| Dealers act as principals and do "principal" transactions. They buy or sell from their own inventory. They charge markups and downs. It is NEVER legal to charge commissions and be a dealer an charge markups. It's one or the other. |
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Term
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Definition
| Earnings before interest and taxation - profit after expenses but prior to payment of interest and taxes. Remember - interest on debt is subtracted because interest is a pre-tax deduction |
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Term
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Definition
| HFTs - high frequency trading systms are mostly for short-term trades. Some are hybrid - act as both proprietary traders and market makers. Delta-neutral ends the day flat, nont delta-neutral means net long or net short positions held. |
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Term
| What to NPV values of zero, above zero, or below zero mean? |
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Definition
| If the NPV is positive, project will be profitable. |
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Term
| Speculatitive Capital Structure |
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Definition
| Large% Bonds, small common outstanding |
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Term
| Conservative Capital Structure |
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Definition
| Large% common outstanding; Small% bonds outstanding |
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Term
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Definition
| Market risk is systematic risk - the market system. Can't reduce by diversification. Other includes interest rate risk. |
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Term
| PE Ratio (sometimes called "multiple" |
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Definition
| MEPS! Market price / EPS. It's what the market views about a company's earnings potential. You want it in the teens 13:1 or 20:1. If too high - sooner or later something will happen- company may not be worth it. |
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Term
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Definition
| NEOs - net earnsings/oustanding shares |
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Term
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Definition
| Net earnings - after taxes less div paid on preferred stock- once you subtract common dividends from net earnings you get retained earnings. |
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Term
| How do you calculate earnings per share? |
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Definition
| Net Earnings/common shares outstanding = EPS. Trick. Use your fishing net and divide it by the fish you have to catch because they are still outstanding |
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Term
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Definition
| Net Income (net profit after taxes) / total tangable Assets |
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Term
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Definition
| Net income + depreciation and amoritization (does not consider long term costs. Cash Flow from operations give investors an idea of cash flow over a specified period of time. |
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Term
| Are redemption fees a form of back end sales loads? |
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Definition
| No, not considered part of a sales load. |
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Term
| Can you trade options in a cash account? |
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Definition
| No, only in a margin account. |
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Term
| Is short selling allowed in a cash account? |
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Definition
| No, only in a margin account. |
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Term
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Definition
| Only with qualified clients and may induce higher risk investing. |
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Term
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Definition
| Operating Profit / Gross Sales |
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Term
| List the Order of asset distribution |
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Definition
| Order sequence: 1. Taxes; 2. Secured debt; 3. Unsecured debt like debentures, general creditors, accounts payable (not backed by hard assets). 4. Preferred; 5. Common stockholders. Common stock is riskiest asset class |
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Term
| Who trades OTC - what are they called and explain which markets are negotiated and which markets are listed? |
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Definition
| OTC is unlisted. Trades take place off the floor of an organized exchange. Unlisted securities are traded by market makers who trade from their own inventory. Think about a pharmacist selling you from his counter. Market makers maintain a firm Bid Ask price. OTC is considered a "negotiated" market. |
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Term
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Definition
| overall profibility after all divs and expense paid. |
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Term
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Definition
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Term
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Definition
| Program trading is based on computer signals - electronic trades of a basekt of stocks for index arbitrage, portfolio restructure, etc. Must involve at least 15 different stocks with a value of $1M |
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Term
| Total Income AKA Earings Before Income |
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Definition
| Same as EBIT but interest payments subtracted and then taxes subtracted and it becomes net income (EAT) Earnings After Taxes before dividends. |
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Term
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Definition
| Shareholders Equity + Bonds outstanding equals total capital |
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Term
| The market price of the investment must be part of calculation. |
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Definition
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Term
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Definition
| The DMM is required to maintain a fair and orderly market in the securities assigned to him. Securities that trade on an exchange are considered "listed securities" Exchange has "auction market" style. |
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Term
| What are three characteristics of IRR? |
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Definition
| The higher the IRR, the better; it considers cashflows always; always assume re-investment |
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Term
| Extraordinary expenses show up on |
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Definition
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Term
| What is Opportunity Cost? |
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Definition
| The next best choice is made. Should have chosen the first one. |
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Term
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Definition
| Total Debt / Net Worth (or shareholder equity it's the same thing). A measurey of financial leverage |
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Term
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Definition
| Total Liabilities + Net worth (or shareholders equity) |
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Term
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Definition
| Total Stockholders Equtiy -preferred stock/common shares outstanding. High PB Value could be a growth stock. A low PB could indicatean undervalued stock. |
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Term
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Definition
| unscheduled events that need to be reported. Must be filed within 4 days. |
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Term
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Definition
| Used by money mangers to see if stock overvalued. Market Price/Book Value per share. |
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Term
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Definition
| using ratio analysis to analyze a company. EPS |
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Term
| Employee stock option trivia |
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Definition
| usually option policies and transactions are in the footnotes of annual report |
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Term
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Definition
| When there is a deviation between an index fund's performance and its benchmark. |
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