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S-79 Prep > S-79 Packet 1 > Flashcards

S-79 Packet 1 Flashcards

1
Q

To appeal a decision of the National Adjudicatory Council against membership of a firm, a written request for review must be filed within

A

25 days

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2
Q

What three fees are paid by the issuer?

A
  1. Blue sky fees 2. Printing fees 3. Issuer expenses
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3
Q

What fees are considered compensation to the underwriter?

A

Marketing expenses

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4
Q

How much stock does a “mini-tender” seek to acquire?

A

Less than 5% of the outstanding shares

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5
Q

Under the Securities Act of 1933, who is held liable for untrue or omitted information in a registration statement

A
  1. ) professionals preparing and certifying reports

2. ) Officers and directors

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6
Q

What does the SEC Act of 1933 regulate and what does it require?

A
  1. ) regulates the new issue market

2. ) requires registration of securities

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7
Q

What does the Securities Exchange Act of 1934 regulate, what did it create, what does it require?

A
  1. ) secondary market
  2. ) Created the SEC
  3. ) requires Broker-Dealers register with the SEC
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8
Q

What are 3 types of covenants in the Trust Indenture Act of 1939?

A
  1. ) Affirmative
  2. ) Negative
  3. ) Financial
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9
Q

What is an affirmative (“positive”) covenant?

A

require issuer perform certain actions (sustain a business, pay taxes etc.)

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10
Q

What is a negative covenant?

A

Restricts issuer from doing something (paying a special dividend)

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11
Q

What are financial covenants

A

requires issuer maintain a certain credit profile

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12
Q

What is the SIPC?

A

Securities Investor Protection Corp - non profit org. that protects customers from a B/D default

  • provides insurance up to the $500K per account, but no more than $250K in cash
  • each individual account gets coverage
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13
Q

What does the Insider Trading and Securities Fraud Enforcement Act of 1988 prohibit?

A

Prohibits trading on insider information

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14
Q

What are the penalties for insider trading?

A
  1. ) Civil - 3X the profits made or losses avoided

2. ) Criminal - Fine up to $5 million and/or 20 years in prison

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15
Q

What is misappropriation of information?

A

someone uses non-public info to trade on a company other than their employer

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16
Q

What does a statutory disqualification result in?

A

Person can not be associated with a member firm in any capacity unless he/she has a FINRA waiver

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17
Q

When is an amended U-4 required and when must it be filed? What is filing deadline for conviction of a crime?

A
  1. ) anytime information on a U-4 changes
  2. ) Must be filed within 30 days
  3. ) Conviction of a crime: 10 days
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18
Q

What is a rep who has lapsed on his/her Regulatory Element training? What is the consequence?

A

CE Inactive / can not function or be paid as a registered rep

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19
Q

OSJ must have what type of registered person in place?

A

S-24 registered person

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20
Q

What does selling securities outside of the jurisdiction of their firm require?

A
  1. ) Notification
  2. ) Supervision
  3. ) Permission if compensation is received
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21
Q

When do transactions for personal accounts at another B/D require notification?

A

must be done before the initial transaction in the account

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22
Q

What are three requirements for sharing in personal accounts?

A
  1. ) require permission from the firm
  2. ) permission from the account
  3. ) gains and losses must be in proportion to each contribution
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23
Q

When are loans to registered reps from customers permitted?

A
  1. ) If firm has supervisory procedures in place
  2. ) Loans from family members, banks and individuals whom broker has business/personal relationship outside of any business relationship
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24
Q

What two actions must happen if a customer has a written complaint?

A
  1. ) Must be forwarded to a principal/supervisor

2. ) Must receive a written response via an investor brochure

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25
Q

What is FinCEN?

A

Treasury group that deals with money laundering

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26
Q

What is a SAR & CTR?

A

SAR - Suspicious Activity report (required to be reported in 30 days)
CTR - Currency Transaction report - must report cash deposits in excess of $10,000 in a single day

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27
Q

Does anti-money laundering compliance program require SEC profile?

A

No

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28
Q

What must any transaction with a customer on the Office of Foreign Assets & Control list have done?

A
  1. Be blocked 2.) Reported in 10 days
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29
Q

What does Foreign Corrupt Practices Act require?

A

Require firms to report to DOJ any knowledge of bribery or kickbacks of foreign gov’t officials

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30
Q

What are the FINRA code of procedures appeal process in rank order?

A
  1. ) National Adjudicatory Council
  2. ) SEC
  3. ) Federal Appeals Court
  4. ) Supreme Court
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31
Q

What type of award does arbitration result in?

A

a monetary award

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32
Q

What is the limit for simple arbitration and is the result binding?

A

$50K, yes and renders a decision in 30 days

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33
Q

What is a Memorandum of Understanding?

A

a binding contract signed after mediation

34
Q

What is the trade settlement date time period for a dividend?

A

T + 3 / Date which legal ownership of securities change hands -

35
Q

When does cash trades settle?

A

Same day

36
Q

What is the difference between statutory voting rights and cumulative voting rights?

A

Statutory - 1 vote per share for each board set

Cumulative - can aggregate votes and allocate among board seats

37
Q

What is the primary benefit of issuing preferred stock?

A

Issuer can raise equity without diluting the ownership of common stockholders

38
Q

What is the par value of preferred stock and how is it quoted?

A

100 / % of par

39
Q

What do participating preferred stock holders get to participate in?

A

Get to participate in the common stockholder dividend payments

40
Q

What are ARPs?

A

Adjustable Rate Preferred Stock - will fluctuate to accommodate interest rates

41
Q

What market do sponsored ADRs trade? Unsponsored?

A

1.) A listed exchange 2.) OTC

42
Q

Do Canadian companies use ADRs?

A

No, directly issue shares in the U.S.

43
Q

What are key characteristics of warrants?

A
  1. Generally issued with another security

2. ) are detachable (can trade individually)

44
Q

An issuer sells $125 mm in bonds at 99. Underwriting fees are 80 basis points. What are the proceeds received by the issuer?

A
  1. ) Calculate the public offer price ($125M x 99%)
  2. ) Calculate underwriter fee (off par!!!) ($125M x .008)
  3. ) Subtract underwriter fee from POP
45
Q

When do bonds trade at a discount?

A

When Market Value < Par

46
Q

When do bonds trade at a premium?

A

When Market Value > Par

47
Q

What are the days in month / yr for a corporate bond? When is the trade settlement date

A

30/360

T + 3

48
Q

What are the days in month / yr for a treasury bond? When is the trade settlement date?

A

Actual days / 365 days in a year

T + 1

49
Q

What months are less than 30 days?

A

February - 28 days

April, June, September, November - 30 days

50
Q

How is accrued interest calculated?

A

= days accrued / days in year X annual interest

51
Q

What date is NOT included when calculating accrued interest?

A

The settlement date

52
Q

What type of bonds have no reinvestment risks?

A

Zero coupon bonds

53
Q

If a bond rated AA is downgraded two notches, what is the resulting credit rating?

A

A+

54
Q

When an issuer refunds debt it is effectively doing what?

A

Refinancing

55
Q

What is a put feature of a bond redemption?

A

Allows investor to sell bonds back to the issuer

56
Q

Who can issue Equipment Trust Certificates?

A

The user of equipment only

57
Q

What are collateral trust bonds backed by?

A

Backed by company-owned securities (ie. stock in a subsidiary)

58
Q

How is the conversation ratio calcuated

A

Par value / conversion price

59
Q

How do you calculate the parity of a convertible bond? of a stock?

A

Market price of stock x conversion ratio

Market value of a bond / conversion ratio

60
Q

How is a T-bill quoted?

A

As a discount, yield basis off of par (Bid - Ask)

61
Q

What does the plus in 98-19+ price of a Treasury note or bond equate too?

A

Add 1/64 to price

62
Q

What are the maturities of a T-bill, T-note, and T-bond

A

T-bill - 1, 3, 6 and 12 months
T-note: 2, 3, 5, 7 and 10 yrs.
T-bond: 30 years

63
Q

Are Fannie and FreddieMac backed by the full faith/credit of the government?

A

No!

64
Q

What is the purpose of GinnieMae, Fannie and FreddieMac?

A

provide liquidity in the mortgage market by securitizing loans

65
Q

What type of exchange is an auction marketplace?

A

NYSE

66
Q

How many designated markers per security in NYSE

A

1 only

67
Q

What is another term for Independent brokers on the NYSE?

A

$2 brokers

68
Q

What are the initial listing requirements for the Nasdaq?

A

$4 price

3 market makers

69
Q

What are the continual listing requirements for the Nasdaq?

A

$1 price
2 market makers
>= 400 shareholders

70
Q

How many market makers are required for OTC Pink?

A

1 only

71
Q

What are the two main differences between OTC Pink and OTC Bulletin Board?

A

OTCBB firms must be SEC filers AND quotes must be firm

72
Q

What is the third market?

A

Where listed stocks trade OTC

73
Q

What index is price-weighted?

A

DJIA

74
Q

What is quantitative suitability?

A

requires a series of recommendations to be appropriate / help craft a plan

75
Q

What type of investors are exempted from customer suitability

A

Institutional Investors

76
Q

What are Eurodollars? Eurobonds?

A

Eurodollars - US denominated deposits outside the US.

Eurobonds: US-denominated bonds outside the US

77
Q

What is a Yankee bond?

A

USD bonds issued by a foreign entity in the U.S.

78
Q

What are examples of recession-proof/defensive stocks?

A

Utilities, food retailers, beer, cigarettes, cosmetics

79
Q

What are 2-3 examples of cyclical stocks?

A

tech, auto, paper manufacturers

80
Q

What are two key coincident indicators?

A

1.) Industrial production index 2.) monthly non-farm payrolls

81
Q

What is the federal funds rate?

A

Overnight lending rate between banks

S-79 Prep (6 decks)

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