7 special cards Flashcards
NAV, POP, SC%
parity
paritystock= bond price/ conversion rate
parity of bond= stock price* conversion rate
conversion rate= par/ conversion price
conversion price= par/ conversion rate
nominal yield
current yield
Regulation T
Regulation U
Initial vs Min
Reg T- FRB, intial customer broker dealer. hypothecation
Regulation U- broker dealer rehypothecates. bank to broker
maitenance margin- FINRA
Simple IRA
SEP IRA
KEOGH HR10
403b
Simple IRA- 14k max salary reduction 2-3% match
SEP IRA- contibute less when needed, 25% of employee income
KEOGH HR10- 61k max contribution 20%
403b
accumulation unit vs
annuity units
accumulation unit- accounting measure of owners of owners interest in seaprate account. shares that a customer aquires
annuity- accounting measure of annuity amount to be received by customer. once contract is annuized, accumulation units converted to annuity units determine annuity payments to be made
Payments received by owner of non-tax qualified variable annuity are only taxable to extent of earnings above cost basis. not tax deductible. earnings build up tax deferred
147
intra state issues
issuer can advertise in any state, msut be resident where its sold
cannot sell out of state for 6 months after effective date
Regulation A
start up companies to raise capital- smaller dollar amounts in 12 months
tier 1- 20 million no audited
tier 2 75 million audited
1A- SEC and circular not prospectus
415
shelf registration.
3 year shelf life,blue chip companies
used by seasoned ocmpanies to issue shares quickly. blanket registration with SEC
regulation D
private placements.
accredited investor- net worth 1 mil, 200k income, 5 mil for instutition
regulation M
public offerings. prohibitions on syndicate members
stabilization rules, market manipulation
144
exempt transactions, sale of restricted stock
unregistered held for 6 mo before they can be sold
form 144 with sEC.
1% outstanding shares, 4 weeks trading vol, 4x a year
144a
QIB qualified insitutitional buyers. 100 mil assets
large blocks. PORTAL. illiquid, inactive
145
SEC statements with merger, divesture, spinoff
crowdfunding
max 1 mil, don’t need to be accredited.
10b-5
catch all fraud rule
form 13 d
proxies. SEC 5% or more of companys stock
1939
trust indenture act.
protect bond holders. covenants SEC.issuer appoints trustee
1940
investment advisors act.
not required to register. banks, attorneys, accountant
Serbanes Oxley
faster reporting.
analysts separated from broker dealer investment banking function
10k and 10Q
term
serial
series
term- same time, same maturity. dolalr percentage of par PRICE quotes. Corp + muni DOLLAR bonds 1/8, US gov bonds 1/32nd
serial- same time, different maturities, BASIS YIELD quote, BASIS points. money markets. muni bonds, corp equipment and trust certificates.
series- different time, same maturity
for premium bonds quote YTC
primary vs secondary
ex date and record date
what are dated date, settlement date, record date
primary: DREP
secondary: DERP
dated date- day bond start to accrue interest. up to settlement
trade date- agree to terms
settlement date- ownership trades
record date- looks to see if owner dividend
debt to equity ratio
debt to equity ratio: long term debt/ capitalization
capitalization= long term debt +shareholder equity
solvency
working capital
working capital= current asssets- current liabilities
current ratio
current assets/current liabilities
acid or quick ratio
quick assets/ current liabilities
quick assets= - inventory
Bond vs basis points
bond points= $10, 1% of par
basis point= .10$, 01% of par. 100 basis=1%, $1 per 1k
if spread is 1.25 points, 1 1/4% of par= $12.50 per 1k, 125 basis points
credit ratings. long term vs short term debt
long term: Moodys Baaa, S&P BBB
shor term: Municipal- MIG 1,2,3 SG,B
commercial paper: A1,2,3 B,C/ P1,2,3 NP
1st, 2nd, 3rd, 4th markets
1- inside quote, auction. physical location. exchanges
2- market makers and quotes. negotiated. unlisted electronic. PINK OTC
3rd- NYSE secuirities traded away OTC global market 24hrs
4th- direct instutitional investors ECN
TRACE
EMMA
OATS
ACT
TRF
OSS
ADF
TRACE- debt/corp reported no later than 15 min
EMMA-muis
OATS- NASDAQ, synchronized
ACT- nasdaq confirmation
TRF- third market
OSS- options bypass communication posts
ADF- ECNs
introducing vs clearing agent
intorducing- cannot take custody. clearing can
new account verification within how many days of opening
30 days
written complaint
retention of customer accounts
arbitration statue of limitations
retail communications retained
account record verification
transfer of assets
options communications
written complaint- 4 years. reported 15 days of quarter
retention of customer accounts-6
arbitration statue of limitations- 6
retail communications retained- 3 years
within 30 days of opening and change. 36 months after
carrying firm 1 business day to validate. complete in 3 days
any options commuincation not occompanied by ODD disclosure be fille dwith exchange 10 days in advance of use
initial margin vs maitenance
iniital- REg T FRB
maitienance- FINRA
departments for flow of funds (margin etc_
Margin departments- all accounts maintained under margin regulations of FRB and FINRA
Purchase and sales- processing orders
Reorganization- securities changes in capitalization due to mergers, aquesistions, stock splits
Order department- routing buy and sell orders
accumulation unit
annuity units
accumulation units- shares. interest in separate account
annuity units- fixed annuity to be received by owner. accumulation converted into annuity
defined benefit vs contribution
benefit- employer assumes risk. known beenfit. high salaried
defined contribution- employee assumes risk. formula based.
