series 7 brian lee Flashcards
Suitability chart
Growth (cap appreciation)
large cap
small cap(agressive)
diversity(international stocks)
moderate- balance equity
income corp bonds preferred stock blue chips reits
conservative
bills bonds notes
bond ladder
Stabilizing bids must not be made
at a price higher than the public offering price (POP).
rule 5130 classifies a ristricted person as
member firms
employees of member firms
any person owning 10% or more of member firm
portfolio managers
finders and fiduciaries acting on behalf of managing underwriter
Whether a first-year firm or not, retail communications for investment companies (including mutual funds, variable contracts, and unit investment trusts) that include
a ranking or a comparison that is generally not published or is the creation of the investment company or the member must be filed with FINRA at least
10 business days before first use (pre-filing).
EXEMPT ISSUERS AND SECURITIES
Among the exemptions are the following issuers:
■ The U.S. government
■ U.S. municipalities and territories
■ Nonprofit religious, educational, and charitable organizations
■ Banks and savings and loans
■ Public utilities and common carriers whose activities are regulated as to rates and other items by a state or federal regulatory body
Commercial paper—maturity less than 270 days
■ Bankers’ acceptances—maturity less than 270 days
■ Securities acquired in private placements—restricted stock
trust indenture.
series of promises between the issuer and the trustee
rule 144 breakdown
RS(unregistered) held by nonafilliate(noninsider)
6 month
sell freely after
rs(unregis) held by affilate(insi)
6 month hold
volume limits after
control stock(registered)
held by affiliate(insider)
no hold
vol limits apply
EPS
earnings available to common
/number of shares outstanding
dividend payout ratio
annual divs per common share
/eps
is responsible for setting the opening quote for issues listed on the NYSE.
designated market maker
Tax consequences for options
same sp-p or sp+ pr
bullish is cost basis
bearish is sale proceeds
leaps contract margin requirement is
100% of the premium
An issuer will call the
higher coupon bonds before calling the lower coupon bonds.
the one with lower price is more likely to be called
All of the following are minimum requirements for listing on the NYSE EXCEPT:
there is no minimum earnings per share requirement. However, there is a minimum earnings requirement.
The author received royalties as a result of an active trade or business, therefore the payments are considered
earned income
To determine the parity price of the common
1000/conversion price
current price/conversion ratio after
interest earned on GNMA is taxable at
federal, state, and local levels.
In a competitive bidding situation, each underwriter submits a sealed written bid. Once the bid has been awarded, the bonds are repriced to give the underwriters a profit when selling them to the public. The yield at which the bonds are sold is called
reoffering yield
To note that a sell order is long, a broker/dealer must either have
the stock in its possession or have reasonable assurance that the customer owns the stock and will deliver it promptly.
Which of the following are qualified plans? Payroll deduction. Deferred compensation. Defined benefit. Defined contribution.
Defined benefit.
Defined contribution.
taxes and the 529 and cordevel
both are after tax so the contributions are not tax deductable.
All of the following may be used to service special tax bond issues
such as gasoline, cigarettes, liquor, and business licenses
closed end shares trade where
exchanges and otc
The Bond Buyer’s Revenue Index is an
average yield of 25 revenue bonds with 30 years to maturity.
A price spread same thing as
vertical spread
what cannot be altered according to msrb
the rules regarding the content of confirmations.
net revenue pledge order of what is paid
operations and maintenance are paid first, with debt service following
gross revenue pledge order what is paid
debt service and then operations and maintenance
The POP for a mutual fund as quoted in the financial press reflects:
the maximum sales charge the fund distributor collects.
tax equiv yield
taxable yield) x (100% - tax bracket)
Typically, general obligation bonds are not sold short because:
thin markets may make it difficult to cover a short municipal position.
All of the following would flow through as a loss to limited partners EXCEPT: A) depletion. B) accelerated depreciation. C) interest payments on recourse debt. D) principal repayment on recourse debt.
interest payments deductable
principal is not
In both exchange and OTC markets, traders can sell short
any time without any consequence
The Act of 1934 created the SEC
33 is for
required the registration of broker/dealers, empowered the Federal Reserve to control the extension of credit on securities transactions, and created rules dealing with secondary market trading.
new issues, prospectus
re-filing with FINRA is not required if
If unaltered and used as it was originally intended
The Code of Arbitration Procedure would be mandatory to settle disputes between:
Disputes between anyone in the industry, including registered clearing corporations, must go to arbitration, with the exception of statutory discrimination claims,
The Trust Indenture Act of 1939 is applicable to corporate debt issues that are
nonexempt, are over $50 million to be issued within 12 months, are offered interstate, and have maturities of 9 months or more.
If a book author receives royalty payments from a publisher, the payments will be taxable as which of the following types of income?
Earned income
The interest on municipal debt is largely exempt from
taxation, but not capital gains. Municipal bond investors who buy low and sell high will have capital gains to report.
some issuers establish a sinking fund account to
accumulate funds to pay off term bonds at or before the established maturity date
highly rated or lowly rated issuers establish sinking funds
low do it so its more marketable
statutory debt limit protects
taxpayers from excessive taxes
and can make a bond safer
limited tax goes
bond securued by a specific tax. limited to what tax can be used
voter approval for goes are revs
goes
trust indentures required?
no munis are exempt. enhances marketability.
interest taxable for IDRS or IDBS
yes because the act reserves tax exemption for public purpose
if used for non public purpose it may be subject to alternative minimum tax
AMT
Congress enacted the AMT to make certain that high-income taxpayers do not escape paying taxes. Certain items receive favorable tax treatment. These items must be added back into taxable income for the AMT. These tax preference items include:
certain costs associated with DPPs, such as research and development costs and IDCs;
■ local tax and interest on investments that do not generate income;
■ tax-exempt interest on private purpose, nonessential government service municipal bonds; and
■ incentive stock options exceeding their FMV.
PHAS or NHAS only
issues backed in full by us gov. also called section 8 bonds
bans
are sold as interim financing that will eventually be converted to long-term funding through a sale of bonds.
tans
is often used in place of BANs and TANs for up to 270 days, though maturities are most often 30, 60, and 90 days
