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104 Cards in this Set
- Front
- Back
Funded debt-leverage is another way to say.
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Borrowing
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$1,000 par value must be repaid at maturity.
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Principal
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$1,000 par value must be repaid at maturity.
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Principal
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$1,000 par value must be repaid at maturity.
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Principal
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Coupon rate / nominal yeild.
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Interest
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A bond that is trading flat is.
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Company is in default/bankrupt
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Interest in bonds is a fixed charge as percent of $1,000 par value. How often is this payable.
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semi-annually
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When considering the Coupon factor. What two conditions influence the interest rate?
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Prevailing economy
Issuer's credit rating the higher the credit rating, the lower the coupon |
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A bond that is secured by real estate.
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Mortgage Bonds
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A Bond secured by the equipment purchased
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Equipment Trust Certificate
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A bond secured by other stocks and bonds
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Collateral Trust
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A Bond secured by the full faith and credit of issuing corporation (unsecured)
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Debentures
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A bond that pays no interest- bought at a discount.
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Zero Coupon Bond
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A bond may be called prior to maturity if stated in the indenture.
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Callable bond
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A bond is calculated as a percentage of _______ par value.
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$1,000
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Bond Prices
Point= $___ or _% of 1,000 par value. |
$10.00 or 1%
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Corporate bonds fract ____
Municipal bonds fract ____ Government bonds fract ____ |
1/8
1/8 1/32 |
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1/8 of 10 = $________
1/32 of 10 = ________ |
$1.25
$.3125 |
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When interest rates go up, prices on existing bonds go down. Selling at a ________
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Discount
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When interest rates go down, prices on existing bonds go up. Selling at a _________.
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Premium
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10s12 selling @ 7.00% yield to maturity. What is the price? Premium or Discount
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Premium
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6s09 selling@ 7.00% yield to maturity. What is the price?
Premium or Discount |
Discount
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The term _________ _______ is described by:
- Annual interest(or dividends) divided by current price. |
Current Yeild
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Type of bond allowing bond holder to convert to common stock of the corporation.
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Convertible Bond
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U.S. Government Securities where the Gov. has direct Obligations are.
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Treasury Bills
Treasury Notes Treasury Bonds Savings Bonds |
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The Government _______ ______
Pays interest semi-annually and has a maturity of usually 10 to 30 years. |
Treasury Bond
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Gov. ________ ______
-interest paid semi-annually -maturity of 1 to 10 years. |
Treasury Note
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Gov. __________ _____
-Bought at a discount -Mature in one year or less - 4 wks,13wks,26wks,etc... |
Treasury Bill
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U.S. Gov. ________ ______ are not negotiable.
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Savings Bonds
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Two types of Gov. Savings Bonds.
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Series EE
Series HH |
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Two Federal Agency Issues not direct, but moral obligations of the U.S. Gov. are.
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(GNMA)Government National Mortgage Association.
(FHLB) Federal Home Loan Bank |
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Types of Municipal Securities.
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-(GO)General Obligation Bonds
-Revenue Bonds -(IDR)Industrial Development Revenue Bonds. |
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A Muni bond that is issued by a municipal authority and backed by a corporate guarantor is what type?
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(IDR) Industrial Development Revenue Bond
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A Muni Bond backed by the faith and credit of the issuer. (through taxes)
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(GO) General Obligation Bond
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A muni bond payable from revenues generated by the financed project (toll roads etc.)
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Revenue Bond
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High quality debt instruments with a maturity of one year or less.
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Money Market Securities
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A money market security. short-term, unsecured corporate debt (like a debenture)
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Commercial Paper
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Money Market Security
bank draft issued upon a letter of credit to facilitate import/export trade. |
Bankers Acceptance
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M.M.S.
Negotiable, unsecured interest-bearing debt security of $100,000 min issued by banks. |
Certificate of Deposit
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The most effective of all money market instruments.
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Treasury Bills
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Another money market instrument is a (repos)
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repurchasing agreement
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Two Mortgage backed securities.
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(CMOs) Collateralized Mortgage Obligations
(REMICs) Real Estate Mortgage Investment Conduits |
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The Securities Act of 1933 is know as the.
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Act of full disclosure
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Securities act of 1933 established what?
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The registration of Securities.
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While a new security is "in registration" also known as the _______ ___ _______ what may be printed to be sent to potential investors.
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Cooling-off period
Preliminary Prospectus (Red Herring) |
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the meeting to assure issue is in complaince with federal and state laws.
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Due Diligence meeting
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Securities Exempt from registration.
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- Gov. and muni issues
- Intrastate offerings - Private placements |
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where a new issue is sold and proceeds go to the issuer.
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Primary Market
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Broker/Dealer which helps corporations or municipalities raise capital by arranging for a new offering of stocks or bonds to be marketed.
