Abbreviations, Dates, and Times Flashcards
1
Q
What are TIPS?
A
Treasury Inflation-Protected Securities
2
Q
The Securities Exchange Act of 1934 regulates the __________ _______.
A
Secondary Market
3
Q
Is there a registration exemption for IARs doing business in a state if employed by an IA registered in another state?
A
Yes, if the IAR has no office in the state and has five or fewer retail clients in the state in the past 12 months.
4
Q
If an IA is no longer eligible for SEC registration, it has ____ days to file ADV-W and register at the state level.
A
180 days
5
Q
The application for withdrawal of registration of an agent or IAR becomes effective in _____ days.
A
30 days
6
Q
What form is used to notify Administrators that an IA is maintaining custody of client assets?
A
Form ADV
7
Q
A registration withdrawal is effective ____ days after filing.
A
30 days
8
Q
With newspaper offers, no offer is made if more than __________ of the circulation is outside of the publishing state.
A
two-thirds
9
Q
Identify the acronym: NASAA
A
North American Securities Administrators Association
10
Q
What is the penalty for making excess contributions to an IRA?
A
6% of the excess
11
Q
List the four categories of professionals who are excluded from the IA definition.
A
Lawyers, accountants, teachers, and engineers (remember L, A, T, E)
12
Q
Under the USA, the de minimis exemption limits an IA to no more than ____ clients within the previous ___ months.
A
five clients within the previous 12 months.
13
Q
Registration by Filing (Notification) requires issuers to be in business at least _____ months preceding registration.
A
36 months
14
Q
True or False: 100% of investors must be state residents to qualify for the Rule 147 intrastate exemption.
A
True
15
Q
Under the IA Act of 1940, when must a balance sheet be provided to a client?
A
A balance sheet must be provided if the IA collects prepaid fees of $1,200 or more, six months or more in advance.
16
Q
If an IA is registered with the SEC, is registration required in any state in which it intends to do business?
A
No. The National Securities Markets Improvement Act (NSMIA) exempts federal covered advisers from state registration.
17
Q
A BD must maintain its books and records for a minimum of ____ years.
A
3 years
18
Q
The statute of limitations for criminal violations of the Uniform Securities Act is ____ years.
A
5 years
19
Q
A corporation’s financial reports are reported to the SEC each year on Form _____
A
10-K
20
Q
If an asset outperforms the market when prices are up, but underperforms when prices are down, what is its beta?
A
Its beta must be greater than 1.00
21
Q
For what reasons may an individual take an early withdrawal from his IRA without penalty?
A
Death, disability, qualified higher education, home buyer ($10,000 limit), birth or adoption of a child ($5,000 limit)
22
Q
How much may be contributed to a 529 plan and avoid gift tax?
A
A donor may give up to $19,000 per year and avoid the gift tax
23
Q
Under the IA Act of 1940, an IA may charge performance fees to clients with a net worth of at least $____________.
A
$2.2 million
24
Q
The electronic system used to register investment advisers is the __________ _______ ____________ ________________.
A
Investment Adviser Registration Depository (IARD)
25
Grandparents who contribute to a grandchild's 529 plan may give how much money and still avoid gift tax consequences?
Front-loading five years of contributions is allowed; therefore, each could contribute $95,000 for a total of $190,000.
26
Money-market securities have a maturity of __________________.
one year or less
27
Statute of limitations for USA civil violations is _____ yrs. of occurrence or ___ yrs. of discovery, whichever is first.
three yrs. of occurrence or two yrs. of discovery
28
Due to SEC Release 1092, what other candidates are included in the expanded IA definition?
Sports and entertainment reps, pension consultants and financial planners
29
If an IA maintains custody of client funds, are unannounced audits required?
Yes. IAs must arrange for unannounced audits on an annual basis.
30
A person may appeal a stop order that is issued by the Administrator within _____ days.
60 days
31
Registration by Filing (Notification) requires that the underwriting commission be no more than _____%.
10%
32
BD records must be kept for at least _____ years.
3 years
33
____________ governs the extension of credit by BDs.
Regulation T
34
When are non-material (routine) changes to Form ADV required to be filed?
Routine items require an amendment within 90 days after the end of the IA's fiscal year.
35
The Securities Act of 1933 regulates ____________.
new issues
36
Who is eligible to contribute to a qualified annuity?
Public school employees [403(b)] and certain non-profit organization employees [501(c)3]
37
What is the Capital Asset Pricing Model (CAPM)?
A model of the relationship between expected risk and expected return
38
When does state registration become effective?
At noon on the 30th day after filing an application, provided there are no proceedings pending
39
What is a 1035 Exchange?
