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Series 65 > From The Videos > Flashcards

From The Videos Flashcards

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Series 65 flashcards
1
Q

What is the minimum non-interested percentage that must be on the board of directors for an investment company?

A

40%

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2
Q

What are the limits on investment companies purchasing shares from another investment company?

A

No more than 3% ownership
No margin
No joint trading on a single account
No short sales

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3
Q

How does pricing for open and closed- end funds differ?

A

Closed-end: price based on supply and demand, not the nav

Open: determined by NAV + admin cost = POP

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4
Q

What is the maximum 12-1b fee percentage?

A

.75%

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5
Q

Key points of a class A share?

A

Front end load
Maximum 8.5% of pop fee
Allows for breakpoints

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6
Q

What percentage of a REIT income must be distributed to its investors?

A

90%

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7
Q

What is the percentage of real estate sources that must make up a REIT?

A

75%

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8
Q

Regarding rights, are they sold above or below current market value?

A

Below, always

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9
Q

How long do rights last for?

A

9 months

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10
Q

What are exchange traded notes?

A

Unsecured debt instruments

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11
Q

What is the difference between a viatical and life settlement?

A

Viatical is for those with less than 24 months to live

Life is for those over 65

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12
Q

What does a yield spread narrowing indicate?

A

Consumer optimism

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13
Q

What is the yield spread?

A

The difference between government bond and corporate bond yields

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14
Q

What are items included in net worth or “owners equity”?

A

Preferred stock
Common stock
Paid-in surplus
Retained earnings

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15
Q

What happens to a company’s net worth when bonds are converted?

A

The debt is paid off, liabilities decrease, and the net worth increases

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16
Q

What happens to a company’s net worth is a company calls a bond?

A

The assets go down by using cash to pay the called bond

The liabilities go down by paying off the debt

Net worth stays the same

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17
Q

What is the form 8-k?

A

A businesses report of changes to the business or the board. 4 days reporting

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18
Q

What is key to form 10-q?

A

Only 3 quarters. The annual report makes up the fourth quarter.

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19
Q

What is form 10-k?

A

The annual audit of a company

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20
Q

Who is and isn’t a “person”?

A

A person is broad
A non-person is a minor, incompetent, or dead

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21
Q

What is NOT a security?

A

A fixed insurance or annuity contract (not variable)

A retirement plan

(4 C’s) Collectibles, commodity futures, condominiums, and currency

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22
Q

What is the difference between issuer, issuer transaction, and nonissuer transaction?

A

Issuer: the person who issues the security (the car manufacture)
Issuer transaction: when the issuer receives proceeds (dealer to the car manufacturer)
Nonissuer transaction: proceeds go to the previous owner of the security. (Individual to the car dealer)

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23
Q

What is an exempt security?

A

Short term notes: max maturity of 270 days, min denomination $50k, must be in top three ratings (notes, paper)

Government issues: Canada and U.S.

Bank issues: S&L, trusts, etc

Insurance companies

Public utility companies

Charities

C

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24
Q

What are federally covered securities?

A

Also, exempt securities from registration with the state.

On a listed exchange
Open or closed investments 1940

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25
Q

What is rule 147?

A

Intrastate exemption. If the security doesn’t go across state borders, then it is not covered federally

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26
Q

What are exempt transactions (verb) under the USA?

A

Reorganized certificate
Transactions with an institution or BD
Nonissuer transactions - unsolicited
Fiduciary transactions - just not custodians

27
Q

What is the process for process for registering a security under federal law?

A

File registration statement

Cooling off period (20 days)

Effective date - date underwriters can start taking money and orders

28
Q

What is the procedure for registering securities under state law?

A

Two ways:
Coordination: issue that is registered with both the state and the fed

Qualification: used for intrastate registration

29
Q

2 key items to remember about “investment counsel”.

A

Must be in the principle business of giving advice

Must be a significant portion of the business - advice or supervision

30
Q

Who is a 1092 investment advisor?

A

Financial planner
Agent for sports and entertainment talent
Pension consultant

31
Q

Who is not an investment advisor? (LATE)

A

Lawyer
Accountant
Teacher
Engineer

Remember “incidental”

32
Q

Is an investment advisor representative, an investment advisor?

A

No - a IAR works for a IA

33
Q

What entities are not IAs?

