Investment Vehicles - Stocks, REITS, Investment Co Flashcards Preview

CFP 3/17 COPY > Investment Vehicles - Stocks, REITS, Investment Co > Flashcards

Flashcards in Investment Vehicles - Stocks, REITS, Investment Co Deck (16)
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1
Q

Capitalization

A
Market Value of the Company
Large Cap -> $10 Billion
Mid Cap - $2 Billion- $10 Billion
Small Cap - Under $ 2 Billion
Micro Cap - Under $300K
2
Q

Corporate Reports

A

10K Annual Report to SEC
10Q Quarterly report to SEC
Annual Report - previous years results to shareholders. Audited by independent auditors

3
Q

Preferred Stock

A
resemble equity and debt
pays a fixed dividend
Issued at $25
pay div before common stock
Noncumulative- missed div not made up

Often bought by corporate treasures with excess cash. If bought bonds all interest taxable…if corporation buys preferred 70% dividend exclusion

Can be callable

4
Q

ADR

A

receipts for shares of a foreign company held in US vault

Alternative to buying stock on a foreign exchange

Quoted in US $

Dividends paid in US $ but declared in currency of origin

5
Q

Exchange Traded Funds

A
basket of stocks or bonds
Open end - UIT or Investment Co
Traded on exchange
SPDR- Broad based
More tax efficient
Marketable
non-liquid
market risk
Do not have to pay out gains-tax efficient
Can be bought on margin or shorted
6
Q

UIT

A

investment co
no day to day management
passive investment (investments frozen at purchase, no new, rarely sold)
Self liquidating
funds received distributed to unit holders not shareholders

7
Q

Mutual Funds

A

Open End Investment Company
marked to market
Nav computed end of day

Aggressive Growth- max capital appreciation
Growth- potentially rising share price and capital appreciation
Growth and Income- equity and dividend income
Balanced- appreciation and income stocks and bonds
Global equity- worldwide including US
International- no US
Corporate Bond- US company bonds
GNMA-Mortgage Backed Securities
High Yield- non investment grade corporate bonds
Muni Bonds- bonds issued by states and municipalities
Speciality- sector
Index- components of various indicies - tax efficient

Redeemable NOT tradeable

8
Q

Closed End Investment Company

A

issue stock once
trades on exchange after that
hold illiquid securities
favorable because can sell fund in market rather than try to liquidate illiquid securities

9
Q

Investment Companies Act 1940

A
Open end
Mutual Funds
Closed End
UIT
Variable Annuities
10
Q

Hedge Funds

A

Aggressive managed portfolio -leveraged, short, long, derivatives
limited number of investors
require large deposit.
illiquid-lock up
cater to sophisticated investors
require accredited investors
residence does not count toward net worth
$100 Million+ required to register with SEC

11
Q

Limited Partnerships

A

common for real estate and oil and gas
Blind Pool
objective is known but investment not
GP performance is key

12
Q

Guaranteed Investment Contracts GIC

A
similar to CD
Issued by Insurance companies
2-5 years
guaranteed rate of interest
dependent on financial strength of issuer
popular in defined benefit plans!
13
Q

Net Operating Income

A

Real Estate Analysis

Gross rental receipts
+Non-Rental Income(Laundromat machine Income)
=Potential Gross Income (PGI)
-Vacancy and collection losses
=Effective Gross Income
-Operating Expenses(excluding interest and depreciation)
=Net Operating Income (NOI)
Divide by capitalization rate to get intrinsic value!

Operating Expenses include only cash expenses. No depreciation or amortization, or debt service, interest expense on mortgage.

14
Q

REIT

A

similar to CE investment company.
Invests in real estate, construction loans, mortgages, not necessarily securities.
provides a way to invest in illiquid assets

Equity REIT - income producing properties
If Non-public- not tradeable or marketable
Derived from rental income and interest on loans

Mortgage REIT- loans to develop property or finance construction
higher default risk
Purchasing power risk
Spread between lending and borrowing
Produce a lot of income…best in retirement act

Private REIT -Reg D - accredited investors

75% from Real estate
90% income distributed - only remainder taxed to REIT
IF 90% not distributed all taxed to REIT

managed by BOD

15
Q

RELP

A
Real Estate Limited Partnership
relatively illiquid
not popular anymore 
subject to passive loss rule not cap gains
managed by GP
16
Q

REMIC

A

Real Estate Mortgage Investment Conduit
limited life
self liquidating
invested in real estate mortgages or securities back in real mortgages
Similar to CMO but with more flexibility
Can separate into pools including various credit ratings

If corporation taxed as pass through