Brainscape's Knowledge GenomeTM

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


See full index

Series 7 > Questions > Flashcards

Questions Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 7 Top-off Exam flashcards
0
Q

What is the tax rate for dividends?

A

15%

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

How many days must a new employee of MSRB wait before dealing with public?

A

90

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

What is the formula for current yield?

A

Current yield = annual income / current market price

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

Parity price

A

shares that can be received upon conversion par / conversion rate the parity is current market value of convertible / # shares

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

Minimum dollar amount for Ginnae Mae pass-through.

A

$1,000

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

Interest earned on Fannie Mae owes taxes where?

A

Federal, state, local

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

Calculate tax equivalent yield.

A

Muni rate / (1-tax bracket)

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

To whom must you report trades between MSRB members?

A

NSCC

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

What is the dollar amount of a round lot in muni bonds?

A

$100,000

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

Who is insures against the issuers default or credit risk of the issuer?

A

AMBAC and MBIA

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

What is an out firm quote?

A

An out form quote means that the dealer quoting the prices is obligated to trade with another party at that price.

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

Are capital gains on OID muni bonds considered ordinary income?

A

Yes

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

Must an investor who purchases a muni bond at a premium amortize the premium over the remaining years?

A

Yes

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

Will a syndicate member filling a customer order receive the total takedown?

A

Yes

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

How are most revenue bonds awarded to syndicates?

A

Through negotiation

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

Formula for tax equivalent yield.

A

Tax exempt yield / (1 - the tax bracket)

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

What is the maximum duration for a piece of commercial paper?

A

Nine months or 270 days

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

Who controls the discount rate?

A

The Federal Reserve Board

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

At what rate do banks repay each other?

A

The fed funds rate.

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

How many days for delivery when a stock option is exercised?

A

Three days.

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

What triggers the automatic exercise of capped index options?

A

If they go 3o points in the money.

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

How many days for options settlement?

A

The next day

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

How many days does a customer have to return a signed options agreement after the account has been approved?

A

15 days

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

For how many days may a letter of intent be backdated?

A

90

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

May an investment club qualify for breakpoint sales charge reductions?

A

No

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

How many shareholders must an investment company have to start and continue?

A

100

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

How often may a mutual fund send out capital gains distributions?

A

One per year

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

What is the max investment of its assets in any one company for a diversified mutual fund?

A

5%

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

Pricing formula for an open end investment company?

A

NAV + SC = POP

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

How much net investment income must a mutual fund distribution to retain tax advantages?

A

90%

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

Who sets the ex-dividend date for an open ended mutual fund?

A

The board of directors.

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

How often must mutual fund prospectus be updated?

A

Every 13 months

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

What type of risk is carried by the owner of a fixed annuity?

A

Purchasing power risk

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

What is a free shoe provision?

A

A green shoe provision allows the syndicate to purchase up to an additional 15% of the offering from the issuer.

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

How many non-accredited investors are allowed in a corporate bond offering?

A

35 in any 12 month period

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

What is a standby underwriting agreement?

A

The underwriter will standby to purchase any shares not purchased by shareholders.

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

How many bids may be entered to the benefit of the syndicate?

A

1

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

For how long after the IPO must the prospectus be presented?

A

90 days

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

Does a selling group member have liability to the syndicate is issues remain unsold?

A

No

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

On a ticker tape, what does s/s stand for?

A

S/s indicates a round lot is 10 shares.

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

May a representative ever borrow from a client?

A

Yes, if the client is in the business of making loans. (Bank, credit union)

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

May any relatives purchase “hit issues”?

A

Yes, in-laws provided strict limits.

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

Does a new account form require the signature of the customer?

A

No. Before opening a new account for a new customer, a registered rep fills Ajit and signs the form, not the customer.

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

Who sets the minim margin maintenance for a new margin account?

A

NYSE / FINRA

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

What is the initial minimum for a new margin account?

A

$2,000 or 50% of the purchase price.

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

How do you calculate the minimum equity in a long account?

A

Multiply the market value by .25

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

How much margin is required for a muni bond?

A

The greater of 7% of par value or 15% of market value.

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

What is the penalty for an excess Keogh contribution?

A

10%

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

How often and what is the transfer window for Ira rollovers?

A

Once per year and 60 days.

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

Is IRS approval required for participation in qualified and non-qualified plans?

A

Yes for qualified, no for non-qualified.

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

What does signing a stock or bond power do?

A

Allows for the transfer of shares.

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

How many days prior to an annual meeting must proxies be returned?

A

10

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

How many days smoke settlement of treasuries?

A

Next day

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

Who may guarantee signatures?

A

Bank officers and principals of exchange member firms.

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

Formula for current yield.

A

Annual div / market share

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

Composition of capitalization.

A

Assets, liabilities, net worth, stockholders equity.

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

Describe overriding royalty interest.

A

Has no partnership risks but received a royalty from the partnership.

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

May a limited partner advise the general partner?

A

No

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

What is the greatest risk associated with purchasing a CMO?

A

Early refinancing or prepayment risk

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

What does the Securities Act of 1934 regulate?

A

The secondary market

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

What does the Uniform Practice regulate?

A

The way members conduct business with other members.

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

What is the Maloney Act?

A

An amendment to the Securities Act of 1934 established NASD (now part of FINRA) as the self regularly organization of the OTC market.

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

For how long must brokers maintain ads?

A

3 years

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

Requirements for accredited investor

A

One or more of:
Net worth of 1m ex house
Single w/income of 200k
Income of 300k jointly w/spouse

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

Accretion

A

An accounting method used to step up an investors cost badges for a bond purchases at a discount

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

Acid test ratio

A

Subtract inventory from current assets and divide the result by current liabilities

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

As valorem tax

A

A tax based on the value of the subject property.

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

Formula: AGI

A

Earned income + investment income (portfolio income) + capital gains + net passive income

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

Affiliate

A

An individual who owns 10% or more of the companies voting stock

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

Agency issue

A

A debt security issues by any authorized entity of the U.S. government.

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

Allied member

A

An owner-director or 5% owner of a NYSE firm. Callie’s members may not trade on the floor.

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

AMBAC INDEMNITY CKRPORATION

A

Insures the interest and principal payments of muni bonds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

Assumed interest rate (air)

A

Benchmark used to determine the min rate of return that must be realized by a variable annuitys separate account during the layout stage to keep the annuitants payments consistent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

Automated transaction comparison (act) service

A

ACT is the service clears and locks NASDAQ TRADES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

Balance sheet equation

A

Liabilities + shareholders equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

Bankers acceptance note

A

A letter of credit that facilitates foreign trade.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

Blind pool

A

A type of direct participation program where less than 75% of the assets to be acquired have been identified

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

Block trade

A

10,000 shares or $200k mc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

Blue list

A

Daily pub of muni offerings and secondary market interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

Blue sky

A

State registration process for a security offering

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

Blue sky laws

A

State based laws enacted under the Uniform Securities Act.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
81
Q

Number of members on board of governors.

A

27

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
82
Q

Bond anticipation note

A

Short term municipal financing sold in anticipation of long term financing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
83
Q

Bond ratio

A

How much of the capitalization is from bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
84
Q

Bond swap

A

The same and purchase of two different bonds to claim a loss and avoid violating wash same rules.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
85
Q

How much do firms pay into SIPC and what is the coverage?

A

All member firms pay dues to SIPC based upon their revenue. SIPC provides coverage for each separate customer for up to $500,000, of which $250,000 may be in cash.

The Securities Protection Act of 1970 created SIPC.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
86
Q

Breakpoint Sale

A

The practice of selling mutual fund shares in dollar amounts that are just below the amount where the investor is entitled to a sales charge reduction.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
87
Q

Buyers option

A

A settlement option that allows the butler to determine when the transaction will settle.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
88
Q

Buy in

A

An order executed I the event of a customers failure to deliver the securities it sold.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
89
Q

Capitalization

A

The composition of a company’s financial structure. It is the sum of paid In capital + paid in surplus + long term debt + retained earnings.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
90
Q

Capital stock

A

The sum of the par value of the company outstanding common and preferred stock.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
91
Q

Capital surplus

A

The amount of money received in excess of par at the IPO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
92
Q

Capped index option

A

An index option that trades like a spread and is automatically exercised if it goes 30 points in the money.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
93
Q

Carried interest

A

A sharing arrangement for a oil and gas direct participation program where the general partner shares in the tangible drilling costs with the limited partners.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
94
Q

Cash account

A

Investor has 5 days to deposit funds and is not required to sign anything when opening.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
95
Q

Cash assets ratio

A

Cash and equivalents / current liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
96
Q

Cash flow

A

Net income plus depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
97
Q

Cash management bill

A

Short term federal financing issued in minimum denominations of 10 million

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
98
Q

Certificates of accrual on Treasury securities

A

Zero coupon bonds issued by brokerage firms and collateralized by Treasury securities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
99
Q

Class A share

A

A mutual fund share that charges a front end load

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
100
Q

Class b share

A

A mutual fund share that charges a back end load

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
101
Q

Class c share

A

A mutual fund share that charges a level load

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
102
Q

Class d share

A

A mutual fund share that charges a lev load and a back-end load

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
103
Q

Classical economics

A

The economy will do best when the government does not interfere.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
104
Q

Code of ProcedureTHE FINRA

A

The FINRA bylaw that sets the guidelines for the investigation of trade practice complaints and alleged rule violations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
105
Q

Collection ratio

A

A measure of a municipalities ability to collect taxes it has assessed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
106
Q

Combination preferred stock

A

A preferred share with multiple features such a cumulative and participating

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
107
Q

Combined account

A

A margin account that contains both Ming and short positions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
108
Q

Commercial paper

A

Does not pay interest
Issues at discount
Matures at 270 days or less for face value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
109
Q