A

Banks, savings institutions, trusts,

B/Ds with incidental services

Newspapers and magazines with general recommendations

34
Q

What is the state private fund advisor exemption?

A

No registration if you manage less than and aggregate of $150mm of private funds

If you’re a foreign advisor, you manage less than $25mm

You only advise venture capital funds

35
Q

Breakdown the various parts of form ADV.

A

Part 1A: business structure and key players

Part 1B (state only): more details on business structure

——part 2 is the brochure——

Part 2A: describes the firm and how it operates

Part 2B: describes the personnel of the firm

36
Q

Registering under the state, what are the minimum amounts of net worth for discretion or custody?

A

Discretion: $10k
Custody: $35k

37
Q

Where must a federally covered IAR register with the state?

A

Only in the state where that IAR is a resident and conducts business

38
Q

For termination, what is the difference in who notifies between state and fed registration?

A

State: the IA notifies administrator
fed: the IAR notifies the administrator (because the IAR is filed with the state)

39
Q

What is a gift of assessable stock?

A

It is an offer and a sale. It also doesn’t protect the owner from limited liability. Creditors can come after holders of assessable stock

40
Q

For printed offers, when does the state administrator lose jurisdiction over the offer in the state of publishing?

A

When more than 2/3 of the circulation is outside the published state

41
Q

If someone has a misdemeanor on their record in one state, but that crime is a felony in the state where they are trying to register, can they register?

A

Yes. It’s what’s on the record.

42
Q

What is the statute of limitations for securities civil liabilities?

A

3 years from event
Or
2 years from discovery

Whatever is sooner

43
Q

Who does the broker represent and how do they earn money?

A

They represent the agent and make a commission

44
Q

Who does the dealer represent and how do they make money?

A

They represent the principle and make their money from mark up / mark down

45
Q

What does the partnership have to do when the partnership changes (under and over 50% change)?

A

Under 50% - notify clients within a reasonable amount of time

Over 50% - means new assignment. A new client agreement is required.

46
Q

What are the requirements for disclosure when something negative is on their record?

A

Any disciplinary action in the last 10 years
Any fine over $2500

47
Q

ADV Appendix is in reference to…

A

The Wrap fee program

48
Q

What is the difference between adoption and entanglement?

A

Entanglement is when there is participation in the creation of an ad

Adoption is when the ad is 100% adopted

49
Q

What are soft dollars and when are they allowed?

A

Soft dollars are “kickbacks” basically from a BD to an advisor in the form of using BD provided items related to client planning.

Research, software, seminar registration fees, etc

50
Q

What is the difference for discretion authorization between IAs and BDs?

A

IAs - oral discretion okay for up to 10 days after first trade

BDs must have in writing prior to first trade

51
Q

When does a FinCEN form 112 have to be filed?

A

When a deposit of greater than $10,000 is made

52
Q

What are qualified dividends taxed at?

A

Long term gains

53
Q

What must a simple trust do each year?

A

Distributable net income

(Everything but reinvested gains)

54
Q

What are the social security ranges for taxation for single and married?

A

Single $25k - $34k
Married $32k- $44k

55
Q

If you have a high income client, what kind of investment is suitable?

A

Muni bonds

56
Q

How do you arrive at book value?

A

Net worth - preferred stock- intangibles

57
Q

What are quick assets?

A

Current assets - inventory

58
Q

What is the credit agreement?

A

For a margin account to borrow money

59
Q

What is hypothecation?

A

It is the pledge of stock as collateral for your margin loans and that your stock can be sold as needed to meet margin

60
Q

What is the consent to loan agreement?

A

This is the agreement that the BD uses to loan out your stocks as required.

This is an optional doc - they could do this anyway

61
Q

What are the other names for the OTC and Exchange markets?

A

OTC = negotiated
Exchange = auction

62
Q

What is the inside market?

A

The highest bid and the lowest ask and their associated volume of stock trades

63
Q

What is the bid and what is the ask?

A

The bid is the amount a BD would be willing to pay for your stock (trading in your car)

The ask is the amount a BD would sell a stock (turning around and selling your car)

64
Q

What is SLoBS and BLiSS?

A

Sell Limit and Buy Stop Limits are above the line
-——————————————————
Buy limit and sell stop limit are below the line

Series 65 (2 decks)

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