Definitions Flashcards
A financial institution, a private business development company, directors or officers of the issuer, or an individual with a net worth of $1,000,000, or $200,000 annual income, for the past two years. If a joint account, the income goes to $300,000.
Accredited Investor
The increase of the cost basis on a bond.
Accretion
Interest realized between interest payments
Accrued Insterest
An accounting measure used to determine the annuitant interest in a seperate account. This deposit of money in an annuity is expressed in these units.
Accumulation Unit
The Uniform Securities Act of 1933.
Act (the)
According to value; the term is used for property taxes
Ad Valorem Tax
the State securities commission, its commissioner, or secretary
Administrator
General information to the general public; it is considered an indirect audience (material used in the media)
Advertisement
When a firm effects trades for the account of others
Agency Capacity
A mutual fund that attempts to achieve the highest capital gains
Aggressive Growth Fund
A foreign security on deposit at an overseas American bank branch (used to facilitate U.S. investors trading in foreign securities)
American Depository Reciepts (ADRs)
The person receiving the payments from an annuity
Annuitant
A contract that provides for payments over the life of the contract.
Annuity
The payout period of an annuity
Annuity Period
The payments from an annuity are expressed in these units
Annuity Units
The charter granted by the state where the corporation exists
Articles of Incorporation
The lowest price a seller is willing to accept for a security
Asked Price
An assumption of a reasonable rate of return on a security.
Assumed Interest Rate (AIR)
The number of shares to be issued according to the articles of incorporation.
Authorized Share
Checks payable at a specified future date drawn on and accepted by a bank
Bankers Acceptance
The highest price that a buyer is willing to pay for a security.
Bid Price
HIghly rated issues of large, mature companies
Blue Chip Stock
The governing body of the corporation (or mutual fund) elected by the shares owned by the shareholders who establish corporate management policies.
Board of Directors
A corporate or government debt security
Bond
Used for temporary project financing that eventually will receive revenues from a bond issue
Bond Anticipation Rate (BAN)
Mutual fund that invest all of their assets in debt securities
Bond Fund
The possessors of debt instruments
Bondholder
Ownership of a bond evidenced by an accounting entry with no physical certificate.
Book Entry
A person engaged in transacting securities business for the account of others.
Broker
Firm that effects securities transactions for their own account or the account of others
Broker/Dealer
The issuer has the flexibility to retire debt prior to maturity
Call Feature
Gives the buyer of the contract the right to purchase the underlying security at a set price known as the strike price
Call Option
The right to call or repurchase the security
Callable
Appreciation of the market value of a security
Capital Gains
An investment sold for less than its cost basis
Capital Loss
The sum of all issued securities of a corporation
Capital Structure
The accumulated value of an insurance policy that will be returned to the policy owner upon surrender of the policy
Cash Value
An order preventing the continuation of an action.
Cease and Desist Order
Short term instruments issued by commercial banks
Certificate of Deposit
Engaging in the transactions solely to generate commissions (excessive training)
Churning
A liability created without willful intent against an individual
Civil Liability
Non-criminal penalties usually resulting in a fine
Civil Penalty
An investment company whose issues are not redeemable and trades on an exchange or over the counter
Closed-End Investment Company
Concerned with settling disputes between broker/dealers, associated persons, and/or the public
Code of Arbitration
Outlines procedural process in the even of securities violations
Code of Procedure
Bond issued by a corporation that owns portions of other companies and use these stocks as collateral for a bond issue
Collateral Trust Bond
Marketable securities are used as collateral to back the certificate
Collateral Trust Certificate
The collateral backing the obligation is a pool of conventional mortgages.
Collateralized Mortgage Obligation (CMO)
Promissory note issued by a corporation
Commercial Paper
Company stock that does not pay a specified dividend
Common Stock
A consideration to alleviate extra tax burdens on shareholders
Conduit Theory
An individual who obtains financial products or services from a financial institution one time only (no continuing relationship expected)
Consumer
A fund offered at NAV that will include a sales charge if the fund is redeemed within a specified period of time.
Contingent Deferred Sales Charge (CDSC)
A plan in which sales are held by a trust that allows for periodic payments
Contractual Plan
Stock acquired by an affiliated person such as officer or director
Control Stock
Market Value of a Bond = the market value of the common stock for which it is exchanged.
Conversion Parity
The number of shares that will be received for each share of preferred stock or corporate bond.
Conversion Ratio
A set price at which the preferred shareholder or bondholder can convert to common stock.
Conversion Price
Allows a preferred stock owner or bondholder to convert to shares of common stock
Conversion Privilege
Bonds that allow the holder to exchange or convert into common shares in the issuin company at a predetermined price
Convertible Bonds
The 20 days after the filing date of a registration statement
Cooling-Off Period
A legal business entity whose existence is legally distinct from the people who own or control it.
