Reinvestment risk Study guides, Class notes & Summaries

STRIPS may be attractive to investors for which of the following reasons? A. They offer semi-annual interest payments B. The securities are tax-free until they mature C. They carry almost no reinvestment risk D. They are offered at only a 20 year maturity which is a maturity that is not offered by traditional Treasury securities - Answer- C. They carry almost no reinvestment risk The Alternative Minimum Tax (AMT): A. Adds back in certain "tax preference items" that are deducted for...

Diversification - ANSWER-Acquiring assets with low or negative correlations to each other with the goal of lowering overall risk Correlation - ANSWER-- a relative measure of the degree to which the returns of two assets move together - range from +1.0 to -1.0 - in practice negative correlations are rare - the further a correlation is from +1.0, the more diversified Asset allocation - ANSWER-- the apportioning of available funds among a number of asset classes in a way that meets the ne...

Bond Indenture - Answer- Contract that specifies all the rights and obligations of the issuer and owners of a fixed income security. Negative Covenants - Answer- Prohibitions on the borrower. Affirmative Covenants - Answer- Actions that the borrower promises to perform. Maturity or Term to Maturity - Answer- Length of time until loan contract or agreement expires. Remaining life of bond. Par Value - Answer- Amount borrower promises to pay on or before maturity date. Coupon Rate - ...

AAMS Module 1-10 Quizzes - Questions and Answers (Complete Solutions) What are the major steps in the asset management process? 1. gather data 2. establish goals 3. analyze information 4. make and implement recommendations 5. monitor Stefan's business plan includes the following goal: "I will contact 50 prospective clients and document this activity in the CRM for tracking purposes." Which primary element of a good goal is missing? This goal is not time-framed. The acronym to remember for g...

Bond Indenture - Answer- Contract that specifies all the rights and obligations of the issuer and owners of a fixed income security. Negative Covenants - Answer- Prohibitions on the borrower. Affirmative Covenants - Answer- Actions that the borrower promises to perform. Maturity or Term to Maturity - Answer- Length of time until loan contract or agreement expires. Remaining life of bond. Par Value - Answer- Amount borrower promises to pay on or before maturity date. Coupon Rate - ...

May a brokerage firm place a temporary hold on a securities transaction? - Correct Answer-No, since this is beyond the scope of the SRO rules Which of the following is NOT included in a list of institutional investors? - Correct Answer-an accredited investor Included: a hedge fund, a public pension plan, an insurance company A registered representative has requested a loan from an immediate family member who is also a customer of the broker-dealer that employs the RR. Which of the followi...

Practice Test Series 65 Questions & Answers 2024 what is the equation for operating margin? - ANSWER-net profit / revenue what type of risk does beta calculate? - ANSWER-systematic risk, risk of a single security compared to the market as a whole what type of risk is eliminated if you always hold a bond until maturity? - ANSWER-interest rate risk can preferred stock ever be called back by a company? - ANSWER-yes do you have voting rights if you hold an ADR? - ANSWER-no what a...

Functional obsolescence - Answer- Refers to the loss in desirability of the style, layout or function of an element of a property over time Sales comparison - Answer- best indicator of value for existing properties highest and best use - Answer- the legal use for property that gives the greatest return in money and/or amenities external obsolescence - Answer- the loss in value of a property caused by factors outside the property itself principle of contribution - Answer- suggests the...

American Recovery and Reinvestment Act (ARRA) - ANSWER **Authorized INCENTIVE PAYMENTS to specific types of hospitals & healthcare professionals for adopting & using interoperable Health Information Technology and EHR's. The purposes of this act include the following: (1) To preserve/create jobs and promote economic recovery. (2) To assist those most impacted by the recession. (3) To provide investments needed to increase economic efficiency by spurring technological advances in science and he...

Fund JKL has a mean return of 8% and a standard deviation of 12, and its returns are evenly distributed. This would mean that 68% of the time its returns would fall between a. -4% and +20% b. +4% and +20% c. -8% and +8% d. -16% and +32% - correct answer a. -4% and +20% Assuming the market is currently returning 12% and the beta of your stock is .8. What percentage return can you expect on your stock? a. 2.4% b. 8.0% c. 9.6% d. 14.4% - correct answer c. 9.6% Jezebel o...