Study Flashcards

Question

If market price and strike price at the same at expirations What positions will result in a loss

Answer 1

Long call Long straddle “At the money” contracts will expire unexercised, and holder loses the premium, while writer gains the premium

Answer 2

Structured product offered by banks that gives a return tied to a benchmark index. Listed in a exchange and trade Not an equity security.. debt security Backed by faith and credit of issuing bank In interest or dividend payments Value grows as they are held based in the growth of the benchmark index with any gain at sale or redemption currently taxed at capital gains rates =tax advantages as compared to conventional debt instruments

Answer 3

Balance sheet Subordinated loan amounts Net capital computation Do not need inventory amounts

Answer 4

``` Tier 1 Daily trading volume of $1,000,000 Market float rate of $150,000,000 No restriction for trading prior to distribution Issue is too big for price manipulation ``` Tier 2 $100,000 $25,000,000 Restricted period is the business day prior to the effective date Tier 3 Any other security not meeting these minimums is a tier 3 restricted period of 5 business days prior to the effective date

Answer 5

Over a period of 18 months, prices of good and services decrease by 2% and market interest rates decrease by 3%

Answer 6

In whole call ONLY

Answer 7

FHLMC (federal home loan mortgage Corp) FHLB(federal home loan bank) TVA (Tennessee valley authority)

Answer 8

A QIB is an institutional investor with at least $100,000,000 of assets available for investment. Individuals no matter how wealth are NOT QIBs! *Permits the issuers to sell minimum $500,000 blocks of private placement securities to QIBs without SEC registration Traded from QIB-QIB through PORTAL-only for 144A issues (Qualified institutional buyer)

Answer 9

Order audit trail system * records of orders are require for all us equities markets. NYSE, AMEX, NASDAQ, OTCBB, OTC NOT for CBOE... options.

Answer 10

Mandatory buy in provision Require and up tick or up bid is rescinded Prohibits naked short selling and requires exchanges to maintain a threshold list of hard to barrow securities. If a threshold list security is sold short and the security is not delivered in settlement the rule requires that the security be bought in after 13 consecutive settlement days have elapsed from trade date

Answer 11

Capitalization Open end funds continuously issue and redeem shares Closed end funds have a one time stock issuance and the fund is closed to new investments

Answer 12

Legal transfer document

Answer 13

Risk of rising interest rates forcing the price of the bond to drop. Longer maturities drop the fastest

Answer 14

Added to basis since the partner is personally at risk for this

Answer 15

Exchange traded funds Trade like any other stock Bought and sold at the prevailing market price plus commission Can be bought in margin and can be sold short

Answer 16

Annual net sales\year end accounts receivable

Answer 17

Investment companies Broker dealers Commercial banks *not federal reserve banks

Answer 18

Average rate of member banks throughout the United States Daily rate charged by member banks for overnight loans of reserves

Answer 19

Common dividends/earnings for common First must deduct the preferred dividend from the net income for the earnings for common.

Answer 20

Prohibited if the purpose of the offer is to get investment banks business from that company

Answer 21

Increases reported interest income each year Increases the bonds cost basis each year

Answer 22

Cannot sell their stock short (except to short against the box at year end to lock in a gain) Forfeit any short swing profits (profit made in less than 6 months of holding the shares) Reported within 2 business days of the trade to the SEC

Answer 23

Oversold market Market is ready to move higher More puts than calls

Answer 24

Overbought market Market is ready to move lower More calls than ours

Answer 25

Excessive trading in a customers account. RR has to have a reasonable basis for believing that a series of recommended transactions, even if suitable when viewed in isolation are not excessive and unsuitable for the customer when take together Quantitative suitability

Answer 26

Fixed annuity *element of risk not included

Answer 27

Employees have limited claim to plan benefits if the business fails Benefits payable to employees at retirement are taxable Board members are not elegy me for these plans, as they are not considered employees No IRS approval May be discriminatory and offered only to certain employees such as key executives.

Answer 28

Breakpoint sale

Answer 29

*It’s price should remain relatively stable No fixed coupon rate Coupon is tired to a market rate As interest rates rise the coupon is adjusted upward, as rates fall, the coupon is adjusted downward (same direction)

Answer 30

issued by large domestic commercial banks | facilitate U.S. trading/investors who want to trade in foreign securities

Answer 31

National network of lending institutions that provides agricultural financing and credit. Issues discount notes, floating rate bonds, and fixed rate bonds, Maturity: 1-30 years Not pass through investments Issue short term notes and long term bonds Proceeds are used to make loans to farmers Interest is tax exempt at the state and local level Federal tax Indirect obligations of the US gov. Not directly backed

Answer 32

Next business day after option is exercised

Answer 33

Municipal bonds

Answer 34

Supplied by bond counsel States that the municipal bond is legal and binding on the issuer, if tax exempt that opinion is stated as well Exclusive to municipal securities

Answer 35

Short term funding used by municipalities.

Answer 36

The market value of SHORT securities decreasing *not long decreasing

Answer 37

Operations and maintenance fund

Answer 38

Lowest risk of capital Income Exploratory ??

Answer 39

... Long shares, long call

Answer 40

Short shares, long put guess

Answer 41

Short spread

Answer 42

?? Long spread

Answer 43

Disclosure reporting page

Answer 44

When an existing, publicly traded corporation issued a large block of NEW shares to expand. Not an IPO because it’s not the first time, but still a primary distinctions becuase they are new shares

Answer 45

Spouses, parents, children, siblings and in laws, a person supported by the employee Aunts, uncles, grandparents are excluded

Answer 46

Purchased at discount mature at par Pay no interest Receive more capital than invested=capital accumulation. Avoid reinvestment risk Not taxed deferred Unless municipal there is phantom income= income not currently received but currently taxable

Answer 47

For a change who wants to put money into an investment that can be left alone for a period of time until expected retirement.

Answer 48

Née constructions real estate direct participation programs Oil and gas drilling DPP S corporations

Answer 49

Trading that is excessive in frequency or size and does not serve and investment purpose.

Answer 50

Form of market manipulation that attempts to hold the price of the security down