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Financial Mgmt

Series 7

Computing Equity in Margin Accounts Current Market Value - Debit Balance = Equity
NYSE Minimum Maintenance Requirement Current Market Value x .25 = NYSE Min Req
(OP) Offering Price (NAV) Net Asset Value / (100% - SL) NAV and BID are SAME!!
Sales Load % (OP-NAV) / OP
Calculating Parity Price Step 1: Par Value / Conversion Px = Common Shares Produced Step 2: Market Px of Bond or Preferred Stock / Common Shares Produced
Credit Spreads Max profit is n Net Credit in the premiums, if options expire Max Loss is the difference between the two strike prices, less the net credit in the premiums Credit Spreads must NARROW and/or expire to be profitable
Call/Put Options Buy Call = Buy Stock Sell Call = Sell Stock Buy Put = Sell Stock Sell Put = Sell Stock
Accrued Interest (Bonds) Principal x Rate x Time / 360
Convertible Bonds Par Value / Conversion Px
Dividend Payout Ratio Dividends Per Share / Earnings Per Share
In The Money Call UP Put DOWN Call in the money = Market Px above strike px Put in the money = Market Px below strike Px
Reasons a company repurchases its own stock (Treasury Stock) Increase Earnings Per Share Finance Future Acquisition (Takeovers) Provide stock for employee stock option plans Fight a Takeover
Outstanding Stock Issued Stock - Treasury Stock
Hedging Option Positions Long Puts Protect or hedge Long stock positions Long Calls protect or hedge Short stock positions Investors generally Do Not Sell options to hedge
Current Yield (Bonds Annual Interest / Market Price
Current Yield (Common Stock) Annual Dividend /Market Px
Asset Distribution Taxes Secured Debt Unsecured Debt Preferred Stock Common Stock
Low Quality Bond High Yield Low Market Px
High Quality Bond Low Yield High Market Px
Calculating Equity Market Value long - Debit Balance + Credit Balance - Short Market Value = Equity
Subscription Rights Outstanding Shares / New Shares
Conversion Px Par Value / Common Shares Produced
Debit Spread Max Loss potential is the net debit in the premiums Max Profit is the difference between the two strike prices less the net debit Debit Spreads must WIDEN by more than the net debit to be profitable
Debit Balance Chart DB < Half Market Value = Excess Equity DB > Half Market Value = Restricted DB = Half Market Value = at Reg-T
Margin Acc't Short Initial Requirements $0-$5 = $2.50 per share OR $2000, whichever is GREATER $5-$17 = $5.00 per share $17 and Over = Reg-T 50%
Short Margin Equity Formula Proceeds of Short Sale + Reg T Deposit = Credit Balance - Current Market Value Short = Equity
Closed End Funds Net Asset Value Per Share is Greater then the Offering Px
Open End Funds Net Asset Value Per Share is Less than the Offering Px
Net Revenue Pledge (Revenue Bond) Operation and Maintenance Fund Bond Service Account Debt Service Reserve Surplus/General Fund
Reasons for Refunding Bonds To Lower Interest Rates To Change the maturity or Amortization schedule To liberalize the bonds indenture provisions
Corporate Equivalent Yield Muni Yield / (100% - Investors Tax Rate) = Taxable Equivalent Yield
Allocation Procedures Among Underwriters 1. Pre Sale Orders 2. Group Net Account/Syndicate Group Account 3. Designated Orders 4. Members Orders Takedown
Holder of Unregistered Securities may make a public sale Sales in an 90 day period are limited to either 1% of the outstanding stock or the average trading volume for the previous 4 weeks. Whichever is greater. Form 144 Notice of Offering is effective for 90 days. BE SURE TO ONLY INCLUDE THE MOST RECENT 4WK
Order of Brokerage Operations (WPMC) Wire room order Purchase and sale department Margin department Cashiers department
Open Market Operations FED........Banks.......Public Buy........$ IN........IR Up Sell.......$ Out.......IR Down
Order of Claims Upon Partnership Dissolution 1. Creditors- secured then general 2. Limited Ptnrs- profit claims then capital 3. General Ptnrs- profit then capital
4 Types of Oil & Drilling Programs 1. Exploratory- wildcatting. great risk/reward 2. Developmental- areas w/proven reserves 3. Balanced- Both exploraroty & Developmental 4. Oil & Gas Income Program- buy properties already producing oil
Created by: Jnbk