A tax-free exchange of one annuity for another. These exchanges are allowed under Section 1035 of the Tax Code.
40
An IA must maintain its books and records for a minimum of ____ years.
5 years
41
Identify the acronym: NSMIA
National Securities Markets Improvement Act
42
When is Form ADV-W filed?
When an adviser withdraws its registration
43
What is the purpose of an annual updating amendment.
To determine if an IA is eligible for continued SEC registration; it is filed within 90 days of its fiscal year end
44
True or False: Bankers' Acceptances rated AAA, maturing in 6-months, and issued in $25,000 denominations are exempt.
False. Because the BAs were not issued in at least $50,000 denominations, registration is required.
45
When must an access person file a transaction report?
Within 30 days of the end of each calendar quarter
46
IRA rollovers must be completed within ____ days.
60 days
47
When may an individual withdraw money from an IRA without penalty?
After he turns 59 1/2
48
What U.S. Government agency, created by the '34 Act, enforces securities laws?
The SEC
49
A new issue being offered in one state only is _________ from federal registration under SEC Rule ______.
exempt from federal registration under SEC Rule 147
50
When must IRA withdrawals begin in order to avoid the late withdrawal penalty?
By April 1st of the year after an individual turns the age of 73
51
The SEC may suspend trading in a security for up to _____ days.
10 days
52
An IAR may exercise discretion over a client's account based on the client's oral authorization for up to ___ days.
10 days
53
Identify the acronym: TSA
Tax-Sheltered Annuity (a qualified contract)
54
When must a federal adviser file an updating amendment to determine continued eligibility for SEC registration?
Within 90 days of the end of the adviser's fiscal year
55
True or False: According to the IA Act of 1940, delivery of a disclosure document is required for all IA contracts.
False. A brochure is not required for investment company contracts or impersonal advisory services priced below $500.
56
Schedule ____ must be filed within ___ business days if an investor acquires more than 5% of a publicly traded company.
13D must be filed within five business days
57
An investment adviser with more than $___________ under management must register with the SEC.
$110 million
58
Administrative cease-and-desist orders may be appealed in a state court if application is made within _____ days.
60 days
59
True or False: An IA must physically deliver its brochure to clients at least annually
False. At a minimum, the IA must (in writing) offer to deliver its brochure annually.
60
What is Form ADV?
The form filed by investment advisers for registration
61
Identify the acronym: UPIA
Uniform Prudent Investor Act
62
According to the Investment Company Act of 1940, who are considered affiliated persons of an investment company?
Officers/directors, members of the advisory board, employees, or owners of 5% or more of the voting stock
63
_____ Plans are college savings plans with high contribution limits set by the state sponsor.
529 plans
64
Accredited investors have net worth of at least $_________ or pre-tax income in each of the last two years of $________.
$1,000,000 or pre-tax income in each of the last two years of $200,000
65
What is the maximum penalty for criminal violations of the Investment Company Act of 1940?
Five years in prison and/or a $10,000 fine
66
Identify the acronym: AMT
Alternative Minimum Tax
67
If an IA contract stipulates cancellation penalties, a brochure must be provided ____ hours before the contract signing.
48 hours
68
State registration remains in effect for ___ year(s).
one year
69
True or False: Under the Uniform Prudent Investor Act (UPIA), an IA's main objective should be risk avoidance.
False. The UPIA indicates that advisers are responsible for managing risk, not avoiding risk.
70
What is Form ADV-E?
Form filed by an independent public accountant after auditing the records of an IA maintaining custody of client assets
71
Identify the acronym: CRD
Central Registration Depository
72
True or False: Perfect negative correlation is -1.00, while a perfect positive correlation is 1.00.
True
73
A customer must respond to a letter of rescission within _____ days or lose the right to sue.
30 days
74
What is a client's right if an IA does not deliver the required brochure 48 hours prior to the signing of the contract?
The client may terminate the contract without penalty within five business days from the signing of the contract.
75
If a BD's net capital falls below the required minimum, it must notify the Administrator within ___ business day(s).
one business day
76
Is registration required for a Section 3(c)(1) hedge fund?
No. Section 3(c)(1) hedge funds are exempt from registration under the Investment Company Act of 1940
77
The principal value of TIPS may be adjusted based on changes to the __________________________.
Consumer Price Index (CPI)
78
Only one IRA rollover is allowed per rolling ____ months.
12 months
79
What is Form 13F?
A report filed by investment managers with discretion over securities that exceed $100 million
80
The maximum criminal penalty for violations of the USA is _____ years in prison and/or up to a $______ fine.
