Series 6
Terms
- 12B-1
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quarterly charges
reviewed annually
implementation requires approval from majority of o/s shares, full board, & non-interest board members
cover advertising, sales lit, prospectus delivery (NOT fund mgt expenses)
max 12b-1 i
- American Depository Receipt
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subject to currency risk
bought/sold/divs paid in USD
no voting rights
still registered with SEC
- Authorized Stock
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Specific # of shares a corp will issue; receives authorization from states as part of its original charter
unissued authorized stock is not included in corps total capitalization, doesn't carry privileges of issued shares
- Bearish options
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selling/writing (short) calls
Buying (long) puts
- Bonds that pay interest semi-annually
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municipal revenue bonds
municipal GOs
IDRs
T-notes
T-bonds
HH Bonds
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Breakpoint sale
- NASD violation; when a broker allows/facilitates purchase of MF shares at just below the breakpoint where investor would've received reduced sales load
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Broker call loan rate
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interest rate banks charge b/ds on money they borrow to lend to margin acct customers
- Bullish options
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buying (long) calls
Selling/writing (short) put
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CMOs (collateralized Mortgage Obligations)
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Mortgage-backed securities
Pool of Mortgages structured into maturity classes called tranches
Primary risk is that of refinancing of mortgages
higher yield than T-securities
Interest, principal paid monthly
Taxable on all
- Debentures
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Unsecured corporate bonds
backed by general credit of issuing corp
subordinated - lower claim to assets at co. liquidation; higher income; aka high income/yield, junk bonds
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Declaration date
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set by board of directors
date dividend is declared
must be at least 10 business days before record date for notification to NASD purposes
- Deferred annuities
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can be purchased with a single lump sum or periodic payments
tax deferral benefits on growth for periodic payments
Benefits paid at a later date, at time of annuitization
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Discount Rate
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Interest Rate Fed charges its member banks for short term loans;
lower rate reduces cost of money to banks, increasing demand for loans
- ex-dividend date
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based on dividend record date
two days before record date
customer must purchase stock 3 days before record date to qualify for dividend
set by board of directors for MFs, by the NASD for stocks/closed-end funds
NAV/price drops
- Fed Funds Rate
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Rate banks charge each other for overnight loans exceeding $1mil.
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GNMAs
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backed by full faith/credit of govt
pay higher rates than comparable treasuries
low-risk; risk is that of interest rate changes
minimum denom of $25K
taxable at all levels
monthly interest/divs
- Immediate annuity
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Lump sum payment only
payments usually begin within 60 days
-
Industrial Development Revenue Bonds
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Issued by municipality to construct facilities/purchase equipment to be leased to a corp.
lease payments used to pay interest/principal on bonds
bonds carry the corps debt raiting
usually taxable
-
Investment Co Act of 1940
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requires MFs maintain a 3:1 asset:debt ratio
requires at least 40% of fund boar/directors be non-interested persons
fund must have at least 100 s/h
must have commitment for at least $100K in assets -
Issued stock
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stock that can be distributed to investors for purpose of raising capital, paying stock dividend, exchanging common stock for o/s convertible bonds/preferred stock, satisfying exercise of o/s warrants
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MF Expense Ratio calc
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expenses/average net assets
- Money Market Instruments
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T-Bills (2ndry market, not newly issued)
FNMA short term discount notes
banker's acceptances
commercial paper
negotiable CDs
-
Outstanding stock
-
issued, non-treasury stock
included common and preferred stock
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Participating preferred stock
- Receive an additional dividend consisting of profits that remain after all other dividends/interest to other securities have been paid, on top of they already get
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Payable date
- date the div check is sent to stockholders/shareowners
- POP calcuation
- NAV/100%-sales charge percent
- Prime Rate
- Rates banks charge their best clients
- Record date
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Date the dividend posts
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Series EE Bonds
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cannot be traded
bought at a discount, redeeming at face value at maturity; less if before maturity
pay federal taxes only
can be taxed annually or at time of redemption
-
Series HH Bonds
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cannot be traded
bought/redeemed at face value at maturity
pay federal taxes only
can be taxed annually or at time of redemption
- T-Bills
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Fastest maturity
mature in 4-, 13- or 26 weeks
issued at a discount from par
no cash interest payments
denoms from $1k to $1mil
- T-Bonds
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Semiannual interest
mature in 10 - 30 yrs
may be callable
- T-Notes
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Pay interest semiannually
denoms from $1k to $1mil
mature in 1 to 10 yrs
priced/traded in 1/32 of a percent of par
- Total Return on an investment calculation
-
gain/loss + dividend
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Treasury stock
- stock that's been issued and subsequently repurchased from the public. Can be held indefinitely, reissued or retired. no voting or dividend rights
- UIT
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not actively managed, no trading w/in portfolio
defined under investment company act of 1940
traded in primary market only
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Variable Life Insurance (VLI)
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premium invested in separate acct, not Co's general acct, providing inflation protection
minimum guaranteed death benefit
minimum of 75% available for loan after 3 yrs
if loan exceeds policy cash value, holder has 31 to make up di
- Zero coupon bond
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No interest payment
Issued at discount from face value
Still taxable
Volatile; prices fluctuate greatly
Duration = maturity