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series 66 quicksheet > 66 QuickSheet > Flashcards

66 QuickSheet Flashcards

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Series 66 flashcards
1
Q

What act has to do with regulating securities?

A

Securities Act of 1933

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2
Q

Nonexempt new issues can only by sold by?

A

Prospectus

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3
Q

What can be issued prior to a registration’s effective date?

A

Indication of Interest

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4
Q

What act has to do with regulating the registration process of persons and exchanges?

A

Securities Exchange Act of 1934

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5
Q

Margin requirements are determined by?

A

Board of Governors of the Federal Reserve System as provided in the Securities Exchange Act of 1934.

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6
Q

When equity drops below 25% in a margin account, what happens?

A

Maintenance margin call is sent to client

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7
Q

What are “house” calls?

A

Maintenance calls that are set at a higher level than typical maintenance calls as determined by the issuer.

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8
Q

Describe positive margin.

A

Profits exceed Interest Cost

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9
Q

Three types of Investment Companies

A
  • Face-Amount Certificates
  • Unit Investment Trusts
  • Management Companies
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10
Q

Under the USA, all professional’s registrations and withdrawals take place when?

A

At noon, 30 days after completion of application.

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11
Q

Difference in registration expirations of people and securities?

A

People- Expire on Dec 31st every year.

Securities- Expire one year from registration date.

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12
Q

Who are not considered persons?

A
  • Minors
  • Dead People
  • People declared mentally incompetent
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13
Q

What things are not considered securities?

A
  • Retirement plans
  • Non-variable life insurance contracts
  • Collectibles
  • Commodities
  • Condos used as personal residence
  • Currencies
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14
Q

The term “sale” includes?

A
  • Transfer for value

- Gifts of assessable stock

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15
Q

The term “sale” does not include?

A
  • GIfts of non-assessable stock
  • Stock dividend or stock splits
  • Bona Fide pledge or loan
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16
Q

Termination procedures for an agent?

A

Notification to administrator by both agent and broker/dealer.

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17
Q

Termination procedures for an IAR with state IA?

A

IA notifies administrator.

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18
Q

Termination procedures for an IAR with federally covered IA?

A

IAR notifies administrator.

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19
Q

Describe notice filing.

A
  • Generally used by investment companies registered under the Investment Company Act of 1940.
  • -Admin may require docs sent to SEC
  • -Quantity of securities being sold in state (fee)
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20
Q

Describe coordination.

A

Coordination of state registration with federal registration.

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21
Q

Registration by coordination is accomplished by filing a registration statement with the administrator containing:

A
  1. Three copies of latest prospectus
  2. Copies of articles of incorporation
  3. Amendments to prospectus filed with the SEC.
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22
Q

Coordination is effective when?

A

At the same time as federal registration.

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23
Q

Describe qualification.

A
  • Primarily for intrastate issues.
  • Have to submit anything admin requests.
  • Effective when declared by admin.
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24
Q

What are the most common exempt transactions?

A
  • Isolated nonissuer transactions
  • Unsolicited orders
  • Transactions with banks
  • Transactions between issuer and underwriter
  • Transactions by fiduciaries
  • Private Placements
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25
Q

An exemption from registration for all securities professionals when dealing with vacationing clients.

A

Snowbird Rule

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26
Q

Broker Dealer record must be kept for how long?

A

3 years

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27
Q

IA records must be kept for how long?

A

5 years

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28
Q

A civil suit under the terms of the USA must be filed within?

A

3 years of the alleged infraction or 2 years from discovery of a violation. Fed Law is 1 year from discovery.

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29
Q

The offer to return a customer’s money, plus interest, less any income received, when a sale has taken place in violation of the USA.

A

Right of Rescission

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30
Q

Used to stop registration of securities issues.

A

Stop Order

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31
Q

Stop orders many be appealed to the appropriate court within how many days?

A

60

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32
Q

Used to halt activities of persons.

A

Cease and Desist

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33
Q

The suspension of registration of any person or security.

A

Summary Action

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34
Q

Maximum criminal penalty under USA?

A

5,000 and 3 years jail

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35
Q

Maximum criminal penalty under federal law?

A

10,000 and 5 years jail

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36
Q

If IA has more then 110 million, they must register as?

A

SEC registration as federal covered advisor

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37
Q

if IA has less than 100 million, they must register as?

A

State registered advisor

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38
Q

If any clients of an IA are investment companies, IA must register as?

A

Federally covered advisor

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39
Q

LATE

A

Lawyers, Accountants, Teachers, Engineers

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40
Q

A term used by an IA whose principal business consists of rendering investment advice and a substantial portion of the IAs advisory business involves investment supervisory services.

