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SIE SELF STUDY > Regulatory entities agencies and market participants > Flashcards

Regulatory entities agencies and market participants Flashcards

1
Q

Securities exchange act 1934

A

Primary securities regulator

Broker dealers

Self regulatory organizations

Reporting companies

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2
Q

Broker dealer may not claim registration

A

The commission has passed upon or approved the broker dealers financial standings, business, or conduct

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3
Q

A B C

A

Agents brokers commissions

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4
Q

P D M

A

Principal - dealer - markup/mark down

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5
Q

Not a security

A

Insurance guaranteed whole life universal life term life endowment fixed and equity indexed annuity policies

Retirement plans (IRAs, Keogh, pensions)

Qualified retirement plans

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6
Q

Associated persons = DEBOP

A

Directors employees branch managers officers and partners

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7
Q

Sanctions for broker dealers “BROKER CHECK”

A

Don’t arrest

Don’t jail

Don’t impose injunctions

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8
Q

self regulatory organization’s SROs

A

FINRA Financial industry regulatory authority

CBOE Chicago Board options exchange

MSRB Municipal bond rulemaking board

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9
Q

Margin accounts

A

Put half down then borrow the rest from a regulated entity

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10
Q

Commodities commodity futures and currencies

A

Not covered by SIPC meaning they are not securities

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11
Q

SIPC Insurance covers

A

Missing assets

NOT Market loss

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12
Q

FDIC (Federal deposit Insurance corporation)

A

Covers member banks up to $250,000

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13
Q

Accredited

A

Net worth of 1 million excluding equity in home

Or annual income of 200,000 for two most recent years

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14
Q

Investment advisor

A

Investment advice

Business advice

Compensated for advice

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15
Q

Issuers and underwriters

A

Issuer (IPO)

Common stock

Primary sell

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16
Q

Traders and market makers

A

Like a car deal

MM- Manheim

Traders- me

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17
Q

OTC Over the counter

A

Unlisted also known as Lindsay Lohan stock he pulling trash stock or D-list

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18
Q

MMBB

MARKET MAKERS

A

Market makers by at the bid

And sell at the ask

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19
Q

Broker dealers

A

Buy at the ask

Sell at the bid

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20
Q

100 shares equals

A

1 round lot

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21
Q

Firm quote

A

A price quote that guarantees a bid or ask price up to the amount quoted

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22
Q

T + 2

A

Corporate stock

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23
Q

T +1

A

US government/federal securities

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24
Q

T

A

Trade Date

Or

Same Day

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25
Q

A market maker in an over-the-counter stock

A

Buys at the bid price

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26
Q

CUSIP number

A

Committee uniform security identification procedures meaning

Personal identification number for each individual security nine digits

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27
Q

Custodians and trustees

A

Persons or institutions responsible for making all investment decisions

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28
Q

Transfer agents

A

In charge of good delivery

UPC- uniform practice code

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29
Q

DTCC

A

Depository trust and clearing company

Worlds largest securities depository

WORLD

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30
Q

NSCC

A

National securities clearing corporation

U.S.

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31
Q

Primary market

A

Capital markets such as stock and bond markets

Primary focus is to raise funds in the public and private sector

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32
Q

IPO

SPO

APO

A

Primary sell

Securities act of 1933

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33
Q

Primary issuer transaction

A

(Manheim)

IPO- initial public offering’s

APO- additional public offerings

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34
Q

Secondary non-issuer transaction in the primary market

A

(Me/individual)

Financial markets

Stock market

Bond market

Physical or electronic venue

Regulated conduct rules

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35
Q

Secondary offering

A

Sales by one or more major stockholders to the public

Proceeds paid to stockholders

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36
Q

Third market

A

NASDAQ (Apple)

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37
Q

Fourth market

A

Unlisted

No middleman

ECNs - Electronic communication networks- Open 24 hours examples are Merrill Lynch and Raymond James

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38
Q

3 Ps of 1933

A

Paper prospectus and primary

IPO

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39
Q

Which of the following statements regarding the market is true?