Common stock ratio

A

Par value of common stock + excess paid in capital + retained earnings / total capitalization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
110
Q

Concession

A

The amount of the underwriting discount that is allocate to the syndicate member or a selling group

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
111
Q

Conduit theory

A

The IRS classification that allows a regulated investment company to avoid paying taxes on investment income it distributes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
112
Q

Contemporaneous trader

A

Enters an order on the other side of the market at the same time as a time as someone with inside info. They can sue the trader with inside info

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
113
Q

Control person

A

A director or officer of a issuer or broker dealer or a 10% stakeholder of a corporation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
114
Q

Control stock

A

A stock that is acquire or owned by a officer, director, or person owning 10%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
115
Q

Length of cooling off period

A

At east 20 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
116
Q

Coordination

A

Securities registration at state and federal level at same time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
117
Q

Coterminous

A

Municipalities that share the same borders as have overlapping debt.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
118
Q

Crossover point

A

The point at which all tax credits have been used up by a limited partnership resulting in a tax liability for the partners.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
119
Q

Cumulative preferred stock

A

A preferred stock that entitles the holder to receive unpaid dividends prior to common shareholders. Divs that accumulate in arrears are first to be paid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
120
Q

Cumulative voting

A

Cast all votes for one director or distribute

Favors smaller investors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
121
Q

Current yield

A

Annual income / current market price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
122
Q

Customer protection rule

A

Rule 15c3-3 requires customer assets to be segregated from firm assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
123
Q

Dated date

A

The day when interest starts to accrue for bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
124
Q

Deer paper

A

Commercial paper sold to public by dealer, rather than be placed with investors directly by the issuer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
125
Q

Debenture

A

An unsecured promissory note issued by a corporation backed only by their word.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
126
Q

Debt to equityLT

A

LT debt / shareholders equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
127
Q

Defeasance

A

Results in the elimination of the issuers debt obligation by issuing new debt to pay off the old issue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
128
Q

Disintermediation

A

The flow of money from traditional bank accounts to alternative higher yielding investments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
129
Q

Disproportional allocation

A

A method used by FINRA to determine if a free riding violation has occurred with respect to a hot issuer. Bad form is only allowed to sell up to 10% of a new issue to conditionally approved purchasers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
130
Q

Disproportionate sharing

A

An oil and gas sharing arrangement where the general partner past a portion of the cost but receives a larger portion of the revenues.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
131
Q

75-5-10 rule

A

A diversified fund must have 75% in assets issued by others, no more than 5% in any one and no more than 10% ownership of a single issue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
132
Q

Dividend payout ratio

A

Dividends / EPS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
133
Q

Dividend yield

A

Annual dividends / current market price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
134
Q

Doctrine of mutual reciprocity

A

Agreement of fed govt to not tax muni bonds and vice versa

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
135
Q

Dollar bonds

A

Minus quoted as a percentage of par rather than yield

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
136
Q

Eastern account

A

Syndicate where all members are responsible for their allocations as well as their proportional share of unsold by others in syndicate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
137
Q

EE savings bonds

A

No marketable zeros they must be purchased from and redeemed by the govt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
138
Q

ERISA

A

Legislation in 1974 governs private sector pension plans.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
139
Q

Exchange distribution

A

Large block of stock off the floor is crossed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
140
Q

Exchange privilege

A

Transfer money between funds w/out sales charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
141
Q

Existing property program

A

Real estate direct participation program that purchase existing property for the rental income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
142
Q

Face amount certificate company (fax)

A

Investor makes fixed payments over time or deposits limo sum for return of stated, or face, sum

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
143
Q

federal reserve bank

A

12 central banks

24 regional

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
144
Q

Fidelity bond

A

A bond posted by the broker dealer to ensure the public against employee dishonesty.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
145
Q

5% markup

A

FINRA Recommends this cap but not a rule.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
146
Q

10-k

A

Annual report

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
147
Q

10-q

A

Quarterly report

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
148
Q

Form letter

A

To more than 25
People in a 90’day period
Subject to approval and record keeping requirements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
149
Q

403b

A

401k for teachers and nonprofits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
150
Q

Fourth market

A

Deal between two large institutions w/out brokers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
151
Q

General obligation bond

A

Muni bond backed by taxing power of the state or municipality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
152
Q

Greenshoe option

A

An option given the underwriter of cs to lurches up to 15% at original offering price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
153
Q

HH BOND

A

No marketable security lays semi annual. $500 min denom. May only be purchased by trading in EEs and not with cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
154
Q

Hypothecation

A

The customers pledge of securities as collateral for a margin loaned

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
155
Q

Income bond

A

Highly speculative
Issued at discount
Only pays if issuer has enough income to do so
Trade flat w/out accrued interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
156
Q

Income program

A

Oil and gas program purchase wells to receive income from sale of proven reserves.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
157
Q

Insider trading penalty

A

Greater of 300% or 1mil and up to 5 yrs in prison.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
158
Q

Intangible drilling costs (IDC)

A

Costs for an oil and gas program that are expenses in the year I which they are incurred for wages, surveys and well casings.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
159
Q

Interlocking directorates

A

Corp boards that share a directors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
160
Q

Inter positioning

A

The placing of another broker dealer in between the customer and the best market. This is prohibited unless it can be demonstrated that the customer receives a better price because of it.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
161
Q

Investment advisors act of 1940

A

Fed guidelines for investment advisors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
162
Q

Joint tenets in common

A

Assets of deceased transfer to decedents estate not partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
163
Q

Joint tenants with survivorship

A

Deceased assets transfer to survivor, not decedents family.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
164
Q

Keogh plan

A

For self employed

Limited to lesser of 20%!of gross or 51k

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
165
Q

Keynesian economics

A

Governments should intervene on markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
166
Q

Rule 405

A

Know your customer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
167
Q

LEAPS

A

Long term option that has an expiration of up 39 months.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
168
Q

Limited principal

A

Passed series 26; may supervise Series 6 reps

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
169
Q

Limited representative

A

Passed Series 6 and May sell mutual funds and variable accounts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
170
Q

M1

A

Most liquid

Currency, demand, NOW (checking)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
171
Q

M2

A

M1 + time deposits, savings accounts, no institutional money markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
172
Q

M3

A

M2 + large time deposits, institutional money markets, short term repos, large liquid assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
173
Q

Maloney Act of 1938

A

An amendment to the Securities Exchange Act of 1934 that gave NASD, now FINRA, the authority to regulate the OTC market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
174
Q

Mini maxi underwriting

A

Best efforts underwriting that states the offering will not become effective until a minimum amount is sold and sets a maximum that may be sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
175
Q

Minimum death benefit

A

The minimum guaranteed death benefit paid to the beneficiaries of the holder of a variate life insurance policy dies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
176
Q

Modified accelerated cost recovery system (macrs)

A

An accounting method that allows the owner to recover larger portion of the assets value in the early years of its life.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
177
Q

Moral obligation bond

A

A muni revenue bond that will allow the state or muni to vote to cover a shirt fall

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
178
Q

MBIA

A

Municipal Bond Investors Assirance Corp is a independent insurance company that will, for a fee received from the issuer, insure the interest and principal payments on a muni bond

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
179
Q

Maloney Act of 1938

A

Authorized NASD which is part of FINRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
180
Q

The 4 major bylaws of NASD

A

Rules of fair practice
Uniform Practice Code
Code of Procedure
Code of Arbitration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
181
Q

NAV

A

The net value of mutual funds after deducting liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
182
Q

Negotiable CD

A

Issued by bank for time deposit in excess of 100k

FDIC only covers the first 250k of principal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
183
Q

NOW

A

Negotiable order of withdrawal

Allows users to write checks agains an interest bearing account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
184
Q

Net revenue pledge

A

A pledge from a revenue bond that lays maintenance and operation expenses first, then debt service.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
185
Q

New Housing Authority

A

A muni bond to build new low-income housing. NHA bonds are guaranteed by the USA govt and are considered the safest type of muni bonds. They are not considered to be double barreled.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
186
Q

Nominal owner

A

Individual or entity registered as the owner of record of securities for the benefit of another party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
187
Q

Non competitive bid

A

Purchaser agrees to accept the average yield of all yields accepted. They’re always the flrst orders filled.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
188
Q

Odd lot differential

A

An additional fee charged for handling odd lots.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
189
Q

Open end covenant

A

Bond indenture that allows the issuance of more bonds v same collateral.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
190
Q

Original issue discount

A

Issued at a discount to par
OID corporates is taxed
OID muni is not taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
191
Q

Overriding royalty interest

A

A type of sharing arrangement that offers an individual with no risk a portion of the revenue in exchange for something of value such as the right to drill on the owners land.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
192
Q

Phantom income

A

Taxable appreciation of zeros

Taxable income generated by a limited partnership that is not producing positive cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
193
Q

Preemptive right

A

The right of a common shareholder to maintain proportional ownership interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
194
Q

Preferred stock ratio

A

Total par value of preferred stock / total capitalization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
195
Q

Project note

A

A muni bond issues as an interim financing in anticipation of the issuance of new housing authority bonds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
196
Q

Quick assets

A

Current assets - unsold inventory.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
197
Q

Rate covenant

A

A promise in the trust indenture of a muni to keep the user fees high enough to support the debt service.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
198
Q

Re allowance

A

Sales concession available to dealers who sell securities subject to an offering who are not syndicate or selling group members

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
199
Q

Recapture

A

An event that causes a tax liability on a previously taken deduction, such as selling an Asser above its depreciated cost base.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
200
Q

Reclamation

A

The right of a seller to demand or claim any loss form the buying party Dille to the buyers failure to settle the transactions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
201
Q

Registered as to principal only

A

A type of bond registration that requires the investor to clip coupons to receive the bonds interest payments. The issuer will automatically send principal at maturity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
202
Q

Registered options principal

A

Passed series 4

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
203
Q

Regular way settle days for corporates, munis, govt securities

A

Corps and minis are three days; govs are next day.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
204
Q

Regulated investment companies must distribute how much of their net income?

