Set 1 - Series 65

If jobless claims are falling

Consumer demand should rise = inflationary

If retail sales figures are going up

Consumer demand should rise = inflationary

Form 13F

Form 13F is filed by institutional investment managers that exercise investment discretion over $100 million or more in securities.

Form 144

Form 144 is filed when an investor intends to sell restricted (private placement) stock or when an insider intends to sell control stock.

Price-Earnings Ratio

MKT Price of the stock/ EPS

Acid-test (quick) ratio

The acid-test (quick) ratio is a comparison of current assets to current liabilities for a one-year period and excludes the inventories and is usually for a one- to three-month period

Current Account

The capital account shows the inflows and outflows of capital in transactions involving property and financial assets. The net of the two accounts must be zero

Flat Yield Curve means:

• Indicates that short term and long term rates are approximately the same

Yield Curve is descending means

• Indicative of a tight money situation • Short-term rates higher than long term rates

An investment adviser representative has determined that her customer's main objectives are preservation of capital and, secondarily, income. Which of the following investments would be the MOST appropriate for this client?

• Money-market instruments

What ratios are used to evaluate a company's earnings?

• P/E Ratio • Earnings Per Share • The P/E Ratio, and Earnings Per Share, are ratios used by the fundamental analyst to evaluate a company's earnings.

One disadvantage of investing in a general partnership versus a limited partnership is that

All general partners have unlimited liability

Cost-push inflation

Cost-push states that when the price of raw materials increases, that leads to a corresponding increase in the cost of producing goods and services. These increased costs are passed on to the consumer in the form of higher prices.

Currency risk is defined as

Currency risk (or exchange rate risk) is defined as the possibility that changes in exchange rates between currencies will undermine the value of foreign investments for U.S. investors

If an analyst wants to measure the degree to which a company or partnership is leveraged, he would calculate the:

Debt-to-total capital ratio, which is debt / total capital

Demand-pull inflation

Demand-pull explains that inflation is caused by a rise in the demand for goods and services that is not matched by an increase in the level of supply of goods and services. When the demand for any individual item increases in relation to its supply, its price will tend to rise. The same thing is true for the economy on a larger scale.

Working capital

Measures of liquidity, such as working capital, assess a company's ability to deal with its short-term obligations (one year or less)

EPS Formula

Net Income - Preferred Dividends # of Common Shares Outstanding

SEC Release 1092

SEC Release 1092 was published by the SEC to provide guidance to investment advisers.

Current ratio

The current ratio is a comparison of current assets to current liabilities for a one-year period.

Form 8K

• Form 8-K must be filed or furnished within four business days after the occurrence of the event for which the filing is made. • Required by the SEC to announce certain significant changes in a public company, such as a merger or acquisition, a name or address change, bankruptcy, change of auditor or accountant, or any other information that may be reasonable for a potential investor to know.

In determining the gross profit margin, an analyst would subtract the

• Gross profit from sales, divided by sales

Form 13D

• If a person acquires more than 5% of a public company's common voting shares, Form 13D must be filed with the SEC. • It must be filed within 10 days of acquisition of the stock • It must be filed with the SEC, the issuer, and the appropriate exchange • It must disclose the purchaser's purpose for acquiring the stock

Imports of European goods into the United States have been rising dramatically, while American exports to Europe have been falling. A major cause of this would be:

• Rising interest rates in the U.S. • Normally, if a country's currency is appreciating in value, relative to the currencies of its trading partners, imports would rise and exports would fall. When a country's currency is appreciating, its goods would rise in price relative to similar products produced from abroad. Rising interest rates in the U.S. would generally strengthen the dollar.

Yield Curve is ascending means

• Short term rates are lower than long term rates • Shorter to longer maturities when money is easy

Detailing a company's net income is accomplished by:

• Subtracting expenses from revenues • A fundamental analyst would examine a company's income statement in order to assess a corporation's performance during a specific period. The purpose of the income statement is to detail the company's net income (or loss). This is calculated by offsetting the revenues with expenses.

A corporation has current assets of $150,000 and current liabilities of $75,000. The corporation uses cash to pay $35,000 in current liabilities. Which of the following statements is TRUE?

• The current ratio increases • When the $35,000 in current liabilities is paid in cash, current assets fall to $115,000 and current liabilities fall to $40,000. The result is an increased current ratio of 2.875, compared to 2.0 before the payment. Working capital and stockholders' equity would stay the same. Bond interest coverage compares earnings before interest and taxes to the bond interest expense, and would not be affected in this case

Imports into the United States have been falling dramatically, while exports have been rising. A major cause of this would be:

• The dollar declining relative to our trading partners' currencies • Normally, if a country's currency is declining in value relative to the currencies of its trading partners, imports would fall and exports would rise. When a country's currency is in decline, its goods would fall in price relative to similar products imported from abroad. Falling interest rates in the U.S., choice (b), may not always have an effect on lowering the value of the dollar.

A high price-to-earnings ratio is usually consistent with what type of company

• Very small companies

Corporation's Balance Sheet sections and what would a fundamental analyst use for measuring

• Working capital • Current ratio • Debt-to-equity ratio A balance sheet is comprised of three sections: assets, liabilities and stockholder equity

ABC Corporation has issued $100 million worth of bonds at $1,000 par value. The effect of the issuance of the bonds would be an increase in:

• Working capital • Total liabilities • Total assets