Series 66 Guru Videos & NASAA Study Guide Flashcards
Series 66 I, II, III (89 cards)
1
Q
Ep: 1
What does The Current Ratio measure?
A
- CA/CL
- Financial ratio that measures the ability to pay short-term liabilities
2
Q
What does The Quick Ratio (Acid Test) measure?
A
- (CA - Inv) / CL
- Financial ratio that measures the ability for short term assets to cover current liabilities using the most liquid assets
3
Q
What does the Debt-to-Equity Ratio measure?
A
- Financial ratio that measures a companies financial leverage
4
Q
What is Time Value of Money?
A
- Money today is greater than money in the future
5
Q
What is IRR?
A
- The nessesary return that make an investment worth the future goal. This rate makes NPV = 0
6
Q
What is NPV?
A
- Measures the profitability of a investment
7
Q
What is FV?
A
The value of an asset based ona growth rate over a number of periods
8
Q
What does the book-value per share measure?
A
- Measures if a stock is undervalued or overvalued based on its actual accounting value
- NAV per share outstanding
9
Q
What is Standard Deviation?
A
- How often things vary
10
Q
What does Alpha measure?
A
- Actual - expected return
- Positive = Outperform, Negative = underperform
11
Q
What does Beta measure?
A
- Volitility of a stock relative to the market
12
Q
What does the P/E Ratio measure?
A
- Valuation factor that measures the stock price relative to EPS
- If the stock is overvalued or undervalued
13
Q
What does the Price-to-Book ratio measure?
A
- Market Value v. Book Value
- Valuation factor that shows how much tangible assets are actually worth
14
Q
Ep:2
What is Duration?
A
- A measure of bond volitility
- Long and Low (Zero Coupon)
15
Q
What are TIPS?
A
- Treasuty Inflation Protected Securities
- Semi annual principle adjustments based on CPI
- Coupon rate does not change
16
Q
Wha is a SPAC?
A
- Special Purpose Aquisition Company/Blind Pool/Blank Check
- Blind pool that offers shares of a shell company at $10/unit
- SPAC goes out an aquires company
17
Q
Open v Closed End Fund
A
- Open End - Priced Once a Day at 4pm (Mutual Fund)
- Closed End - Can trade a premium/discount to NAV (IPO)
18
Q
Futures v Forwards
A
- Futures = Commodities (Farmer) traded on organized exchange
- Forwards - Hedge Interest Rates traded over the counter
19
Q
What is Technical Analysis?
A
- Focuses on charts, price trends, patterns and other information
20
Q
What is Fundemental Analysis?
A
- Focuses on financial equations
21
Q
What is Discounted Cash Flow?
A
- PV of a bond based on future cash flows
- How much income a bond will pay over the life
22
Q
What is the Dividend Discount Model?
A
- Values a stock by estimating future dividends and discounting them back to PV
23
Q
What are Precious Metals?
A
- Gold, Silver, Platnium
24
Q
What is an Equity Index Annuity?
A
- Can not loose principle
- Cap on your return
- No Negative reset
25
What is a Fixed Annuity?
- Invested in general account
- Pay the greater of current interest return or min garunteed rate of return
- Fails to keep up with inflation
26
What is a Varible Annuity?
- Invested in seperate account with no garunteed rate of return
- Fluctuating payments that are designed to keep up with infaltion
27
What is Whole Life Insurance?
Wants life long coverage with financial stability
- Fixed Premium
- General Account Only
- Garunteed Cash Value and Death Benefit
- Life Long Coverage
- Low Risk
Policy holder may borrow agaist cash value
28
What is Varible Life Insurance?
Wants a death benefit and the ability to build cash value
- Fixed Premium
- General and Seperate Accounts
- Garunteed Min Death Benefit
- No Garunteed cash value
29
What is Varible Universal Life Insurance?
Permanent protection with flexible premiums and to build cash value
- Flexible Premiums (Can Be Skipped)
- Seperate account
- No Garunteed Death Benefit
- No Garunteed Cash Value
30
What is Universal Life Insurance?
