Term
| Features of Equity and Debt |
|
Definition
Equity - become owners of a publicly traded company by buying stock int hat company (common stock) Debt - More conservative, gives up a chance to vote |
|
|
Term
An investor interested in monthly interest income should invest in |
|
Definition
| Government National Mortgage Association (GNMA) pays monthly interest and principal, treasury bonds pay semi-annual interest, utility stocks pay qtrly dividends, and coporate bonds pay semi-annual interest. |
|
|
Term
| To which securities mkt does the Sec Act of 1933 apply? |
|
Definition
It covers the registration and disclosure reqmts regarding new issues, or the primary mkt. The secondary mkt covered under the Sec Exchg Act of 1934 |
|
|
Term
| The securities Exchange Act of 1934 regulates and mandates ea of the following EXCEPT |
|
Definition
Full and fair disclosure on new offerings It does: created the SEC, manipulation of the secondary mkt, extension of credit to customers |
|
|
Term
Firm commitment underwriting |
|
Definition
Requires the underwriters to purchase all of the securities being offered for resale to the public |
|
|
Term
| A gift given to a minor under UTMA may be revoked under which of the following circumstances? |
|
Definition
|
|
Term
| If a customer is concerned about interest rate risk which of the following securities is least appropriate? |
|
Definition
| 25 year municipal bonds - Interest rate risk is the danger that interst rates will rise and adversely affect a bond's price. This risk is greatest for long term bonds; short term debt securities are affected the least if interest rates change |
|
|
Term
| Inside information about a publicly traded company can |
|
Definition
| never be divolged to a client |
|
|
Term
| A statutory disqual applies to an employee or and officer or a broker/deal who within the past 10 yrs has |
|
Definition
| been convicted of securities-related fraud |
|
|
Term
| Closed-end investment companies |
|
Definition
Publicly traded or closed end funds generally make a one-time public offering of shares and may issue debt securities, unlike mutual funds they may issue both bonds and preferred stock |
|
|
Term
| The sharholders of an investment co. must vote to approve |
|
Definition
| a change from diversified to nondiversified status and a change in the funds' objectives. Any subjective change in an investmt company's form, structure, investment objectives, or bus operation must be approved. |
|
|
Term
| Mutual funds are like other types of corporations in which of the following ways |
|
Definition
| Mutual funds may only issue redeemable common stock. Like corp stockholders, mut fund shareholders have several rights, incl the right ot elect the board of directors, which sets policies for the fund. Only purchased in the primary mkt and then redeemed. |
|
|
Term
| The primary purpose for creating ERISA was to |
|
Definition
| protect the employees from the mishandling of retirement funds by corporations and unions |
|
|
Term
| The interest on which of the following instruments is subj to taxation at the fed, state & local levels? |
|
Definition
| Collateralized mortgage obligations (CMOs). Treasury instruments are tax a the fed level only. Municipal instruments are exempt from taxation at fed level and possibly the state level if holder is a resident. |
|
|
Term
|
Definition
| Invest in common stocks and bonds to preserve capital, generate current income and provide long-term growth. |
|
|
Term
| Foreign funds (internation funds) |
|
Definition
| Invest in common stocks of companies located o/s of the US |
|
|
Term
| The redemption reqmt may be suspended when: |
|
Definition
- NYSE is closed other than wkend/ holiday
- trading on the NYSE has been restricted
- an emergency exists
- the SEC has ordered the suspension
|
|
|
Term
| The 12b-1 plan must approved by |
|
Definition
- a majority vote of the shares
- board of directors
- noninterested members of the board of directors
The fee must be reapproved annually by the board. |
|
|
Term
Who qualifies for tax-sheltered annuities (TSA) |
|
Definition
| Employees of 501(c) (3) and 403 (b) organz (charities, religious groups, sports org, school systems) |
|
|
Term
|
Definition
