Keentune

Securities Products curriculum

8 chapters
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174 concepts
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free
Everything the adaptive question bank can teach and test in Securities Products, from foundations through advanced practice. Work through it in order, or start practising and let the questions find your level.
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A free 18-minute primer — the mental model, the mistakes beginners make, and what to practise first.
A. Equity securities
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Voting, preemptive rights, residual claim, limited liability.
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Allocating votes under each method (computed family).
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Fixed dividend, priority over common, interest-rate sensitivity.
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Cumulative (dividends in arrears), participating, callable, convertible preferred.
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Term, exercise price vs market, and how each is issued — the classic pair.
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American Depositary Receipts: currency risk, dividends paid in USD.
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Declaration, ex-date, record, payable; must-own-by logic (computed family).
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Cash vs stock dividends; splits' effect on price, shares, and total value.
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No vote, no dividend; the effect of buybacks.
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Market-cap tiers; growth vs value vs income vocabulary.
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Definition, risks, and cold-call rule basics.
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Authorized vs issued vs outstanding vs treasury shares, and how a buyback moves them (computed).
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Why par value on common stock is an accounting artifact rather than a measure of worth.
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Proxies, the record date for voting, and what shareholders actually get to vote on.
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Class A vs Class B structures and what unequal voting rights buy the founders.
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Fewer shares at a higher price: why an issuer does it and what it does not change (computed).
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Cash, stock and property dividends; who declares them and why a dividend can be cut.
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Working a missed-dividend scenario on cumulative preferred before common is paid (computed family).
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Conversion ratio, parity price, and what forces a conversion (computed).
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Ordinary shares abroad, global depositary receipts, and the ratio that links a receipt to the underlying (computed).
B. Debt securities
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Par, coupon, maturity; bond points and basis points (computed).
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THE debt concept: premium vs discount and why prices move opposite yields.
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Nominal vs current yield vs YTM vs YTC on premium and discount bonds (computed family).
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Annual interest ÷ market price (computed).
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30/360 corporate/muni vs actual/365 government; trading "and interest" (computed family).
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Secured (mortgage/equipment trust) vs debenture vs subordinated; liquidation order.
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Conversion ratio and parity (computed family).
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Why issuers call, call protection, and the reinvestment-risk link.
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Bills (discount) vs notes vs bonds; auction basics.
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TIPS principal adjusts with CPI; STRIPS zeros and phantom income.
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GNMA (full faith and credit) vs FNMA/FHLMC; MBS prepayment risk.
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GO (taxes) vs revenue (project); federal tax exemption and in-state triple exemption.
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Muni yield ÷ (1 − bracket) and who benefits most (computed family).
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T-bills, commercial paper (≤270 days), bankers' acceptances, negotiable CDs, repos.
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Investment grade (BBB−/Baa3 floor) vs high yield; ratings vs yield.
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Corporate and municipal points and eighths vs government 32nds — converting a quote to dollars (computed family).
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Why a T-bill's discount yield understates the return a bond-equivalent yield shows.
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Duration as the weighted average time to a bond's cash flows, and the price move it predicts.
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Comparing yield to call against yield to maturity and quoting the lower of the two (computed).
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A sinking-fund provision: what it does for credit quality and what it does to call risk.
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Indenture covenants: what they restrict, who enforces them, and what a breach triggers.
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Coupons that reset to a benchmark, and why the price barely moves when rates do.
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Original-issue discount, annual accretion, and the price volatility a zero carries.
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Currency-of-issue vs country-of-issuer labels, and the pair that trips candidates every time.
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Collateralized mortgage obligations: sequential tranches and how prepayments are allocated.
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Debt-service coverage, flow of funds, and the rate covenant on a revenue issue (computed).
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Taxing power, statutory debt limits, overlapping debt, and per-capita measures (computed).
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Selling one bond to buy a similar one; the wash-sale trap that voids the loss.
C. Options
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Call vs put; holder vs writer — rights vs obligations (the 2×2 grid).
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Max gain, max loss, breakeven (computed family).
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Max gain, max loss, breakeven (computed).
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Unlimited risk; covered vs naked (computed).
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Max gain, max loss, breakeven (computed).
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In/at/out-of-the-money; intrinsic vs time value (computed family).
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Exercise vs trade; American vs European style; the OCC as issuer/guarantor.
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100 shares per contract; premium quotes ×100 (computed).