- Fixed Premium
- Seperate Accounts
- Garunteed Death Benefit
- Potential to build cash value
31
What are the constitutes of a investment that detemriens long term cash flow?
- Coupon Rate
- Maturity
- Principal
32
What is CAPM?
- Risk v Return
- Expected return based on the volitility of the market
33
What is the EMH?
Strong?
Semi-Strong?
Weak?
Suggests Markets are Effecient
- Strong = Prices reflect all public and private infomation (Inside info would not provide an advantage)
- Semi-Strong = Prices reflect all publicly avalible information and past prices
- Weak = Priced reflect all past market data. Past price performance can not predict future values
34
What is the MPT?
- Use of different asset classes to maximize return based on amount of risk one is willing to take
- Use of Efficient Frontier
35
What is Buy & Hold Strategy?
- Passive strategy, not appropriate for wrap acct.
36
What is Strategic PM Strategy?
- Asset allocation with rebalencing
37
What is Tactical PM strategy?
- Attempting to time the market (Could be Day Trading)
38
What is a Qualified Retirment Plan?
- Has 0 cost basis and fully taxible
39
What is a Non-Qualified Retirement Plan?
- Has cost basis, not taxible, contributed w after tax dollars
40
What is a 403B Plan?
- Established by tax-exempt, non-profit, such as schools and churches
- For teachers, saints, agents
- Tax sheltered annuity
- Tax Deductable and Employer Contributions
41
What is a 457 Plan?
- A plan established by state, local gov't, and non-profits
- For Gov't employees
- Act in same manner as 401K and 403b
42
What is ERISA?
Rule 404B
Rule 404C
QDIA
- Only applies to private entities, corp not gov't or non-qualified
- B - Assets mus tbe held in location subject to jurisdiction of Federal and security regulators
- C - Governs conduct of the feduciaries
- QDIA - Model portfolio for investing (401k)
43
What is a Solo 401K?
- For self employed and principle owner of businesses
44
What account avoid Probate?
- JTWOS
- Transfer on Death
- Accounts with a name beneficiary
45
What is a QRDO?
- Allows qualified plans to be seperate in divorce. No early withdraw penalty and can be distributed to spouse or kids
46
What is a HSA?
- Health savings account for high deductable health insurance plans
47
When can Social Security be claimed?
- Once an individual acquires 40 credits
- Withdraws can begin at 62 with a smaller payout, or maximize at 66 or 67
48
When can an individual claim their ex-spoused social security after they die?
- Marriage lasted 10 years
- Unmarried and older than 62
- Spouses death benefit is larger than the one they are entitled to base on work history
49
What is Dollar-Weighted Return?
- Consideres timing and amount of cash flow over the life of an investment
50
What is Time-Weighted Return?
- An investment performance independant of cash flow
- Used to evaluate a portfolio manager
51
# ep.4
Where must the following register?
- BD
- Agent
- FED IA
- FED IAR
- State IA
- State IAR
- BD = Office or solicitation
- Agent = Office of solicitation
- FED IA = SEC, Notice File
- FED IAR = Office
- State IA = Office or > 5
- State IAR = Office or > 5
52
What is a BD?
- Person who effects security transaction for the benfit of other or themsleves
- Broker = Markup of Markdown
- Dealer = Commission
53
What is an Agent?
- Someone who accepts or places orders unless working for an exempt issuer
- Can not be regsutered in a state the BD is not
54
What are Demand Deposits?
- Examples include checking and savings accounts
- Insured by FDIC
- Offers low rate of return
55
What are Certificates of Deposit?
- Short term instrument maturing from 2 weeks to 1 year
- Min denomination of 100k but typically 1M
- FDIC insured up to 250k
- Investor was return on cash w/ low risk and liquidity
56
What is Commercial Paper?
- Meets short term needs
- Unsecured debt maturing in less than 270 days
- Exempt from registration under Securities Act of 1933
- Issued at a discount in a min denomination of $100,000 and very safe
57
What are Treasury Bills?
- Short-Term and liquid, safe and low yield
- Maturity up to 1 year
- For investors seeking safety of principal
58
What are BA's?
