Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Series 7 > Series 7: QuickSheet > Flashcards

Series 7: QuickSheet Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 7 Top-off Exam flashcards
1
Q

Dividend Yield

A

Annual Dividend / Current Market Value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Ex-Dividend Date

A
  • One business day before record date

- Date is set by FINRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Cash Dividend

A
  • Price of stock adjust downs by the amount of the dividend on ex-dividend date
  • Taxable when received
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Stock Dividend

A
  • Price of stock adjust down for dividend
  • Aggregate value remains the same
  • Taxable when shares are sold
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Even Split & Odd Split

A
  • Number of shares is increased while price decreases

Example Even Split - 100 shares at $30 : 2 for 1 split

2/1 x 100 shares = 200 shares
1/2 x $30 = $15

Example Odd Split - 100 shares at $30 : 3 for 2 split

3/2 x 100 = 150 shares
2/3 x $30 = $20

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Reverse Stock Split

A
  • Number of shares is decreased while price is increases

- Aggregate value remains the same

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Non-cumulative Preferred Stock

A

Missed dividends are not payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Cumulative Preferred Stock

A

Missed dividends are payable and must be paid before common stock holders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Callable Preferred Stock

A
  • Issuer may buy back shared after a specified date at a specified price
  • Issuer will buy back when interest rates drop
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Participating Preferred Stock

A

Issuer may pay more than stated dividend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Adjustable Rate Preferred Dividend

A

Dividend is tied to another rate (e.g., T-bill rate)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Rights

A
  • Available to existing shareholders
  • Short term (30-45 days)
  • When issued exercise price is below CMV (allows purchase at a discount)
  • Not marginable
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Warrants

A
  • Offered with other securities as “sweeteners”
  • Sold as units
  • Long term (2-5 years)
  • When issued exercise price is above CMB (anticipated value with time)
  • Marginable
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

American Depositary Receipts (ADRs)

A
  • Facilitate U.S. citizens owning foreign shares
  • Foreign shares held by bank (bank issues receipt)
  • ADR is U.S. security traded in U.S. markets (quoted in US dollars)
  • Dividends declared in foreign currency, but paid in US dollars
  • ADRs have currency risk
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Real Estate Investment Trust (REIT)

A
  • Traded on exchanges or OTC
  • Provide liquidity for real estate investors
  • 75% of assets must be invested in operating income producing real estate or mortgages to qualify as a REIT
  • 90% of net operating must be distributed for REIT to avoid taxation as a trust
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Coupon, Nominal or Stated Yield

A

Annual Interest / Par Value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Current Yield

A

Annual Interest / Current Market Value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Yield-to-Maturity (YTM)

A

Annualized return if held to maturity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Yield-to-Call (YTC)

A

Return reflecting early redemption and acceleration of discount gain or premium loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Price Quote

A

1 bond point = 1% of par = $10

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Yield Quote

A

1 basis point = .01 of yield

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Callable Bonds

A
  • Issuer can buy back bonds as of a specified date before maturity at a specified price
  • Issuer will call bonds in anticipation of current interest failing
  • Allows issuer to lower the cost of borrowing
  • Facilitates “refunding” replacing one issue with another at a lower net interest cost to the issuer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Conversion Ratio

A

Par / Conversion Price

Example: Bond convertible at $40

$1000/$40 = 25 shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Parity Price of Common

A

Market Price of Bond / Conversion Ratio

Example:
Bond trading at $1,100
Conversion Ratio: 25 shares

$1,100/25 = $44 parity price of common

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Parity Price of Bond

A

Conversion ratio x common stock price

Example:
Bond has 25 share conversion ratio
Common stock trading at $44

25 x $44 = $1,100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Term Maturity

A

Entire issue matures on one date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Serial Maturity

A

Issue matures over over a period of years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Balloon Maturity

A

A repayment schedule over a period of years having the largest number of bonds maturing at the final maturity date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Mortgage Bond

A
  • Backed by real estate

- “Secured”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Collateral Trust Bond

A
  • Backed by other securities the issuer owns (e.g. government debt)
  • “Secured”
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Equipment Trust Certificate

A
  • Backed by equipment used in the issuers business

- “Secured”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Debenture Bond

A
  • Backed by the issuer’s full faith and credit

- Unsecured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Subordinated Debenture Bond

