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Series 65 Brian Lee Study Guide

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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...

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  • October 6, 2024
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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

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