Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Tutoring For 65 > Q Bank Stuff > Flashcards

Q Bank Stuff Flashcards

1
Q

ADR

A

American Depository Receipt

-Give your money to a bank
-they invest that in foreign Securities
-Your money never technically leaves US Soil

HAS CURRENCY RISK

Facilitates Domestic Trading of Foreign Securities

Can Be Redeemed for the actual shares of Foreign Stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

ADS

A

American Depository Shares

—another word for ADR’s—

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How much $ needs to be paid to Preferred Stock holders Before the Company can Pay Dividend to Common Stock Holders

A

All Dividends due to preferred Stock Holders for THAT YEAR.

As well as any Dividends due to Cumulative preferred Stock Holders that were missed in past years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Rules for qualifying as an Affiliate for relatives

A

Must be a direct relative and LIVE WITH the Affiliate

% ownership of company is the affiliate and all direct relatives % ownership combined
IE:
Husband 5% ownership
Wife 6% ownership
Means they are both affiliates becasue combined they have 11% ownership of company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Do Preferred Stock Holders get to receive Pre-Emptive Rights?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Record Date

A

The Date you must be be shown as an owner on companies records
in order to participate in a specific vote or a specific dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Payment Date

A

The day on Which a Declared Dividend is paid to all stockholders

(must be marked as an owner by the record date in order to be paid on the payment date)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Employee Stock Options

A

Options Awarded usually to employees of a company to purchase their companies stock at a specific price and time

2 Types:
NSO - Non-Qualified Stock Option

ISO - Incentive Stock Option (Qualified Stock Option)

CMV - Strike Price(Excercise Price) = Employees Profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

NSO

A

Non-Qualified Stock Option

Most Common Employee Stock Option
Can be given to people other than employees IE: Board Memebers

CMV - Bargin Price => Profit

Profit is reported as wages for tax purposes (taxed as Ordinary Income)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

ISO

A

Incentive Stock Option

Only given to Employees

CMV - Bargin Price => Profit

Profit is Reported as Either Long or Short Term Capital Gains

If Stock is Held for
2+ years from being given the ISO
and
1+ years from being exercised into Stock
= Long-term Capital Gain

if Less than that
= Taxed as Ordinary Income

MAX 10 YEARS UNTIL EXERCISED

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Rule 144 Holding Period applies to what type of stock

A

Only Stock that was acquired through an unregistered means

(the stock was unregistered when the person acquired it)

Means they have to wait the 6 month waiting period before reselling it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Rule 144 Liquidation requirements apply to what type of stock

A

Stock acquired by an affiliate

Doesn’t matter if it was registered or unregistered stock when they got it
(But if registered they won’t have to wait the 6 month holding period but still have to follow the liquidation requirements)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Capital Risk

A

The Risk of Losing Capital
(What you initially spent to get that security)

Common stock has a greater capital risk than
Preferred Stock
Bond
because it has a lower claim if the company goes under

Deals with the losses you might incure on your Principle investment (the actual money you put down) NOT the Intrest you might receive (IE: bond coupon rates fluctuating)

THINK PRINCIPLE
NOT INTREST

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The Indenture

A

the contract that sets forth the rules and promises of the Issuer of a bond

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Eurodollars

A

American $ held in International Bank
especially ones in Europe

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Difference Between a Dividend and a Stock Dividend

A

Dividend - pays money to Shareholder

Stock Dividend - pays stock to Shareholder

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What’s the process of calculating the cost basis after a Stock Dividend has been paid

A

Find the value of the shareholders position
(This will not change after a stock dividend)

before the stock dividend:
Number of shares Owned x Price of Stock = Value of Position

After the Stock Dividend:
Value of Position / NEW # of shares owned = Cost Basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Ex-Date

A

the first day a shareholder is not entitled to a specific Dividend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Should You Assume Riets are Listed or Unlisted

A

LISTED unless they specify its not

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Are 12b-1 Fee’s high or low on A B and C Funds

A

A - Low or None

B - High
C - High

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

what effect does Redemptions and Purchase’s have on NAV of a Fund

A

NO EFFECT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Special Situtation Fund