A

90%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
205
Q

Regulation A

A

A small company offering that allows company to raise up to $5mil in any 12 month period without filing full registration.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
206
Q

Regulation D

A

A private placement or sale that I allows for an exemption from registration indeed the securities act of 1933. Na private placement may be sold to an unlimited number of accredited investors but only 35 min accredited in 12 months.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
207
Q

Regulation G

A

Regulates the extension of credit for securities purchases by other commercial lenders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
208
Q

Regulation T

A

The extension of credit by broker dealers for securities purchases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
209
Q

Regulation U

A

The extension of credit by banks for security purchases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
210
Q

Regulation x

A

The extension of credit by overseas lenders for securities purchases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
211
Q

Rehypothecation

A

The act of a broker dealer pledging a customers securities as collateral at a bank to obtain a loan for a customer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
212
Q

Restricted account

A

A long margin account that had less than 50% equity but more than 25%
A customer account that has been subject to a sellout.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
213
Q

ROE

A

After tax income / stockholders equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
214
Q

Reversionary working interest

A

A revenue sharing arrangement where the general partner shares none of the cost and received one of the revenue until the limited partners have received their payback, plus any redetermine amount of return.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
215
Q

Rights of accumulation

A

A right offered to mutual fund investors that allows them to chula re all past contributions and growth to reach a breakpoint to receive a sea charge discount on future purchases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
216
Q

Rule 144

A

SECS rule that regulate the sale of restricted control securities requiring the seller to file form 144 at the time the order is entered to sell.
Regulates the amount of securities that may be sold.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
217
Q

Rule 145

A

SEC rule that requires a corporation to provide stockholders with a full disclosure relating to reorgs and to solicit proxies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
218
Q

Rule 147

A

An intrastate offering that provides an exemption from SECS regulation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
219
Q

Rule 405

A

The NYSE rule that requires that all customer recommendations must be suitable and rep must “know” the customer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
220
Q

Sea literature

A

Market letters, research reports, and form letters sent to more than 25 customers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
221
Q

Schedule 13d

A

A form that must be filed with the SEC by an individual or group of individuals acquiring 5% or more of a corporations non exempt equity securities. Must be filed within 10’days of the acquisition.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
222
Q

Secondary distribution

A

A distribution of a large amount of securities by a large sharehder or group of shareholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
223
Q

Secondary offering

A

An underwriting of a large block of stock being sold by a large shareholder.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
224
Q

Securities Act of 1933

A

1st major piece of securities legislation. It relates the primary market and requires that no exempt issuers file an registration statement with the SEC. The act also requires that Investors in new issues be given a prospectus.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
225
Q

Securities Act Amendments of 1975

A

Created the Municipal Securities Rule-making Board (MSRB)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
226
Q

SIPC

A

All members must pay in based on their revenue.
Provides coverage for each separate customer up to 500k / 250k in cash.
The securities investor protection act of 1@70 created SIPC.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
227
Q

Selling away

A

Recommending of an investment not offered by your firm without their consent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
228
Q

Serial bonds

A

A bond issue that has an increasing amount of principal maturing in successive years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
229
Q

Series EE bond

A

No marketable Zero issues at discount. Purchases and redeemed w/ govt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
230
Q

Series HH bond

A

No marketable
Only purchased with maturing EE bonds
$500 min denom

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
231
Q

75-5-10 diversification

A

75 % in other issuers
No more than 5 in any one
May not own more than 10% of any one outstanding.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
232
Q

Shelf offering

A

Allows issuer to sell the offering over 2 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
233
Q

Simplified arbitration

A

Resolve disputes over 50k or less

No hearing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
234
Q

SEP

A

Qualified investment plan for small employers with25 or fewer employees.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
235
Q

Sinking fund

A

An account established by issuer of debt to place money for the exclusive purpose of paying bond principal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
236
Q

Split offering

A

A portion of proceeds goes to issuer and a portion goes to selling shareholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
237
Q

Statutory voting

A

Requires investors to cast their votes evenly for the directors they wish to invest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
238
Q

Stripper well

A

An oil well I’m operation to recover the very limited supply left

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
239
Q

Subchapter s corporation

A

Allows the tax consequences to flow through to the owners.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
240
Q

Takedown

A

The price at which a syndicate purchases a new issue of securities from the issuer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
241
Q

Tax preference item

A

An item that received preferential tax treatment and must be added back into income when calculating on investors alternative minimum tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
242
Q

Tax sheltered annuity

A

Qualified pan for employees of govt, schools and nonprofits..

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
243
Q

Term bond

A

Entire principal due on one date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
244
Q

Term maturity

A

Bond maturity that has all principal due on one date.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
245
Q

Third market

A

Exchange listed securities on the Nasdaq workstations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
246
Q

Top heavy rule

A

The rule that states maximum salary for which a Keogh contribution may be based

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
247
Q

Treasury receipt

A

Zero coupon bond created by a brokerage firm that is backed by is give securities. Issued at discount matures at par

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
248
Q

Treasury stock

A

Stock issued and repurchased by corp

Does not vote or receive divs or count towards eps.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
249
Q

True interest cost

A

The cost of s municipal issuers interest expense that includes the time value of money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
250
Q

Trust indenture act of 1940

A

Regulates the issuance of corporate debt in excess of 5mil and term of more than one year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
251
Q

12b-1 fee

A

An asset based distribution fee that is accessed annually and paid out quarterly to cover advertising and distribution costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
252
Q

Uniform securities act

A

The framework for state/based securities legislation.

253
Q

UTMA

A

Allows custodian to determine the age at which the assets become the property of the minor. The max age to transfer ownership is 25

254
Q

Western account

A

A type of security syndicate account where only the member with unsold shares is responsive for the shares.

255
Q

What is the safest type of muni bonds and why?

A

New housing authority (NHA) and public housing authority (PHA) payments are guaranteed by the federal government.

256
Q

Price paid for open end fund?

A

NAV + SC =POP (Public Offering Price)

257
Q

Three requirements for investment company registering with SEC

A

Net worth of 100k
At least 100 shareholders
Clearly defined investment objectives

258
Q

Formula for stock parity price.

A

Determine number of shares to be received:
Par value / conversion price

Then cost share at parity price
Current market value of convertible bond / number of share to be received.

259
Q

Trust Indenture a act of 1939

A

Corporate bond issues > 5 mil that are to be repaid during a term in excess of one year, use a trust indenture.

260
Q

What is a Z Tranche.

A

The final, and most volatile, tranche of a CMO tranche.

261
Q

Principle only CMO

A

Receive both the scheduled principle payments as well as any prepayments made by the home owners to the pool.

262
Q

Planned amortization class CMO (PAC)

A

Paid off first and offer the most protection against prepayment and extension risk.

If presume to come too quickly those principal payments will be placed in another CMO known as support class.

If prepayments are too slow, funds come from support class.

263
Q

Targeted Amortization. Class (TAC)

A

Only offers protection from prepayment risk. If prepayments come too fast they go to support class however if too slow the investor is subject to extension risk.

264
Q

Another name for default risk.

A

Credit risk.

265
Q

Treasury Receipts

A

Similar to Treasury STRIPS, except dealers and banks create them.

266
Q

Coterminous debt

A

Muni debt issued by different municipal authorities that draw revenue from the same base of taxpayers

267
Q

Revenue bonds: indentures

A 
Exempt from The Trust Indenture Act of1939 and must have an indenture with:
Rate covenant
Maintenance covenant
Additional bond test
Catastrophe clause
Call or put features
Flow of funds
Outside audit
Insurance covenant
Sinking fund
268
Q

Industrial development/ industrial revenue bonds.

A

A muni bond issues for the benefit of a private corporation.

269
Q

Double barreled bonds

A

Issued to build or maintain a revenue producing facility such as a bridge or roadway.

Generally supported by revenues generated but if they fall short general tax revenues are used.

270
Q

Short term notes a state or city may issue (4)

A

Tax anticipation
Revenue anticipation
Bond anticipation
Tax and revenue anticipation

271
Q

How are general obligation bonds generally awarded?

A

Through competitive bidding

272
Q

Eastern vs western syndicate

A

In eastern account, unsold is responsibility of all in syndicate.
Western: only the syndicate member who fell short is responsible for balance.

273
Q

Syndicate members must determine three things:

A

The underwriters spread
The re offering yield
The prices and yields to be submitted to the issuer.

274
Q

The total takedown

A

What syndicate members can earn on sales of the bonds to their customers. The total takedown consist of the additional takedown and the selling concession.

275
Q

Selling concession

A

May be earned on sales of bonds made by dealers who are not syndicate members.

276
Q

days syndicate manger has to return good faith deposits once the manager had settled with the issuer

A

2

277
Q

Days the syndicate manager has to distribute profits.

A

60

278
Q

What type of legal opinion is most desirable for investors and why?

A

Unqualified legal opinion means the bid counsel has no reservations

279
Q

When executing a muni bond trade for a customer on an agency basis consider these five things towards fair and reasonable commission:

A 
The availability of the security
The expense of execution
The value of the security
The services offered by the member
Other fees or consideration received
280
Q

When executing a customer order on a principal bassist, consider there four things:

A

The dealers opinion in asset value
The expense of execution
The total dollar amount involved
The fact the dealer is entitled to a profit.

The amount of the markup does not have to be shown On the confirm.

281
Q

REVDEX 25

A

A yield based index that tracks the health of the revenue bond market.