A

It is composed of listed securities traded OTC

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40
Q

The federal reserve board

A

Helps regulate the economy

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41
Q

Monetary policy

A

Quickest way to make changes to air money supply

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42
Q

Fiscal policy

A

Based on taxes and spending

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43
Q

M1

A

Cash +demand deposits (checking)

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44
Q

M2

A

M1 +CDs +money market mutual funds +overnight repose

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45
Q

M3

A

M2 + negotiable CDs + term repos

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46
Q

Open markets activities and impact on the economy

A

T-bills FOMC

Most frequently used

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47
Q

Raising interest rates or tightening contracts

A

Bearish

fight inflation

Bond prices decrease

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48
Q

Lowering interest rates or loosening money supply

A

Bullish

Risks inflation

Bond prices increase

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49
Q

BBFF

A

Bank to bank for federal funding

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50
Q

Prime rate

A

Best rate

Big banks to big customers

The general public usually pays prime + one or two

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51
Q

Financial statements

A

Assets = liabilities + net worth (Equity)

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52
Q

Working capital

A

Current assets Minus current liabilities

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53
Q

Recession

A

Two consecutive quarters

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54
Q

Depression

A

Six consecutive quarters

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55
Q

Leading indicators and measures for economic factors

A

The money supply = M2

Price rule of S&P 500 index of common stocks

New building permits for private housing units

Orders for consumer durable goods and materials

Average weekly production hours in manufacturing

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56
Q

Coincident

A

Usually mirror movements of the business cycle (same time)

Employees on non-agricultural payrolls

The index of industrial production

GDP

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57
Q

Lagging

A

Consumer price index for services

Prime rate charged to banks

Labor cost per unit of output for manufactured goods

Average duration of unemployment

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58
Q

Inflation

A

Rate at which;

goods and services is rising

purchasing power of currency is falling

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59
Q

Deflation

A

Decline in prices

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60
Q

Stagnation

A

Prolonged periods of slow economic growth with high unemployment rates

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61
Q

Stagflation

A

Combination of inflation and high unemployment

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62
Q

Utilities

A

Highest Dividend payout ratio

63
Q

Cyclical

A

Equity security affected by ups and downs in overall economy

64
Q

Non-cyclical (defensive)

A

Stock that provides constant dividend and stable earnings regardless of the state of the stock market

Examples include;
Food
Tobacco 
Drugs
Liquor 
Clothing
Cosmetics
Utilities
65
Q

Counter cyclical

A

Stock who’s price tends to move in opposition to overall business cycle

Examples include;

Precious metals
Used automobiles

66
Q

Growth industries

A

Industry that is growing faster than the economy

Apple

Tesla

Microsoft

Paying hardly any dividends

A. Bioengineering

B. Computers and IT

67
Q

Special situation stocks

A

Stocks of a company with unusual profit potential resulting from non-recurring circumstances

New management

Introduction of a new product

Oprah’s stock because she pays to help her stock stay afloat

68
Q

GNP

A

Measures the total value of all the goods and services produced by a national economy

Example includes;
US plant in Mexico or outside of the country

69
Q

Deficit

A

More money flowing out of the country

US interest rates are low

US dollar is strong

SID- strong import deficit

US currency buys more foreign goods

70
Q

Surplus

A

More money flowing into the country

US interest rates are high

US dollar is weak

WES- w. Export services

71
Q

Keynesian theory

A

Active government involvement

72
Q

Investment objective must

A

Be included in the registration statement

73
Q

Registration statement

A

Lists everything possible on that security and up to five years business history

74
Q

Tombstone advertisement

A

New mutual fund

Name of the issuer

Type of security being offered

Public offering price POP

Number of shares to be sold

75
Q

Shelf offering

A

Raising money immediately and notconcerned with later

Only strong companies can do this

76
Q

State registration requirements under the uniform securities act

A

NASAA or BLUE SKY

“STATE”

77
Q

Coordination

A

Method of registration where the issue were files with the state at the same time files with the SEC

