Open Exam Prep

Open Exam Prep

By Ran Chen, EA, CFP®EducationCourses
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Open Exam Prep episodes

  • Series 7 Exam Prep 33, Money Market Instruments and Short-Term Debt
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - Treasury Bills are issued at a discount and are the safest money market instrument.
    - Commercial Paper is unsecured corporate debt with a maximum maturity of 270 days.
    - Negotiable CDs are large-denomination bank-issued deposits that trade in the secondary market.
    - Banker's Acceptances are bank-guaranteed time drafts that facilitate international trade.
    - Money market instruments are suitable for clients needing high liquidity and capital preservation for short-term goals.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • Series 7 Exam Prep 32, Municipal New Issues and Underwriting
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The difference between a competitive sale, used for most G.O. bonds, and a negotiated sale, common for revenue bonds.
    - Key information found in the Notice of Sale and the role of the Official Statement as the primary disclosure document.
    - The breakdown of the underwriter's spread into the manager's fee, total takedown, selling concession, and additional takedown.
    - The strict priority of orders for allocating bonds: Presale, Group Net, Designated, and Member, remembered by the mnemonic 'Pro Golfers Don't Miss'.
    - Common exam traps, such as identifying the largest single component of the spread and understanding the liability of selling group members versus syndicate members.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • Series 7 Exam Prep 31, Municipal Bond Taxation
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - That municipal bond interest is generally federally tax-exempt, but may be subject to state tax for non-residents.
    - How certain private activity bonds can trigger the Alternative Minimum Tax (AMT), making their interest taxable.
    - The critical difference between a tax-free Original Issue Discount (OID) and a taxable market discount.
    - That capital gains on the sale of any municipal bond are always fully taxable.
    - How to calculate the tax-equivalent yield to compare municipal bonds with taxable corporate bonds.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • Series 7 Exam Prep 30, Municipal Bond Credit Analysis
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - How to analyze the creditworthiness of General Obligation (GO) bonds by focusing on the issuer's tax base, debt burden, economic characteristics, and financial health.
    - The key factors in Revenue bond analysis, including the feasibility study, debt service coverage ratio, and the flow of funds.
    - The importance of the trust indenture and its protective covenants, such as the rate covenant and the additional bonds test.
    - Common exam traps, like distinguishing between net and gross revenue pledges and understanding the concept of overlapping debt.
    - A simple mnemonic to differentiate between the backing of GO bonds (taxes) and Revenue bonds (project earnings).
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    3 min
  • Series 7 Exam Prep 29, Municipal Bond Basics
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The fundamental difference between General Obligation (GO) bonds backed by taxes and Revenue bonds backed by project-specific income.
    - Why GO bonds require voter approval and are subject to debt limits, while Revenue bonds typically are not.
    - That the primary benefit of municipal bonds is federally tax-exempt interest, which is most suitable for investors in high tax brackets.
    - How to calculate the taxable equivalent yield to compare municipal bonds with taxable corporate bonds.
    - Key exam traps like Industrial Development Revenue (IDR) bonds, whose interest may be subject to the Alternative Minimum Tax (AMT).
    5 min
  • Series 7 Exam Prep 28, Mortgage-Backed Securities and CMOs
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - How mortgage-backed securities pass through both principal and interest payments monthly.
    - Why falling interest rates lead to prepayment risk, a form of reinvestment risk.
    - Why rising interest rates cause extension risk, locking investors into lower yields for longer.
    - How PAC and Support tranches in a CMO redistribute prepayment and extension risk.
    - The inverse relationship between interest rates and the value of Interest-Only (IO) strips, a common exam trap.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    6 min
  • Series 7 Exam Prep 27, Government Securities
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - U.S. Treasury securities (Bills, Notes, Bonds) are backed by the full faith and credit of the U.S. government, making them the benchmark for safety.
    - Interest income from U.S. government and agency debt is taxable at the federal level but always exempt from state and local income taxes.
    - Ginnie Mae (GNMA) is the only agency security directly backed by the U.S. government; Fannie Mae (FNMA) and Freddie Mac (FHLMC) are Government-Sponsored Enterprises (GSEs) with an implied backing, carrying slightly more credit risk.
    - Treasury STRIPS are zero-coupon bonds created by broker-dealers, while Treasury Inflation-Protected Securities (TIPS) have a principal value that adjusts with the Consumer Price Index (CPI).
    - Government securities are highly suitable for conservative investors prioritizing safety of principal and income, especially those in high state tax brackets.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • Series 7 Exam Prep 26, Bond Ratings and Credit Risk
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The key differences between investment-grade and high-yield (junk) bonds, including their S&P and Moody's rating thresholds.
    - How credit upgrades and downgrades from rating agencies inversely impact a bond's market price and yield.
    - The definition of a "fallen angel" and what it signifies about an issuer's changing financial health.
    - The priority of claims in a corporate bankruptcy, from secured debt holders down to common stockholders.
    - How to apply credit risk principles to Series 7 suitability questions by matching bond credit quality to a client's risk tolerance.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    3 min
  • Series 7 Exam Prep 25, Callable, Putable, and Convertible Bonds
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - That callable bonds benefit the issuer, especially in a falling interest rate environment, and typically come with a higher coupon to compensate investors for call risk.
    - How to calculate the yield to call (YTC) and why it's the relevant yield to quote for a premium bond, representing the 'yield to worst'.
    - That puttable bonds benefit the investor, particularly when interest rates are rising, and therefore offer a lower coupon.
    - How to determine a convertible bond's conversion ratio by dividing the par value by the conversion price.
    - How to calculate the parity price of both the stock and the bond to identify potential arbitrage opportunities.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • Series 7 Exam Prep 24, Yield Calculations and Bond Math
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - How to calculate a bond's current yield using its annual interest and market price.
    - The relationship between yields for discount bonds: Yield to Call > Yield to Maturity > Current Yield > Nominal Yield.
    - The relationship between yields for premium bonds: Nominal Yield > Current Yield > Yield to Maturity > Yield to Call.
    - The tax treatment of annual accretion on a secondary market municipal bond, which is considered ordinary income.
    - That one basis point equals 0.01%, and a 10 basis point change in yield typically results in a $1 price change on a $1,000 bond.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min

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