A

Type of Mutual Fund

VERY RISKY

Not good for income or retirement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

How to View Private Equity Funds

A

Think Private Sector

Invests in private (non public) companies
(they also do public but can focus on private aswell)

Avoid being an Investment Company because they are more private in who can be apart of it
(100 people or under within the fund)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

NAV Calculation Formula

A

(Portfolio Assets - Portfolio Liabilities) / # of shares outstanding

Management Fee’s
and
Portfolio Debts
Both count toward portfolio Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Difference Between
Fixed Portfolio
and
Fixed Security

A

Fixed Portfolio - the portfolio cannot change its holdings
(Probably a UIT)

Fixed Security - securities Like Bonds, Money Market, Etc…

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

12B-1 Fee’s Must be approved by

A

Board of Directors
AND
Shareholders

Both also have to create and approve a
WRITTEN Distribution Plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Do Changes in Interest Rate Affect Long Or Short Term Debt Security Prices More

A

LONG TERM DEBT PRICES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Asset Allocation Fund

A

A mutual fund whose portfolio managers have the flexibility to allocate between different investment classes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

A Straddle

A

Betting on whether the market will move a lot or stay the same (ignoring if it moves up or down)
Buying a Call and a Put in the same security

Buyer - Wants Volatility (Lots of movement in the market)
Seller - Wants Stability (Little movement in the market)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

When asked Future and forwards questions that want you to decide if someone should buy or sell a forwards/ Futures contract,

What’s the process?

A

1) Determine if the person is a producer or buyer of the commodity

Producers - Worried about price going down - Sell’s contract

Buyers - Worried about prices going up - Buy’s the Contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Difference Between European and American Style Option

A

American - Option can be exercised @ any time during the contract

European - Option can only be exercised @ Expiration Date

HAS NOTHING TO DO WITH GEOGRAPHY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Do Futures contracts have the buyer and seller exchanging the commodity at expiration?

A

No

there is NOT an actual exchange of the commodity for FUTURE’s contracts at expiration
BUT they must settle the contract (they took a bet and the looser needs to pay the winner)
therefore they both have an obligation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Do Buyers and Sellers have an obligation for Options, Futures and Forwards?

A

Options - Seller Only
(the seller is obligated to either buy or sell the security)

Futures and Forwards - Both Buyer and Seller
(the buyer is obligated to pay $ and the seller is obligated to exchange the commodity)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

A very good Security for Funding College Education Is

A

Zero-Coupon Bonds

Because you know exactly what the growth will be

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Definition of Antipodal

A

In opposition to

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What Relationships work toward breakpoints

A

Family - Spouses and Kids

Incorporated/ Affiliated Entities
(includes qualified retirement funds)

NOT
friends
investment clubs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Are Hedge Funds Loosly or Heavily Regulated

A

Heavily Regulated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

How do Convertible Securities Tend to sell in comparison to normal ones?

A

At a Slight Premium

Means you would expect their price to be a little above their parity price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

When are Employee Stock Options Taxed

A

When the sale of the security happens

(not when the option is exercised)

(but ISO’s can sometimes have the profit on exercise be counted toward the AMT)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Important
RIET’s
%’s

A

75% - Assets must be invested in Real Estate cash and Government Securities

75% - AGI must be from Real Estate Related Assets and Intrest

90% - Taxable Income must be paid to investors as dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Class C shares usually have what type of Sales Charge

A

1% CDSC that goes away if held for at least 1 year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Options Clearing Company

A

Issues Standardized Equity Options

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Structured Products

A

Funky “One of a Kind” Investments

Extremely Illiquid
Extremely Low Transparency
Unsecured Obligations
Very Low Interest Rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Draw the Yield Curve

A

Draw it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Draw the Inverted Yield Curve

A

Draw it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What is Inverted Yield Curve caused By

A

Investors
Buying Long-term Bonds
and
Selling Short-term Bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Is an inverted yield curve usually Good or Bad

A

BAD

its a precursor for Recession

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Yield Spreads

A

The Price Difference Between
Quality Debt Instruments
and
Lower Rating Debt Instruments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