3 years in prison and/or up to a $5,000 fine
81
What criteria must be met for commercial paper to be exempt from registration?
A 270-day maximum life, minimum denomination of $50,000, rated in one of the top-three categories according to an NRSRO
82
The criminal penalty for insider trading by an individual is a maximum of $_________ and/or ___ years in prison.
$5 million and/or 20 years in prison
83
For how long must an IA maintain records?
5 years
84
If an agent has withdrawn registration, the Administrator may still take action for ___ year(s) after the withdrawal.
one year after the withdrawal
85
The _______________________ is often considered the most important measure of inflation.
Consumer Price Index (CPI)
86
Who operates the IARD?
FINRA
87
True or False: An agent whose client moves to a new state may not contact the client until registered in the new state.
False. The agent may engage in transactions with the client for 60 days if registration is pending in the new state.
88
Under the USA, when must an IA provide a balance sheet to a client?
if the IA collects prepaid fees of $500 or more, six months or more in advance
89
Under Regulation T, does the payment date requirement apply to cash or to margin accounts?
Both. Payment is due within three business days for a cash account (100% payment) and a margin account (50% payment).
90
A holdings report filed by an access person must be current as of ___ days prior to the date the report is submitted.
45 days
91
For financial professionals, state registration expires annually on ______________
December 31
92
What is the beta of the market (S&P 500)?
1
93
Define an insider.
Officers, directors, partners, greater than 10% owners, and immediate family members of all listed
94
The SEC may suspend trading on an exchange for up to _____ days with notification to the ____________________.
90 days with notification to the President of the U.S.
95
IA records must be kept for at least ____ years.
5 years
96
The cooling-off period for a federal securities registration is a minimum of _____ days
20 days
97
Identify the acronym: FINRA
Financial Industry Regulatory Authority
98
The maximum number of shareholders in an S Corporation is _____.
100 U.S. shareholders
99
What is Form ADV-NR?
Form required for IAs with general partners who are non-U.S. residents; gives the SEC the right to receive legal papers
100
The _____________________ has the authority to regulate margin requirements.
Federal Reserve Board (FRB)
101
What is a Simplified Employee Pension (SEP) Plan?
An employer-sponsored IRA for the self-employed and its employees
102
What is the primary purpose of the Securities Act of 1933?
Provide investors with full and fair disclosure regarding new issues (prospectus)
103
Assuming a 12% rate of return, how long will it take $50,000 to double?
6 years. Using the Rule of 72, 72 divided by the rate of return determines the number of years (72 ÷ 12 = 6 years)
104
What are the justifiable reasons for denying an individual's registration?
Conviction for any felony or securities-related misdemeanor within the last 10 years
105
When and by whom is Form ADV-E filed?
It is filed within 120 days from the completion of an audit of the IA's books; filed by the auditor
106
Under Regulation D, securities distributed through a private placement may be sold to how many non-accredited investors?
No more than 35
107
Criminal penalties for violating the IA Act of 1940 may not exceed $_______ and/or imprisonment not exceeding ____ years.
$10,000 and/or imprisonment not exceeding 5 years
108
For how long does the registration of a state-registered adviser remain in effect?
Until December 31, unless renewed by the adviser
109
When must an access person file a holding report?
Within 10 days of becoming an access person and at least once every 12 months thereafter
110
To use Filing (Notification) to register stock, the offering price must be at least $______ per share.
$5 per share
111
Under Reg. D private placement, ___ is the maximum number of non-accredited investors allowed.
35
112
What is NOT required to be reported on an 8-K filing?
The location change of a subsidiary of a company
113
When does the SEC require an adviser to include its balance sheet in its ADV Part 2?
If the firm has custody of a client's funds or collects prepaid fees of $1,200 or more, six months or more in advance
114
What must issuers have to qualify for the Rule 147 intrastate exemption?
The issuer must have its principal place of business in that state
115
When should routine changes to an adviser's ADV be filed?
Within 90 days of the end of the adviser's fiscal year
116
What is Form ADV-W?
The form filed by investment advisers to withdraw registration
117
True or False: An IA with five or fewer retail clients in the state in the past 12 months must register under the USA.
False. No registration is required as long as the IA has no place of business in the state
118
What is ERISA?
Employee Retirement Income Security Act
119
What is the minimum cooling-off period for registration by notification?
5 days
120
Identify the acronym: SEP
Simplified Employee Pension Plan
121
There is a ____% penalty for early withdrawals from an IRA
10%
122
When an adviser files Form ADV with the SEC, when does registration become effective?
Within 45 days of filing, the SEC will either grant the registration or institute denial proceedings
123
A SIMPLE 401(k) may not be established by a business that has more than ___ employees
100 employees
124
If Joe is 55 years old, how much is he able to contribute to his IRA?
