Term
What tax rate are cash dividends from
stocks taxed at? |
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Definition
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Term
| How are Capital gain distributions from mutual funds taxed? |
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Definition
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Term
| How are Long term capital gains taxed? |
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Definition
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Term
| How are mutual fund dividends taxed? |
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Definition
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Term
how are Taxable retirement plan
distributions taxed? |
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Definition
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Term
| how is earned income taxed? |
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Definition
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Term
| How is the return of cost basis taxed? |
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Definition
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Term
| how are Life Insurance death benefits taxed? |
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Definition
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Term
| How are qualified distributions from a ROTH IRA taxed? |
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Definition
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Term
| How can a company pay it's shareholders? |
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Definition
Cash dividend - preferential rate
Stock splits -
Stock dividends - |
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Term
| Buyers have rights or obligations? |
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Definition
Rights.
Writers have obligations |
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Term
| Writers have rights or obligations? |
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Definition
Obligations.
Buyers have rights. |
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Term
| How many shares does a 'contract' hold? (in regards to writers and buyers of options) |
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Definition
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Term
| What does 'speculative' refer to? |
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Definition
| A lower grade investment. On Standard & Poor's it's any investment with a credit rating of BB, B, C and D. on Moody's Ba, B and C. |
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Term
| BBB or Baa is what grade of investment? speculative or investment grade? |
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Definition
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Term
| a bond's basis is higher than it's net yield, was it bought at par, discount? |
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Definition
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Term
| What is a Collateral Trust Certificate secured with? |
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Definition
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Term
The net yield calculation lets us compute the % in terms of ______ interest.
Before or after tax? |
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Definition
| After-tax. Net always refers to after-tax |
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Term
| what is the word "authority" a clue to in regards to a bond issuer? |
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Definition
a clue that the bond is a revenue issue.
NOT a GO bond |
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Term
| how often is interest paid on treasury notes? |
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Definition
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Term
| What is the price on a treasury bond that is quoted at 5%? |
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Definition
| $950 (5% off of $1000 face value) |
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Term
| 0 Coupon bonds create something called _____ |
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Definition
| phantom income, an annual tax liability |
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Term
| What is the initial maturity of a Treasury Bill |
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Definition
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Term
| What is the initial maturity of a Treasury Note? |
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Definition
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Term
| What is the initial maturity of a Treasury Bond? |
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Definition
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Term
| Bonds are usually called when current interest rates are _____ than the bond's coupon? (lower or higher) |
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Definition
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Term
A bond trading above par would have a YTM that is ________ than it's coupon?
(lower or higher) |
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Definition
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Term
| What would a holder of an 8% bond paying semiannual interest receive on each payment date? $40 or $80? |
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Definition
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Term
| What is the dollar price of a $1000 par value bond trading for 84.25? |
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Definition
| do the problem one step at a time 84.25 becomes 84.25 points. Multiply by $10 to get the dollar price. $842.50 |
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Term
| Call buying and put writing are _____ strategies? (bullish or bearish) |
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Definition
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Term
| Which of the following securities are typically issued with a strike price above the current market value of the stock? |
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Definition
| Warrants are issued with a strike price above the stock's current market value. Rights are issued at an exercise price below the stock's market value. |
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Term
| What is used by a corp as an inducement to purchase an upcoming debit? |
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Definition
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Term
| ________ are issued to existing common shareholders? |
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Definition
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Term
| US holders of ADR carry what risk? |
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Definition
| Currency risk. They track the value of their underlying security, which is non-dollar denominated |
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Term
| Preferred stock holders are typically most concerned with which of the following investment objectives? (income or growth) |
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Definition
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Term
derivatives is another word for what?
rights, warrants, options, calls |
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Definition
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Term
| you're buying an option. The premium is $3 what is the cost for the contract? |
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Definition
| Multiply by 100 $3 x 100 = $300 |
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Term
| Bonds are always quoted as ______ of par? |
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Definition
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Term
| Any bond said to be trading less than 100 is said to be trading at what? |
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Definition
| Discount. this is the FIRST collumn |
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Term
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Definition
Unsecured corporate bond. an IOU.
