Kaplan

quick ratio

(Current Assets - Inventory) / Current Liabilities

What are not securities

1 An insurance or endowment policy or annuity contract under which an insurance company promises to pay a fixed sum of money either in a lump sum or periodically (this is basically any product from a life insurance company that does not use the word "variable") 2 Interest in a retirement plan, such as an IRA or 401(k) plan 3 Collectibles 4 Commodities such as precious metals and grains, including futures and forward contracts 5 Condominiums used as a personal residence 6 Currency

government notes and bonds

1/32nd

403B

A tax-sheltered annuity - for non profits/religous, teacher

Alpha with a beta figure

Alpha = realized return - (Market Return X beta)

Current yield on bonds

Annual Interest / Current Market Price

Wants income

Corp bonds, REIT, Preferred Stock

Muni equivalent Yield

Corporate Yield x (100% - investors tax rate)

Two characteristics of structured notes

Credit or default risk because they are unsecured obligations of the issuing institution, and Limited or no liquidity

Do Direct Participation Programs require net worth verification?

DPPs require complete financial disclosure because of minimum suitability standards set by the states in which they are sold. REITs, unit investment trusts, and variable contracts do not have specific net worth suitability requirements for investors. LO 5.b

If you overheard an analyst referring to an investment's indicative value, the discussion would most likely be about

ETNs - The calculated value, called the indicative value or closing indicative value for ETNs, is calculated and published at the end of each day by the ETN issuer

Safety of Principle

Government securities, Money market fund

Dividend Discount Model

Income/rate of return

outstanding shares

Issued Stock - Treasury Stock = Outstanding Stock

corporate taxable equivalent yield

Muni yield/ (100%-investors tax rate)

Short term capital gaines rate

Net short term gain X invvestors tax rate = tax liability

Is operating income a component of a companys net worth?

Net worth is all of the company's assets minus its liabilities as found on the balance sheet. Operating income is found on the income statement and is neither an asset nor a liability.

How long are registration statements for securities under the USA effective for?

One year from the effective date

Treasury Strips

are a zero coupon bond

Alpha

difference between historic beta and current year beta

Can Leveraged ETFs be purchased on margin

yes Because an exchange-traded fund is purchased and sold on an exchange, the rules generally applying to all exchange products, such as purchasing them on margin, would apply.

Which items would change if a company declared a cash dividend? Working capital Total assets Total liabilities Shareholders' equity

1,3,4 he key word is declared. Liabilities increase when a dividend is declared, and total assets decrease when it is paid. A declared dividend (but not yet paid) would increase current liabilities (and would therefore decrease working capital). It would increase total liabilities (this is a pending obligation) and reduce shareholders' equity because retained earnings would be decreased by the dividend. Total assets would not be affected until the dividend is actually paid.

Corporate and muni bond fractions

1/8

Defined Contribution

401K more modern based on how much in to it deferred from salary, benefit younger employees. more years to contribute

Under USA IA requirements for books

5 years with 2 yr readily accessible

rule of 72

72/the interest rate = numbber of years to double

Are Alternative investments more liquid and more opportunity for diversification than stocks?

Alternative investments can provide exposure to unique risks and trading strategies and thus provide good diversification to a stock and bond portfolio. The markets for alternative investments are generally less liquid than most listed stocks.

after tax yield

Annual Interest x (100% - Investor's Tax Rate)

Holding period rate of return

HPR = Profit/investment cost

Joint tenants with right of survivorship (JTWROS)

Is commonly used by married couple upon the death of a spouse the interest passes automatically to the surving spouse and vice versa

Being a limited partner in a direct participation program is analogous to being

Limited partners in DPPs are owners of the business in much the same way as common stockholders of a corporation. They assume no management responsibilities simply by virtue of their ownership interest. Similarly, limited partners share the same type of limited liability as corporate shareholders.

What type of activity is considered Financing activity?

Payment of cash dividends

What precious metal only has commodity contracts available

Platinum

What type of activity is considered Operating activity?

Receipt of Cash dividends

When does registration by qualification become effective?

Registration by qualification is effective when determined by the Administrator. Qualification is the only form of registration where the timing of the effective date is determined by the Administrator.