282
Q

Millage rate

A

One mill =!1/10 of 1%

283
Q

Revenue bond

Net revenue pledge flow of funds

A 
Operations and maintenance
Debt service
Maintenance reserve account
Renewal and replacement fund
Surplus account

Net revenue edge is preferable to investor as it assures maintenance of asset

284
Q

Revenue bond

Gross revenue pledge flow of funds

A

Debt service account
Operation and maintenance
Renewal and replacement fund
Surisvaccount

285
Q

What are LGIP’s

A

Local government investment pools allow state and local governments to manage their cash reserves and receive money market rates on funds.

286
Q

What is MSRB?

A

Municipal securities rulemaking board was established by the securities acts amendment of 1975.

SRO for municipal securities dealers
Has no enforcement functions and just writer rules and test questions.

287
Q

For how long must municipal securities dealers preserve record and complaints?

A

Records for three with two years readily accessible.

Customer complaints on file for six years.

288
Q

Gift and gratuities limits for securities deletes.

A

$100 per person per year.

289
Q

Political contributions and municipal securities dealers.

A

Dealer may not induct muni business with issuer for 2 yrs after contributing $250

290
Q

Negotiable CD: maturity range and min denom

A

30 days to 10 years 100k min

291
Q

Definition of a depression.

A

Decline in GDP lasting 18 months or six quarters.

292
Q

M1, M2, M3

A

M1: cash and demand deposits
M2: M1 + money mkt instruments, time deposits < 100k, negotiable CDs > 100k, overnight repos
M3: M2 + Time deposit > 100k and repos maturing in more than one day.

293
Q

Disintermediation

A

When people take money from low yielding accounts to fund high yielding accounts.

294
Q

Keynesian view on economy

A

Duty of government to be involved with controlling gore ruin of economy.

295
Q

Straddle

A

But call and put same strike and expiry

296
Q

Dollar value of price based options on on T-Bills

A

$1,000,000

297
Q

Importer / exporter and FX. Who buys calls on foreign currency?

A

Importer buys calls on foreign.

298
Q

Tow dollar broker

A

Executed orders for commission house borders when they are too busy.

299
Q

Maximum positions in options.

A

250,000

300
Q

Options adjustments

A

Options are not adjusted for cash dividends but are adjusted for stock dividends.

301
Q

Open end vs closed end funds

A

Closed are like stock and trade in the secondary market. Open are only purchased from issuer.

302
Q

Government bums fund and taxes

A

Dividends based on interest payments from direct treasury obligations are only subject to federal taxation.

303
Q

Calculation of a mutual fund NAV

A

Assets - liabilities = NAV

304
Q

Maximum sea charge on open ended mutual fund

A

8.5% of POP (public offering price)

305
Q

Formula for sales charge

A

SC% = (POP - NAV) / POP

306
Q

45 day free look

A

within 45 days of receiving notice of sales charge, investor may return Terminate and receive current NAV and sales charge.

307
Q

Mutual funds: front end load vs spread load

A

Both maxed at 9% over life of plan
Max charge in 1st ur
50% front load; 20% spread
Max sales charge first 18 mod
None on front load; max avg 16% yr on spread
Termination in forts 18 months
Both return NAV and front end also returns sales charges exceeding 15% of total payments.

308
Q

Investment risk to purchaser of a fixed annuity.

A

None as a fixed annuity is considers an insurance product not a security.

309
Q

Investment risk of variable annuity

A

Annuitant bears investment risk and the contract is considered both a security and an insurance product.

Reps selling them must have securities and insurance license.

310
Q

Variable annuity: premium enhancement

A

Insurance company’s match a portion of your contribution

311
Q

Equity index annuity

A

Provides additional interest based on the return of an index.

312
Q

Prospectus delivery requirements

A

IPO: 90 days post for OTCBB / Pink
25 days Nasdaq
Additional offering: 40 days OTCBB/pinks
No requirement for Nasdaq

313
Q

FINRA rule 5130

A

requires broker dealer obtain an eligibility statement from all account owners who purchase a new issue within 12 months prior to the purchase.

Cannot hold shares for most but can offer hot issues with conditions to officers and employees of financial institutions, no supported family members, accountants, attorneys. Finders.

314
Q

Greenshoe provision

A

When demand is high, green shoe allows the offering to increase by up to 15%

315
Q

Mini-maxi underwriting

A

Best efforts underwriting that does not become effective until a minimum amount of securities have been sold.

If minimum amount is not sold, the offering will be cancelled.

316
Q

Selling concession

A

Paid to any syndicate member or selling group who sells shares. It’s the only fee the selling group members may earn

317
Q

Underwriting spread

A

The total amount of the management fee, the underwriting fee, and the Delong concession.

This is the difference between the gross proceeds of the offering and the net proceeds tithe issuer.

318
Q

Transactions exempt from securities act of 1933

A 
Private placements/regulation d offerings
Rule 144
Regulation a offerings
Rule 145
Rule 147 intrastate offerings
319
Q

Accredited investor:

A

Earn at least 200k if single
Earn 300k jointly with spouse
Have net worth of 1m ex primary residence.

320
Q

Rule 144

A

Regulate how control or restricted securities may be sold.

Designates:
Holding period for security
The amount of the security THET may be sold
Filing procedures
Method of sake
321
Q

Holding period minimum for insiders to book profit on stock

A

Six months or profit goes back to company

322
Q

Rule 144 on selling controlled or restricted stock:

A

Limited to the average trading volume of the preceding 4 weeks
Or
1% of the issuers total outstanding stock

For orders of 5000 share or less that do not exceed 50k, form 244 does not need to be filed.

323
Q

Regulation A offering

A

Aka small business company offering allows the issuer to raise up to 5m in any 12m period w/out full registration w/SEC. Instead the file an abbreviated notice

324
Q

Rule 145

A

Requires shareholders approve any merger or reorg of ownership

325
Q

Rule 147

A

Pertains to offerings that are limited to one state.
Exempt from registration with SEC and subject to jurisdiction of the state securities admin.

Headquarters must be I that state.
80% of income and proceeds from the state
80% of assets must be I the state
100% of purchases must be located in that state.

326
Q

Threshold security

A

Equity security
Registered under section 12 of the Securities Exchange Act of 1934.
There is an aggregate fail-to-deliver position at a clearing form of 10,000 shares or more for 5 consecutive settlement days and such positions represents 0.5% or more of the issuers outstanding securities
The acidity had been included on the threshold securities list by an SEO and the mist had been smdjstribited

327
Q

Listing requirement for NYSE

A

At least 400!shareholders with holding at least 100! Shares

At least 1,100,000 publicly held shares.

328
Q

Automated confirmation system (act) / trade reporting facility (Trf)

A 
Facilitates the reporting and clearing of trades executed through Nasdaq and other OTC environments.
Includes:
Non-Nasdaq OTC SECURITIES
third market trades
Nasdaq convertible bonds
329
Q

Order shredding

A

Splitting orders in order to increase fees

330
Q

Third market

A

Transactions for exchange listed securities executed over the counter through the Nasdaq workstation.

331
Q

Proceeds translations

A

The recommended 5% markup should be split when proceeds of sale are applied to new purchase on same day.

332
Q

TRACE

A

Trade reporting and compliance engine
Report transactions of eligible fixed income securities including:

Domestic and foreign corporate debt
Dollar denominated debt that is depository eligible
Investment grade and no investment grade issues
Securities issued under the Securities Acr of 1933 that are lower of the 144a transaction

333
Q

Securities exempt from TRACE

A 
government (sovereign) debt
Muni debt
Convertible corp debt
CMO's
Repos
Money markets
MBS
ABS
DEVELOPMENT BAN DEBT
334
Q

SEC a Rule 201, prohibits shirting when?

A

Prohibits shorting on down tick if stock is down 10%

335
Q

Rule 80b limits trading if the SP 500 falls…

A

7/13/20 percent

336
Q

Window for sending customer copy of new account form.

A

30 days

337
Q

How often must forms verify account info?

A

36 months

338
Q

Direct registration system (DRS)

A

Offered through the depository trust corporation will allow investors to hold their securities on the books of the issuer or transfer agent.

339
Q

Death of customer: In order to sell or transfer assets, agent must have:

A

Letters testimony
Inheritance tax waivers
Certified copy of death certificate

340
Q

Testimony trusts

A

Trusts that are established under the terms of a will

341
Q

Power of attorney is also known as…

A

Full discretion

342
Q

Tax free limit for UGMA

A

14k

343
Q

Regulation S-P

A

Requires the firm maintain adequate procedures to protect the financial info of the customer.

344
Q

Regulation T of the securities exchange act of 1934

A

Allowed the FED to regulate extension kid credit by broker dealers.

345
Q

Initial margin for is govt securities and municipal securities

A

Is govt securities is 1 to 7 % of par

Munis is the greater of 7.% or 15% of MV

346
Q

Minimum equity value in short market account

A

30% of the short market value of the account

347
Q

How many days does a customer have to fulfill a margin call

A

Three business days.

348
Q

Contribution limit for SEP IRA

A

Lesser of 25% of income or 52k

349
Q

Corporate and muni securities regular way settle

A

T+3

350
Q

Three categories of stockholders equity.

A

Capital stock at par: aggregate or for both common and preferred stock

Additional paid in surplus: any sum paid over par by investors when the shares were issued by the company

Retained earnings: profits that have been kept by the corporation; sometimes called earned surplus.

