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level: Level 1

Questions and Answers List

level questions: Level 1

QuestionAnswer
American Depositary receipt - Type of equity security designed to simplify foreign investing for Americans. Created when common shares are purchases in the foreign company's home market. Then deposited in a foreign branch of US bank and a receipt is created.ADR/ ADS
assumed interest rateAIR
Broker DealerBD
Bankers AcceptanceBA
Business Development Company (growth)BDC
Certificate of DepositCD
Collateralized debt ObligationCDO
the corporate executive officer - responsible for the operations of the firm; reports to a board of directors; may appoint other managers (including a president)CEO
Collateral mortgage obligationCMO
Current Market ValueCMV
Code of procedureCOP
Consumer Price IndexCPI
Current YieldCY
District Business Conduct CommiteeDBCC
designated examining authorityDEA
Dow Jones Industrial AverageDJIA
Designated Market MakerDMM
series ee savings bondsEE
earnings per shareEPS
Employee Retirement income Security Act of 1974ERISA
Exchange-trade fundETF
face amount certificateFAC
federal reserve systemfed
Federal Deposit Insurance CorporationFDIC
financial guaranty insurance companyFGIC
first in first outFIFO
financial industry regulatory authorityFINRA
federal national mortgage associationFNMA
federal open market committeeFOMC
Federal Reserve boardFRB
government national mortgage associationGNMA
Gross Domestic productGDP
General Obligation BondGO
Series HH savings bondHH
Health SAvings accountHSA
Industrial Development Revenue BondIDR/ IDB
Initial Public OfferingIPO
Individual Retirement accountIRA
Internal Revenue CodeIRC
Internal Revenue ServiceIRS
Joint Tenants in commonJTIC
Joint Tenants with rights of ownershipJTWROS
Last-in first outLIFO
Municipal securities rulemaking boardMSRB
National associate of securities dealers automated Quotation systemNASDAQ
Net asset valueNAV
New Housing AuthorityNHA
No LoadNL
new york stock exchangeNYSE
Office of Supervisory JurisdictionOSJ
Over the counterOTC
price to earning ratioPE
Public Housing AuthorityPHA
Public offering PricePOP
Real Estate investment trustREIT
Registered RepresentativeRR
statement of additional informationSAI
securities exchange commisionSEC
Simplified employee pension planSEP
Securities Investor protection corporationSIPC
self-regulatory organizationSRO
Trade date plus two business days' settlementT+2
telephone consumer protection actTCPA
Tax sheltered annuityTSA
Uniform Gift (transfers) to Minor ActUGMA / UTMA
Unit Investment TrustUIT
uniform Practice CodeUPC
YieldYLD
yield to call-may be redeemed before maturityYTC
Yield to maturity - rate until bond matures (if bought at discount good/ if bought at premium and held to maturity reduces investor return)YTM
Zero CouponZR
ADR's are listed in NYSE, some traded over OTC market. Dollars are converted into American dollars, making it easier for trade. T +2 settledEase Of use
Dividends paid to a US invester, maybe subject to taxes applied against investors US tax liability. Trading Profits (capital Gains) only taxable USAADR TAXATION
Dividends paid in Current home, Underlying foreign influenced by currency wingsCurrency & political risk
unlisted - not listed on US stock exchange, trading at less than $5 per share. Highly speculative. Must get signed and dated acknowledgment from customer, doc receivedPenny Stock
Name of penny stock/ number of shares to be purchased/ current quotation / amount of commission firm & representative receiveBD must disclose when cold calling
has held an acct w/BD@least 1yr, / had made at lease 3 penny stock purchases of different issuers on different daysEstablished customer - Penny stocks
Bonds owing monies to a rep. pay investor a specific rate- Investor buys a bond the vestor is lending the borrowing entity money for period of time @ fixed rate. The vestor is creditor of this of the borrowing entitydebt Securities (Bonds)
the principal of the whole issue materures at onceTerm bond
schedules portion of principal to mature at internvals, until entire balance is paidSerial bond
both serial and term maturities. pays portion before end date, then remaining amount on set dateballoon bond
Face value normally 1k per bond - note (buyers of zero coupon bonds do not pay accrued interest since these securities are not interest bearing) % generally paid on a semiannual basis - 6% in one year will pay $30 semiannually paying $60 in the full yearPar value
Par, Premium to par, discount to par, (premium might be 1200, discount 800, par is 1,000) BOnd pricing is measured in points = 1000/1%=$10Pricing
impact = supply & demand / because also debt instrument sensitive to market rates. have inverse relationship to %rates. if rates fall, bond $ go up in secondary market- note, coupon is a fixed %rate of par value, 6% coupon pays $60 of annual%Market forces Affecting Bond Prices
allows issuer to call ina bond before maturity, generally done w/rate falls, this feature benefits issurercall
put the back to the issuer before maturity - generally done by investors when rate are rising ( this benefits the bondholder)Put feature
Issued by corporates - allowing to convert to shares of common stock. giving the opportunity to exchange a debt instrument for ownership rights (generally considered a benefit for investors)Convertible feature
US Treasury department determines quantity and types of securities (market place determines rate) US Gov, back by full faith and credit based on power to tax. classified by Bills, notes & bonds. (short, intermidate, long term) issued in book entry form. no physical form. have a T+1 settlement cycleTreasury securities
Short Term, quarterly issued, issued at Discount & redeemed at par,t-bills only issued at discount,issued without stated interest, highly liquid, 90d used in market analysis at the stereotypical risk free investment.T-bills ( less than 1 yr)
US government debt, pay semiannually, % of state par value, mature @ par,have intermediate maturitiesT-notes ( 2-10 years)
(greater than 10yrs maturity)T-Bonds
debt of corporate, back by credit worthy and its word, promise to pay at maturityDebenture
backed by company other than issuing corp, such as parent company, value is only as good as strength of companyGuaranteed bonds
Used when corp reorganizing or coming out of bankruptcy. pay interest only if capable, falls under unsecured debt securitiesIncome bonds (aka adjustment bonds)