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Exam 4 (end of 14, 15, 16) - Flashcards

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Class:FIN 3325 - PERSONAL FIN MGMT
Subject:Finance
University:Texas State University - San Marcos
Term:Fall 2011
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capital gain distributions the payment made to a funds shareholders that result from the sale of securities in the fund portfolio.
income dividends the earnings a fund pays to shareholders from its dividend and interest income.
reinvestment plan a service provided by an investment company in which income dividends and capital gain distributions are automatically reinvested to purchase additional shares of the fund.
bond indenture a legal document that details all of the conditions relating to a bond issue.
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maturity date
for a corporate bond, the date on which the corporation is to repay the borrowed money.

 the final payment date of a loan or other financial instrument, at which point the is due to be paid.

face value the dollar amount the bondholder will receive at the bonds maturity. 
corporate bond
a corporations pledge to repay a specified amount of money with interest.

a bond issued by a corporation.
selling short
selling stock that has been borrowed from a brokerage firm and must be replaced at a later date.

the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to that third party.
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selling short
selling stock that has been borrowed from a brokerage firm and must be replaced at a later date.

 the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to that third party.
limit order a request to buy or sell a stock at a specified price.

"if the stock drops X amount, sell it"
market order a request to buy or sell stock at the current market value-- most common
turnover ratio the percentage of fund's holdings that have changed or "been replaced" during a 12 month period.
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convertible bond a bond that can be exchanged , at the owner's option, for a specified number of share of the corporations common stock

a type of bond that the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price.
high yield bonds corporate bonds that pay higher interest, but also have a higher risk of default. 

a bond that is rated below investment grade at the time of purchase.
call features a feature that allows the corporation to call in or buy outstanding bonds from current bondholders before the maturity date
sinking fund a fund to which annual deposits are made for the purpose of redeeming a bond issue.

a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity.

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registered bond a bond that is registered in the owners name by the issuing company
registered coupon bond a bond registered for principal only and not for interest 
bearer bond a bond that isn't registered in the investors name

a debt security issued by a business entity, such as a corporation, or by a government.
stop order an order to sell a particular stock at the next available  opportunity after it market price reaches a specified amount

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day trader an individual who buys and the later sells stocks and other securities in a very short period of time

trustee a financially independent firm that acts as the bondholders represents 
debenture a bond that is backed only by the reputation of the issuing corporation

 a document that either creates a debt or acknowledges it.
mortgage bond a corporate bond secured by various assets of the issuing firm

a bond backed by a pool of mortgages on a real estate asset such as a house.
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subordinate debenture an unsecured bod that gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments, repayments, and assets
zero coupon bond a bond that is sold at a price far below its face value, makes no annual or semi annual interest payments and is redeemed for its face value at maturity.

a bond bought at a price lower than its face value, with the face value repaid at the time of maturity.
12 b 1 fee distribution fee a fee that an investment company levies to defray the costs of distributions and marketing a mutual fun and commissions paid to a broker who sold you shares in the mutual fund. 
expense ratio all the different management fees, if any, and additional fund operating costs for a specific mutual fund 
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family of funds a group of mutual funds managed by one investment company 
bond ladder a strategy where investors divide their investment dollars among bonds that mature at regular intervals in order to balance risk and return. 
municipal bond a debt security issued by a state or local government

a bond issued by a city or other local government, or their agencies.
general obligation a bond backed by the full faith, credit, and unlimited taking power of the government that issued it.  

 a common type of municipal bond in the United States that is secured by a state or local government's pledge to use legally available resources, including tax revenues, to repay bond holders.
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revenue bond a bond that is repaid from the income generated by the project it is designed to finance.

a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax.
taxable equivalent yield tax exempt yield 
1.0 - tax rate
yield
the rate of return earned by an investor who holds a bond for a stated period of time.

 the amount in cash that returns to the owners of a security.
current yield annual income amount (divided by) current market value
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yield to maturity dollar amt of annual interest + face value - market value
                                                       # of periods               
                         market value + face value
                                             2

[formula]
closed end fund a fund whose shares are issued by an investment company only when the fund is organized.

a collective investment scheme with a limited number of shares.
exchange traded fund [ETF] a fund that generally invests in the stocks or other securities contained in a specific stock or securities index
open end fund a mutual fund whose shares are issued and redeemed by the investment company out the request of investors. 
collective investment scheme which can issue and redeem shares at any time.
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net asset value value of portfolio - liabilities 
# of shares outstanding

 [formula]
 a term used to describe the value of an entity's assets the value of its liabilities.
load fund a mutual fund in which investors pay a commission (as high as 8.5%) every time they purchase shares 

no load fund a mutual fund in which the individual investor pays no sales charge.