Corporation
Any written or electronic mail messages distributed to existing or prospective customers.
Correspondence
The original purchase price of a security, inclusive of sales charges
Cost Basis
The interest rate paid on a bond.
Coupon Rate
A liability created by willful violations
Criminal Liability
A provision that allows no dividend to be paid to common stockholders if preferred dividends are in arrears.
Cumulative Dividend
Number of shares (X) the number of vacancies = the number of votes
Cumulative Voting
Annual interest paid on a bond DIVIDED BY its current market value or annual dividend on a stock DIVIDED BY its current market value
Current Yield
A national bank or trust company that safeguards a mutual fund’s physical assets. Also, the fiduciary of a minor’s account (UGMA)
Custodian
An individual or entity with which a financial institution expects to have a continuing relationship.
Customer
Stock whose earnings tend to flucuate within the busines cycle of their industy.
Cyclical Stock
The date that accumulation units are converted to annuity units
Date of Annuitization
A firm that performs securities transactions for their own acount as a part of regular business
Dealer
The amount the beneficiary receives from the decedent owner of an annuity or life insurance policy
Death Benefit
A bond issue that is not secured by a pledged asset
Debenture
The date the board of directors authorizes a dividend
Declaration Date
Stocks in companies that have a resistance to recession
Defensive Stock
Payments from the annuity are delayed for a specific period of time after the deposit
Deferred Annuity
The sales charge is determined by the length of time the security is held
Deferred Sales Charge
A letter sent by the SEC to a company issuing a prospectus and it outlines recommendations and changes to the prosepctus thus postponing the issue.
Deficiency Letter
The employee is assured a specified annual benefit payment at reitrement
Defined Benefit Plan
A retirement plan where the employer is required to fund a specified contribution on behalf of each employee.
Defined Contribution Plan
The persisten and appreciable decline in general price levels
Delation
A bond that is sold at less than par value.
Discount
Securities that are purchased at below the face value and redeemed at full value
Discount Securities
The yield denotes the percentage discount from the face value and redeemed at full value.
Discount Yield Basis
The controlling influence effecting securities transactions in which the registered representative or the B/D has to determine either the Action, Amount or Asset to be purchased or sold.
Discretion
Th principal underwriter of a mutual fund
Distributor
The spreading out of investment assets to reduce volatility
Diversification
A portfolio that contains various investment vehicles and/or asset classes
Diversified Portfolio
A payment of earnings of a corporation per share of stock
Dividend
Systematic investments at fixed intervals, usually monthly or quarterly.
Dollar Cost Averaging
Proper investigating and researching of a security prior to transaction.
Due Dilligence
The date in which a registration statement becomes effective.
Effective Date
Equipment owned by the issuing corporation is used as collateral to back a debt issue.
Equipment Trust Certificate
Represents 100 shares of a specific common stock
Equity Option
the Employee Retirement and Income Security Act of 1974 establishing IRS standards for qualified retirement plans.
ERISA
Employee Stock Ownership Plan, a profit sharing plan wherby the employer contributions are invested in the stock of the company.
ESOP
The date in which a stock trades without the right to receive a dividend.
Ex-Dividend Date
Investment companies whose objective is to achieve the same return as a particular market index.
Exchange Traded Funds (ETFs)
A security that is not required to be registered
Exempt Security
Trades that do not normally include the general public
Exempt Transaction
Establishes the maximum amount of administrative expenses for annuity or variable life contracts
Expense Guarantee
Total expenses of a mutual fund divided by the fund’s total net assets
Expense Ratio
Debt certificates that offer pre-determined interest rates
Face Amount Certificate
The Federal National Mortgage Association
Fannie Mae
Registration made effective by the SEC.
Federal Registration
The body that implements US monetary policy
Federal Reserve System
Financial Industry Regulartory Authority (formerly NASD)
FINRA
The government’s usage of taxation and expenditure programs to maintane a stable economy.
Fiscal Policy
Fixed dollar payments that remain constant
Fixed Annuity
Pricing method used by mutual funds based on the next price to be computed
Forward Pricing
The deliverate misleading of a person to effect a transaction
Fraud
The Federal Home Loan Mortgage Corporation
Freddie Mac
Same as a registered bond with the addition of semi-annual interest payments sent from the issuer. No physical bond is issued.
Fully Registered Bond
Bond issued by a policitical subdivision who has the authority to levy and collect taxes
General Obligation Bond (GO)
The Government National Mortgage Association
Ginnie Mae
Delivery of stocks and/or bonds in certain, acceptable units
Good Delivery