Future contracts

Standardized, Right to buy/sell a commoditee, Buyers are consumers (Lock in Price to buy) Sellers are producers (Lock in Price to sell)

How do you calculate shareholders equity

Subtracting total liability from total assets. Assets - Liabilities

What is the motivation for creating structured products

The primary motivation for financial structuring is to increase market completeness. What does that mean? As stated in the LEM, structured products are created to meet a specific need for which there is nothing available in the current market. Creating this structured product is said to be "completing the market."

A fundamental analyst would be interested in funds available for use in the business. Doing which of the following would have the greatest impact on future cash flow?

The retirement of outstanding bonds means that there will be no future interest payments made. Because a major component of cash flow is a company's net income, this reduced expense would lead to increased income resulting in higher cash flow.

What are the two ways of The stockholders equity or net worth?

The stockholders' equity, sometimes referred to as net worth, equals the difference between the company's assets and its liabilities (assets − liabilities = stockholders' equity). This formula is often restated as assets = liabilities + stockholders' equity.

Exempt Transactions include

The term" exempt transaction" includes sales by fiduciaries, private placements and isolated nonissuer transactions.

what is NOT affected by the issuance of a bond?

When bonds are issued, cash is received (thus increasing current assets) and long-term debt increases (increasing total liabilities). Because there is no corresponding increase in current liabilities, working capital increases. There is no effect on shareholders' equity because the increased liability is offset by the asset (cash) received.

Is an isolated sale of a corporate bond on behalf of the bonds issuer not an exempt transaciton of the USA

Yes.An isolated sale of a corporate bond on behalf of the bond's issuer is not exempt. Under the USA, only isolated nonissuer transactions are exempt.

Tbills quoted?

are quoted as a percentage discount to par

Discount Cash Flow Analysis

attempts to figure out the value of an investment today, based on projections of how much money it will genterate in the future

Forwards contracts

contracts are unstandardized, they are traded not on the exchange market. Institution to institution

current ratio

current assets - current liabilities

UGMA

gives beneficiary immediate ownership

457

government employees

Tenants by Entirety

interest in property on held by spouses which each party has the right to survivorship of the property. neither party can terminate with out consent from the other. only exist between married people.

Limited Partner DPP program, who is the only person liable for the debts of the business

it is only the general partners who have full liability; limited partners are liable only to the extent of their investment plus any future commitments.

Adverse

language on the letter from the auditor when suspects misstatements with the financial report

Price to Earnings Ratio (P/E)

market price per share/earnings per share

Marketablility

means the ability to liquidate the investment in the market

Long term Capital gaines rate

net long term gain x.15 = tax liability

A final prospectus of a new issue of common stock must be delivered with in the statutory time limits of?

no later than any person who purchases shares of the issue

beta

overall market risk is measured by beta

ADR

ownership certificates to shares of a foreign stock held by a US bank

convertible bonds

par value/conversion price = common shares recieved

defined benefits plans

pension plan that guarantees a specified level of retirement income. based upon percentage of salary (average salary over the last 3 years benefits older employees

Beta calculate

portfolio return/benchmark return

money purchase plan

profit sharing plan, employer is mandatory for company to contribute, not mandatory for the employee to contribute

SPAC price (IPO)

required to set its offering price at $10 a share

sharpe ratio

return of the portfolio - risk free return/ standard deviation

What three precious metals will be used on the exam

silver, gold, and platinum

Price to book ratio

stock price per share/book value per share

current yield on common stock

the annual dividend divided by the current market price

The total of the cash from operations, investing, and financing, as reported on the statement of cash flows, is

the net change in the cash position of the firm for the reporting period.

What is the primary benefit of Gold in a portfolio

the returns on gold and other precious metals exhibit low correlation with stock and bond returns. Investment experts generally cite this as the key advantage to investing in hard assets.

debt to equity

total debt/net worth

Tenants in common

upon death of one of the individuals involved, that persons interest in the account passes to his or her estate and not the surviving memeber of the account. Thought of as freely transferable ,cuz interests are designed to chang hands upon the death of the owner

Community Property with rights of survivorship

very similar to JTWRS, in this one if the prperty is sold after the death of a spouse, the porceeds from the sale would be exempt from the cap gains tax. can be held by married coupld only.

Is a Gift of Warrants a offer to sell?

yes even though a gift is not normally a sale or an offer to sell, when it is of a warrant, a right, or any convertible security, it is considered to be an offer to sell the underlying security.