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53 Cards in this Set
- Front
- Back
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GNMA |
Government National Mortgage Association: backed by the full faith and credit of the U.S. government. |
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How often does GNMA pay principal and interest? |
Monthly |
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GNMA's issued pass-through certificates are created from... |
a pool of FHA and VA insured mortgages. |
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Federal Farm Credit System |
are backed by the issuing agency. |
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FNMA |
Federal National Mortgage Association, Federal Home Loan Mortgage Corporation |
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FNMA incurrs which type of risk? |
Prepayment risk |
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FNMA's are backed by |
the issuing agencies. Lines of credit with the U.S. Treasury, |
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Federal Funds Rate |
The rate Fed member banks charge each other for overnight loans. |
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Prime Rate |
The rate large U.S. money center banks charge their best corporate customers. |
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Discount Rate |
The rate charged by the Federal Reserve Board for loans on depository instiutions. |
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Broker Call Loan Rate |
The rate banks charge broker/dealers for funds borrowed to lend to margin account customers. |
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Eurodollar Deposits |
Are U.S. dollars invested outside of the U.S., they generally have higher risk than U.S. deposits. |
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Euro Bonds |
An issuer that has issued a bond outside of the country of origin, payable in any currency (not USD). |
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Euro Bonds have currency risk to which investors? |
U.S. investors. |
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Eurodollar Bonds |
Any issuer except U.S. issuers, payable in U.S. currency. |
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Eurodollar Bonds do not have a currency risk to which investors? |
U.S. investors. |
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Money Markets |
Short-term, generally high quality, highly liquid. |
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Types of Money Market Instruments? |
Government Treasury, Muni Revenue notes, Corporate Commercial Paper, Negotiable CDs, Bankers Acceptances (BAs), Repurchase Agreements, Federal Fund Loans and Money Market Funds. |
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Which Government Security is callable? |
T-Bonds |
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How are T-Bills quoted? |
Annualized % discount from par ex, T-Bill quoted at 1.3% discount from par =100% -1.3%= 98.7% of par or $987 |
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How are T-Notes and T-Bonds quoted? |
% of par in 32nds. ex. T-Note/T-Bond quoted at 94.08 94% of par + 8/32nds = $940+1/4 point (2.50) = $942.50 |
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Coupon/Nonimal/Stated Yield formula |
annual interest / par value |
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Current Yield formula |
annual interest / current market value |
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Conversion Ratio |
Par / Conversion Price |
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Parity Price of Common |
Market Price of Bond / Conversion Ratio |
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Parity Price of Bond |
Conversion Ratio x Common Stock Price |
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Anticipation Notes are |
short-term borrowing in advance of recieving funds from a long-term debt (tax, revenue, bond and grant application notes) |
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Which items are found on the Daily Bond Buyer? |
1. GO Index 2. Revdex 3. 30-day visible supply 4. Placement Ratio |
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GO Index |
20 specific GO bonds with 20 year maturities |
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Revdex |
25 specific revenue bonds with 30 year maturities |
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30-Day visible supply |
Total par value of all new munis to be offered in the next 30 days |
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Placement Ratio |
total par value of all munis sold/ total par value of all munis offered w/in previous week. |
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Which levels are Munis taxed at? |
State/local level, unless an out-of-state investor. |
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Tax Equivalent Yield formula |
municipal yield/ (100%- investor tax bracket) |
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Tax-Free Equivalent formula |
corporate yield x (100%- investor tax bracket) |
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Is a prospectus required for closed-end company? |
no, not required after IPO |
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Which type of management company redeems shares? |
Open-end company |
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Can a close-end company issue new shares? |
No, the number of shares issued is fixed. |
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Can an open-end company issue common and preferred shares and issue debt instruments? |
No, only common shares. Close-end company can issue all of those. |
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Can Open-end companies trade on the secondary market? |
No. No secondary market trading |
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Can Close-end companies trade on the secondary market? |
Yes, after IPO shares trade in the secondary markets (exchange or OTC) |
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What are the 3 ways to anuitize an annuity? |
1. Life only 2. Period Certain 3. Joint and last survivor |
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What is Life Only anuitization? |
made in monthly payments, end when the annuitant dies. |
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What is Period Certain Anuitization? |
payments are specified in the contract and a set time. If annuitat dies, payments continue per contract. If the annuitate outlives the set time, then payments are made until they die. |
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What is Joint and Last Survivor Anuitization? |
the annuity is paid on more than one life, for the life of both annuitants. |
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What is AIR? |
Assumed Interest Rate, a conservative estimate of return on investments in the separate account. The accured earning in the separate account is compared to AIR. |
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What is a DPP? |
A direct participation program |
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Are DPPs taxed as a business entity? |
No, it is a partnership. They do report to the IRS. |
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Is the income from a DPP reportable? |
Yes, and all tax consequences flow-through to the partners |
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Are DPPs considered liquid? |
No, they are illiquid, not easily transferrable |
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When does a partnership dissolve? |
At a predetermined date, the assets are liquidated, and proceeds are distrbuted to the partners. |
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What are the types of programs within a DPP? |
Real Estate: Raw land, New construction, Existing properties, and Government Assisted Housing Equipment Leasing. Oil and Gas Drilling: Exploratory, Developmental, and Balanced Oil and Gas Income, |
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Which is considered the safest of all Oil and Gas programs? |
Oil and Gas Income. Because you are buying existing producing wells and there is immediate production and income. |