Debentures typically pay more than secured bonds due to risk. |
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Term
| What transactions are prohibited in a UGMA account? |
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Definition
| Margin transactions (since it would put the child into debt) |
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Term
| Investors seeking capital preservation would most likely invest in equities? T or F |
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Definition
| False. Treasuries or other vary conservative investments may be more suitable. |
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Term
| Jack and Jill own a joint account. Jack calls and says liquidate the entire account. What do you do? Liquidate his portion? |
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Definition
| You must liquidate the account per his instructions. (the check must be written as the account is titled) |
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Term
| Which type of authorization allows a 3rd party to remove/deposit money into a brokerage acct? POA or Full POA? |
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Definition
| Full POA's. Limited POA's allow a third party to enter orders only |
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Term
| What kind of transfer is an ACAT transfer? |
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Definition
| A procedure used to transfer accounts to another brokerage firm. |
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Term
| a 1% move in a bond's yield is equal to the yield rising or falling how many basis points? |
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Definition
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Term
Monday a bond yields 7.21, Tues it's at 7.18. Which is true?
A- The yield has fallen 3 percentage points
B-The bond has risen in price
C-The yield has fallen by 3 basis points |
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Definition
B and C.
When the yield of a bond drops that means that the dollar value has increased. (inverse relationship between price and yield) |
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Term
A portfolio manager is looking to produce income against an existing long position. What should she do?
A-Sell Calls
B-purchase calls
C-purchase warrants |
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Definition
Sell calls.
This is referred to as "covered call writing" |
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Term
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Definition
| an option contract giving the holder the right to buy the underlying security at a specific price, until a specific day. |
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Term
| Buyers and sellers of closed-end funds will typically pay which of the following: Commissions or sales charges |
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Definition
| commissions for close-end |
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Term
What is the basis for the calculation of a front-end sales charge (for mutual fund shares)?
% of POP
% of NAV
% of mngmnt fee |
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Definition
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Term
| Do capital gains distributions to fund shareholders cause the NAV to drop or make not effect? |
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Definition
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Term
| A decline in value of one of the fund's positions will cause the NAV to drop or stay the same? |
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Definition
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Term
| What are the three methods of registering securities w/the state? |
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Definition
Notification (registration by filing)
Coordination
Qualification |
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Term
| What is Freeriding and witholding |
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Definition
| refers to a broker-dealer allocating 'hot issue' or new issues to ALL EQUITY to their acct or other broker dealers, or employees or employees immediate family memembers |
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Term
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Definition
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Term
| What are the 4 securities that are exempt from the registering requirement of the Act of '33? |
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Definition
Government Securities
Government Agencies (GMNA,Freddie Mac, etc)
Municipal securities
Commercial Paper |
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Term
| for Reg D what is considered a 'wealthy individual'(therefore accredited)? |
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Definition
| $1M net worth / $200k income requirement |
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Term
| Reg D offerings may be made to: |
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Definition
Unlimited amt of securities
Unlimited accredited investors
35 non-accredited purchasers |
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Term
| What is a restricted security? |
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Definition
| Purchased through Reg D - restricted (cannot be sold for 6 mo) |
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Term
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Definition
AKA Small issue exemption
Sell up to $5M of stock within any 12 mo period w/out registering. |
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Term
| Rule 147 (AKA interstate exemption) |
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Definition
80% of company's assets must be in the state
80% of revenues must be generated from the state
80% of the offerings must be used in the state
100% of the shares must be sold to residents of the state.
If all four requirements are met it does NOT need to be registered |
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Term
| Where do securities trade in the secondary mkt? |
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Definition
| on the floor of an exchange or OTC |
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