351
Q

Book value per share

A

Assets - liabilities - par value of preferred / outstanding common

352
Q

Working capital

A

Current assets - current liabilities

353
Q

Current ratio

A

Current assets / current liabilities

354
Q

Quick assets

A

Current assets - inventory

355
Q

Acid test (quick ratio)

A

Quick assets / current kaibilities

356
Q

Debt to equity ratio

A

Toto ltd / total shareholders equity

357
Q

Common stock ratio

A

Common shareholders equity / total capitalization

358
Q

Preferred stock ratio

A

Preferred stock / total capitalization

359
Q

Bond ratio

A

Total ltd / total capitalization

360
Q

Efficient market theory: weak, semi strong, strong

A

Weak: future price can’t be predicted from last
Semi strong: market adjusts too quickly to achieve excess return with market info
Strong: current price reflects all info and there’s no opportunity to outperform.

361
Q

Parity price of common stock with a convertible debenture.

8% debenture; trading @120 convertible @25

A

Determine number of share that can be received
1,000 / 25 = 40
Thane market value of convertible / # share
1,200 / 40 = 30

362
Q

How to determine how low a margin account may fall:

A

Divide the debut balance by .75

363
Q

Formula for mutual fund net investment income:

A

Dividend income + interest income - expenses

364
Q

If an investor uses SMA to with withdraw cash, what happens to SMA and debit balances?

A

SMA is reduced and debit bal is increased by same amount.

365
Q

Current yield of a 10% preferred stock trading at 110.

A

Annual income / market price

$10 / $110 = 9.1%

366
Q

How to calculate minimum maintenance

A

Multiply long market value by .25

367
Q

You have an open margin account with long market value of 125000 and debit Val of 54000. How low can the value of the securities fall before you get a margin call?

A

Divide be or balance by .75

54000 / .75 = 72000

368
Q

Optimal investment for college investment

A

Treasury strips which are government issued zero coupon bonds

369
Q

What type of fund is optimal for a young investor seeking current income?

A

Corporate bond fund

370
Q

May treasury notes trade in money markets?

A

Yes, a high quality debt instrument with mess that one year left may

371
Q

What instruments are likely to trade in round lots of 10?

A

Preferred shares

372
Q

One good reason for a company to buy back its stock and increase treasury stock.

A

Maintain control, increase eps, fund employee stock plans, pay for a merger

373
Q

Under FINRA’s Uniform Practice Code, a stocks ex dividend is is set how?

A

It’s always 2 days prior to record date.

374
Q

A respondent to arbitration has how long to respond?

A

45 days

375
Q

Where are inter dealer inventories found?

A

Blue sheets

376
Q

All of the following are examples of retail communication and always require pre approval except:
Blogs, chat rooms, websites, bulletin boards

A

Chat rooms don’t as long as business is not promoted or advice given

377
Q

What is the consideration for market makers?

A

The spread

378
Q

Is the muni good faith deposit returned to the winning syndicate?

A

No

379
Q

NIC & TIC

A

Net interest cost
Most competitive underwriting do for munis are given to syndicate with lowest NIC

True interest cost (includes time value of money)

380
Q

A city lists an add stating it’ll accept bids for the sale of bonds. What kind of ad is it?

A

A notice of sale

381
Q

Mia capital appreciation on OID bonds ordinary income or capital gains?

A

Ordinary income

382
Q

When is the ex dividend date for stocks?

A

Two business days prior

383
Q

The maximum duration of a right is:

A

45 days

384
Q

Which act gave NASD the authority to regulate OTC markets?

A

The Maloney Act of 1938

385
Q

Holder of an 8% subordinated debenture recieves how much at maturity?

A
  1. Don’t forget the last interest payment.
386
Q

Which FINRA bylaw covers resolution of customer complaints?

A

Code of Procedure

387
Q

What is the most important factor in determining which underwriter to award a GO Bond.

A

I net interest cost, NIC, is the cost of borrowing

388
Q

Collateral trust certificates use what as collateral?

A

They pledge securities which the own issued by another company as collateral for the issue.

389
Q

What constitutes the largest part of the underwriting already for a corporate stock offering?

A

The selling concession which goes to whoever sells the securities to their clients.

390
Q

The subscription price of a right is:

A

The price offered to current stockholders during a subsequent primary offering.

This is generally below market value.

391
Q

A customer must return the signed option agreement n how many days?

A

15

392
Q

Greatest risk when buying a CMO?

A

Prepayment risk.

393
Q

500 preferred shares paying 12% receives how much?

A

500 shares x $12 / share = $6,000

394
Q

Sanctions imposed by FINRA are effective within how many days of a written decision?

A

The decision are final after 30 days.

395
Q

Which organization sets the rules for margin?

A

the Federal Reseve Board we granted this control under the Securities Exchange Act of 1934

396
Q

Define debenture

A

Unsecured corporate debt obligations

397
Q

YTM for bond purchases at discount

10% bond @ $900 w/ 10 hrs to maturity

A

((Annual interest + annual discount) / (price paid + PAR) / 2

((100 + 10) / (900 + 1000) /2

11.57%

Annual discount is found by taking total discount and dividing it by number of years remaining.

398
Q

YTM for bond purchases at premium.

10% bond @ $1100 w 10 yrs left

A

((Ann interest - ann premium) / (price paid + PAR) / 2

((100 - 10) / (1100 + 1000) / 2

8.57

399
Q

Characteristics of yield to call (ytc)

A

Ytc will always extend past the YTM.
Ytc will always be the highest God on a bond purchases at a discount
Ytc will always be lowest for a bond purchases at a premium

400
Q

Your brokerage firm regularly trades stock in the third market. What does this mean?

A

They regularly trade stock on the Nasdaq workstation.

401
Q

If the market opens below a stop limit price, what happens to the order?

A

The order is elected and becomes a limit order at the limit price.

402
Q

What type of underwriting agreement is likely with a preemptive right offering and why?

A

A company using a preventive rights offering will use a stand bye underwriting where the underwriter will starve to purchase unsold shares.

403
Q

How long is the free look period on variable annuities?

A

45 days

404
Q

How many days delivery for an exercised stock option?

A

3

405
Q

Investor owns 100 shares of 8% preferred paying a quarterly div of $.25. How much does he take in dividends per year?

A

$8 * 100 = 800
4 * .25 = 100

900

406
Q

Who owns the OCC?

A

the OCC is wholly owned by the exchanges

407
Q

What is the balance sheet equation?

A

Assets - liabilities = net worth

408
Q

The maximum contribution to a educational IRA is

A

2000

409
Q

A fraudulent practice used to entice buyers as a result of new activity in the security is a violation is known as:

A

Match sales are sales they two parties arrange to increase the volume of the security ownership.

410
Q

What regulates the way members conduct business with other members?

A

Uniform Practice Code

411
Q

Who issues all standardized options?

A

The OCC

412
Q

In the opening rotation for options; which open first?

A

Calls with the lowest strike price and nearest expiration open first.

413
Q

Formula for excess equity in an account

A

Current market value - debit = equity - reg t at CMV = EE

414
Q

If a client does in testste, who liquidates his assets?

A

The administrator

I’m testate means without a will

415
Q

How many days does an investor have to deposit funds in a plan when doing an IRA ROLLOVER?

A

60

416
Q

How long is the window to change from a variable life policy to a whole life policy?

A

24 months

417
Q

Who participates in the trade of a principal?

A

Dealer

418
Q

How long does an investor have to bring a case to arbitration?

A

6 years

419
Q

Who is the nominal owner of a UGMA account?

A

Custodian

420
Q

What does ERISA regulate?

A

Private sector pension plans

421
Q

ABC Corporate bid is quoted at 110 and is convertible at 20 per share. What is parity price of stock?

A 
# shares = par / CVP or 1000 / 20 = 50
Parity = 
CMV 0f bond / # shares or 1100 / 50 = 22
422
Q

Formula for pricing open end mutual fund

A

NAV + SC = POP

423
Q

Customer buys 10m 7% state bonds on April 5 @ 99. They owe what?

A

9900 plus interest of:

10,000 * 7% * 97 / 360 or 269.44

10,169.44

424
Q

How much is a round lot for munis

A

$100,000

425
Q

Purchasers of a new IPOD get prospectus if within how many days?

A

25

426
Q

What is the order of priority for mini bonds when over oversubscribed?

A

Presage, syndicate, designate, member

427
Q

A consolidated stock reading of 30s/s XYZ Pr C 84.15 means what?

A

300 shares traded at 84.15; the s/s means round lot of 10 shares.

428
Q

An investor has deposited $14,500 into a variable annuity over three years. The money has grown to 17,800. He withdraws 3k. How much will he pay taxes on?

A

3k

All random withdrawals from a variable annuity wi be on LIFO basis and made in the growth in the account.

429
Q

How are most revenue bonds awarded to syndicates?

A

Through negotiation

430
Q

A muni bond trader calls a market maker asking for a quote. Dealer responds “6.1 bid offered 5.9 out form”. Why what does that mean…out firm

A

Dealer is obligated to another party at that price

431
Q

What type of layout option is optimal for max monthly payments when annuitizing contract?

A

Life only

432
Q

What does the assumed interest rate affect?

A

The amount of the annuitys payment and the value of the annuity unit

433
Q

Which is the lowest yield for a bod purchased at s premium?

A

Yield to call

434
Q

Formula for YTM for a bind purchased at a premium.

A

(Annual income - annual premium) / (price paid + par)

435
Q

XYZ has 8% subordinated debentures trading at $120. They are convertible into XYZ @ $25. What is parity price?

A

The parity price is found by determining the number of shares that can be received upon conversion par/conversion price then parity is current market cal of convertible / # shares

1000/25 = 40
1200 / 40
=30

436
Q

Coterminous debt

A

AKA overlapping debt

Muni debt issued by different mini authorities that draw on revenue from the same tax base

437
Q

For types of short term notes a state or municipality

A

TAN Tax anticipation notes
RAN Revenue anticipation note
BAN Bond anticipation note
TRAN Tax and revenue anticipation note

438
Q

How are most revenue bonds awarded?

How are most GO bonds awarded?