contingent deferred sales load a 1 to 5 percent charge that share holders pay when they withdraw their investment from a mutual fund.
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 capital gain distributionsthe payment made to a funds shareholders that result from the sale of securities in the fund portfolio.
 income dividendsthe earnings a fund pays to shareholders from its dividend and interest income.
 reinvestment plana service provided by an investment company in which income dividends and capital gain distributions are automatically reinvested to purchase additional shares of the fund.
 bond indenturea legal document that details all of the conditions relating to a bond issue.
 maturity date
for a corporate bond, the date on which the corporation is to repay the borrowed money.

 the final payment date of a loan or other financial instrument, at which point the is due to be paid.

 face valuethe dollar amount the bondholder will receive at the bonds maturity. 
 corporate bond
a corporations pledge to repay a specified amount of money with interest.

a bond issued by a corporation.
 selling short
selling stock that has been borrowed from a brokerage firm and must be replaced at a later date.

the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to that third party.
 selling short
selling stock that has been borrowed from a brokerage firm and must be replaced at a later date.

 the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to that third party.
 limit ordera request to buy or sell a stock at a specified price.

"if the stock drops X amount, sell it"
 market ordera request to buy or sell stock at the current market value-- most common
 turnover ratiothe percentage of fund's holdings that have changed or "been replaced" during a 12 month period.
 convertible bonda bond that can be exchanged , at the owner's option, for a specified number of share of the corporations common stock

a type of bond that the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price.
 high yield bondscorporate bonds that pay higher interest, but also have a higher risk of default. 

a bond that is rated below investment grade at the time of purchase.
 call featuresa feature that allows the corporation to call in or buy outstanding bonds from current bondholders before the maturity date
 sinking funda fund to which annual deposits are made for the purpose of redeeming a bond issue.

a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity.

 registered bonda bond that is registered in the owners name by the issuing company
 registered coupon bonda bond registered for principal only and not for interest 
 bearer bonda bond that isn't registered in the investors name

a debt security issued by a business entity, such as a corporation, or by a government.
 stop orderan order to sell a particular stock at the next available  opportunity after it market price reaches a specified amount

 day traderan individual who buys and the later sells stocks and other securities in a very short period of time

 trusteea financially independent firm that acts as the bondholders represents 
 debenturea bond that is backed only by the reputation of the issuing corporation

 a document that either creates a debt or acknowledges it.
 mortgage bonda corporate bond secured by various assets of the issuing firm

a bond backed by a pool of mortgages on a real estate asset such as a house.
 subordinate debenturean unsecured bod that gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments, repayments, and assets
 zero coupon bonda bond that is sold at a price far below its face value, makes no annual or semi annual interest payments and is redeemed for its face value at maturity.

a bond bought at a price lower than its face value, with the face value repaid at the time of maturity.
 12 b 1 fee distribution feea fee that an investment company levies to defray the costs of distributions and marketing a mutual fun and commissions paid to a broker who sold you shares in the mutual fund. 
 expense ratioall the different management fees, if any, and additional fund operating costs for a specific mutual fund 
 family of fundsa group of mutual funds managed by one investment company 
 bond laddera strategy where investors divide their investment dollars among bonds that mature at regular intervals in order to balance risk and return. 
 municipal bonda debt security issued by a state or local government

a bond issued by a city or other local government, or their agencies.
 general obligationa bond backed by the full faith, credit, and unlimited taking power of the government that issued it.  

 a common type of municipal bond in the United States that is secured by a state or local government's pledge to use legally available resources, including tax revenues, to repay bond holders.
 revenue bonda bond that is repaid from the income generated by the project it is designed to finance.

a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax.
 taxable equivalent yieldtax exempt yield 
1.0 - tax rate
 yield
the rate of return earned by an investor who holds a bond for a stated period of time.

 the amount in cash that returns to the owners of a security.
 current yieldannual income amount (divided by) current market value
 yield to maturitydollar amt of annual interest + face value - market value
                                                       # of periods               
                         market value + face value
                                             2

[formula]
 closed end funda fund whose shares are issued by an investment company only when the fund is organized.

a collective investment scheme with a limited number of shares.
 exchange traded fund [ETF]a fund that generally invests in the stocks or other securities contained in a specific stock or securities index
 open end funda mutual fund whose shares are issued and redeemed by the investment company out the request of investors. 
collective investment scheme which can issue and redeem shares at any time.
 net asset valuevalue of portfolio - liabilities 
# of shares outstanding

 [formula]
 a term used to describe the value of an entity's assets the value of its liabilities.
 load funda mutual fund in which investors pay a commission (as high as 8.5%) every time they purchase shares 

 no load funda mutual fund in which the individual investor pays no sales charge.

 contingent deferred sales loada 1 to 5 percent charge that share holders pay when they withdraw their investment from a mutual fund.
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