78
Q

Qualification

A

IQ

Intrastate by qualification

Interstate offerings

States have high IQ

79
Q

Prospectus

A

You can sell with this

final asking price

Offering date

Offering price

Description of offering

80
Q

Preliminary prospectus

A

Red herring

Take orders

Distribute sales literature or advertising material

81
Q

Underwriters may

A

Take indications of interest nonbinding on both sides

Can’t take any checks during cooling off period

Minimum of 20 days

82
Q

Exempt securities

A

They don’t have to do a prospectus

US government securities federal (exempt)

Municipal bonds = State and local

Commercial paper and bank acceptance is with the maturity of 270 days

Insurance policies and fixed annuities

National and state bank securities

83
Q

Exempt transactions

A

Regulation A+

Regulation D

Rule 147

Regulation S

84
Q

Rule 147

A

Securities offered and sold exclusively intrastate

80% in state

85
Q

Which of the following is used by corporations raise capital?

A

APO and IPOs

86
Q

What can be delivered during the cooling off period of a new registration?

A

A red herring may be delivered to prospectus investors

87
Q

What is associated with economic expansion

A

Increasing GDP
higher stock prices
more consumer demand

NOT rising consumer debt

88
Q

Fiscal policy

A

Gives fits because it involves taxes and spending

89
Q

What rate is set by the federal reserve board

A

The discount rate

90
Q

SIPC coverage limits bar

A

$500,000 total

up to which only $250,000 can be cash

91
Q

What is the basic corporate balance sheet equation

A

Assets = liabilities + shareholders equity

92
Q

Working capital is

A

Current assets - current liabilities

93
Q

Who decides how much and how often stock sells?

A

The Board of Directors

94
Q

A stock dividend or a forward stock split

A

Not a taxable event

The number of shares goes up

Cost basis and cost of shares goes down

The aggregate position stays the same

It’s not taxed until the shares are sold

95
Q

Reverse stock split

A

1:2

Cutting shares in half

value doubles

96
Q

Process for cash dividends (STOCKS)

A 
D
      Declaration = BOD
E
      Ex = FINRA / Exchange 
R
      Record = BOD
P
      Payable = BOD

Stock is reduced by your dividend

97
Q

DERP

A 
D
      Declaration = BOD
E
      Ex = FINRA / Exchange 
R
      Record = BOD
P
      Payable = BOD
98
Q

Ex date rules

A

Buy on or after ex-date

no received dividends

99
Q

Spin off

A

Type of divestiture where a parent company sells all or part of the shares of a company to create a new company

100
Q

Take over

A

The purchase of one company known as a target company by another in a hostile manner

101
Q

Tender offer

A

Buying securities for cash

7 business days

102
Q

MMBB

A

Market

Maker

Buys

@ Bid price

103
Q

Proxies

A

Power of attorney

The public never pays expenses for;

clerical

administration

mailers

104
Q

Notice required…

A

No later than 10 days prior to the record date

105
Q

Under the cumulative voting system and investor but shares of CDE would have?

A

500 votes yes that he could cast in anyway he chooses among five directors

106
Q

Client has 100 shares of GH I common stock when the stock undergoes a split. After the split the client has?

A

No effective change in value of the position

107
Q

Par value

A

Common =1

Preferred = 100

Bonds = 1000

108
Q

Market value

A

Based on supply and demand

109
Q

Warrants

A

Long term

Above market value

Attached to bond offering

110
Q

Rights

A

Short term

4 to 6 weeks

Below market value

111
Q

Preferred stock

A

Acts like a bond

fix stated dividends

112
Q

Interest rates go up

A

Preferred stock goes down

113
Q

Participating preferred stock

A

Pays an extra dividend

Preferred paid first

Common paid second

Preferred then paid the additional

114
Q

ADRs

A

American depository receipts

Equity positions

Facilitating the trading of foreign shares in US market

Helps by Sony stock in US

Facilitates US citizens owning foreign shares

115
Q

Dividends

A

Current yield

Current rate of return

116
Q

Capital gains

A

Losses

Based on your income bracket

117
Q

SEC rule 144

A

Regulates the sale of control and restricted securities

No holding period

Held for six months

Effective for 90 days

118
Q

Penny stocks

A

Unlisted security trading at less than five dollars per share

Exempt from the suitability statement but NOT exempt from disclosure document

Monthly statements are provided to customers

119
Q

Market capitalization

A

(CMV/share) x Number of common shares outstanding

120
Q

Standard and poors 500 (S&P 500)