A

Revenue bonds are awarded through negotiation

GO, general obligation, through competitive bidding

439
Q

4 components of underwriters spread (compensation)

A

Management fee
Underwriting fee
Additional takedown
Selling concession

440
Q

A roundly on municipal securities is how much?

A

$100,000

441
Q

Who declares that an issue is legally binding?

A

The bond counsel issues the legal opinion.

442
Q

How is capital gains on OID municipal bonds taxed?

A

As ordinary income

443
Q

The exercise of a call option results in the delivery of stock in how many days?

A

Three

444
Q

How many days for settlement of options trades?

A

Next day

445
Q

How long does a customer have to return a signed options agreement?

A

15 days

446
Q

A fixed income investor may not write what kind of spread.

A

It is not possible to to write a rate based covered call as rate based options are based o. Trills that have not been issued yet

447
Q

Useful like of prospectus

A

Should Updated a every 12 months
Must be updated every 13 months
May be used for 16 months then discarded

448
Q

Taxation on treasuries

A

Only taxable on Federal level

449
Q

XYZ mutual fund has 10 million in assets and 500 thousand in liabilities with 1 million shares out. What is NAV per share

A

NAV = 10,000,000 - 500,000 = $9,500,000

Per share 9,500,000/1,000,000 = $9.50

450
Q

Determine investors average cost and price per share.

A

Average cost is
Total $ invested / tot all number of share

Average price is

Summation of all prix jade prices / number of purchases

451
Q

What type of fund may sell its own shares to investors?

A

No-load funds only

452
Q

Traits of a UNIT investment Trust (UIT)

A

Will invest in either a fixed portfolio of securities or no fixed portfolio
Traditionally a fixed UIT INVESTS IN A large block of govt securities
No fixed my buy mutual funds
Neither are actively managed with no board or investment advisors
Both must maintain a secondary market for their shares

453
Q

An investor has 70k to invest in mutual fund with POP OF 20 & SC of 8.5%. Va breakpoint is at 50k for 6% sales charge.
How many share can they buy?

A

Take POP x complement of sc
.915(100% - sc) =20x.925 = 18.30
This is the NAV
Then take NAV / complement of SC at breakpoint = (100-sc).94 = 18.3/.94 = 19.47

Then 70k / 19.48 = 3595

454
Q

In order to charge the max allowable sales charge of 8.5% requires you offer these three things

A

Breakpoint sales charge reduction
Rights of accumulation
Automatic reinvestment of dividends and cap gains at NAV

455
Q

Three ways to purchase annuity

A

Single payment deferred annuity
Single payment immediate annuity
Periodic payment deferred annuity

456
Q

Traits of annuity units

A

Number of annuity units is fixed and based on the layout option selected,
their age, sex,
the value of account and
assumed interest rate (AIR)

457
Q

6 types of underwriting commitments

A 
Firm commitment
Firm with Market out clause
Best efforts
Best effort / mini-maxi
All or none
Standby
458
Q

What doe the subscription price of a right represent?

A

The price offered to current stockholders during s subsequent primary offering

459
Q

Which type if syndicate account is undecided and what does that mean?

A

Eastern accounts are undecided and must assist in selling the remaining bonds in accordance with their commitment level regardless of which syndicate member was unable to sell them.

460
Q

Traits of a threshold security

A

SRO’s monitor reports from National Securities Clearing Corporation (NSCC) for these:

The security is registered under section 12 of the Securities Exchange Act kf 1934

There is an aggregate fail-to-deliver position at a clearing form of 10k shares for five consecutive days and each position represents 0.5% of the issuers outstanding shares

The security has been imploded in the threshold securities last by a SEO

461
Q

After how many days must a broker dealer cover a failed to deliver?

A

13

462
Q 
Define these trade tape terms:
SLD
OPD
Pr
R/T
W/S
s/s
A 
SLD Trade reported out of sequence
OPD opening Leong after a delay
Pr. Preferred stock
R/T Rights
w/S warrant
s/s round lots of 10 share
463
Q

Of the following; which is the hardest to short?

Preferred stock
Listed out option
Non convertible corporate bond
GO municipal bond

A

Muni bonds are not readily available to be borrowed this difficult to short.

464
Q

Which of the following is most likely to trade in a round lot of 10 shares

Munis
Corporates
Equities
Preferred stock?

A

Preferred stock

465
Q

In which Thule of account does the nominal owner of the account enter all orders for the beneficial owner? A

A

Custodial account

466
Q

To open a guardian account, what document must be obtained?

A

I declaration papers

467
Q

In which type of account does a trustee enter all orders for the owners of the account?

A

Fiduciary account

468
Q

JTWROS

A

Joint account with rights of survives hip all assets are transferred into the name of the surviving party.

469
Q

Margin required for purchasing s LEAP with expiration exceeding 9 months.

A

75% of the options premium

470
Q

What is Regulation T

A

Sets the minimum initial retirement for purchasing securities on margin

471
Q

Who sets the minimum maintenance for a new margin account?

A

NYSE / FINRA

472
Q

An investor has an open margin account with 48000 in value and a debit bal of 10k. What is his minimum equity at this level

A

To find the minimum equity given the long market value, multiply the market value by .25

12000

473
Q

Who sets the initial margin on muni bonds?

A

NYSE .Municipal bonds are exempt from Reg T; margin is set by SRO.

474
Q

Sample of securities exempt from Reg t

A

Us govt securities
us govt agencies
Munis
No convertible corp debt

475
Q

Example of nonmarginable securities

A

Non NASDAQ OTC securities
Options
IPOS less than 30 days
When issued, nonexempt securities

476
Q

You have this:
Long 500 abc @ 27
Long 1500 XYZ @ 42
Long 250 MCS @ 80

Debit Val of 28200
What is min maintenance?

A

To find the minimum maintenance multiply the long market value by .25

.25 x 96500 = 24125

477
Q

Customer buys 100k principle amount of Ny bridge rev bonds @ 54 in margin account. MBIA much must she deposit?

A

When buying a muni bond in a margin account, must deposit the greater if 7% of par of 15% of market value.

15% x 54000 = 8100

478
Q

Investor buys 200 share of ABC @ 20 on margin and deposits 2000. Abc falls to 18 and equity drops to 1600. Must she act on this?

A

No. The 2k deposit is only for initial

479
Q

You have an open margin account with long market Val of 125k and a debit bal of 54k. How low can the Val go before margin call.

A

The market Val could drop to 72k. Divide debit bal by .75 or 54k /.75

480
Q

What is the window for its rollover

A

60 days

481
Q

How are gains in qualified accounts taxed when withdrawn?

A

Ordinary income

482
Q 
Which of the following is not required on an order ticket?
Commission
Registered reps number
Customer name
Customer account number
A

Commission

483
Q

When investing in DPP, an asset is sold at s price above its depreciated basis and all tax credits have been used up. This is known as what?

A

Crossover point

484
Q

When investing in a wildcat oil and gas program, most of the tax credits are generate by:

A

Intangible drilling costs

485
Q

Example of instruments that would create AMT exposure

A

Interest on some industrial revenue bonds
Some stock options
Accelerated depreciation
Personal property tax on investments that do not generate income
Certain tax deductions passes through from DPPS

486
Q

What does the securities act of 1934 regulate?

A

The secondary market

487
Q

Rule of fair practice covers:

A

Commissions and markups
Retail and instititional communications
Customer recommendations
Claims made by reps

488
Q

Uniform practice code covers:

A 
Settlement date
Ex dividend date
Rules of good delivery
Confirmations
DK procedures
489
Q

The code of procedure covers:

A

How FINRA investigates complaints and violations.

490
Q

Who is exempt from registration?

A

Clerical
Non supervising officers and managers not dealing with customers
Non U.S. citizens working abroad
Floor personnel

491
Q

Time of principal: must approve these four things

A

New accounts
Retail communications
Transactions
Correspondence

492
Q

When FINRA investigates, how many days do you have to provide info

A

25 days

493
Q

FINRA has taken disciplinary action. The decision of the Department of Enforcement becomes final in how many days?

A

45

494
Q

Sanctions impaired by FINRA are effective within how many days of a written decisions?

A

30

495
Q

Conduit theory

A

IRS classification that allows a regulated investment company to avoid paying taxes on investment income if it distributes it to shareholders

496
Q 
Determine customer equity in this combined account
LMV 60000
Debit 25000
SMV 40000
Credit 62000
A

(LMV-Debit)+(credit-SMV)

(60000-25000)+(62000-40000) = 57000

497
Q

501c3

A

Nonprofit organization / tax exempt organization

498
Q

Settlor functions

A

Not all decisions directly involving a plan, even when made by a fiduciary, are subject to ERISAs fiduciary rules. These decisions are commonly referred to as “settlor” functions.

Choosing type of plan
Amending a plan
Requiring employee contributions
Terminating a plan

499
Q

What does ERISAS regulate?

A 
Pension plan participation
Funding
Voting
Communication
Beneficiaries
500
Q

2 forms of ERISA vesting

A

3-6 year gradual vesting schedule

3 yr cliff: nothing till three years then full

501
Q

An investor purchases 10m XYZ j&j 8% corporate bonds on Monday April 1 for regular way settle. How much accrued interest do they owe?

A

(10000 x .08) x (93/360)
= 800 x .2583 = 206.67

360 day year each mo has 30 days

Us govt securities use actual days

502
Q

Delivery of round lots

A

Stock certificates must be delivered in denominations that are in round lots or in lots that can easily be rolled into round lots

503
Q

Funded debt

A

The corporations debt that comes due in five years or more

504
Q

Three components of stockholders equity

A

Capital stock at par (common and preferred)

Additional paid in surplus: any sum paid over par when shares were issued

Retained earnings

505
Q

When hypothecating customer securities, to obtain a loan Folsom a bank, at what value may they broker dealer lace on the securities?

