Series 66 flashcards
Series 66 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Real GDP
- Inflation-adjusted value of all final goods and services produced in a country over a period, used to measure true economic growth.
- Leading indicators
- Statistics such as building permits, average weekly jobless claims, and stock prices that typically turn before the overall economy, used to forecast turning points.
- Inverted yield curve
- A yield curve in which short-term interest rates exceed long-term rates; often treated as a recession signal reflecting tight credit and expectations of falling rates.
- Open market operations
- The Federal Reserve's buying or selling of government securities to expand or contract bank reserves and thereby influence short-term interest rates.
- Core CPI
- The Consumer Price Index excluding food and energy prices, used to track underlying inflation trends that are less distorted by volatile components.
- Current ratio
- Current assets divided by current liabilities; it measures a company's ability to meet obligations due within one year.
- Duration
- A measure of a bond's price sensitivity to interest rate changes expressed in years; duration of 5 implies roughly a 5% price move per 1% rate change.
- Fiscal policy
- Government use of taxation and spending decisions to influence aggregate demand, employment, and the pace of economic growth.
- Yield to maturity
- The total return on a bond held to maturity, assuming all coupon payments are reinvested at the same rate; it reflects coupon, price, and time.
- Zero-coupon bond
- A bond that pays no periodic interest, is sold at a deep discount, and matures at face value; its duration equals its time to maturity.
- TIPS
- Treasury Inflation-Protected Securities whose principal is adjusted for changes in the CPI, with semiannual interest paid on the adjusted principal.
- Revenue bond
- A municipal bond repaid solely from revenues of a specific project or facility, such as a toll road, rather than from general tax revenue.
- Preferred stock
- An equity class with a stated dividend, priority over common stock for dividends and liquidation, and often callable or convertible provisions.
- 12b-1 fee
- An annual mutual fund charge for distribution and marketing expenses, deducted from fund assets and disclosed in the fund's prospectus.
- Closed-end fund
- A fund that issues a fixed number of shares that trade on an exchange, frequently at a premium or discount to net asset value.
- Variable annuity
- An annuity contract whose payments vary with performance of underlying subaccounts, providing tax deferral and optional living or death benefits.
- Beta
- A measure of a security's volatility relative to the overall market; a beta of 1.5 suggests price swings 50% larger than the market's.
- Sharpe ratio
- Portfolio return minus the risk-free rate, divided by the portfolio's standard deviation; higher values indicate better risk-adjusted performance.
- Alpha
- The portion of return not explained by market movement or beta; positive alpha indicates outperformance relative to a risk-adjusted benchmark.
- Systematic risk
- Market-wide risk from factors such as interest rates, inflation, and recessions that cannot be eliminated by diversifying within an asset class.
- Dollar-cost averaging
- Investing a fixed dollar amount at regular intervals, which purchases more shares when prices are low and fewer when prices are high.
- Rebalancing
- Periodically returning portfolio holdings to target allocation weights, which typically means selling relative winners and buying relative laggards.
- Wash sale rule
- A tax rule disallowing a loss deduction when a substantially identical security is purchased within 30 days before or after the sale.
- 529 plan
- A state-sponsored education savings plan offering tax-deferred growth and tax-free withdrawals when funds pay for qualified education expenses.
- Securities Act of 1933
- Federal law requiring registration of new securities offerings and delivery of a prospectus, emphasizing full and fair disclosure to investors.
- Securities Exchange Act of 1934
- Federal law that created the SEC and governs secondary market trading, periodic issuer reporting, and registration of broker-dealers.
- Form ADV
- An investment adviser's registration document; Part 2 is the brochure describing fees, conflicts of interest, and business practices.
- Churning
- Excessive trading in a client account primarily to generate commissions, a prohibited practice and a breach of fiduciary or suitability obligations.
- Rule 10b-5
- An antifraud provision prohibiting material misstatements or omissions and insider trading in connection with the purchase or sale of securities.
- Pay-to-play rule
- A rule restricting investment advisers from accepting compensation from government entities after making political contributions to certain officials.
- Custody rule
- A requirement that advisers holding client assets use qualified custodians and undergo surprise examinations or send audited account statements.
- Fiduciary duty
- The obligation to act in a client's best interest, comprising duties of loyalty and care, owed by investment advisers to their clients.