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level: Level 1

Questions and Answers List

level questions: Level 1

Question	Answer
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 rate	AIR
Broker Dealer	BD
Bankers Acceptance	BA
Business Development Company (growth)	BDC
Certificate of Deposit	CD
Collateralized debt Obligation	CDO
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 obligation	CMO
Current Market Value	CMV
Code of procedure	COP
Consumer Price Index	CPI
Current Yield	CY
District Business Conduct Commitee	DBCC
designated examining authority	DEA
Dow Jones Industrial Average	DJIA
Designated Market Maker	DMM
series ee savings bonds	EE
earnings per share	EPS
Employee Retirement income Security Act of 1974	ERISA
Exchange-trade fund	ETF
face amount certificate	FAC
federal reserve system	fed
Federal Deposit Insurance Corporation	FDIC
financial guaranty insurance company	FGIC
first in first out	FIFO
financial industry regulatory authority	FINRA
federal national mortgage association	FNMA
federal open market committee	FOMC
Federal Reserve board	FRB
government national mortgage association	GNMA
Gross Domestic product	GDP
General Obligation Bond	GO
Series HH savings bond	HH
Health SAvings account	HSA
Industrial Development Revenue Bond	IDR/ IDB
Initial Public Offering	IPO
Individual Retirement account	IRA
Internal Revenue Code	IRC
Internal Revenue Service	IRS
Joint Tenants in common	JTIC
Joint Tenants with rights of ownership	JTWROS
Last-in first out	LIFO
Municipal securities rulemaking board	MSRB
National associate of securities dealers automated Quotation system	NASDAQ
Net asset value	NAV
New Housing Authority	NHA
No Load	NL
new york stock exchange	NYSE
Office of Supervisory Jurisdiction	OSJ
Over the counter	OTC
price to earning ratio	PE
Public Housing Authority	PHA
Public offering Price	POP
Real Estate investment trust	REIT
Registered Representative	RR
statement of additional information	SAI
securities exchange commision	SEC
Simplified employee pension plan	SEP
Securities Investor protection corporation	SIPC
self-regulatory organization	SRO
Trade date plus two business days' settlement	T+2
telephone consumer protection act	TCPA
Tax sheltered annuity	TSA
Uniform Gift (transfers) to Minor Act	UGMA / UTMA
Unit Investment Trust	UIT
uniform Practice Code	UPC
Yield	YLD
yield to call-may be redeemed before maturity	YTC
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 Coupon	ZR
ADR's are listed in NYSE, some traded over OTC market. Dollars are converted into American dollars, making it easier for trade. T +2 settled	Ease Of use
Dividends paid to a US invester, maybe subject to taxes applied against investors US tax liability. Trading Profits (capital Gains) only taxable USA	ADR TAXATION
Dividends paid in Current home, Underlying foreign influenced by currency wings	Currency & 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 received	Penny Stock
Name of penny stock/ number of shares to be purchased/ current quotation / amount of commission firm & representative receive	BD 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 days	Established 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 entity	debt Securities (Bonds)
the principal of the whole issue materures at once	Term bond
schedules portion of principal to mature at internvals, until entire balance is paid	Serial bond
both serial and term maturities. pays portion before end date, then remaining amount on set date	balloon 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 year	Par 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%=$10	Pricing
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 issurer	call
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 cycle	Treasury 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 maturities	T-notes ( 2-10 years)
(greater than 10yrs maturity)	T-Bonds
debt of corporate, back by credit worthy and its word, promise to pay at maturity	Debenture
backed by company other than issuing corp, such as parent company, value is only as good as strength of company	Guaranteed bonds
Used when corp reorganizing or coming out of bankruptcy. pay interest only if capable, falls under unsecured debt securities	Income bonds (aka adjustment bonds)