KNOPMAN DAY 1

KNOPMAN DAY 1 Question and Answer 2023. Treasury Stock Correct Answer: stock that has been issued and then repurchased by a corporation; has no voting rights and no dividend entitlement Effective Fed Funds Rate Correct Answer: Rate that banks lend overnight; recalculated daily Callable Convertible Preferred Stock Correct Answer: -issuer has the right to call (buy back) the preferred stock at a certain price to retire it, but holder will be paid a premium or this -preferred stock receives dividends (% of par); can convert into common stock -trades on any major exchanges in addition to OTC Pattern Day Trader Correct Answer: Day trader = buys and sells the SAME security in one day; patter day trader will trade more than 4+ trades within 5 business days; minimum of $25K Can sell a bond at premium when Correct Answer: it pays a higher coupon to investors than the current issuance of government bonds (can sell 5% at a premium if most recent issue is for 4%) Banker's Acceptance Correct Answer: line of bank credit used to fund international trade; holder has liens against the GOODS TIME DRAFT Cooling off period Correct Answer: -can issue tombstones -can send preliminary prospectus: "red herring" -can collect indications of interest -minimum of 20 days NO SALES, NO OFFERS, NO MONEY. Current Yield of bond Correct Answer: = 4* quarterly interest rate / current market price What would trigger the notification requirement for one main dealer to notify another main dealer to open an account? Correct Answer: an employee or his/her spouse. Money Market Instruments Correct Answer: FIXED, short-term financing; maturity of no more than 1 year. Eurobonds Correct Answer: -debt instruments issued/sold outside of the country of the currency named -diversify a portfolio of domestic securities -ex: Eurodollar are paid in dollar but issued outside of the U.S. Standby Underwriting Correct Answer: U/W is prepared to sell/act as principal for shares that remain unsold from preemptive rights offering or another secondary offering Orders that ARE reduced by the specialist on the ex-dividend date: Correct Answer: *all orders placed BELOW the market are adjusted downward on the ex-div date by dividend amount*: -buy limits, sell stops, sell stop limits Orders that are NOT reduced by the specialist on the ex-dividend date: Correct Answer: -sell limits, buy stops, buy stop limits are NOT adjusted on the ex-dividend date Fill-or-fill order Correct Answer: order to buy an exact number of shares in one trade IMMEDIATELY and to cancel if it cannot be filled entirely in one attempt Level 1 Nasdaq Correct Answer: used by individual investors and shows the highest bid/lowest offer (aka the "inside market") OTC Pink/OTCBB Correct Answer: -give working quotes for market makers; to affect a transaction, the investor must contact the market maker to obtain the FIRM quote -non-exchange equity quote facility -highly illiquid OTC stocks (penny stocks) "Transfer and Ship" Correct Answer: rep instructs the margin department to transfer ownership into the customer's name and deliver to the customer directly Research Report Correct Answer: -communication that includes an analysis of equity securities of individual companies/industries -provides information reasonably sufficient upon which an investment decision can be made "Good Delivery Form" of stock certificates Correct Answer: the certificates must be accompanied by: -an assignment or -a stock power endorsed signature by the owner of the certificates -in denominations that can be added into round lots (100 shares) Municipal bonds trade _______. Correct Answer: regular way = T+3, but do NOT include the settlement date in number of days SMA= Correct Answer: (equity) - (new Reg-T requirement) Stock index call option Correct Answer: The buyer receives the cash that is equal to the strike price and current market value * 100 The Bond Buyer Correct Answer: -25 Revenue Bond Index -20 GO Bond Index -Municipal Bond Index Classical Economic Theory Correct Answer: leave the economy alone Economic Depression Correct Answer: severe downturn in the economy (lasting 18+ months), with unemployment rates greater than 15%