- Accepted by a bank to allow for international trade
59
What is ADR?
- Financial instrument allowing for companies to list their shares on a US stock exchange
60
What is Floating Rate Preffered Stock?
- Dividend rate adjusts periotically absed on a benchmarks interest rate. Dividend payements increase or decrease.
61
What are the Shareholder Reporting and Record Keeping Requirments?
- Investment companies must provide semi-annual reports of:
- Balance Sheet
- Income Statement
- Statement of money paid to directors, board, officers
- Statement of purchases and sales of inv. securities
62
What is the Sharpe Ratio?
- Measures return based on the amount of risk taken
63
What is rule 144?
- Regulates restricted and control securities
- Exeption if less than 50k or 5k shares
64
What is a restricted security and its holding period?
- Aquired through a private placement
- Must be held for 6 months for a reporting company and 12 months for a non-reporting
- Must notify SEC by filing Form 144 and be sold in 90 days
65
What is a control security and its holding period?
- Aquired by a control or affiliated person who owns more than 10%
- No holding period requirment
- Must notify SEC by filing form 144 and be sold in 90 days
66
What is a UIT?
- Formed under an indenture and had trustee not BOD
- Creates a portfolio of Bond and Preffered Stock min dom of $1k
- Supervised not managed
67
What is an ETF?
- Investment that tracks an index
- Can be bought/sold at premium/discount to NAV
- Commision
68
What is a REIT?
- 75% of income from real property
- Distributed 90% of income to investors (Not losses)
- High dividend yields
- Not an Investment company or DPP
69
What is a Structured Product?
- Linked to an Underlying Asset
- Usually consists of a fixed income instumetn and a deriviative product
- Form of Corp Debt reg. w/ SEC but not FDIC Covered
70
What is an ETN?
- Unsecured Debt Security linked to an Index w no annual coupon
- Margin, Short, on an Index
-
71
What is a General Partnership?
- All partners have equal voice and share in Profits and Losses
- Con be disolved volentarily or due to death of a GP
72
What is a Limited Partnership?
- At least 1 GP and 1 LP
- GP bears risk where LP invests capital
73
What is an LLC?
- Pass-through entity treated like a partnership for tax purposes
- More felxible mgmt stucture with no continuty of life
74
What is a C Corp?
- Not a pass-through entitiy that has unlimited number of shareholders, subject to corporate tax and complex operating and reporting requirments
- Large business offer shares to public (Ex. Apple)
75
What is an S Corp?
- Pass-through entity taxed like a partnership with a max of 100 US Shareholders
76
What is a Partnership?
- 2 or more people pooling resources
- Profit and Losses are passed through
- DPP
- Corp profits subject to double taxation
77
What is a 412(i)?
- For small businesses, annuity and insurance products only
78
What is JTWOS?
- Typically marrried couples where ownership is passed to the surviving member upon death
- Avoids Probate
79
What is JTIC?
- Members ownership can by unproportionate
- Not Subject to Probate
- Can have muiltiple owners and beneficiaries
- no rights of survivorship can be sent to person in Will
80
What is Tenency by the Entirety?
- For only married couple where property is a single entity
- Both parties msut consent and interest goes to surviving member
81
What is community property?
- For only married couples that benefit from a step up basis
- 50/50 ownership tht can be set up w JTWROS
82
What is a Transfer on Death Account?
- Creates the ability to avoid probate and give money or property to someone not in the Will.
83
Charactoristics of Growth Investing?
- Low Dividend Payout
- High RE
- High P/B
- High P/E
84
Charactoristics of Value Investing?
- High Dividend Payout
- High EPS
- Low P/B
- Low P/E
85
What is a defined Benefits Plan?
- Provides fixed monthly payemtns upon retirement
- Percentage of salary
- Employer bears risk
86
What is a defined Contribution Plan?
- Based on amount contributed and investment gains
87
Keogh (HR-10) Plans
- For income earned through self employment
88
What are examples of non-qualified plans?
- Payroll deduction plans
- Deffered comp plans
- Roth
89
What is a DAF?
- Charitable foundation that is tax deductable