| Security that gives the holder the right to purchase securities from the warrant issuer at a stipulated subscription price. Unually long term instruments w/ expirations in the future |
|
|
Term
| After opening an account with a mutual fund, in which of the following min. amounts may an investor generally make add'l periodic investments? |
|
Definition
| An amount that varies from fund to fund |
|
|
Term
| Some open-end investment co. offer their investors a conversion privilege which permits an investor to |
|
Definition
| exchange, or conversion. privilege allows an investor to exchange shares of toen fund for those of another under the same mgmt w/o paying an additional sale charge (tax deductible event) |
|
|
Term
|
Definition
| do not issue commercial paper (unsecured, short term corporate debt |
|
|
Term
Bond point is:
Stock Points is: |
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
- was outstanding stock before it was repurchased by the issuer
- has no voiting rihgt
- does not receive dividends &
- can be reissued or retired
Buy Back - increase earnings per share
- stock avail to distribute as stock options, pension plan
- use for future acquisitions
|
|
|
Term
|
Definition
| a firm must apply to become |
|
|
Term
|
Definition
| Compensated by a markup/markdown in securities transactions |
|
|
Term
|
Definition
| Compensated by a commission in securities transactions |
|
|
Term
|
Definition
| Someone controlling or controlled by a member firm |
|
|
Term
| Formula for Outstanding Stock |
|
Definition
| Issued stock - Treasury stock = outstanding stock |
|
|
Term
|
Definition
|
|
Term
|
Definition
| An arbitrary accounting value |
|
|
Term
|
Definition
- It has no voting rights & no dividend entitlement
- It has been isued and repurchased by the company
|
|
|
Term
Preemptive rights include the right to |
|
Definition
| maintain proprotionate ownership interest in the corporation |
|
|
Term
Cumulative voting system (5 Directors and 100 shares) |
|
Definition
The investory my cast 500 votes for the 5 directors in any way the investor chooses. Gives teh small investor more voting power |
|
|
Term
|
Definition
| Assets = Liabilities + Net Worth |
|
|
Term
| Disadvantage of investment in common stock vs. w/ fix income securities |
|
Definition
- No assurance of return
- Lower priority of income payment
|
|
|
Term
NASDAQ Three market designations |
|
Definition
OTC (Over-the-counter) stocks that have national and internation interest are listed on quotation system - Nasdaq Global Select Mkt
- Nasdaq Global Mkt
- Nasdaq Capital Market
|
|
|
Term
|
Definition
- Greater sensitivity to interest rate fluctation than common stock
- does not offer the appreciation potential
- priority claim over common stockholders
- no preemptive rights
|
|
|
Term
| Straight (Non Cumulative) |
|
Definition
| Has not speical features, it will pay a higher stated rate of dividends |
|
|
Term
|
Definition
Annaul dividend
Current market value of the stock |
|
|
Term
| What type of perferred stock might pay a dividend that is higher than that printed on the certificate? |
|
Definition
| Participating & Cumulative |
|
|
Term
| The priority of dividend payments made by a corporation; order of payment |
|
Definition
- Div. in arrears pd to cumulative shares
- Stated dividends pd to all preferred shares
- Common dividend & partricipating excess divident pd
|
|
|
Term
Total Return on Investment (Yield & Growth) |
|
Definition
Dividends + Capital / Purchase Price $1 + $4 / $20 Answer: 25% |
|
|
Term
| ADRs (American Depositary Receipts) or ADSs are used to |
|
Definition
Facilitator domestic trading of foreign securities has right to exchange has no voting reights currency risk no preemptive rights |
|
|
Term
| The owner of an ADR is likely to receive |
|
Definition
| Dividends and Capital gains or losses |
|
|
Term
Rights traded in secondary mkt |
|
Definition
- Short term instruments,
- exercise price is below market price,
- issued to current shareholders only
Preferred stockholders do not have the right to subscribe to rights offerings |
|
|
Term
Warrants Traded in secondary market |
|
Definition
- long term
- exercisable above mkt value
- may trade w/ or separate from the units
- used as sweetners;
- not entitled to dividends
|
|
|