A

Investment Counsel

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41
Q

An IA is exercising discretion must have what kind of surety?

A

10,000 net worth or a surety bond

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42
Q

An IA is maintaining custody must have what kind of surety?

A

35,000 net worth or a surety bond

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43
Q

Rule on use of third-party research reports?

A
  • If distributed, credit must be given.

- If used for basis of an IAs report, no mention is necessary.

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44
Q

What is it called when an IA represents both sides and receives commissions from both sides?

A

Agency Cross Transaction

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45
Q

Under state and federal law, a person is deemed to be in control of an IA with an ownership level of at least..

A

25%

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46
Q

If IA has custody of funds, statements must be sent to clients..

A

Quarterly

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47
Q

What form specifically requires information on how an adviser will be compensated?

A

Form ADV

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48
Q

What form is the annual financial examination of an IA and who is it completed by and submitted by?

A

Form ADV-E

  • completed by IA
  • submitted by independent accountant
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49
Q

Says that investors must act with reasonable care, skill and caution.

A

Uniform Prudent Investor Act

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50
Q

Insurance that’s pure protection and has no cash value

A

Term

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51
Q

Insurance that builds guaranteed cash value with policy loans

A

Whole life

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52
Q

Insurance with flexible premiums-and with insufficient funds, could cause policy to lapse.

A

Universal Life

53
Q

Describe variable life insurance.

A
  • Separate account
  • Guaranteed minimum death benefit
  • Cash value based on underlying account
54
Q

Options, futures, and forwards are?

A

Derivatives

55
Q

An order that instructs the BD to buy a specified security at or below a certain price or to sell a specified security at or above a certain price.

A

Limit Order

56
Q

Used to “stop loss” by persons with a short position in a stock. Can accelerate the direction of a bull market.

A

Buy stop order

57
Q

Used to “stop loss” by persons with a long position in a stock. Can accelerate the direction of a bear market.

A

Sell stop order

58
Q

Investing a fixed dollar amount on a regular basis and purchasing at different prices.

A

Dollar cost averaging

59
Q

Account who’s investor looks for stocks that trade with high PEs and low dividends. High price to book ratios and earning momentums.

A

Growth

60
Q

Account who’s investor looks for stocks that trade with low PEs and high dividends. Focuses on financial statements.

A

Value

61
Q

Investor thinks majority is wrong, so does opposite of what most investors are doing.

A

Contrarian

62
Q

Done periodically to bring a portfolio back to target allocation percentages.

A

Rebalancing

63
Q

Someone who attempts to profit by finding the best performing sectors of the economy and buying stocks in that sector.

A

Top-down analyst

64
Q

Someone who attempts to profit by identifying individual companies that will outperform others in the industry.

A

Bottom-up analyst

65
Q

Placed in a portfolio to reduce inflation risk

A

Tangible assets

66
Q

A type of trust that distributes all income each year.

A

Simple

67
Q

A type of trust that may distribute or retain income, and income is reported on Form 1041.

A

Complex

68
Q

Sole proprietors file their business information on a..

A

Schedule C

69
Q

What kind of business use a Schedule K-1?

A

LLCs, and shareholders in S corporations

70
Q

C Corps report income on?

A

Form 1120

71
Q

Small Cap market capitalization

A

300 million to 2 billion

-Russell 2000

72
Q

Mid Cap market capitalization

A

2 billion to 10 billion

-S&P 400

73
Q

Large Cap market capitalization

A

More than 10 billion

-S&P 500

74
Q

Working capital

A

Current Assets-Current Liabilities

75
Q

Current Ratio

A

Current Assets / Current Liabilities

76
Q

Quick Ratio (Acid Test)

A

(Current Assets - Inventory) / Current Liabilities

77
Q

Total Capitalization

A

Long Term Debt + Net Worth

78
Q

Debt Ratio

A

Long Term Debt / Total Capitalization

79
Q

Form filed when a corporate even happens

A

Form 8-K

80
Q

Annual audited financial report

A

Form 10-K

81
Q

Quarterly financial report

A

Form 10-Q

82
Q

TIC

A

Tenants in Common

-if person dies, assets flow through to estate

83
Q

JTWROS

A

Joint Tenants with Rights of Survivorship

-Assets flow through to other owners of account

84
Q

A business entity with unlimited liability.