A

140% of the customers debit balance

506
Q

Short against the box

A

A short position established against an equal long position in the security to roll tax liability forward.

507
Q

Spousal account

A

An KRA opened for a no working spouse that allows a full contribution to be made for the no working spouse.

508
Q

Spread Load Plan

A

A contractual plan to spread the sales charge over a longer period.
Detailed in Spread Load Plan Act of 1970.
Max sales charge override of plan is 9% while the max sales charge in any one year is 20%

509
Q

Statutory voting

A

A method of voting where where voters must cast votes evenly across directors.

510
Q

Stopping stock

A

Specialist guarantees a price but works it better

511
Q

Sub chapter S

A

A business organization that allows the tax consequences of the organization to pass through to the owners

512
Q

Subscription agreement

A

An application signed by the purchaser of an interest in a direct participation plan. An investor does not officially join until the GP signs.

513
Q

Takedown

A

The price at which a syndicate purchases a new issue of securities from the issuer.

514
Q

Tax preference item

A

An item that received preferential tax treatment and must be added back into income when calculating AMT.

515
Q

Top heavy rule

A

The max salary for which a Keogh contribution may be based. This is in effect to limit the disparity between high and low salary employees

516
Q

Unit of beneficial interest

A

The redeemable share issued to investors in a unit investment trust

517
Q

Unit refund annuity

A

An annuity payout option that will make payments to the annuitant for life.
If they die before its all paid, the balance is paid to beneficiaries

518
Q

Yellow sheets

A

A daily publication provided by the national quotation bureau providing quotes for corporate bonds

519
Q

Investment Advisor vs. IA reps

A

Only the company and the publisher of the marketer yet are investment advisors. Individual as are invesent advisor representatives.

520
Q

Yellow sheets

A

A daily publication published by the national quotation bureau providing quotes for corporate bonds

521
Q

Workout quote

A

A no firm quite that requires handling and settlement conditions to be worked out between the parties prior to the trade

522
Q

Working interest

A

An interest that requires the holder to bear the proportional expenses and allows the holder to share the revenue produced by an oil or gas project in relation to the interest

523
Q

Working capital

A

A measure of a corporations liquidity that is found by subtracting current liabilities from current assets

524
Q

Workable indication

A

An indication of the prices and yields that are a municipal securities dealer may be willing to buy or sell bonds

525
Q

Term of a warrant

A

A long term security that gives the holder the

right to purchase the common shares of a corporation for up to 10 years. The warrants subscription price is always higher than the price of the underlying common shares when the warrant is initially issued.

526
Q

Variable death benefit

A

The amount of a death benefit paid the beneficiary that is based on the investment results of the insurance company’s separate account. The amount is over the contracts minimum guaranteed death benefit.

527
Q

Variable life insurance

A

A life insurance policy that provides for s minimum guaranteed death benefit as well as an additional death benefit based on the investment results of the separate account.

528
Q

Monetary requirement for a benefit plan to be considered institutional?

A

1 million dollars

529
Q

Is a trust indenture a security?

A

No. A trust indenture is the contract between a corporate issuer of debt securities and a trustee. It is not a security.

530
Q

Floor fee on market report to be considered an IA?

A

The publisher of a market report that charges a fee in excess of $200 per year based on market developments is an investment advisor.

531
Q

The Securities Act of 1933

A

The Securities Act of 1933 was the fm first major piece of securities industry regulation which was brought about largely as a result of the “29 crash.

532
Q

Cooling off period

A

Introduced in Securities Act of 1933 whereby SEC will review registration statement for at least 20 days. During this time, no sale of securities may occur.

533
Q

Deficiency letter

A

Issued by the SEC when they require more information during a resignation. This may extend the cooling off period beyond the normal 20 days.

534
Q

S1

A

The formal name of the registration statement is the issuers full disclosure doc for registration with the SEC.

535
Q

Red-herring

A

During the cooling off period the only thing a registered rep may do is obtain indications of interest from clients by providing them with a preliminary prospectus.

536
Q

Access equals delivery rule

A

If the issuer has filed a prospectus with the sec and the prospectus may be viewed on the SEC website, the prospectus will be deemed to have been provided to the investor through the “access equals delivery” rule

537
Q

13 things required on final prospectus

A 
Type and description of securities
Price of securities
Use of proceeds
Underwriters discount
Date of offering
Type and description of underwriting
Business history of issuer
Bio data of camp officers and directors
Info on large stockholders
Company financial data
Risks to purchasers
Legal matters concerning the company
SEC disclaimer
538
Q

SEC disclaimer

A

Must appear on the cover of all prospectuses:

“These securities have not been approved by the SEC nor have they been approved of disapproved by the SEC nor have any representations have been made about the accuracy or the adequacy of the information”

539
Q

Misrepresentations

A

Financial relief made under a Securities Act of 1933

540
Q

From whom may financial relief be claimed for misrepresentations? (5)

A

The issuer
The underwriters
Officers and directors
All Parties who signed the registration statement
Accountants and attorneys who prepared stmt

541
Q

Securities act of 1934 (12)

A

2nd act after crash
2ndy mkt and OTC
Created SEC
Requires registration of broker dealers and agents
Regulates exchanges and NASD / FINRA
requires net capital for brokers
Regulate short sales
Regulates insider transactions
Requires public companies to solicit proxies
Requires segregation of firm and customer money
Authorizes FED on EXTENTION of credit under reg t
Regulates the handling of client accounts

542
Q

SEC
SRO
DEA

A

SEC is the ultimate authority and a govt body. 5 commissioners / 5 yr terms / approved by senate. Neither a SRO OR DEA

SRO regulates its own members: NYSE, FINRA
DEA, designated examining authority insects books and may also by BYSE or FINRA

543
Q

Who must register with SEC?

A

Issuers of securities with more than 500!shareholders and with assets exceeding $5 million. They must also file quarterly and annual reports and solicit proxies from stockholders.

544
Q

Extension of credit 3 regulations

A

Securities act of 1934 authorized Fed.

Regulation T : broker dealers
regulation U : banks
Regulation g: all other financial institutions

545
Q

What regulate all companies I the business to provide retail distribution of gas and electric power?

A

Public utilities holding company act of 1935

Because companies are regulated by this act, their securities are exempt from state registration requirements.

546
Q

Maloney act of 1938

A

Amendment to the securities exchange act of 1934

Created NASD, the SRO of OTC

547
Q

Four bylaws of NASD

A

Rules of fair practice
Uniform practice code
Code of procedure
Code of arbitration

548
Q

Trust indenture act of 1939

A

Corporate bonds issue on excess of 5million that are to be repaid in one year must issue a trust indenture

549
Q

Investment Adviser act of 1940 set registration requirements for advisors and state they must disclose these six things:

A 
Methods of recommendations
Types of securities recommended
Professional back ground and qualifications
Fees to be charged
Method for computing and charging fees
Types of clients
550
Q

Investment company act of 1940 (3 types)

A

Management investment companies
Unit investment trusts
Face-amount companies

551
Q

What SIPC doesn’t cover

A

SIPC does not consider a margin account and a cash account as delegate customers, and the customer would be covered for the max of 500k
SIPC does not offer coverage for commodities contracts and all member firms must display the SIPC sign in the lobby.

552
Q

Fidelity bond

A

All SIPC members are required to obtain a fidelity bond to protect customers. The min fidelity bond is 25k

553
Q

Definition of insider

A

Officer
Director
10% stockholder
Anyone in possession of no public material info

554
Q

Insider trader fines

A

The greater if 300% of the gain or loss avoided or 1mill for the person. Who acts in the info.

A fine of up to 1mill for the person. Who divulges info

Insiders may be sued by the affected parties

Criminal prosecution

Sec pays up to 10% to informants

555
Q

Telephone consumer act of 1991

A

Calls only between 8am and 9pm in customers time zone
Maintain do not call lis
Give prospect the name, address and phone number when soliciting
Follow adequate procedures to maintain do not call list
Trains reps on calling policies and do not call list
Ensure fans solicitations have name, number and address

556
Q

Exemptions from Teel consumer protection act

A

Calls to existing customers
Calls to delinquent debtor
Calls from religious and nonprofit

Calls may be made outside the windows to businesses.

557
Q

National securities market improvement act of 1996

A

States or political subdivisions can’t impose laws or read that differ for securities exchange act of 1934 relating to

Capital requirements
Recordkeeping
Financial repetitive
Margin
Custody

Also, states have no authority to regulate IA firms that are federally registered

558
Q

Uniform securities act (6)

A

AKA Blue Sky Laws:
Prohibits state admins from using post for personal gain
Gives admin right to enforce USA in state
Gives admin right to set certain registration requirements
Allows admin to set fee and testing read
Permits admins to suspend or revoke state registrations
Sets civil and criminal penalties

559
Q

Uniform prudent investors act of 1994 - five fundamental changes

A

The main consideration of a fiduciary is the management and trade off between risk and reward
The standard of prudence for each investment will be viewed in relationship to the overall portfolio
The rules regarding diversification have become part of prudent investing
The restrictions from investing in various those have been removed and trustee may invest in anything prudent
The rules of fasting duties has been removed

560
Q

The Howey test 4 characteristics

A

Used by Supreme Court to determine if something is a security

  • an investment of money
  • involves a common enterprise
  • investor has expectation of a profit
  • entails the management of a third party
561
Q

7 examples of securities and key identifying terms

A 
Stocks
Bonds
Notes
Debentures
Evidence of indebtedness
Transferable shares
Warrants, rights, options
- certificate, variable, interest in
562
Q

Examples of what is not a security (11)

A 
Real estate
Retirement plans - ira, 401
Bank accounts
Collectibles
Precious metals
Fixed annuities
While and term life policy
Antiques
Futures contracts
Trade confirmations
Prospectuses
563
Q

9 examples of a person

A 
Natural person
Corporation
Trust
Government organization
Partnership
Joint stock company
Sole proprietor
Association
Unincorporated organization
564
Q

An example of a non-person - 3

A

A minor
Someone deemed legally incompetent
Deceased individual

565
Q

Broker dealer registration

A

Home state and states of individual customers

566
Q

Broker dealer is not (5)

A

An agent
A bank
A savings and loan
A person w/no place of business in state and deals exclusively with financial institutions or issuers
A perso. W/ no place of bus. In the state who conducts bus. W/ existing clients who do not raise in state and are in state for

567
Q

Agent registration

A

Home state,
State of employ
State of customer residence

No registration required if:
Represent an issuer or BD in an underwriting transaction
Represent a band or S&L in issuance of securities
Represent exempt issuers

568
Q

Example of exempt securities (6)

A

U.S. Govt
State and muni govt
Canadian fed and muni govt
CP w/ maturities of

569
Q

Qualified Purchaser

A

Individual w/ at least 5mil I’m investments
A family owned business with at least 5m in investments
A trust sponsored by a qualified purchaser.