121
Q

The Wilshire 5000

A

Broadest US market

122
Q

Characteristics of bonds

A

Borrow the money (debtor)

the investor lends the money (creditor)

123
Q

Call provisions

A

Advantages to the issuer

places a ceiling on how high a Price of a bond will increase

124
Q

Interest

A

The charge of the privilege of borrowing money usually stated as a percentage

Usually every six months

Par + semi annual interest payment

125
Q

Accrued interest

A

Paid by the buyer to the seller

For corporate and municipal bonds

Using 30 day months and 360 day years

Fort government securities

126
Q

Bonds trading flat

without accrued interest

A

Trade on an agreed-upon market price only

127
Q

Zero coupon bond

A

Sold at a discount and mature at par

128
Q

A bond would be considered speculative below which of the following ratings?

129
Q

list treasury bills treasury bonds and treasury notes in ascending order of maturity

A

Bills

Notes

Bonds

130
Q

The only 100% back by the full faith and credit of the United States government mortgage Association

A

Ginnie Mae = GNMA

Interest taxed at all levels- federal, state, and local

131
Q

4 Gs

A

Ginnie

Guaranteed

Government

Guaranteed monthly income

Pays monthly interest

132
Q

Collateralized mortgage obligation’s

CMOS

A

Equity positions

Pools of private individualize mortgages

Pass through certificates

Monthly check

133
Q

Collateralized debt obligations

CDOS

A

Very risky

Pool of non-mortgage-backed security‘s

134
Q

Money market securities

A

Short term

High quality debt

Best liquidity

Mostly T-bills

One year or less to maturity

135
Q

TANS

A

Taxes

Tax anticipation notes

Example is Worthington sidewalks

136
Q

RANs

A

Revenue

Revenue anticipation notes

Example is OSU wants new bleachers

137
Q

Commercial paper

A

High quality short term debt obligations

270 days maximum maturity

138
Q

Bankers acceptances

A

Facilitates foreign trade of imports and exports

Backed by the letter of credit

Issued at a discount

270 days maximum maturity

139
Q

US treasury bills

A

Treasury notes and bonds in the final year of maturity

140
Q

Liquidation priority list

A

Taxes

Secured Debt

General creditors

Common stock

(MONEY MARKET INSTRUMENTS)

141
Q

Municipal bond characteristics

A

GO (General obligations) -T Taxes

Backed by full faith and credit general taxing Authority

Political subdivisions cities and counties - Ad Volorem (real estate) taxes (property tax)

142
Q

Double-barreled Bonds

A

Primarily backed by revenue ultimately by municipality

143
Q

Revenue bonds

A

Self-supporting

Fees are from highways bridges airports and parks

144
Q

Open End Bonds

A

Allowing further issuance of bonds with the same status and equal claims on assets

145
Q

Closed End Bonds

A

Allowing NO further issuance of bonds with an equivalent lien on assets

146
Q

Revenue bonds

A

Industrial development revenue bond IDRs

Used to construct facilities or purchase equipment

147
Q

Safest bonds

A

Public housing in new housing (SECTION 8 Bonds)

Backed by for faith and credit of US government

148
Q

Section 529 Plans

A

Municipal fund securities for K through 12 and post secondary education

The donor may also be the Donee

Unlimited donations

5 year aggregate

149
Q

Section 529 Plans

A

Prepaid tuition plan

College savings plans

Local government investment pools (money market)

Achieving a better life experience account (ABLE)
Ability or disability

150
Q

Muni bonds

A

Whatever level is given to you in bonds they tax you on the same level

Federal tax exempt interest

Taxable at state and local

151
Q

A B C

A

Agent broker commission

152
Q

P D M

A

Principal Dealer Mark-up

153
Q

Gifts and gratuities to other municipal dealers

A

$100 limit per year

154
Q

Derivative securities

A

Speculative contracts

Risky

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