Customers wishing to minimize risk in common stock portfolio
largest % of the securities in the portfolio are affected differently by economic conditions
Largest % consists of leading stocks
What is not needed by a pension fund
not in need of tax exempt securities
CAPM
Capital Asset Pricing Model, a linear model that relates risk and return. Higher the risk, higher the return
Asset Allocation
the process of spreading your assets among several different types of investments to lessen risk
Duration
degree of sensitivity in a bonds price to small changed in interest rates and length of maturity of the bond
Higher the duration, the more volatile the price of the bond will be
Bond buyers should look for bonds with low duration
Passive Investment management
Buying and holding
low management fees
replicating or matching the holding of the index
What kind of risk do small cap companies have
Requires due diligence since there is liquidity risk
Efficient Market Hypothesis
the hypothesis that prices of securities fully reflect available information about securities. You cant beat the market. Always trade at their real value
Fundamental Analysis
Company specific
Management
earnings etc
Technical Analysis
Looking for patterns moves and trends in the market place
Odd Lot Theory
Theory that the ODD LOT investor who trades in less than 100-share quantities is usually wrong and that profits can be made by acting contrary to odd-lot trading patterns.
Advanced decline theory
concerned with the number of stocks that advance in relation to the number that declines
Good measure of strength of a bull or bear market
market sentiment
a judgement of the overall mood of the market, often found through the put/call ratio and option volatility
Market Momentum
measures the rate of acceleration of a price movement
Includes the degree of strength or weakness
Random Walk Theory
The theory that there are no predictable trends in securities prices that can be used to "get rich quick.
NYSE Composite Index
Tracks the price of all stocks on the NYSE. Common stock only
Dow Jones Industrial Average
a measure based on the prices of the stocks of 30 large companies, widely used as a barometer of the stock market's health
Dow Jones Composite Average (DJCA)
A market indicator composed of the 65 stocks that make up the Dow Jones Industrial, Transportation, and Utilities Averages. Related item(s): average; Dow Jones Industrial Average; Dow Jones Transportation Average; Dow Jones Utilities Average.
Value line average
The index represents 1,700 companies from the NYSE, AMEX, and the over-the-counter market; many individual investors use it because it more closely corresponds to the variety of stocks the average investor may have in his portfolio (equal-weighted index).
Standard and Poor's 500 Index
reports price movement of 500 stocks of large, publicly traded firms. Measures of average market performance
Wilshire
5000 stock Index
Alpha
measure of the extent to which a stocks price will react to new or events that relate to a particular company
Beta
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.
Program trading
a computer assisted trading strategy of buying or selling a large number of securities simultaneously. Does not consider Fundamental analysis
Dilution
decrease in the EPS resulting from additional shares being issued because of the issuance of a new issue or the exercise of options, warrants, or convertible stocks
Not be diluted by a stock split or a stock dividend
EPS may increase
tax loss carry forward
reduction of corporate income tax rates
retirement of outstanding bonds
Current ratio
current assets divided by current liabilities.
Standard is 2:1
Most accurately describes liquidity
P/E Ratio
Referred as the multiple at which the stock is selling
Ratio does not change when a stock split occurs
Of the choices listed, which would be considered to be the most appropriate investment choices for a Senior Investor?
U.S. Government Bonds
Deferred Variable Annuity
U.S. Savings Bond
Immediate Variable Annuity
[A] I & III
[B] I & IV
[C] II & III
[D] II &
B
FINRA regulations apply to communications with the public and advertising by broker/dealer firms. Of the following communications, which would be labeled as an advertisement and would have to abide by advertising regulations?
[A] A web log (blog) which ha
B
Control over who sees it
A registered representative suggests and then implements a strategy in a client's portfolio. This strategy involves the RR coming up with certain determinations in relation to an appropriate distribution of investments in the client's account and the main
C