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Protective put and covered-call income — matching strategy to view.
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Approval before the first trade; ODD delivery order.
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What the buyer pays and the writer receives; converting a quoted premium to dollars (computed).
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Call breakeven = strike + premium, put breakeven = strike − premium, from either side (computed family).
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Premium income against a capped upside, and the risk that is actually still there (computed).
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Writing a put with the purchase money reserved; the obligation you have accepted (computed).
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Insuring a long stock position: the floor it sets and the breakeven it raises (computed).
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A long put paid for by a short call around existing stock, and the band it creates.
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Which direction you need and where maximum gain sits in each (computed family).
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Same class and expiration, different strikes: max gain, max loss, breakeven (computed).
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Same strike, different expirations, and the time-decay logic that drives it.
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Buying both sides for a move in either direction; the two breakevens (computed).
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Selling volatility for premium, and where the unlimited risk lives (computed).
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Different strikes on the two legs, and the wider band the position needs (computed).
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Random assignment through the OCC, and what a writer can and cannot control.
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How splits, stock dividends and special cash dividends adjust strike and contract size (computed).
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Broad-based index options: cash settlement and European-style exercise.
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Hedging a receivable or a payable denominated in another currency.
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Long-dated options: more time value, slower early decay, larger premium outlay.
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Position and exercise limits, and the approval levels that gate each strategy.
D. Packaged products
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NAV forward pricing, redeemable shares, no secondary trading.
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Sales charge as a % of POP, not NAV (computed family — classic trap).
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A (front load) vs B (CDSC) vs C (level 12b-1) — who fits which.
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Breakpoints, letter of intent (13 months, backdating), rights of accumulation (computed).
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Selling just under a breakpoint — the violation.
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What they pay for; no-load limits.
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Fixed shares trading at premium/discount to NAV (vs open-end grid).
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Intraday trading, generally passive, tax efficiency vs mutual funds.
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Fixed portfolio, no board or manager, redeemable units.
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75% real-estate / 90% distribution tests; traded vs non-traded liquidity.
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Growth, income, balanced, sector, index and target-date objectives, and what each implies about holdings.
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What the expense ratio includes, and the drag it applies to return every year (computed).
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Orders are priced at the next computed NAV, never the last one — and why that rule exists.
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The prompt-redemption obligation in concept, redemption fees, and liquidity management.
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Summary prospectus, statutory prospectus, and the statement of additional information.
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Income, short-term and long-term capital-gain distributions, and the reinvestment default.
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The stable-value objective, what the portfolio may hold, and why it carries no deposit insurance.
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Tracking a benchmark, and where tracking error comes from.
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Authorized participants, creation units, and the arbitrage that keeps price near NAV.
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Daily-reset mechanics, and why a multi-day result drifts from the stated multiple (computed).
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An exchange-traded note is unsecured issuer debt, not a portfolio of holdings.
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Why a closed-end fund trades away from NAV, and what borrowing inside the fund does to it.
E. Insurance-based & alternative products
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Separate account, accumulation vs annuity phases, surrender charges, no FDIC/SIPC-style guarantee.
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Who bears investment risk; indexed-annuity basics.
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Variable vs whole life; the separate account's securities status.
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Limited partnerships: flow-through, illiquidity, GP vs LP liability.
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Accredited/qualified investors, lockups, fee structure.
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Life only, life with period certain, and joint-and-survivor — the payment-size vs duration trade.
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Units that change in number during accumulation vs units that change in value during payout (computed family).
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Non-qualified annuities: cost basis, last-in-first-out gain ordering, and the early-withdrawal penalty in concept.
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Swapping one insurance contract for another without triggering a taxable event.
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Participation rates, caps and floors — how the credited "index" return is actually computed (computed).
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Living-benefit and death-benefit riders, and the fee each adds.
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Term vs whole vs universal life, and where cash value comes from.
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Flexible premium plus separate-account investment risk carried by the policyholder.
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Why a separate account is an investment company and the contract on it is a security.
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Real estate, oil and gas, and equipment-leasing programs — what each is built to generate.
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Passive income and loss, depletion and depreciation flowing through to limited partners in concept.
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Liquidation order in a partnership: secured lenders, general creditors, limited partners, then the general partner.
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Committed capital, capital calls, the J-curve, and how an investment is exited.
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Commodity pools and managed-futures vehicles, and which regulator oversees them.