SAR vs CTR
SAR- 5k within 30 days
CTR- 10
technical analysts vs fundamental
Technical- market price, trading changes in dow jones, reversal, support and resistance levels. Advance/ decline lines, short intereset. Selling and buying decisions
Fundamental- intrinsic quality, PE ratios, earnings per share
recession vs depression
recession- 6 mo
depression- 6 quarteres
leading and lagging indicators
Leading
S&p 500
Housing starts
Unemployment claims
Durable good orders, consumer good orders
Money supply levels
Coincident
GDP
Employment levels
Personal income- number of hours
Industrial production
Leading
S&p 500
Housing starts
Unemployment claims
Durable good orders, consumer good orders
Money supply levels
Coincident
GDP
Employment levels
Personal income- number of hours
Industrial production
Lagging
Corporate profits
Duration of employment
Inventory to sales ratio
Labor cost per unit
Commercial loans
Consumer credit to income ratio
Corporate profits
Duration of employment
Inventory to sales ratio
Labor cost per unit
Commercial loans
Consumer credit to income ratio
allocations and strategies
portfolio rebalancing
strategic assets
tactical
active
Portfoio rebalacing- reallocation of funds ioveperforming, under
Strategic asset- determination of percentage of assets in each class
Tactical- permited variation from percentages
Active- returns excess benchmark, undervalued stocks
foreign currency optins vs foreign currency trades
options- same day or regular way
secuirities- forward or spot (1 or 2 day)
municipal taxes. one mil
.001 assessed value
special tax bonds
backed by taxes other than ad valorem. usually excise taxes
ARS vs VRDR
both weekly
VRDR- put option. 25k long term debt 20-30 years. reset to benchmark.
ARS- dutch. long term debt. no put
ETN
unsecured debt issued by baank, linked to market.
no periodic interest. trades like stock, can be redeemed
eurodollar
issued in bearer form.
not subject to US withholding taxes. not issued by US gov
CDs
money market instrument
jumbo 100k 1 year or less. FIC- 250k
income/ adjustment bond
pays interest with earnings. Bankrupt ccompanies. trade flat due to uncertainty of future payment
funded vs unfunded debt
funded- long term corp debt
unfunded- short
taxation + amortization and accredtion
OID muni bond- not taxable
OID corp must
MArket discount muni may
fed funds vs clearing house funds
gov bonds- fed funds actual day/month
clearing house- trace, corp
financial risk
Debt financing or utilizing debt leverage too much can lead to the inability to meet principal and interest payments on a company’s debt obligations.
dark pool
private trading for listed secuirities operated by major broker dealer
gray market
smaller bankrupt companies. market illiquid. dont report to SEC, but regulated by finra
Tapes
tickets sent to exchange and stamped with order entry, order execution and cancellation
specialists report trades to tapes
NASDAQ- C tape
NYSE- A tape
AMEX- B tape
NASDAQ
single book system vs NYSE super display book
market maker- finra firm tha t buys and sells secuirities out of its own inventory
letter of intent
investors agree to buy additional shares and is given reduced charge.
