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SIE Unit 1 > Knowledge of Capital Markets > Flashcards

Knowledge of Capital Markets Flashcards

1
Q

Securities Act of 1933

A

Governs the new issuance (primary) market, which involves the money-raising activities of issuers. Requires issuers to register their securities when selling to the public.

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2
Q

Securities Exchange Act of 1934

A

Governs trading markets for existing securities and registration requirements of Broker-Dealers, Broker-Dealer employees, and exchanges

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3
Q

Investment Company Act of 1940

A

Governs the regulation of packaged products such as mutual funds, closed-end funds, and unit investment trusts.

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4
Q

Investment Advisers Act of 1940

A

Governs the regulation of firms that earn fees for providing investment advice.

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5
Q

Securities Investor Protection Act of 1970 (SIPA)

A

Covers the protection thresholds for customers in the event of a broker-dealers bankruptcy

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6
Q

Insider Trading and Securities Fraud Enforcement Act of 1988

A

Defines penalties for the misuse of material, non-public information by both firms and individuals

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7
Q

The USA Patriot Act (2001)

A

Covers anti-money laundering (AML) policies and procedures that must be followed by financial firms.

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8
Q

Securities and Exchange Commission (SEC)

A

Commission created by Congress to regulate the securities markets and protect investors. Composed of five commissioners appointed by the President and approved by the Senate.

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9
Q

Broker-Dealer (BD)

A

A person or firm in the business of buying and selling securities.

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10
Q

Self-Regulatory Organization (SRO)

A

One of eight organizations accountable to the SEC for the enforcement of federal securities laws and the supervision of securities practices within an assigned field of jurisdiction.

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11
Q

Over-the-counter (OTC) market

A

SEC system in which BDs negotiate directly with one another rather than through an auction on the exchange floor

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12
Q

Conduct Rules

A

Regulations designed to ensure that FINRA member firms and their reps follow fair and ethical trade practices when dealing with the public.

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13
Q

Code of Procedure (COP)

A

The formal procedure for handling trade practice complaints involving violations of the Conduct Rules

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14
Q

Code of Arbitration Procedure

A

The formal method of handling securities-related disputes or clearing controversies between members, public customers, clearing corporations, or clearing banks.

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15
Q

Chicago Board Options Exchange (CBOE)

A

The self-regulatory organization with jurisdiction over all writing and trading of standardized options and related contracts listed on that exchange.

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16
Q

Municipal Securities Rulemaking Board (MSRB)

A

A self-regulatory organization that regulates the issuance and trading of municipal securities. No enforcement powers.

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17
Q

Blue-sky laws

A

The nickname for state regulations governing the securities industry

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18
Q

Federal Reserve Board (FRB)

A

A seven-member group that determines monetary policy and takes action to implement its policies.

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19
Q

Securities Investor Protection Corporation (SIPC)

A

A nonprofit membership corporation created by an act of Congress to protect clients of brokerage firms that are forced into bankruptcy

20
Q

SIPC provides brokerage firm customers:

A

Up to $500,000 coverage for cash and securities held by the firms (although cash coverage is limited to $250,000).

21
Q

Customer

A

Any person who opens a trading account with a broker-dealer.

22
Q

Margin account

A

A customer account in which a brokerage firm lends the customer part of the purchase price of securities

23
Q

Federal Deposit Insurance Corporation (FDIC)

A

The government agency that provides deposit insurance for member banks and prevents bank and thrift failures.

24
Q

Institutional Investor

A

A person or organization that trades securities in large enough share quantities or dollar amounts that it qualifies for preferential treatment such as lower commissions.

25
Q

Accredited Investor

A

Any institution or individual meeting minimum net worth requirements for the purchase of securities qualifying under the Reg D registration exemption.

26
Q

Investor

A

The purchaser of an asset or security with the intent of profiting from the transaction

27
Q

Market Maker

A

A dealer willing to accept the risk of holding a particular security in its own account to facilitate trading in that security

28
Q

Registered Representative

A

An associated person engaged in the investment banking or securities business who gives investment advice for compensation.

29
Q

Investment Advisors Act of 1940

A

Legislation which governs who must register with the SEC as an investment advisor

30
Q

Investment Advisor

A

Any person who makes investment recommendations in return for a flat fee or a percentage of assets managed.

31
Q

Issuer

A

The entity, such as a corporation or municipality, that offers or proposes to offer its securities for sale

32
Q

Underwriter

A

An investment banker that works with an issuer to help bring a security to the market and sell it to the public

33
Q

Investment Banker

A

An institution in the business of raising capital for corporations and municipalities. May not accept deposits or make commercial loans.

34
Q

Make A Market

A

To stand ready to buy or sell a particular security as a dealer for its own account.

35
Q

Custodian

A

An institution or person responsible for making all investment, management and distribution decisions in an account maintained in the best interests of another.

36
Q

Mutual Fund Custodian

A

A national bank, a stock exchange member firm, a trust company, or another qualified institution that physically safeguards the securities a mutual fund holds. Clerical.

37
Q

Trustee

A

A person legally appointed to act on a beneficiary’s behalf

38
Q

Fiduciary

A

A person legally appointed and authorized to hold assets in trust for another person and manage those assets for that persons benefit

39
Q

Transfer Agent

A

A person or corporation responsible for recording the names and holdings of registered security owners, seeing that certificates are signed by the appropriate corporate officers, affixing the corporate seal, and delivering securities to the new owners.

40
Q

Capital Market

A

The segment of the securities market that deals in instruments with more than one year to maturity - that is, long term debt and equity securities.

41
Q

New Issue Market

A

The securities market for shares in privately owned businesses that are raising capital by selling common stock to the public for the first time.

42
Q

Initial Public Offering (IPO)

A

A corporations first sale of common stock to the public

43
Q

Public Offering

A

The sale of an issue of common stock, either by a corporation going public or by an offering of additional shares.

44
Q

Secondary Market

A

The market in which securities are bought and sold subsequently to their sold to the public for the first time.

45
Q

Fiscal Policy

A

The federal tax and spending policies set by Congress or the President. These policies affect tax rates, interest rates, and government spending in an effort to control the economy

46
Q

Monetary Policy

A

The Federal Reserve Boards (FRB) actions that determine the size and rate of the money supply’s growth, which, in turn, affect interest rates.

SIE Unit 1 (1 decks)

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