Random #12 Flashcards
Customer made check out inadvertently to wrong co.
Sent back to customer 3 business days
Can I borrow $ for a customer
No unless customer is my mortgage banker- no personal loans
Blanket recommendations
No unless it’s your specialty
Change in control of IA firm
Customer must consent
Customer statements have to be provided how often (at a minimum)
Quarterly
Form ADV part 2 is
The brochure
Form ADV 2A vs 2B
ADV Part 1 is also the vehicle to upload your Firm’s Form ADV Part 2A (Firm Brochure) and Form ADV Part 2Bs (Brochure Supplements).
ADV part 1A
Info about the firm- Part 1A is required whether you’re registering with the state or the SEC.
ADV 1B
Part 1B is only required if you are registering with state authorities- Additional disclosures about your business
ADV 2B
contains required information about the individuals providing financial advice at your firm
ADV 2A
Part 2A requires you to write a narrative brochure where you’ll lay out information about your firm’s services, fees, conflicts, and personnel. The instructions require 18 disclosure items
Cyber security and data protection for IA firms
Written supervisory procedures- must address; How are we protecting customers?
Equity investments- ADRs are?
Foreign security with a domestic wrapper- can diversify a customer with a foreign security- subjects to currency risk
Preferred stock preferential treatment in 2 areas:
1-Can’t pay dividend to common if in arrears
Features of preferred stock
Income stream- stated as a max not a min- so we can use discounted cash flow
2 versions of discounted cash flow
Common stock- Dividend growth model )can’t be used with preferred. This results in a higher growth model
Preferred stock- dividend discount model = dividend stays the same
Current yield
Yield to call
Bonds most volatile
Long maturity, lowest coupon is most volatile
Eurodollar bond
Issued outside US- but in $$ - no currency risk
Eurobond
does have currency risk
Commercial paper
Does not have to be registered
Mutual funds- open end vs closed end
Open end continually offering new shares- federally secured and registeredclosed end trading
Break point sale
BAD- trying to max commission by avoiding
REIT vs open end