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Illiquidity, valuation opacity, and custody risk as the common thread across alternatives.
F. Risk framework & taxation
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Which risk diversification cures — a top-3 trap.
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Duration intuition: long maturity + low coupon = most sensitive (computed ranking).
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Credit/default risk vs liquidity vs marketability.
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Purchasing-power risk and why fixed-income holders suffer most.
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Callable bonds and high coupons; zeros as the escape.
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Call/prepayment, currency, political, regulatory, business, concentration — match risk to scenario.
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Capital gain vs income; total return; qualified dividends and holding periods.
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Systematic risk quantified: what a beta above or below 1 implies about a holding.
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Rule and tax changes as a risk class, and sovereign/political risk on foreign holdings.
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The return given up by a choice, and why a risk-free rate frames every comparison.
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Why the ORDER of returns matters once money is being withdrawn, not just the average.
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Selling quickly and selling near fair value are two different failures.
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What "principal is not guaranteed" actually rules out, and which wrappers do guarantee it.
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Cost basis, adjusted basis, and how reinvested distributions raise it (computed).
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Short-term vs long-term capital-gain treatment and the day count that decides it (mechanics, never current rates).
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Netting gains against losses and carrying an excess loss forward, in concept (computed).
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The 30-day window on BOTH sides of the sale, and the disallowed loss added to basis.
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Qualified vs ordinary dividends and the holding-period test that separates them.
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Corporate, Treasury, and municipal interest across the federal/state grid.
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Carryover basis on a lifetime gift vs stepped-up basis at death (computed).
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Tax-deferred, tax-free, and fully taxable accounts — how each treats contributions, growth, and withdrawal.
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Private-activity municipal interest and the alternative-minimum-tax add-back in concept.
G. Municipal securities products
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The full-faith-and-credit pledge; unlimited vs limited tax general obligations.
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Self-supporting debt: the pledged revenue stream and the flow of funds it feeds.
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Bonds backed by a specific excise tax, or by an assessment on the benefited properties.
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A revenue pledge with a taxing-power backstop, and why it rates like a GO.
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Conduit issues where a corporate lessee's credit — not the municipality's — really backs the debt.
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A legislature's non-binding promise to replenish a reserve, and what that is worth.
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TANs, RANs, BANs and TRANs — what each one anticipates as its repayment source.
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Short-term municipal note ratings and what they assess that a long-term rating does not.
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Federal exemption, in-state exemption, and the taxable capital gain on a bond bought at a market discount.
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On an insured bond, whose credit rating are you actually buying?
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A periodic rate reset plus a put feature, and the liquidity facility standing behind it.
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Long-dated bonds repriced by periodic auction, and what a failed auction does to the holder.
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Serial, term and balloon maturity schedules, and the sinking fund a term bond needs.
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Optional, mandatory sinking-fund, and extraordinary redemption calls — three different triggers.
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Accreting an OID municipal bond, and why the accreted discount is exempt while a market discount is not (computed).
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Municipal bond funds and unit investment trusts; single-state portfolios and their concentration risk.
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Qualified tuition programs as municipal fund securities: account owner, beneficiary, and qualified expenses.
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ABLE accounts and local government investment pools — the other municipal fund securities.
H. Derivatives, futures & structured products
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A customized bilateral forward vs a standardized, exchange-traded, cleared future.
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Contract size, delivery month, tick value, and cash vs physical settlement (computed).
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Initial and maintenance performance bond, daily mark-to-market, and variation margin (computed).
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Who transfers price risk and who accepts it — and why a market needs both.
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Locking in a future purchase price vs locking in a future sale price.
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The cash-versus-futures spread and why it converges as delivery approaches.
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Upward- vs downward-sloping futures curves, and what each costs when a position is rolled.
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Physical commodity contracts vs interest-rate, index and currency contracts.
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Exchanging fixed for floating cash flows on a notional amount that never changes hands.
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Protection buyer, protection seller, and what counts as a credit event.
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Issuer debt whose return is linked to a reference asset — and the credit risk people overlook.
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"Protection" that depends entirely on the issuer remaining solvent.
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Issuer-written, long-dated, dilutive warrants compared with exchange-listed options.
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Why a convertible bond behaves partly like debt and partly like equity as the stock moves.
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How notional exposure exceeds cash outlay, and what that does to a loss (computed).
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Central clearing vs bilateral OTC exposure, and what the clearinghouse actually guarantees.
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