High Yield Spreads means

A

Risky Market Conditions

(the price of lower-rated bonds is low because everyone wants the safe stuff)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Low Yield Spreads means

A

Safe Market Conditions

(the price of lower-rated bonds is closer to that of Quality bonds because everyone feels its not that risky)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

The Process of Creating a New US annual operating budget

A

Steps:

1) President submits a proposal to Congress
2) Congress creates an approved version of the proposal
3) President Signs the Approved Proposal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Do Preferred Stock Holders Get Voting Rights

A

No

they also DONT get Pre-emptive rights

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

CPI

A

Average Cost of Goods and Services (Market Basket) Compared to those same goods and services purchased during a base period

(a basket of what an average American buys)

Measures Inflation

Doesnt compare 1 country to another

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Does CPI measure Retail or Wholesale prices

A

RETAIL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Core CPI

A

CPI excluding
-Energy
-Food

Many Economists believe it’s better at tracking Inflation
(because food and energy prices are too volatile)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

GDP

A

Measure of all the production a country has in $

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

Constant Dollars

A

Used to remove Inflation from the equation

(most accurate way to measure GDP)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

What is Gold good and Bad For

A

Good - Inflationary Times

Bad - Deflationary Times

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

Strengthening the Dollar Means

A

The Dollar is Worth More

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Weakening the Dollar Means

A

The Dollar is Worth Less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

When Hearing:
-Credit
-Debit
Think What?

A

Credit -Money Going In

Debit -Money Going Out

Don’t think credit card
think “I’ve got to give you credit”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

Inertial Inflation

A

Prices are steadily Increasing
UNTIL
a large economic shock that changes that

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

Yield Curves Most Often Chart out which securities?

A

Treasury Securities

But
some yield curves use corporate bonds aswell

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

The Usual Change In Interest Rates That’s Associated With:

-Expansion
-Contraction
-Trough
-Peak

A

-Expansion - Rising Intrest Rates
-Contraction - Falling Intrest Rates
-Trough - Bottomed Out Intrest Rates
-Peak - Peaking Interest Rates

(they follow the business cycle up and down)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

Advisor is told
Insider Information
By Client

What should Advisor do

A

Tell their Supervisor

(there is not requirement to tell the State Admin)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

Penalty for Insider Information

A

3X the persons gain or avoided Loss from the use of that info

and 20 years Imprisonment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

What is Fraud

A

-Saying something False
OR
-Not saying something True (that you should have)
OR
-Not following clients instructions ON PURPOSE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

How Many Of Each Indicator:
Leading
Coincident
Lagging

A

Leading - 10
Coincident - 4
Lagging - 7

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

List all 10
Leading Indicators

A

1 - Money Supply
2 - Building Permits (Housing starts)
3 - Initial Claims for Unemployment
4 - hours, of manufacturing
5 - Manufactures new Orders - Consumer Goods
6 - Manufactures new Order - Nondefensive capital goods
7 - Index of supplier deliveries - vendor performance
8 - Interest rate spread - from 10 yr treasury bonds to Federal Funds Rate
9 - Stock Prices
10 - Consumer Expectations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

List all 4
Coincident Indicators

A

1 - Non-Agricultural Employment
2 - Personal income (minus SS, veteran benefits, and welfare payments)
3 - Industrial Production
4 - Manufacturing and Trade Sales in Constant Dollars

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

List all 7
Lagging Indicators

A

1 - Duration of Unemployment
2 - Ratio of consumer installment credit to personal income
3 - Ratio of manufacturing and Trade Inventories to sales
4 - Prime Rate
5 - CPI
6 - Commercial and Industrial Loans Outstanding
7 - Labor cost per unit of output (manufacturing)

72
Q

Dividend Discount Model

A

Assumes all dividends payments will be the same amount

73
Q

Dividend Growth Model

A

Assumes All dividends payments will be growing over time

74
Q

LEAPS

A

stands for
“Long-term Equity Anticipation Securities”

an options contract that has a long time until expiration
(most options contracts are for up to 9 months)

75
Q

Discount rate

A

Another word for

Current Interest Rate In the Market

Also the rate FED charges Banks on loans

76
Q

How does Each of the following change the Balance Sheet:

-Purchase Equipment

-Depreciation

-Declaring a Dividend

-Paying a Dividend

-Issuing Company Bonds

-Issuing Company Stock

A

-Purchase Equipment - Current assets Decrease / Long Term Assets Increase

-Depreciation - Value of Long Term Assets Fall (also decreases Tax Liability because they get tax write off for depreciation)

-Declaring a Dividend - Current Liabilities Increase

-Paying a Dividend - Current Assets and Current Liabilities decrease

-Issuing Company Bonds - Current Assets Go Up and Long Term Liabilities Go Up Equally (means Net Worth doesn’t change)

-Issuing Company Stock - Current Assets Go Up Net Worth Goes Up (But Book value per share remains the same because there are more Shares Outstanding equal to the increase in Net Worth)

77
Q

Interest Rate Risk

A

The Risk That the PRICE of the security will change because of changes to the Interest Rate’s

78
Q

In order for something to have interest rate risk it must have…

A

The ability to be traded.

If it cant be traded, its price doesn’t change with interest rates

79
Q

Do the Following have Interest Rate Risk:
-Bank CD’s
-Jumbo CD’s

A

-Bank CD’s - NO (because they cant be traded)
-Jumbo CD’s - Yes

80
Q

Fiscal Year Accounting

A

Any 12 month Period that doesn’t end on Dec 31st

lots of companies like to use Fiscal Year Accounting

81
Q

Difference between Cash Flow From
-Investing Activities
-Financing Activities

A

-Investing Activities
deals with the company buying/selling Investments (other than their own), Equipment, Assets etc

-Financing Activities
deals with the cash flow that involves Owners (shareholders) and Creditors (ie: bond holders) of the company
Deals with THEIR COMPANY SECURITIES

82
Q

Difference Between
Eurobonds
Yankie Bonds

A

Eurobonds - Issued By an Entity in a foreign country that Issues the bonds to a country other than the Issuers Home Country

Yankie Bonds - a Type of EuroBonds where the Issuer is from a foreign Country and Issues to the UNITED STATES

83
Q

What is a good way of looking at:

Warrant’s

A

They are Basically:

Long-Term Call Options

With a Strike Price that is ALWAYS above CMV of security at the time of Issue

84
Q

At the time of Issue do warrants have:
-Intrinsic Value
-Time Value

A

-Intrinsic Value
NO (because they are always issued with a strike price above CMV)

-Time Value
YES

85
Q

Explain Each Part of this Order:

5M RAN 6.5s of 32 @ 67

A

5M - Means its 5 Bonds with a par value of $1000 each

RAN - Company Name

6.5s - “s” means “%” => 6.5% Coupon

of 32 - Matures in 2032

@ 67 - “@” means the following # is the Price they were bought at => $670 each
(not $67 because its a bond quoted in basis points)

86
Q

IA/IAR must register in a state if:

A

-They have an office in the state
OR
-They have 5 or more NON-INSTITUTIONAL clients in the state in the past 12 months
(Investment Companies and BDs technically are institutions but for this rule count as non-institutional -and if you have a single one in state then you need to register-)

87
Q

BD/Agents of BD
must register in a state if:

A

-They have an office in the state
OR
-They have ANY NON-Institutional Clients in the state

88
Q

How to determine if IA needs State or Federal Registration

A

If they have an Investment Company as a client
= Federal
OR
If they are required to Register in +15 states
=Federal (THEY CAN BE A FEDERAL IA BUT DOESNT HAVE TO BE ONE)

if not:

Their AUM

-Under $100 million = State
-Over $110 million = Federal
-In-between 100-110 = IA gets to choose

89
Q

If federally Registered IA’s AUM drops below $100 million

A

They dont have to file with states unless it drops to under
$90 million

(rule only applies for IA’s who are federally registered)

90
Q

IA’s AUM for purposes of determining Federal or State Registration is reported when

A

It’s Reported 1/year

and it doesn’t matter what happens to their AUM in between that time just where its at at the time of reporting

91
Q

Tax Exemption from
Capital Gains derived from the Sale of a Home

A

$250k - if single
$500k - if married

to qualify you must have lived in the home for 2 of the past 5 years

92
Q

Is BD considered an IA when they sell research for a fee?

