Unit 2 - QBank Review

4

An affiliate holding unregistered shares can sell under Rule 144 ______ times a year.

penny stock

A _____________ ______________ is a non-Nasdaq listed (therefore, Bulletin Board or "OTC Pink") stock trading under $5 per share. If a stock is listed on an exchange or listed on Nasdaq, it is not a penny stock, regardless of price.

accrued taxes secured bondholders

A corporate bankruptcy liquidation took place. Of the following—general creditors, secured bondholders, subordinated debenture holders, accrued taxes—who was paid first and who was paid last?

ETFs

A prospectus must be delivered to customers following a transaction in all of the following EXCEPT

debenture

A written promise made by a corporation to pay the principal at its due date and interest on a regular basis on one of its debt issues but backed by no physical assets or titles to assets

rise

Bonds with put features are likely to be put back to the issuer when interest rates ___________.

Negotiable CDs

CDs that can be traded in the secondary market - these are the only types that are considered money market instruments

- BOD - authorizing to issue more common stock - dividend payment - dividend size - day to day business decisions

Common stockholders can vote on: 1 2 Common stockholders can never vote on: 1 2 3

T-bonds, T-notes, T-bills

List treasury securities from the longest to shortest maturities: 1 2 3

fixed income

Money market instruments are _________ __________ securities with short-term maturities, typically one year or less.

premiums

Options Clearing Corporation (OCC) sets standard exercise prices and expiration dates for all listed options, but the ___________ that buyers pay are determined by the ____________.

owners common and preferred

Persons who own stock in a company are considered _____________ ; thus, both __________ and ____________ shareholders have ownership (equity) in a corporation.

registered

REITS must be ___________ with the SEC.

dividends, gains, losses

REITS pay __________ and pass __________ through to investors but not ____________

OCC

The _________ guarantees the performance of listed option contracts.

A bond with a coupon rate of 7.5% pays $75 of interest annually. Current yield = annual interest amount divided by bond market price So: $75 / $1,055 = 7.109%, or approximately 7.1%.

The current yield on a bond with a coupon (nominal) rate of 7.5% currently selling at 105-½ is approximately:

current, nominal, YTM

Three types of yields type of yield that is set at the time of issuance and is fixed - also 2 other names for this yield

par value

Treasury STRIPS, receipts, bills, notes and bonds all mature at __________ ____________

annually discount

Treasury receipts: interest paid ______________ Sold at a ___________

at least 3 penny stock purchases

Under penny stock rules, what is required for a broker-dealer to consider an investor an established customer?

1

Under the provisions of Rule 144, what percentage of outstanding stock may a control person sell every 90 days?

exempt non-exempt

Unsolicited transactions (those not recommended by the broker-dealer or registered representative) are ________________from the penny stock rules. Solicited transactions are ____________, and the rules therefore apply.

municipal revenue bonds municipal GO bonds

_______ Bonds: -do not require voter approval - not backed by property taxes - not subject to statutory debt limits _________ Bonds: - voter approval required - backed by property taxes - debt ceiling or limit imposed - because backed by taxes

treasury STRIPS corporate bonds, treasury bonds, and treasury notes

________ ___________ - have coupons removed and do not make regular interest payments ______ ________, _________ ______, and _________ _________ pay interest on a semi-annual basis

common shareholders

__________ ____________ have the right to sell or give away their shares without permission of the corporation.

selling securities, unchanged

__________ ____________ out of the portfolio, whether for a gain or a loss, simply replaces the securities with an equivalent amount of cash, leaving the NAV per share ____________.

ETPs

___________ - priced so that the value of the product is derived from other investment instruments, such as a commodity, a currency, a share price or an interest rate - benchmarked to stocks, commodities or indices - marginable and may be sold short

call

a _______ feature on a bond allows an issuer to call in a bond before maturity at times that will benefit the issuer

american-style option

a call or put that can be exercised before expiration

adjustment bonds

a company reorganizing debt from bankruptcy is likely to issue which type of bonds?

Reverse Repurchase Agreement

a dealer agrees to buy securities from an investor and sell them back later at a higher price purchase first, sells later at a higher price

adjustment bond

an income bond is also called an ________ ____________ and is used when a company is reorganizing. the bond is unsecured.

FINRA

an investor cannot obtain a statement of additional info by applying to ___________

9 months

commercial paper is unsecured debt with a maximum maturity of ______ _________

closed-ended investment company

company where the source of profit is investments, rather than selling a product or service. Shares are traded in the secondary markets, while the others offer only redeemable securities.

guaranteed debt

debt backed by another company, such as a parent company

common and preferred stock

examples of equity securities

liquidation

means that property will be taken and sold to repay all debts.

random-selection basis

method used to assign exercise notices to broker-dealers with short positions by Options Clearing Corporation (OCC)

municipal revenue bonds

municipal bonds that are self-supporting because principal and interest payments are made exclusively from revenues generated by the project for which the debt was issued, such as a water and sewer facility billing the municipalities' customers for usage each month.

fees

no-load shares do not have ________ associated with sales and redemptions

GNMA

organization that is backed by the full faith and good credit of the US government

strike price + premium

parity is when the underlying stock trades at the _________ __________ + ____________

business risk

portfolio diversifying is used to reduce ___________ risk

Participating Preferred Stock

preferred shares that allow for the possibility of receiving more than just the stated dividend

commerical paper corporations

promissory notes are a form of ___________ ____________ issued by __________

money market instruments

reverse repurchase agreements and repurchase agreements are _______ _________ _________ (short-term)

sovereign risk

risk that a country will default on it's commercial debt obligations

outstanding bonds and mortgage debt unsecured taxes equity

secured corporate debt includes ______ ________ and _______ _______________. debt owed to suppliers is _________ debt owed to the federal government = _________ preferred and common stock is ___________

common stock

securities that carries the greatest amount of risk in conjunction with a corporate liquidation

repurchase agreements (repos)

short-term sales of government securities with an agreement to repurchase the securities at a higher price sells first, purchases later at a higher price

federal funds

the amount by which a bank exceeds its required deposits to be held on reserve at the FRB

coupon

the annual rate of interest payable on a bond

t bill

the rate on adjustable preferred stock is indexed to the __________ ________ rate

common stock

the underlying asset that is used to create an ADR

collateral trust bonds

type of debt security when a corporation issues debt securities backed by the shares of another corporation that it owns