For any person who's age 50 or older, an additional $1,000 is allowed. Therefore, the maximum contribution $8,000.
125
How are withdrawals from Roth IRAs treated for tax purposes?
Withdrawals are tax-free if the account is open for at least five years and is not considered an early withdrawal
126
True or False: A Section 3(c)(7) hedge fund may contain performance-based fees.
True. However, investors should understand the fee structure of a hedge fund
127
Under the Uniform Securities Act, the statute of limitations for fraud is ____ years.
5 years
128
What instruments are used to facilitate trading of foreign securities in the U.S.?
American Depositary Receipts (ADRs)
129
The maximum contribution to an IRA is ____% of earned income up to a maximum of $_______.
100% of earned income up to a maximum of $7,000
130
If an IA meets the IA definition in a state, when is it exempt from registration under the USA?
If it has no office in the state and it has institutional clients only OR five or fewer retail clients in the last 12 months
131
In a 529 Plan, what happens if the funds are withdrawn, but not used for qualified education expenses?
The earnings would be subject to ordinary income tax plus a 10% penalty.
132
When does an Administrator require an adviser to include its balance sheet in its ADV Part 2?
If the firm has custody of a client's funds or collects prepaid fees of $500 or more, six months or more in advance
133
A contribution of $_______ can be made to a Spousal IRA for a non-working spouse
$7,000
134
Identify the acronym: MPT
Modern Portfolio Theory
135
What is needed for an investment adviser to exercise discretion over a client's funds?
An adviser may exercise discretion for 10 days with the client's oral authorization as long as it is followed up in writing.
136
The application for registration of an agent or IAR becomes effective in _____ days
30 days
137
What percentage of investors must be residents of the state for a security to be exempt under Rule 147?
100%
138
True or False: 529 plans allow for a five-year front-end contribution of $95,000, which avoids gift tax
True ($19,000 x 5 years)
139
Under the IA Act of 1940, an IA may charge performance fees to clients with at least $_________ under management.
$1.1 million
140
A SIMPLE 401(k) may be established by a ______________.
small business
141
How many 10-Q forms must a reporting issuer file per year?
Three. While 10-Q forms must be filed quarterly, a 10-K is filed at the end of the year in lieu of a fourth 10-Q.
142
Under the USA, private placements are exempt if securities are offered to ____ or fewer retail clients over ____ months
10 or fewer retail clients over 12 months
143
If an agent has been enjoined (forced to cease activity) and a hearing is requested, when must the hearing be held?
Within 15 days of the receipt of a written request from the agent
144
What are treble damages?
The civil penalty for insider trading, which is three times the profit made or loss avoided
145
The SEC may suspend trading in any security for up to ____ business days
10 business days
146
The statute of limitations for criminal violations of the USA is ____ years.
5 years
147
Under the provisions of the USA, a hearing will be held ____ days after a written request.
15 days
148
How much may be contributed to a Coverdell each year?
An after-tax contribution of $2,000 is allowed per year
149
Any material changes to Form ADV must be filed ___________.
promptly (within 30 days)
150
Registration by Coordination has a minimum cooling-off period of _____ days.
10 days
151
True or False: Access persons must file transactions reports annually.
False. Transactions reports are filed within 30 days of the end of each calendar quarter.
152
If a cease-and-desist order is issued against an agent, the agent may file an appeal within _____ days.
If a cease-and-desist order is issued against an agent, the agent may file an appeal within 60 days.
153
Is being charged with a felony or securities-related misdemeanor grounds for statutory disqualification?
No. Statutory disqualification is due to conviction for any felony or securities-related misdemeanor in the past 10 yrs.
154
When should significant changes to an adviser's ADV be filed?
promptly (within 30 days)
155
If an IA maintains custody of a client's funds or securities, how often must account statements be provided to clients?
Statements must be sent quarterly
156
If a registrant wishes to withdraw her registration, when does the withdrawal become effective?
If no action is pending, it is effective 30 days after filing the withdrawal request with the Administrator.
157
Who manages accounts, solicits services, or makes recommendations on behalf of a registered investment adviser?
An investment adviser representative (IAR)
158
$10,000 has become $80,000 in 36 years. What is the internal rate of return?
The money doubled every 12 years. The 10 grew to 20, the 20 to 40, and the 40 to 80. Using the Rule of 72, 72 ÷ 12 = 6%.
159
When does the de minimis exemption from registration apply for an IA that has no place of business in a state?
When an IA has no more than five non-institutional clients who are residents of the state (measured over 12 months)