A

YES

Even if it’s being sold to an Institution

(If the advice is Incidental to selling of securities and their is no actual compensation coming directly from the advise then it doesn’t count)

93
Q

Rules on
Variable Life Policies
Swapping to
Permanent Life

A

All VL Policies give the Owner the RIGHT
to swap

for the 1st 2 yrs of policy
and
without any further Insurability testing

94
Q

On the test do Life Policies have any sort of living benefits

A

NO

they only pay out upon death

95
Q

Methods of determining the Amount to be credited in a Life Insurance Policy

A

Annual Reset
Point to Point
High Watermark

96
Q

A component of a life insurance crediting method

A

Participation Rates

(its not a method in and of itself but a component in the computation)

97
Q

Rules for S Corps to maintain their Tax benefits

A

Must have all the following
-No more than 100 stockholders
-Each stock holder must be a US resident
-S Corp Can only have 1 class of stock
-S corp can only have up to 25% of its income come from Passive Activities

98
Q

Does Holding Period Return include any Interest or Dividends payments

A

YES

All return formulas do

99
Q

When ISO is exercised is there a taxable event

A

No
BUT
the profit COULD be considered income for AMT purposes

100
Q

ISO Long Term Capital Gains Requirements

A

To Get LTCG ISO must be held for at least

1yr from Exercise
and
2yrs from Grant
(dont mix them up)

101
Q

Compare Muni and Corporate Bonds in the following areas:
-Safety
-Amount of Income it pays
-Tax Benefits

When should you recommend a Muni bond instead of a Corporate

A

-Safety - Muni Safer
-Amount of Income it pays - Corp Pays More
-Tax Benefits - Muni has them Corp Doesnt

Recommend Muni’s instead of corporate when taxes is a priority
(or MAYBE if safety is but that’s a pretty close call)

102
Q

Variable Annuity

Who Bears the following Risks:
-Mortality
-Inflation
-Interest Rate
-Market

A

-Mortality - Company
-Inflation - Owner
-Interest Rate - Owner
-Market - Owner

103
Q

Ancoring

A

Making Irrational Decisions Based upon Unimportant Info

104
Q

Herd Mentality

A

Following the actions of a group whether rational or not

105
Q

Confirmation Bias

A

Pay Attention to Info that supports their opinion more than info that doesnt support their opinion

106
Q

Overconfidence

A

Investor considers their abilities to be better than they are

107
Q

Does AMT calculation use
Accelerated Depreciation
or
Straightline Depreciation

A

Accelerated Depreciation

108
Q

Difference between Market Maker and Specialist

A

Market Maker - Helps with Over The Counter (OTC) trades
(imagine them literally standing behind a counter)

Specialist - Helps with trades on the trading floor, not OTC

109
Q

Do Return Folmula’s include Dividends and Interest Payments

A

YES

Return and Yield are the same thing!!

110
Q

Income Tax Filing Due Dates for:
-C Corp
-S Corp
-LLC
-Partnership
-Sole Proprietorships

A

-C Corp - 15th day of the 4t month following the close of their year (April 15th if they use calendar year not Fiscal Year)

-S Corp - March 15th

-Partnership - March 15th

-LLC
if more than 1 member (owner) - March 15th
if only 1 member (owner) - April 15th

-Sole Proprietorships - April 15th

111
Q

Is Being a Federally Registered Advisor and Registering Via Coordination the same thing?

A

NO

they both have to register with SEC but Coordination is registering with the SEC as a STATE registered advisor not a Federally Registered one.

(they do this so that every other state who needs to be registered with can easily do a notice filing instead of a through Qualification Filing in each state. IMAGE it as the SEC is only the one holding the documents and any state can come to verify them when they need to.)

