Ch 1 & 2
When comparing treasury shareholders and common stockholders, who has rights to vote and earn dividends and who does not?
Treasury = no voting, no dividends
Common = vote and receive dividends
When issuing a callable bond, will the coupon rate be higher or lower for the investor? Will the final payment they receive be higher or lower than par value?
Coupon = higher
Final Pmt = more than par
What are municipal bonds exempt from?
federal tax and federal registration
What is the name for a firm that centralizes trading of securities?
Market Maker
When a stock is bought, is a long or short position being taken?
Long
By which two terms can equity securities be defined as?
exchange (listed) or over-the-counter (unlisted)
Are long or short term MORE volatile?
Are low or high coupon bonds MORE volatile?
Long = More volatile
Low = More volatile
What is a general obligation bond backed by?
full faith, credit, taxing power of issuer (usually tax revenue)
In which market do participants trade by posting bid prices and getting matched with ask prices on a decentralized OTC computer network? Who regulates this?
second
FINRA
A customer says "Buy 1,000 shares of XYZ when it looks good to you."
What order is this?
market not held
What is a company's "multiple"?
P/E Ratio
Name at least 2/3 types of secured bonds and explain why they are highly rated bonds.
mortgage, equipment trust certificates, and collateral trust certificates
They are backed by high valued collateral, offering low credit risk
In regards to money market debt, who sets the discount rate?
the fed
What does FINRA's 5% mark-up policy mean?
A guideline saying that a commission or markup/markdown must be fair and reasonable based on transaction type and size.
What does the term backing away mean?
a firm giving a quote and then not honoring it
Between Corporate and US Gov bonds, which is quoted in 1/8 of par and which is quoted in 1/32 of par?
Corp = 1/8
Gov = 1/32
What is unsecured debt backed by?
Issuer's promise to pay
What do non-fixed UITs invest in?
Mutual funds
Compare the following orders and rank them from highest to lowest risk: buy long, sell long, sell short
highest to lowest = sell short, buy long, and sell long being no risk
The ____ is where all securities positions are held by member firms.
Depository Trust Company
If the coupon rate is lower than the current yield, is the bond selling at a discount or premium?
Discount
What type of treasury bond protects the investor from purchasing power risk?
Treasury Inflation Protected Security - TIPS
In the 75-10-5 rule, what is each percentage allocated to?
75 = 75 of assets in securities
10= can own a max of 10 of voting securities of any one issuer
5 = 5 of assets can be invested in any one issuer
What type of order must be filled at a specific price or better?
Limit
In what order are cash dividend dates listed in?
Here's the options: payable date, declaration date, record date, ex-date
declaration, ex-date, record date, payable