570
Q

Only three parties may guarantee something

A

U.S. Govt
Insurance company
Parent company

571
Q

Contumely

A

The willful display of contempt for the administrators order

572
Q

A federally covered security

A

A security listed on a stock exchange
An investment company security
Securities sold to qualified purchasers
Securities w/ info available in national journal like Moody’s

573
Q

Changes in agents employment

A

Change in firm entered in the Central Registration Depository (CDC)

Termination becomes effective 30 days after notifying unless admin is in process of suspending or revoking. Admin has one year to revoke.

574
Q

Canadian firms and agents

A

May engage in translations a a long as they have no office in the state.

If I. Good Canadian standing may register through a simplified process.” Which is effective after 30 days.

575
Q

State registration exemptions for IA’s (5)

A

Federally registered
Manage portions for investment companies
Manage portfolios > $110mill
Have no office in the state and do bus. Only with financial institutions
Have no office in state and offer advice to 5 or fewer clients in any 12 months

576
Q

de minimus exemption

A

Have no office in state and do business with 5 or fewer clients in any 12 months period

577
Q

The national securities market improvement act of 1997 / the coordination action

A

Eliminated regulatory duplication of effort and established registration requirements for IA’s.

A federally covered IA must reuters with SEC and is any IA who:
ManGed > 110mil
Managed investment company portfolios
Is not registered under state laws

578
Q

IA registration and AUM

A

> 110 mil mist resister federally

If falls below 90 m must register w/ state via ADV-W w/in 180 days

579
Q

Dodd-Frank a Wall Street Reform Act of 2010 & 4 categories of IA

A

Increased AUM for fed registration
Small IA 25m 100m

Pension consultants must have > 200m AUM to be eligible for federal registration

580
Q

Capital requirements for IAs

A

If they have full discretion, or custody, of customer funds, they must have 35k or surety bond

If only limited discretionary power, 10k

581
Q

IA advertising and sales literature

Possible admin approval (3)

Record keeping (3)

A

Admin may require prior approval of
Form letters
Prospectuses
Pamphlets

Keep these for five years
Ads and sales literature
Account statements
Order tickets

582
Q

IA books and records

A

Kept for five years and readily accessible for 2

583
Q

Brochure delivery

A

All
Prospective clients must receive brochure or form ADV Part 2 at least 48 hrs prior to signing contract of client is give 5 day grace period Tj with withdraw w/out penalty

584
Q

ADV Part 2 states (5)

A 
How and when fees are charged
The tykes of securities the advisor uses
How recommendations are made
The type of clients the advisor had
The qualifications of officers and directors
585
Q

Wrap account

A

Charges one fee for both the Asvos received as well as the cost of the transactions.

586
Q

Three methods of registering securities Ina state:

A

Coordination
Notice filing
Qualification

587
Q

Registration of IPO through coordination (6)

A

Copies of prospectus
Any amendments to prospectus
The Amy of securities to be offered I state
Lost of other state where it will be offered
Consent to service of process
Other info required by admin

588
Q

Registration. Through notice filing (7)

A 
Issuers name and address
Type of organization
Description of securities
Copy of prospectus
Copy of docs filed with sec
Consent to service of process
State fee
589
Q

Five examples of financial institutions

A 
Banks
Insurance companies
Investment companies
Broker dealers
Pension plans w/ > 1m in assets
590
Q

That’s actions with and 6 examples of fiduciaries

A

All transactions with fiduciaries are exempt from registration.

Trustees
Executors
Guardians
Sheriffs/marshals
Administrators
Receivers
591
Q

Transaction with underwriters

A

Exempt from state registration

592
Q

Offers to existing securities holders

A

Transactions with existing holders of:
Convertible securities
No transferable warrants
Transferable warrants exercisable within 90 days

All are exempt if no commission is involved

593
Q

Reorganization certificate

A

An agreement to purchase securities prior to the formation of a corporation.
Exempt if no commission involved
Number of subscribers may not exceed 10.
Subscriber may not make any payments.

594
Q

Nonissuer transactions

A

Transaction of publicly traded securities and is exempt if the issuer meets these read:
securities registered under section 12 of the securities exchange act of 1934 and has been reporting for 180 days
Or
Securities are registered INDER investment company act of 1940
Or
Issuer filed the info required by the securities exchange act of 1934 w/ the admin for at least 180 days prior to the transaction

595
Q

Updating form ADV

A

Must be done annually within 90 days of fiscal year end

Additionally, must provide each client with an updated brochure annually within 120 days of the advisors fiscal year end

596
Q

Disclosures of IAs (6)

A 
Conflicts of interest
Sources of recommendations
Location of customer funds
Anyway action taken against IA
MATERIAL FACTS
soft dollar arrangements
  Also
If a major shareholder sells
Major partner leaves

If an officer leaves or minor partner leaves, no disclosure necessary

597
Q

Private investment company reqs for charging performance fee

A

Minimum of 1m AUM or net worth of 2m

598
Q

Rule changes

An admin may change a rule as they see necessary. For how long may the change be appealed?

A

60 days

599
Q

Summary order (3)

A

May be issued w/out a hearing

  • to deny or revoke the exemption form registration of a security registration
  • to postpone or suspend the registration of an agent during an investigation
  • to postpone or suspend the registration of a security during an investigation

Parties must be notified that a hearing will be granted within 15 days

600
Q

Punishment for knowingly and willfully criminally violating USA

A

5k fine and or 3 yrs in prison

601
Q

Punishment for violation of Investment Advisors act of 1940

A

10 and or 5 yrs in jail

602
Q

Right of rescission

A

Offers must be in writing

Buyer had 30 days to accept offer

603
Q

Statute of Limitations on sales that violate USA

A

Purchaser has two years from discovery or three years from purchase date, whichever comes first

604
Q

Minimum financial requirements for individual to be considered a qualified purchaser.

A

5m in assets individually or jointly with spouse / family.

605
Q

Minimum assets to be considered an institutional investor

A

1m

606
Q

Trust indenture

A

A trust indenture is the contract between a corporate issuer of debt securities and a trustee. It is not a security.

607
Q

An individual gives 1500 share of assessable stock to his child. Under USA is this a sale?

A

Yes
A gift of assessable stock is considered to be a sale.. Assessable stock can require the owner to make additional payments.

608
Q

Annual subscription fee cutoff for market report publisher to be considered an investment advisor.

A

200 / yr

609
Q

Qualified purchaser (3)

A

An individual with at least 5m in investments
Family owned business w/at least 5m in invest
A trust sponsors by qualified purchasers

610
Q

Define “broker”

A

A broker is a person that executed an order for its account or for the accounts of others.

611
Q

An offer of securities is considered to have been made when?

A

When the prospectus has been diverted

612
Q

The uniform securities act defined an issuer as a:

A

Corporation proposing the same of common shares

613
Q

When has an offer to sell been made?

A

When a representative has made a recommendation.

614
Q

De minimus limits

A

An IA is limited to giving advice to five clients or fewer during a 12 month period

De minimus is: have no office in the state and offer advice

615
Q

With whom must a IA register if they start with 107m?

A

An IA with between 100 and 110m may resister with either the SEC or state.

616
Q

Fees and forms with wrap accounts

A

One fee for advice and execution. Investor must recover Schedule H at the time the account is opened.

617
Q

A securities state registration becomes effective after how many days?

A

20

618
Q

Are securities listed on a a foreign exchange exempt?

A

No

619
Q

An issuer whose registration has already become effective with the SEC will most likely twister with the state how?

A

Notice filing

620
Q

Must a representative always inform the principal of complaints?

A

No. If the client outs the complaint I writing, then the Represetative must inform the principal.

621
Q

May an agent offer to constantly monitor a clients account during market hours?

A

No, this is a violation as it is unreasonable.

622
Q

Window for hearing when requested by firm after state admin notifies of intention to revoke registration.

A

15 days

623
Q

Who enforced and administers USA

A

The states

624
Q

Principal shareholder

A

Any person who is directly or indirectly the beneficial owner of more than 20% of any class of equity security of an issuer

625
Q

If an agent files an appeal of the admin order, how many does do they have to file?

A

60

626
Q

The maximum monetary fine for violating USA

A

5k

627
Q

Travel damages

A

3x the amount of ill gotten gains

628
Q

Why may an admin cancel the registration of a firm or agent?

A

If it ceases to exist or fails to pay filing fees.

If the firm has violated the USA, the admin would revoke or suspend its registration

629
Q

Impersonal advisory services

A

Activities of an IA that do not meet the specific needs or objectives of a client, or which do not render an opinion of the investment merits of a particular security.

Series 7 (1 decks)

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