112
Q

List All State Excluded/Exempt Persons from the Definition of IA

A

Banks
Savings & Loan
Trust Companies

LATE Exemptions Persons
(Advice must be Incidental and no Compensation)

BD’s
(Advice must be Incidental and no Compensation)

Publishers/Writers of newspapers/magazines
(if Regularly Circulated -even if compensated-)

IAR’s

Federally Covered IA’s

Anyone The State Admin Chooses to Exclude

113
Q

What Persons are Exempt from the Definition of IA

only if the Advice given is Incidental and No Compensation for advice is received

A

LATE

Lawyers
Accountants
Teachers
Engineers

THEY ARE EXEMPT only if the Advise given is Incidental and No Compensation for advice is received

(NOT ECONOMISTS)

114
Q

Are Pension Consultants Considered an IA

A

YES

115
Q

Are CFP’s Exempt/ Excluded from the Definition of an IA

A

NO

they qualify for a waiver from the series 65 exam BUT still need to register as IA

116
Q

What Securities Exempt You from the Definition of IA

if they are the ONLY type of securities you give advice on

A

Commodities

and

US Government Securities

117
Q

If you give advice to an employee benefit plan are you Exempt/Excluded from the Definition of an IA

A

If compensated for the advice = No (you’re then considered a pension consultant and therefore also an IA)

If NOT compensated = Yes

118
Q

When Determining if someone meets the definition of IA

Does the Term “Compensation” include:
-Direct Compensation
-Indirect Compensation

A

-Direct Compensation - YES
-Indirect Compensation - YES

Both are considered compensation and for LATE exemption persons means they are considered an IA

119
Q

If IA Changes its Name, address, telephone number, organization type changes (corporation, sole proprietorship, and partnership), degree of control over clients’ funds, sources of funding, management organization, or any information relating to disclosure to clients…

When does it need to update Form ADV

A

Promptly

120
Q

When does a Pension Consultant Register With
-State
-SEC

A

under $200 million AUM = State

Over $200 million AUM = They Get To Decide State or Federal
(THEY DONT HAVE TO REGISTER SEC THEY CAN IF THEY WANT!!!!)

121
Q

When Is IA’s Registration Need to be renewed?

A

Dec 31st every year
(even the 1st year and even if you registered in November. If you registered in December the 30 day waiting period -or 45 for SEC- would be pushing you into the new year anyway)

122
Q

2 types of Private Funds that are Exempt from Registration
and their requirements for being exempt from registration
(basically how can they remain Private not Public)

A

Requirements for Both:
-No Felonies (usually)
-AUM under $150 million

3(C)1:
-No More Than 100 Investors
-Each Investor Must Have either
+1.1 million AUM or
2.2 million Net Worth (Excluding Home)

3(C)7:
-No More Than 2000 Investors
-Each Investor Must Have +$5 million AUM

123
Q

What is the Definition of an IA (not the Exclusions/Exemptions but the actual definition)

A

A Person Who:
-Holds themselves out (advertises) that they are an IA
-Provides advice on a frequent basis
-receives Compensation for advice given (directly or indirectly)
(doesn’t count advice that is incidental to the services a L.A.T.E. Person or BD gives unless DIRECT compensation is recieved)

124
Q

How long is a right subscription period
(usually)

A

30-45 days
(usually)

125
Q

To be considered a Foreign Private Advisor what criteria must be met

A

All the Following

-No office in the US
-less than 15 clients/investors in the US
-less than $25 million AUM in the US
-Doesn’t act as an IA in the US

126
Q

If you only Advising a Government Agency/ Organization do you need to register as IA

A

Yes

127
Q

Is an Estate considered a person

A

Yes

128
Q

When Net Capital Requirement is not met by when must you:
-Notify the Admin
-Meet the Requirement

A

-Notify the Admin - End of the next business day
-Meet the Requirement - End of the Business Day After that

129
Q

If BD/ Agent of BD is providing Investment Advice are they considered an IA

A

Yes

Unless Advice is Incedental and there is no compensation for advice
(then they are still considered an IA but Exempt from registration)

130
Q

Whats the benchmark for if Advice is Incidental to a professionals daily business

A

If they provide the advice to 10 or less Client contracts

131
Q

Are Trustee’s Allowed to sell Securities on behalf of the trust

A

NO - the hire a financial professional to do it

if they do they are considered an IA

132
Q

The offering of securities to ___AMOUNT___ persons is considered a private placement