A

Sole Proprietorship

85
Q
  • An unincorporated associated of 2 or more people
  • Income and losses pass through
  • Easy to form and easy to dissolve
A

Partnerships

86
Q
  • Shareholder’s risk limited to investment

- Taxable entity

A

C Corporations

87
Q
  • Limited liability

- Limited to 100 shareholders

A

S Corporations

88
Q
  • Limited liability

- Unlimited number of members (rather than shareholders)

A

LLC

89
Q

What would someone invest in if they had a financial goal of preservation of capital?

A
  • Bank CDs

- Money market funds

90
Q

What would someone invest in if they had a financial goal of current income?

A
  • Gov’t, agency, municipals, corp bonds
  • preferred stock
  • common stock
  • bond funds
  • equity income funds
91
Q

What would someone invest in if they had a financial goal of capital appreciation?

A
  • Common stock

- Equity funds for growth

92
Q

What would someone invest in if they had a financial goal of speculation?

A
  • Specialized funds
  • Options
  • High-Yield bonds
93
Q

What would someone invest in if they had a financial goal of diversification?

A
  • Foreign stock funds

- Tangible assets for inflation protection

94
Q

What would someone invest in if they had a financial goal of passive investing?

A

-Index funds, ETFs

95
Q

What would someone invest in if they had a financial goal of College Tuition?

A
  • Zero coupon bonds

- Coverdell ESAs, Section 529 plans

96
Q

What would someone invest in if they had a financial goal of Retirement Planning?

A
  • Pensions
  • Annuities
  • IRAs
97
Q

What tells you what an investment made today at a given rate by worth at some point in the future?

A

Future Value

98
Q

What tells you how much needs to be invested today at a given rate to equal a specified value at a point in the future?

A

Present Value

99
Q

Approximate formula for doubling of investments

A

Rule of 72

100
Q

The discount rate that results in a net present value of zero for a series of future cash flows.

A

Internal Rate of Return

101
Q

Difference between an investment’s present value of future revenues and its cost.

A

Net present value

102
Q

Used to evaluate the performance of portfolio managers

A

Time Weighted Returns

103
Q

Used to evaluate the individual’s account performance

A

Dollar Weighted Returns

104
Q

What says that all investors have equal access to the same market information?

A

Efficient Market Hypothesis

105
Q

What runs trials based on varying factors that measure probabilities of meeting specific objectives and goals under varying conditions.

A

Monte Carlo Simulation

106
Q

A method to value the common stock of a company that is based on the present value of the expected future dividends.

A

Dividend discount model

107
Q

A method to value the common stock of a company on the basis of assumed constant growth of dividends in the future.

A

Dividend growth model

108
Q

A portfolio diversified by using securities with a low or negative correlation, thereby reducing portfolio volatility.

A

Modern Portfolio Theory

109
Q

Two securities prices move in similar direction

A

Positive Correlation

110
Q

Prices of two securities move in opposite direction

A

Negative Correlation

111
Q

Measures volatility of investment compared with past returns.

A

Standard deviation

112
Q

What compares the actual return to the expected return.

A

Alpha

113
Q

What measures amount of return per unit of risk taken

A

Sharpe Ratio

114
Q

What measures volatility of bond prices by weighting the time the bond interest takes to pay for the bond.

A

Duration

115
Q

Risk that overall market will affect individual securities adversely regardless of company’s circumstances.

A

Market Risk

116
Q

Risk that a business will fail or perform poorly as a result of specific characteristics of a company or industry in which it operates.

A

Business Risk

117
Q

Risk that a change in interest rates will affect a security adversely.

A

Interest Rate Risk

118
Q

Risk of erosion of a dollar’s buying power.

A

Inflation Risk - Purchasing Power Risk

119
Q

Risk of default

A

Credit Risk

120
Q

Vulnerability to adverse change in regulations.

A

Regulatory Risk

121
Q

Vulnerability to adverse legislation.

A

Political RIsk

122
Q

Speed or ease of converting an investment into cash.

A

Liquidity Risk

123
Q

Risk that a government could default on its debt or other obligations.

A

Sovereign Risk

124
Q

Rate given up on one investment to invest in another.

A

Opportunity Cost

125
Q

What are the key assumptions of the Capital Asset Pricing Model?

A
  • Investors hold diversified portfolios
  • Investors can borrow and lend at the risk-free rate.
  • There is a perfect capital market
126
Q

An efficient portfolio is one that offers:

A
  • The most return for a given amount of risk

- The least risk for a given amount of return

127
Q

A wrap fee account would be most suitable for a customer who:

A

is a frequent trader

128
Q

The concept of creating a model portfolio, through asset allocation principles, that both increases return and reduces risk is known as:

A

portfolio optimization

series 66 quicksheet (1 decks)

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