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Under IRS regulations, a gain or loss upon current disposition of an asset is first considered to be long term if the asset has been held for over:
1 years (1yr+ 1 day)
Gains on assets held over 12 months are taxed at a maximum rate of
15%. (Note that this rate is raised to 20% for individuals in the highest tax bracket.)
The Value Line Index consists of
1700 widely-followed companies, spread between NYSE, AMEX, and NASDAQ.
What accounting method is used for bookkeeping purposes by publicly traded companies?
The Interbank market is a
free wheeling, unregulated, worldwide currency trading market open 24 hours a day. It is completely unregulated, but is influenced by central bank trading. Central bank trading actions are directed by each country's government
net worth is also called
net working capital
current assets-current liabilities
The beta coefficient of a single stock measures that stock's price volatility as compared to the volatility of:
the market as measured by the S&P 500 Index
cash payments made to inbestors (except extremely high earners) from ____ are subhect to lower 15% maximum tax rate
common and preferred stocks
this rate is raised to 20% for high earners
Based solely upon fluctuations in foreign currency exchange rates, the net asset value per share, valued in U.S. dollars, of an "international" bond mutual fund, would increase if
the value of the U.S. dollar decreases and interest rates increase in foreign countries
A stock dividend is appropriated from
retained earnings (reducing retained earnings) and used to increase the number of common shares outstanding.
Par value per share remains the same, but since there are more shares outstanding, aggregate par values increases
no change in stockholder's equity
FOMC (Federal Open Market Committee)
actions nfluence the Fed Funds Rate.
if a portfolio isn't fully diversified it has
systemic and non systemic risk
A customer has $8,000 of capital losses and $3,000 of capital gains in a tax year. On that year's tax return, the investor has a(n):
3k cap loss deduction and
2k loss carryforward
Here, the customer has a net capital loss of $5,000 of which $3,000 can be deducted this year with the unused $2,000 loss carried forward to the next tax year.
The tax law allows capital gains and losses to be
netted each year. Net capital gains are fully taxable at the appropriate tax bracket. However, only $3,000 of net capital losses can be deducted in any year.
only $3,000 of net capital losses can be deducted in any year. Any losses above this amount can be
carried forward to the next tax year.
during long periods of encomic recession
interest rates can be expected to fall as the federal reserve becomes dovish and loosens credit
The loss is not "recognized" for tax purposes until the
securities are sold
A customer buys $23,000 of ABC stock in March of 20XX. On December 31, 20XX, the stock is valued at $20,000. The customer will be able to deduct how much on this year's tax return?
The largest component of the Standard and Poor's 500 Average is the:
a custom contract to make delivery of an underlying asset at a fixed price on a future date. Forward contracts are negotiated between 2 parties (typically big money center banks for contracts on currencies). They are not regulated.
what's false about interbank mkt
trades must settle on a forward contract basis
trades occur in large blocks
trades may settle on a spot contract basis
all trading takes place bw london opening and ny closing
all trades take place bw london opening and NY closing
Trading in the Interbank market will DIRECTLY affect all of the following EXCEPT:
ADR price in terms of US dollars
interbank trading will directly affect
future trade deficit or surplus
foreign currency prices in terms of USD
the "margin" is a profitability or loss
percentage. The Operating Margin of Profit is: Operating Income / Revenues.
contracts to buy or sell commodities at a pre-determined "future" date. Commodities and commodities (futures) options are not securities and are not regulated by the SEC; rather the CFTC - Commodities Futures Trading Commission - regulates the futures markets.
Since dividends are paid out of reported net income, they have
no effect on the amount of net income that the corporation reports.
If a corporation discontinues operations of a division,
it usually takes a charge to net income to pay for the cost of the shutdown.
If the number of common shares is increased,
reported net income per share will fall.
If a corporation changes accounting methods for valuing inventories,
any decrease in inventory value is taken as a charge to net income; while any increase in inventory value will increase reported net income.
If the U.S. dollar appreciates against foreign currencies, then U.S. goods become
more expensive to foreigners, while foreign goods become cheaper in the U.S. This should cause exports to decrease, and imports to increase. If the U.S. is running a trade deficit, the increase in net imports will widen the deficit.
The money supply level as measured by M-2 is a ____economic indicator,
since if the money supply is rising, there is easy credit, encouraging spending.
coincident economic indicators
leading economic indicators
building permits, initial unemployment claims, stock prices, durable goods order, and money supply lebels
shows were the economy was in the business cycle during the past 12 months
reported corporate profits, ratio of consumer credit to income levels and employment duration
if advances and highs outnumber declined and new lows then analysts would suspect a
Recommended textbook explanations
Principles of Economics
N. Gregory Mankiw
Krugman's Economics for AP*
David Anderson, Margaret Ray
Paul Krugman, Robin Wells
Essentials of Investments with S&P bind-in card (Irwin/McGraw-Hill Series in Finance)
Alan J. Marcus, Alex Kane, Zvi Bodie
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