A

10 or fewer

133
Q

Preorganization Certificate

A

Basically a Go Fund Me For a Business

(Company isn’t created yet but is gathering funds to get up and running)

134
Q

Is the selling of Preorganization Certificate’s Exempt Transactions

A

Only if there is no compensation paid to the seller

135
Q

IPO cooling-off period

A

20 business days from the time they file registration

after the 20 days they can then sell the new securities

136
Q

What are companies allowed to do during the cooling-off period

A

Give out the Preliminary Prospectus
and
get an indication of interest

THAT IS IT

137
Q

Do TIPS Principle or Coupon Rate get adjusted with Inflation

A

The Principle. And its compounding

Once at maturity it only pays the Par Value though ($1000)

138
Q

When IA registers what persons are automatically registered as IAR’s
(State Law)

A

Partner
Officer,
Director,
or a person occupying a similar status or performing similar functions.
(even if they do not have that title)

(Partners => Includes Sole Owners of the IA)

139
Q

Required Rate of Return

A

The return that is expected

Also sometimes considered the Expected Return

140
Q

Which is more volatile:

-Short-Term Interest Rates

-Long-Term Interest Rates

A

-Short-Term Interest Rates

141
Q

Which is more volatile:

-Short-Term Bond Prices

-Long-Term Bond Prices

A

-Long-Term Bond Prices

142
Q

How do distributions work in an IRA when

some contributions were Deductable and some were not

A

All Distributions will be split by % of funds that were Deductable and % that were Non-Deducatable

143
Q

Tax Exclusion if

A company receives a Dividend from another Company

A

Only 50% of the Dividend received considered Taxable

144
Q

Who has the power to close a Stock exchange for 90 days?

and what is required to do so?

A

The SEC

Must give the President of the United States Notice
(Thats all that is required)

145
Q

4 times where something is not considered

An Offer or a Sale

A

-A issuer’s securities change Class

-A pledge/loan

-A court-approved reorganization of security (the new security is given out to former shareholders)

-A stock dividend of stock other than the issuer’s for which nothing of value was given
(also im pretty sure a stock dividend that pay stock of the issuer aswell)

Dont be confused with Agnet of Issuers Rules on not being considered an offer

146
Q

If a

fiduciary participates in a transaction on the plan’s behalf that involves a party with interests adverse to those of the plan in order to ensure favorable terms for the plan.

a Conflict of Interest?

A

Yes

147
Q

The total of:
cash from operations, investing, and financing
(The sum total, or the net change in cash)

is reported on which report
-Income Statement
-Balance Sheet
-Statement of Cash Flows

A

-Statement of Cash Flows

(not either of the other 2)

148
Q

When one wishes to refuse the receipt of an IRA, the procedure is known as

A

disclaiming the IRA

149
Q

What does abjure mean?

A

to reject

150
Q

Interest Rates Increasing would affect which industry the most and how?

The utilities industry

The clothing industry

The electronics industry

The food industry

A

The utilities industry

Utilities are generally very heavily funded with debt.

If interest rates go up, their new debt will be at higher interest rates, causing lower earnings available for common stocks.

151
Q

Difference Between
Front Running
and
Trading Ahead

A

Front Running - placing your orders before your clients
and
Trading Ahead - placing orders right before private info becomes public
(and you know the info)

152
Q

Which provisions of the Uniform Securities Act deal with using insider information

A

antifraud provisions

153
Q

Which Organizations were partnered with the US to create
Brady Bonds

A

International Monetary Fund (IMF)

World Bank

154
Q

What is One thing the State Admin is NOT Allowed to do

A

Issue Injunctions

only a court can issue injunctions.

155
Q

If a security is Exempt if thats all that you sell do you have to register in the state as an
Agent of BD

A

Yes

the security does not have to register in the state but the BD still does

156
Q

Risk-adjusted Return

A

Expected Return - Risk Free rate (the 90 day T Bill)

The return you can get ABOVE
the risk free return
(the return you can get without taking any risk)

157
Q

For the Test…
Do Annuitized Variable Annuities

-Pay fixed $ each month

and

do they
-Guarantee a Rate of Return

-Considered Liquid Investments

A

-Pay a fixed ____% but not a dollar amount

-Guarantee a Rate of Return => No only that payment will never be below the AIR

-Considered Liquid Investments => NO!!!