good for 13 months. backdated 90 days
ETFs vs Index mutual fund
pricing
commisisons
margin
shorting
capital gains
pricing: ETF continuous/ mutual- forward pricing
commissions: ETF commission/ mutual none
margin: ETF yes/ mutual no
short: ETF yes/ mutual no
gains: ETF taxed when sold/ mutual- taxed annually
open end vs closed end
offerings vs shares
prospectus
types of shares
charges
open- continuous primary offering/ closed- number of shares fixed
prospectus:open yes. closed- no prospectus afte IPO
shares- open: common/ closed- common, preferred, bonds
charges- 8.5% max sales/ closed- commissions
VC vs BDC
venture capital fund. limited partnership only sold in private placements to wealthy accredited investors
BDC
invests in private start up and financially troubled companiesbusines. private equity investments development company
registered investment 1940, trades like other stock
distribute 90% of taxable net income
to qualify 70% of assets msut be in small or troubled companies
conduit tax treatment 90% taxable income must be from dividends, interest and capital gains on investments
time vs intrinsic
intrinsic= amount an option is in the money
time/extrinsic value premium- intrinsic
options price/ covered call
max life 9 months, near expiration is less expensive
long call protect- same or lower strike price, same or longer expiration
portfolio margening
lower margin requirements for stock positions that are hedged by options
min equity 100k. must be approved for naked options
seaprate approval from registered options principal
fail to deliver
10 days. frozen for 90 days. can trade, fully paid
official notice of sale
advertising in bond buyer and newspaper to solicit competitive bids.
type of bond, dollar amount, secuirty backing, rreputation, good faith deposit
tombstone
announcement of Public offering in newspaper
gross offering size, POP, names of members
official statement
prospectus like document, disclosure.
delivered by settlement
level of options
- covered calls
- buy calls and puts
- spread positions
- naked
options agreement
sign within 15 days. conditions change also 15 days
competitive vs non competitive bids
compeitive bid- primary dealers, gov secuirities dealers, other institutions
max bid 35% of total offering
noncompeitive bid- small insutitional investors. Max $5 million
priority order for municipal markets
PGDM
presale, group, designated orders, member
spread components
management- syndicate manager
underwriting fee- syndicate members
selling concession- seller earns
regulation FD
prohibits issuers from making dslective disclosure to reasearch, mutual fund, and other professionals
fair disclosure inside trading
stabilization
satbilization of new issue in secondary market.
underwriter can stabilize price at or below POP
notice of stabilization in prospectus
reg sho
before it can be sold short, locate requirement
rules for selling secuirities short
10b-18
allow issuer to buy shares at highest bid or last reported sale price
1 broker dealer, cannot be opening transaction, executed within 10 min of close activity, must not be higher than market price or exceed 25% of trading valme
tender offer
attempting to buy majority stake in company
makers offer prices at premium, contigent on min number of shares being tendered
initial offer 20 business days SEC rules, each sweetening extends by 10 days
corp characteristics
unlimited life- can avoid
free trasnferability of shares- can avoid
limited liability
centralized managment- hardest to avoid
-if avoid 2, conduit taxation, not taxed as corp
estate taxes
progressive tax 11.58 million
23 million if married
bullet
barbell
ladder
bullet- same target date, bought over time. beneficial- interest rise. not lower
barbell- short and long term bonds average life near target date. best with variable interest rates
Ladder- bonds purchased one time with maturities at regular intervals. protects in rising interest rates
‘frb monetary tools
discount rate
open market operations- daily buying and selling treasury secuirities between fed dealers
Reserve requirement
scale in municipal
reoffering scale. listing by maturity or yields the issue will be offered
communications
correspondence
instututional communication
retail communicationmore than 25 people in 30 day calendar period
customer identification programs
CIPs
financial instutiions maintain for money laundering
SDN maintained by OFAC
dividends in margin
withrdrawn within 30 days or become equity
recomendations for suitability 3 types
Quantitative, reasonable basis, customer specific
eastern vs western
eastern undivided- responsbile for its original percentage regardless
FDIC
does not protect money markets. only avaiable to banking acccounts
cav
cost basis
who enforces and who doesn’t
enofrce: OCC, FIC, FRB, FINRA
does not: MSRB
continuing education
second year anniversay and every year after
foreign puts and aclls
EPIC
exporters buy puts on foreign
importer buy calls
LEAP
long term options contract. 38 months.
options price
longer term options contarcts are always more
premium vs discount bonds quotes
discount- YTM
premium- YTC
all or none
fill or kill
immediate or cancel
not held
market on close
all or none- all, can wait
fill or kill- entirety not willing to wait
immediate or cancel- immediate, partial execution fine
not held
market on close
decline closings
7% 15 min
13% 15 min
20% end of trading session
inside quote
highest bid, lowest ask
index that most closely approximates market
willshire index