A
  • Paid last of all debt if issuer is in default

- Unsecure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Guaranteed Bond

A
  • Guaranteed by a 3rd party (parent company guarantees subsidiary debt
  • Unsecured
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Income (Adjustment) Bond

A
  • Interest payable only if earned
  • Risky
  • Not suitable for investor seeking income
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Liquidation Priority

A 
Secured Bonds
Debentures & General Creditors 
Subordinated Debentures
Preferred Stock 
Common Stock
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Zero Coupon Bonds

A
  • Issued at a deep discount
  • Matures at par
  • Often used for target goals
  • Very price sensitive to interest rate movement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Treasury Receipts

A
  • Issued at a discount and backed by broker dealers
  • Matures at par
  • Discounts: accrete (add, cost basis up)
  • Premium: amortize (subtract, adjust cost basis down)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Treasury STRIPS

A
  • Issued at a discount and backed by the US Treasury
  • Matures at par
  • Discounts: accrete (add, cost basis up)
  • Premium: amortize (subtract, adjust cost basis down)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Collateralized Mortgage Obligations (CMOs)

A
  • Sold by financial institutions
  • Backed by pool of mortgage securities
  • Associated with refinancing risk
  • Securities separated into tranches
  • Each tranche has different risk characteristics
  • Investor chooses tranche and signs suitability statement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

T-Bill

A

Maturity: 1 year or less
Quoted: Discount from par
Callable: No

Example: Quoted at 1.3%
Price = Par (100) - Discount
Price = 100 - 1.3 = 98.7% = $987

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

T-Note

A

Maturity: 2-10 years
Quoted: % of par in 32nd
Callable: No

Example: Quoted at 94.08 
Price = 94% of par + 8/32 
Price = 940 + 0.25 x 10
Price =  940 = 2.5 
Price = $942.50
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

T-Bond

A

Maturity: 10 or more years
Quoted: % of par in 32nd
Callable: Yes

Example: Quoted at 94.08 
Price = 94% of par + 8/32 
Price = 940 + 0.25 x 10
Price =  940 = 2.5 
Price = $942.50
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Government National Mortgage Association (GNMA)

A
  • Backed by the full faith and credit of the US Government
  • Approves lenders who issue pass-through certificates created from a pool of FHA and VA insured mortgages
  • Monthly check to investor includes both principal and interest
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Federal Farm Credit System

A
  • Backed by the issuing agency
  • Loans to farmers
  • Finance land purchases
  • Finance farm equipment purchases
  • Establishes buying co-ops to agricultural goods
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Federal National Mortgage Association (FNMA) & Federal Home Loan Mortgage Corporation (FHLMC)

A
  • Backed by the issuing agencies
  • Lines of credit with the US Treasury
  • Mortgage-backed paper associated with pre-payment risk
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Modern Portfolio Theory (MPT)

A
  • MPT diversifies a portfolio using a negative correlation of securities to all but eliminate unsystematic risk
  • Perfect negative correlation is -1.0
  • “Efficient Frontier”
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Capital Asset Pricing Model (CAPM)

A
  • Used to derive expected return of an asset on the basis of the assets systematic risk
  • Systematic risk cannot be diversified away
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

Alpha

A
  • The actual returns that a portfolio manager generates in excess of the risk-adjusted returns as defined by the CAPM
  • If the risk-adjusted return is expected is 8% and the actual return is 9%, then the alpha is a positive 1%, this means that the investors return was greater than the risk he took
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Beta

A
  • Measures the volatility of a security compared to the market as a whole
  • The beta of the market is 1.0 (S&P 500)
  • Beta greater than 1 is more volatile than the market
  • Beta less than 1 is less volatile than the market
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

General Obligation Bonds (GOs)

A

Backed by: taxes
Voter Approval: required
Limits: subject to statutory debt limits
Underwriting: competitive bids
Analysis: tolerance to taxes, debt statement, and debt ratios, ad volerem

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Revenue Bonds

A 
Backed by: user fees (self-supporting)
Voter Approval: not required 
Limits: subject to additional bond test 
Underwriting: negotiated 
Analysis: feasibility studies and debt service coverage ratio
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

GO Limited Tax Bond

A

Issued when issue’s ability to raise taxes is limited

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

GO Double-Barreled Bond

A

Bond issue debt funded by project revenue, but backed by the issuer’s full faith and credit (taxes)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Industrial Development Revenue Bonds

A

Backed by corporations with lease back payment made to issuer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