158
Q

The ONLY business entity that limits the amount of Investors is…

A

S Corp

no more than 100 investors

159
Q

Whats the single most distinguishing characteristic of a universal life plan

A

premiums are flexible and not fixed

160
Q

Difference between a callable and convertible bond

A

callable - Issuer can redeem the bond before it matures if they want

convertible - Shareholder can exchange the bond for stock in the company

161
Q

Form ADV Parts are for what:
-Part 1
-Part 1B
-Part 2A
-Part 2B

A

Part 1 - for registration purposes

Part 1B - only used by state-registered advisers

Part 2A - used for IA (or you can give client brochure instead)
(given to client by time of sale)

Part 2B - used for IAR
(given to client by time of sale)

162
Q

Portfolio rebalancing is a strategy
-Explanation
-When they sell stock
-When they buy stock

A

-a strategy that seeks to maintain a constant % of its original investment allocation

-When they sell stock => When a Stock they hold increases in value

-When they buy stock => When a stock they hold decreases in value

163
Q

The hypothecation agreement

A

Gives permission to the BD to pledge a customer’s margin securities as collateral. The firm hypothecates customer securities to the bank, and the bank loans money to the broker-dealer.

(done during margin account investing with a BD)

164
Q

Reg T % Equity Requirements for:
(What % equity you are required to have)

a Long Account

a Short Account

Initial Margin Requirement

A

a Long Account - 25%

a Short Account - 30%

Initial Marin Requirement - 50%

165
Q

What type of security would you not use IRR to analyze

A

Common stock
(DPP would be better than common stock)

166
Q

Can the State Administrator
Compel individuals to give a testimony?

A

Yes

167
Q

Do the following have to be completed BEFORE a customer enters their first options Trade?

-receipt of a completed options agreement
-approval by a designated options supervisor
-delivery of the options disclosure document (ODD)
-completion of the new account form

A

-receipt of a completed options agreement - NO
(it just has to be returned by the customer within 15 days of account approval)

-approval by a designated options supervisor - YES

-delivery of the options disclosure document (ODD) - YES

-completion of the new account form - YES

168
Q

Which of the following is considered a speculative investment and not generally an element in retirement planning?

Life insurance

Commodities

A

Commodities

169
Q

What can an Administrator require from a federally covered adviser?
-Copy of the IA’s Form ADV
-Filing of the IA’s advertising in the state
-A listing of the IA’s fee schedule
-A filing fee

A

Copy of the IA’s Form ADV

A filing fee

170
Q

Sharpe Ratio

A

Risk-Adjusted Return —- (Expected Return - Risk-Free rate (the 90 day T Bill))
/
Standard Deviation

It compares how much return you get to what level of risk it took to get it.

Higher number = Higher performance
(getting a higher return without taking on more risk)

171
Q

Is Financial Insolvency Grounds for Revocation of Registration in Federal / State Laws?
(assets less than liabilities)

A

Federal - No
State - Yes

172
Q

Brady Bonds

A

Foreign Government-Issued Bonds

Backed By US Treasury Bonds

Denominated in US Dollars

Helps support foreign governments

173
Q

Convictions of

-Felonies?
-Misdemeanors?
within the past ____Time_____?

maybe grounds for denying a registration

if a state has a different definition of Penalty/Misdemeanor could that change it?

A

-Felonies - YES
-Misdemeanors - NO
within the past ____10 years_____

Different State - NO Doesnt Matter
(all that matters is what the conviction shows up as on the persons record)

174
Q

Can states enforce more-stringent recordkeeping rules than those of the SEC

A

No

but they could still investigate
(only the principle office state could enforce their rules though)

175
Q

If SEC convicts a BD of a rule breach

can specific states also go after the BD

A

Only the state where the principle office is located

176
Q

Admin cannot enter a final order without what

A

-Prior notice to the applicant as well as the employer
-An opportunity for a hearing
-Findings of fact and conclusions of law

(the individual is not required to provide written acknowledgment before an order is issued)

Tutoring For 65 (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions