Review from Exam I Flashcards
Review missed questions
Municipal Advisor
A municipal advisor is a person that provides advice to or on behalf of a municipal entity with respect to municipal products or the issuance of municipal securities
What can be listed in a mutual fund’s list of expenses?
- Costs to maintain shareholder records
- Costs to provide services
- The investment adviser’s fees
What can be listed as expenses to the investor?
Costs paid in the form of sales charges (loads) to an underwriter or broker-dealer selling mutual funds
tender-offer
When a company offers to buy outstanding securities for cash or for cash plus other securities from its stockholders or bondholders
buy-back
aka a repurchase, when a company buy its own outstanding securities in the open market (rather than appealing directly to its investors)
Takeover
the purchase of one company, known as the target company, by another company, known as the bidder or buyer.
Spin-off
a type of divesture when a parent company sells all of the shares of a subsidiary or distributes new shares of a company or division it owns to create a new company
Retail Communications
any written (including electronic) communication that is distributed or made available to more than 25 retain investors within an 30-calendar-day period. (A retail person is any person other than an institutional investor)
Correspondence
any written (including electronic) communication that is distributed or made available to 25 or fewer retial investors within any 30-calendar-day period.
Institutional Communication
any written (including electronic) communication that is distributed or made available only to institutional investors, but does not include a member’s internal memos
How are T-Bonds priced and when is their interest paid?
as a percentage of pair; interest is paid semiannually
How are T-notes priced and when is their interest paid?
as a percentage of par; interest is paid semiannually
How are T-bills priced and interest paid?
T-bills are priced at a discount to par with no interest paid until maturity
The Options Clearing Corporation (OCC) assigns exercise notices to broker-dealers with short positions with this method.
A random-selection basis.
Note- they could use a FIFO method or any other method that is fair and reasonable.
How are ADRs priced?
ADRs use dollar-based pricing and the value fluctuates throughout the day becuase they are listed on an exchange (NYSE)
When can a Broker-Dealer share in the financial loss with a customer?
When the loss is due to an error on the part of the firm
What amount would trigger a Suspicious Activity Report (SAR)?
at least $5,000 in funds or other assets
What threshold would trigger a Currency Transaction Report (CTR)?
It is triggered by amounts greater than $10,000
How are the shares of open-end Investment Companies priced?
NAV + sales charges; once at the end of the day
What types of products can an open-ended investment company invest in?
Common Stock, Preferred Stock, and bonds
What investments can an open-ended investment company issue?
Only Common Stock
What type of issues can a closed-end investment company issue?
Common stock, Preferred stock, and bonds
What type of investment company can sell shares to the open public in an IPO?
Open end and Closed end Investment Companies
This type of investment company’s shares can be traded on an exchange
Closed end
TOD Accounts
Transfer of Death. Allows registered owner to pass all or a portion of account to named beneficiary(s). This avoids probate but does not avoid estate tax.
TIC
Tenants in Common;
the deceased tenant’s fractional ownership is passed down to their estate instead of being passed to the surviving tenant(s). Each party must specific a percentage of interest in the account.
JTWROS
Joint Tenants With Rights Of Survivorship;
a deceased tenant’s ownership is passed to surviving tenant(s). All parties have an undivided interest.
How is Net Asset Value calculated?
Total assets-total liabilities = Total NAV
NAV/ shares outstanding = NAV per share
What are the activites of a municipal finance professional (MFP)?
if your activity is solely limited to sales or clerical, you’re not a MFP. However, if you assist with UW, research, or communications with customers, you’re an MFP.
Describe the annual dividend of Preferred Shares
annual divident payment is fixed and stated as a percentage of par; CS dividend is subject to variation.
Describe the different ways to meet a margin call of $3,000
$3,000 cash or $6,000 in fully paid for marginable securities.
Is voter approval required for Municipal Revenue bonds?
No and they are not subject to statutory limits because they’re backed by the revenue from the project. However, they generally have a lower rating because they are not backed by ad-valorem (property) taxes
DPP
Direct Partnership Programs are set up to having the owners of the business be liable for any taxes due. Income and losses are passed on directly to the investors
When must a prospectus be delivered?
Before OR duing a sales solicitation or presentation. If you are sending out sales literature to a prospective customer, you must include a prospectus
