Series 65 Brian Lee Study Guide
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
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
