Series 65 Brian Lee
yield curve - correct answer ✔✔longer term bonds have higher yields than shorter term bonds
balance sheets - correct answer ✔✔Assets= liabilities + shareholders equity
current ratios - correct answer ✔✔current assets divided by current liabilities
Quick Ratio (Acid Test) - correct answer ✔✔(Current Assets - Inventories) / Current Liabilities
beta - correct answer ✔✔A measure of a stock's volatility compared to changes in the overall stock
market.
alpha - correct answer ✔✔(actual return − risk-free rate) - (beta × [market return − risk-freerate])
mean - correct answer ✔✔add up all the #'s and divide by the # of #'s
median - correct answer ✔✔middle
mode - correct answer ✔✔occurs most often
range - correct answer ✔✔Distance between highest and lowest #'s
correlation - correct answer ✔✔how two different investments react at the same time
negative correlation - correct answer ✔✔when one stock goes up the other goes down
systematic risk - correct answer ✔✔market risk, interest rate risk, currency risk
,unsystematic risk - correct answer ✔✔business risk, regulatory risk, political risk
record date - correct answer ✔✔must be share holder on or before to receive dividend
Coupon/Nominal rate - correct answer ✔✔The interest the investor receives for lending money to
corporation. Tells us how much income is received
Interest rate - correct answer ✔✔the risk for bonds
If investor buys bond at discount what does this do to their income - correct answer ✔✔Has NO EFFECT
on income, income is FIXED
Yield - correct answer ✔✔return on investment
buying bond at a discount - correct answer ✔✔investors yield will be greater
Current Yield - correct answer ✔✔annual income divided by current market value (current price)
IF you buy bond at premium - correct answer ✔✔Current Yield, Yield to Maturity, & Yield to Call will all
be lower than coupon rate
IF you buy bond at discount - correct answer ✔✔Current Yield, Yield to Maturity, & Yield to Call will all
be higher than coupon rate
Long term Bonds vs Short Term Bonds - correct answer ✔✔long term are more volatile than short term
Bonds with same maturity - correct answer ✔✔If bonds have same maturity one with lowest coupon
rate is more volatile
, zero coupon bond - correct answer ✔✔Do NOT pay income (hold till maturity); these bonds are the
MOST volatile
bond ratings - correct answer ✔✔if it starts with letter B has to have three letters to be investment
grade; if it starts with B and has 2 it is junk bond
preferred stock - correct answer ✔✔pays fixed income & interest rate sensitive
current market price - correct answer ✔✔Does NOT determine how much income bond receives
top down method - correct answer ✔✔first look at economic factors, then industry, then company
bottom up method - correct answer ✔✔first look at company then industry then economic factors
Risk for bonds - correct answer ✔✔ALL have reinvestment risk and interest rate risk
Treasury Inflation-Protected Securities (TIPS) - correct answer ✔✔security that is adjusted based on CPI
(consumer price index(inflation)). Adjusted semiannually; principal adjusted also
Yankee Bonds - correct answer ✔✔Foreign issued bonds to raise capital but paid in US dollars
Brady Bonds - correct answer ✔✔U.S. issued foreign debt
Municipal bonds/securities - correct answer ✔✔interest on these bonds are federally EXEMPT; no fed
taxes on income, no state income tax. ONLY suitable for HIGH tax bracket
Capital Gains - correct answer ✔✔NEVER an exemption
Tax Equivalent Yield/ Tax Free (corporation) Yield - correct answer ✔✔Municipal yield ➗ 100% - tax
bracket
yield curve - correct answer ✔✔longer term bonds have higher yields than shorter term bonds
balance sheets - correct answer ✔✔Assets= liabilities + shareholders equity
current ratios - correct answer ✔✔current assets divided by current liabilities
Quick Ratio (Acid Test) - correct answer ✔✔(Current Assets - Inventories) / Current Liabilities
beta - correct answer ✔✔A measure of a stock's volatility compared to changes in the overall stock
market.
alpha - correct answer ✔✔(actual return − risk-free rate) - (beta × [market return − risk-freerate])
mean - correct answer ✔✔add up all the #'s and divide by the # of #'s
median - correct answer ✔✔middle
mode - correct answer ✔✔occurs most often
range - correct answer ✔✔Distance between highest and lowest #'s
correlation - correct answer ✔✔how two different investments react at the same time
negative correlation - correct answer ✔✔when one stock goes up the other goes down
systematic risk - correct answer ✔✔market risk, interest rate risk, currency risk
,unsystematic risk - correct answer ✔✔business risk, regulatory risk, political risk
record date - correct answer ✔✔must be share holder on or before to receive dividend
Coupon/Nominal rate - correct answer ✔✔The interest the investor receives for lending money to
corporation. Tells us how much income is received
Interest rate - correct answer ✔✔the risk for bonds
If investor buys bond at discount what does this do to their income - correct answer ✔✔Has NO EFFECT
on income, income is FIXED
Yield - correct answer ✔✔return on investment
buying bond at a discount - correct answer ✔✔investors yield will be greater
Current Yield - correct answer ✔✔annual income divided by current market value (current price)
IF you buy bond at premium - correct answer ✔✔Current Yield, Yield to Maturity, & Yield to Call will all
be lower than coupon rate
IF you buy bond at discount - correct answer ✔✔Current Yield, Yield to Maturity, & Yield to Call will all
be higher than coupon rate
Long term Bonds vs Short Term Bonds - correct answer ✔✔long term are more volatile than short term
Bonds with same maturity - correct answer ✔✔If bonds have same maturity one with lowest coupon
rate is more volatile
, zero coupon bond - correct answer ✔✔Do NOT pay income (hold till maturity); these bonds are the
MOST volatile
bond ratings - correct answer ✔✔if it starts with letter B has to have three letters to be investment
grade; if it starts with B and has 2 it is junk bond
preferred stock - correct answer ✔✔pays fixed income & interest rate sensitive
current market price - correct answer ✔✔Does NOT determine how much income bond receives
top down method - correct answer ✔✔first look at economic factors, then industry, then company
bottom up method - correct answer ✔✔first look at company then industry then economic factors
Risk for bonds - correct answer ✔✔ALL have reinvestment risk and interest rate risk
Treasury Inflation-Protected Securities (TIPS) - correct answer ✔✔security that is adjusted based on CPI
(consumer price index(inflation)). Adjusted semiannually; principal adjusted also
Yankee Bonds - correct answer ✔✔Foreign issued bonds to raise capital but paid in US dollars
Brady Bonds - correct answer ✔✔U.S. issued foreign debt
Municipal bonds/securities - correct answer ✔✔interest on these bonds are federally EXEMPT; no fed
taxes on income, no state income tax. ONLY suitable for HIGH tax bracket
Capital Gains - correct answer ✔✔NEVER an exemption
Tax Equivalent Yield/ Tax Free (corporation) Yield - correct answer ✔✔Municipal yield ➗ 100% - tax
bracket
