Industry Essentials Exam With Correct Answers

Reinvestment Risk {Ans: the risk that a fixed-income investor will not be able to reinvest interest payments or the par value at attractive interest rates. Happens when rates are falling (type of systematic risk)}stock warrant {Ans: grants owner the right to purchase securities from the issuer at a specified price, normally higher than the current market price at the time the warrants are issued}Federal Reserve affects money supply through: {Ans: -open-market operations -changes in the discount rate -changes in reserve requirements}primary market {Ans: market for selling financial assets that can only be redeemed by the original holder}trade confirmation {Ans: printed document that confirms a trade, its settlement date and the amount of money due from or owed to the customer}Keynesian economics {Ans: -active government involvement is vital -government affects levels of spending and saving by taxes -demand for goods drives employment and prices}