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Investing FAQs

  1. What is the difference between investing and speculating?

  2. What is moral hazard?

  3. Under the Investment Company Act of 1940, an investment company must have minimum net assets of how much before it can issue shares to the public?

  4. Under the Investment Company Act of 1940, an investment company, or mutual fund company, must have minimum net assets of how much before it can issue shares to the public?

  5. Which statement(s) is/are FALSE about market risk?

  6. What is the difference between yields and interest rates?

  7. What does churning mean?

  8. What is an absolute rate?

  9. What burst the Mississippi bubble?

  10. Can I still make money with a couch-potato portfolio?

  11. Is there short selling in China?

  12. Which statement is FALSE about a prospectus issued under the Securities Act of 1933?

  13. When and why did the euro make its debut as a currency?

  14. What is the performance cult?

  15. What's the difference between EBITDA, EBITDAR and EBITDARM?

  16. All of the following statements about convertible bonds are FALSE EXCEPT:

  17. An investor is in the 36% tax bracket and holds municipal bonds with an 8% yield-to-maturity. What is the equivalent taxable yield?

  18. Which day is known as China's "Black Tuesday" and why?

  19. Compute the offering price for a mutual fund with NAV of $1,200,000,000, an 8% front-end load, and 1,000,000 shares outstanding.

  20. Why is Frank Quattrone credited with contributing to the growth of the dotcom bubble?

  21. What is financial double-dipping?

  22. What is the difference between a gilt edged bond and a regular bond?

  23. What is the difference between exchange-traded funds and mutual funds?

  24. What currency is affected by the interest rate decisions of the Bank of England (BoE)?

  25. Which of the following BEST describes the requirements for advertisements of new municipal securities issues?

  26. How did Peter Young gain infamy as a "rogue trader"?

  27. How do companies like Moody's rate bonds?

  28. What is a Chinese hedge?

  29. What is "hot money"?

  30. How do I use a barbell strategy?

  31. How do I use a premium put convertible?

  32. How did derivatives trader Nick Leeson contribute to the fall of Barings Bank?

  33. What is a wild-card play?

  34. How did currency trader John Rusnak hide $691 million in losses before being caught for bank fraud?

  35. What does "in street name" mean, and why are securities held this way?

  36. What is the incentive to buy a stock without dividends?

  37. What is the difference between a global fund and an international fund?

  38. What are soft dollars?

  39. What is the difference between yield and return?

  40. Can a stop-loss order be used to protect a short sale transaction?

  41. What does the law say about non-U.S. citizens buying stocks of U.S. companies? Are there any restrictions?

  42. How is the value of the S&P 500 calculated?

  43. Where does the stock come from when convertible bonds are converted to stock?

  44. Why are big foreign companies considering delisting their American depositary receipts?

  45. Are ETFs subject to the short sale uptick rule?

  46. What does CHIPS UID mean?

  47. I would like to invest in a dividend-paying stock. How can I find out which stocks pay dividends?

  48. When my mutual fund declares an income distribution, the fund price falls by a similar amount. How does this distribution benefit me?

  49. I have a KSOP through my employer that I've invested 100% in company stock. I am now concerned that I'm not diversified and would like to move out of company stock and into mutual funds. Is this allowed with the funds I've contributed to the account?

  50. How does pyramiding work?

  51. What does investment grade mean?

  52. What is accrued interest, and why do I have to pay it when I buy a bond?

  53. What is the difference between a blend fund and a balanced fund?

  54. What is a DRIP?

  55. How do stock splits affect short sellers?

  56. Stocks with high P/E ratios can be overpriced. Is a stock with a lower P/E always a better investment than a stock with a higher one?

  57. Do convertible bonds have voting rights?

  58. How many types of markets can an investor choose from?

  59. Do noise traders have any long-term effect on stock prices?

  60. Why would a multinational corporation conduct a vertical foreign direct investment?

  61. Are mutual fund performance numbers reported net of fees (operating expenses and 12b-1)?

  62. At what point in the ordering process does a broker charge commission?

  63. What are the oldest mutual funds, by date of inception?

  64. Can I match a fund to my religion?

  65. How can I buy oil as an investment?

  66. What is the difference between preferred stock and common stock?

  67. What is a stripped bond?

  68. What does "buy and hold" mean?

  69. Why can you short sell an ETF but not an index fund?

  70. What's the difference between absolute P/E ratio and relative P/E ratio?

  71. How can you lose more money than you invest shorting a stock? If you have no money left in your account, how do you pay it back?

  72. What is the difference between convertible and reverse convertible bonds?

  73. What does 'froth' mean in terms of the real estate market?

  74. If different bond markets use different day-count conventions, how do I know which one is used in any particular market?

  75. What is the difference between municipal bonds and standard money market funds?

  76. How do you calculate the cost basis for a mutual fund over an extended time period?

  77. Can I sell mutual fund shares below their minimum intial purchase amount without being penalized?

  78. How is margin interest calculated?

  79. What is Black Monday?

  80. What is an echo bubble?

  81. What's the difference between a load and no-load mutual fund?

  82. What happens if I maintain a short position in a stock that is delisted and declares bankruptcy?

  83. What's the difference between a stop and a limit order?

  84. A corporate bond I own has just been called by the issuer. How can a company legally take away my bond? How do these call provisions work?

  85. Why do you need a margin account to short sell stocks?

  86. Short selling vs. purchasing a put option: how do the payoffs differ?

  87. What are the components of the risk premium for investments?

  88. I am a non-U.S. citizen living outside the U.S. and trading stocks through a U.S. internet broker. Do I have to pay taxes on the money I earn?

  89. How does the required rate of return affect the price of a stock, in terms of the Gordon growth model?

  90. How do businesses decide whether to do FDI via green field investments or acquisitions?

  91. Where can I find the number of shares shorted on a specific stock?

  92. What careers are popular among CFA charterholders?

  93. What is a trailing commission?

  94. What is hedging as it relates to forex trading?

  95. Can private corporations issue convertible bonds?

  96. What's the difference between a mutual fund and a hedge fund?

  97. What are the advantages and disadvantages of buying stocks instead of bonds?

  98. How do you find out the price of a mutual fund?

  99. Can a stock lose all its value? How would this affect a long or short position?

  100. I have discovered that a bond I am interested in has a sinking fund. What does this mean?

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