2nd 100 Pages Flashcards
1
Q
Intrinsic value
A
The potential profit available when exercising an option “call up”
2
Q
At the money
A
Phrase used when the option on the underlying stock is trading at the exercise price of the option
CMV- 70
- same
BUY- 70(SP)
3
Q
Time Value of Money (TV)
A
P= IV + TV
For example;
CMV=100
Buy 95 Call @ 5
What’s the TV?
A. In the money b/c call says if the SP
4
Q
Parity
A
When the intrinsic value equals the premium
5
Q
Time Value
A
Premium- intrinsic value
6
Q
Premium
A
Intrinsic value + Time Value
7
Q
Buyers have …
A
Rights
8
Q
Sellers have…
A
Obligations
9
Q
Index and foreign currency options are…
A
Cash Settled
10
Q
Hedge with your…
A
Fear
11
Q
The best options when hedging is to…
A
Buy or long a put
12
Q
For protection you…
A
Buy
13
Q
For income you…
A
Sell
14
Q
A short sell is?
A
Open
15
Q
A long buy is?
A
Open
16
Q
A long sell is?
A
Closed
17
Q
A short buy is?
A
Closed
18
Q
Under OCC EXPIRATION=
A
11:59 pm ET on Saturday after third Friday
19
Q
Growth and income
A
Combination fund
20
Q
Specialized fund
A
Sector fund
21
Q
Index Funds
A
Low Fees + high diversification
Like S&P
22
Q
Global Funds
A
U.S.
23
Q
International Funds
A
Non U.S.
24
Q
Inverse Funds (short or reverse Funds)
A
Hedge for mutual funds
Opposite
25
ETFs
EXCAHNGE TRADED FUNDS
Continuous pricing
26
Mutual funds
Price once per day
27
ETNs
Exchange traded notes
DEBTS
BANK
NO INTEREST
NO Principal protection
28
Maximum sales charges
8 1/2% of the pop
29
Dollar cost averaging
Average cost lower than average price
Same amount into the same funds over a period of time
30
Alternative investments
Direct
Participation
Programs
31
Oil drilling
Intangible drilling costs generate immediate deductions
32
Oil and gas programs
Exploratory also known as wildcatting
High risk and reward
33
REITs
Real estate investment trusts
75% invested in real estate
Rental income
Capital gains
34
Beta measures what?
Systematic risk
35
Interest rates go up
Bonds go down
36
The higher the duration
The more volatile
37
Bonds have the most?
Inflation risk
38
The better the grade/credit
The less default risk
39
Leverage
Too much debt
40
Legislative or political risk
Risk foreign investors will lose money due to changes in a country‘s government
41
An investor currently owns $100,000 of US treasury bonds maturing in 12 years. The most significant risk facing this client is?
Interest rate risk
42
Cooling off period
20 day minimum
43
Preliminary prospectus
RED HERRING
Missing final affective date and final price
44
The primary difference between an underwriting syndicate and a selling group is?
The syndicate assumes liability for unsold shares
The selling group does not
45
Prospectus delivery
With or before delivery of final confirmation.
Can NEVER be marked on
46
Disclosure document
Offering circular
47
Regulation D
Private placements
48
Rule 144
Sale of control and restricted securities
Sets the conditions under restricted unregistered securities sold or resold
49
RULE 144 A
To provide a mechanism for the sale of privately place securities that do not have or not require an SEC registration in place
50
RULE 145
Aims to protect stockholders of any company that proposed to re-organize its ownership structure
51
What risk cannot be reduced by diversifying in equity portfolio??
Market risk
52
Stop orders
These are nets to catch the limit of loss
53
The securities exchange act of 1934
Regulates secondary trading created securities and exchange commission (SEC)
54
Slobs
Buy calls
55
Bliss
Buy puts
56
Floor brokers determine what?
Time and price of trades
57
Who has to sign the new account form?
Only the principal
58
Reg T
Gives the FRB the authority
59
Who’s social is used when you doUGMA OR UTMA account??
The minors Social Security number
60
Update amend alter change
30 days
61
How long should member firms retain records of any customer account?
At least 6years after it is closed
62
Regulation T
A rule that applies to transactions that occur in both cash and margin accounts
SIPC only protects the individual equities
63
Customer delivery on sales
Requested by settlement date
Required within 10 business days
64
Regular way settlement for US government bonds is
Next business day
T+1
65
Regular way settlement for municipal bonds
T+2
66
Regular way settlement for corporate bonds
T+2
67
Tracking executed trades registered reps should
Always go to the supervisor/broker dealer or principal first
68
Due bills
Someone paid your dividend for you
69
FIFO
Capital gains
Most detrimental to customer
70
Progressive taxes
Gets higher the more money you make
71
Regressive taxes
Charged equally regardless of income
72
LIFO
Annuities and non-qualified plans
73
FIFO
IRS DEFAULT
74
Capital gains
Mutual funds
Stocks
Real estate
REITS
Securities
75
Qualified plans
Ordinary income tax
Individual
IRA
Earnings grow tax-deferred
Premature withdraw 10% penalty before 59 1/2
76
No SMUT trading allowed for retirement plans
Short
Margin
Uncovered
Tangibles
77
What’s the max amount of employees for a simple plan?
100
78
Securities act of 1933
Paper prospectus primary act
Regulation of new issues
79
Securities exchange act of 1934
People and places act
80
Excessive trading while ignoring clients objectives and interest
Churning
81
The investment advisors from act of 1940
RIA
A B C
ADVICE. BUSINESS. COMPENSATION.
82
Insider trading act of 1988
Civil penalties greater of 1 million or three times profit
Criminal penalties up to 5 million and up to 20 years jail sentence
83
Telephone consumer protection act of 1991 administered by FCC
Time restrictions include 8 AM to 9 PM local time
84
Regulation national market system
Broad sweeping regulation in acted to bring trading in trade reporting uniformity to US securities markets
85
Maloney act of 1938
Created SROs
86
Pegging
Preventing the stock from moving either direction