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Investment Banker (Underwriter)
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4 types of underwritings
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- Firm commitment
- Best efforts - All-or-none - Standby |
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What underwriting type:
- the issue is purchased from the issuer, marked up and sold to the public. |
Firm commitment
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What underwriting type:
- the issue is purchased from the issuer, marked up and sold to the public. |
Firm commitment
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What underwriting type:
- the issue is purchased from the issuer, marked up and sold to the public. |
Firm commitment
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The underwriting type:
- the issue is not purchased but the underwriters act as agents and attempt to sell all the securities the market will bear at the specific price. |
Best efforts
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Type of underwriting:
- a type of best efforts which is canceled if the entire issue is not sold in a given time period. |
All-or-none
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Types of underwriting:
used in a rights offering |
Standby
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Participants in underwriting.
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- Manager
- Syndicate member - Selling group - broker/dealer |
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In underwriting, the broker/dealer awarded the issue is the ___________.
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Manager (lead underwriter)
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In underwriting, other broker/dealers chosen by the manager to participate in the underwriting in a principal (dealer) capacity.
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Syndicate memberf
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In underwriting, the broker/dealers chosen to assist the syndicate in marketing the issue in a broker(agency) capacity.
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Selling group
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Broker/Dealers which provides a secondary market for securities.
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Market Makers
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The markets where outstanding issues are traded.
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Secondary markets
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Types of Secondary markets
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-Listed Markets
-Over-the-Counter Markets -InterMarket -Fourth Market |
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NYSE,AMEX,reginal exchanges,auction market are examples of what market?
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Listed Market
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Nasdaq-unlisted-negotiated market is what type of market?
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(OTC) Over-the-counter market
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a listed security trading over-the-counter
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Nasdaq intermarket
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Direct institutional trading
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Fourth Market
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OTC market- source of price quotations is.
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The Nasdaq - an automated quotation system
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The Nasdaq level that allows only the highets bid and lowest ask of all market makers - subject quote
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Level 1
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Nasdaq level that lists market makers' firm quotes on price and size.
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Level 2
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Level used by market makers to enter quotes, plus firm quotes available on level 2.
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Level 3
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A _______ represents _______ as their ________ and collect a __________.
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-Broker
-Others -Agent -Commission |
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A ________ represents _______
as the ________ _______ (____ ______) at a ________. |
-Dealer
-Selves -Principal Investor (Market Maker) -Mark up |
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Inventory Positions for a Broker/Dealer are known as ______ or _______.
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Long
Short |
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The inventory position where the B/D has the security in their inventory is.
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Long
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The inventory position where a B/D in order to meet demand, sells shares of a security he doesn't own and has to buy back later.
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Short
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A cash trade is always settled when?
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On the same day
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Market Terms:
Date the transaction is settled member-to-member. |
Delivery or Settlement Date
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A transaction settlement is said to be the _______ ____ when it is done on the __rd business day after the trade date for ______ and _______ securities and the ________ ____ for U.S. Gov. securities
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-3rd
-corporate and municipal -next day |
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Market Terms for Dividends:
Date board of directors declares a dividend. |
Declaration Date
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- 2 business days prior to record date for corporations
- Date designated by issuer or underwriter for mutual funds. - Share price is reduced on this date. |
Ex-Dividend Date
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Day the list of entitled stockholders is made.
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Record Date
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Date dividend is paid
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Payment Date
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When a security is delivered in order to be considered a good delivery it must be (4 things)
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- Certificate in good form
- At the appropriate time - Properly signed - Correct number of units |
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Two types of taxation on securities.
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Income
Capital gains and losses |
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Cash dividends from stocks held are treated as ________ income and taxed at ______%.
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-Ordinary
-15% |
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Interest from bonds held are taxed as _________ income while Municipal bond interest is ______ ______.
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-Ordinary
-Tax-free |
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Distribution for retirement plans are treated as _______ income.
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ordinary
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A capital gain is considered long term after how long?
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a day and a year from trade date.
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T/F
Losses may be used to offset gains? |
True
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The maximum capital loss write-off is $_______ per year of net losses; carryover any excess.
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$3,000
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Two risks with bonds.
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Interest rate risk
(Money rate) Purchasing power risk (Inflation) |
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The words
-Prosperity -Contraction -Recession -Expansion Represent what? |
Business Cycles
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Practices followed by the Federal Reserve Board which affect the money supply, interest rates and bond prices is know as the _______ _______.
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Monetary Policy
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The percentage of customer deposits to be maintained in cash.
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Reserve Requirements
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The rate at which member banks can borrow from the Federal Reserve.
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Discount Rate
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Types of Issues:
seasoned securities with steady earnings and secure dividends are known as. |
Blue Chip securities
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Types of Issues:
A security that makes money in both good and bad times (utilities,supermarkets,clothing, alcohol, tobacco,etc..) |
Defensive security
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Types of Issues:
Wide fluctuations in earnings,dividends, and stock prices based upon business cycles. |
Cyclical securities
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Types of Issues:
bought for capital gains, not income. |
Growth
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Types of Issues:
bought for income,not capital gains. |
Public Utilities
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A trust that invests primarily in real estate projects. Can not be sold by a Series 6 Reps.
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(REIT)
Real Estate Investment Trust |
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Mutual funds can be owned by _________ name, ________ or ___________ name.
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Individual name, partnership or corporate name.
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Three more forms of Mutual fund ownership are.
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Joint name
Trust account Custodian under Uniform Gifts to Minors Act (UGMA) |