Special Tax Bonds

A
  • Backed by taxes other than real estate (alcohol & tobacco)
  • Revenue bonds
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

Special Assessment Bonds

A
  • Only asses property owners who benefit from the bond issue
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

Moral Obligation Bonds

A

Legislative authority is required to pay back bondholders if revenues are insufficient

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

Public and New Housing Authority Bonds (Section 8)

A

Bonds provide financing for low and moderate income housing and are backed by the full faith and credit of the US government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Anticipation Notes

A
  • Short-term borrowing in advance of receiving funds from long-term debt
  • Examples include tax, revenue, bond and grant anticipation notes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

GO Index

A

20 specific GO bonds each with 20-year maturities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

Revdex

A

25 specific revenue bonds each with 30 year maturity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

30-Day Visible Supply

A

Total par value of all new municipals to be offered in the next 30 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

Placement Ratio

A

Total par value of all municipals sold/total par value of all municipals offered within the previous week

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

Premium Amortize

A

Adjust cost basis down

66
Q

Discount Accrete

A

Adjust cost basis up

Example: Original issue discount (OID) bond sold at $950 maturing in 10 years
$1,000 - $950 = $50
Annual Accretion = $50 / 10 years = $5 (cost basis increases every year until maturity )

No gain if held to maturity

67
Q

Tax Equivalent Yield (TEY)

A

Municipal Yield / (100% - investors tax bracket)

Example: Municipal bond yielding 3.5%, investor in 15% tax bracket
TEY = 3.5 / 100 - 15
TEY = 3.5 / 85
TEY = 0.04117 x 100 = 4.12%

68
Q

Tax-Free Equivalent Yield (TFEY)

A

Corporate Yield x (100% - investor’s tax bracket)

Example: Corporate bond yielding 7.2%, investor in 15% tax bracket
TFEY = 7.2% x (100% - 15%)
TFEY = 7.2% x 85%
TFEY = 612 / 100 = 6.12%

69
Q

Management Company

A

Portfolio managed by specific objective

- growth, income, specialized (banking, technology, geographic area)

70
Q

Open-End Company

A
  • Continues primary offering: every share is an IPO
  • Prospectus required
  • Can issue common shares only
  • Company must redeem shares
  • No secondary market trading
  • Priced by formula, forward pricing
  • NAV + sales charge = POP
  • 8.5% max. sales charge
71
Q

Closed-End Company

A
  • Numbers of shares is fixed
  • No prospectus is required after IPO
  • Can issue common and preferred shares and debt instruments
  • Shares are not redeemable
  • After IPO, shares trade in the secondary markets (exchanges &OTC)
  • Priced by supply and demand
  • Commissions
72
Q

Net Asset Value Per Share

A

NAV = Fund Assets - Fund Liabilities / Number of Outstanding Shares

73
Q

Sales Charge

A

$ SC = POP - NAV

% SC = POP - NAV / POP

74
Q

Public Offering Price

A

POP = NAV / (100% - % SC)

75
Q

Variable Annuity

A
  • Insurance company product
  • Priced like mutual funds (NAV + SC = POP)
  • No maximum sales charge
  • Early redemption fees
  • Must re-invest all dividends and gains
  • Earnings grow tax deferred
76
Q

Lump Sum Payout

A
  • All earnings above cost basis is taxed

- Cost basis is returned tax-free

77
Q

Assumed Interest Rate (AIR)

A
  • Conservative estimate of return on investments in the separate account
  • Each period, the actual earnings are compared with AIR
  • Greater AIR; greater than last months payment
  • Same AIR; same as last months payment
  • Less AIR; less than previous months payment
78
Q

Direct Participation Programs (DPPs)

A
  • Business that reports to the IRS but is not taxed as a business entity
  • All tax consequences flow through to partners
  • Income is reportable
  • Expense is deductible
  • Interests in partnerships are considered illiquid (nor easily transferable)
  • Partnership dissolves on pre-determined date, assets liquidated, and proceeds distributed to partners
79
Q

General Partner

A
  • Manages the partnership
  • May appoint other to manage the assets
  • Unlimited liability; can lose more than invested
  • Fiduciary responsibility to partners; can be sued
  • May not compete with the partnership
80
Q

Limited Partner

A
  • No management responsibilities
  • Passive investors only
  • Limited liability; cannot lose more than invested
  • No fiduciary responsibilities
  • No limitations applied to other investments
81
Q

Real Estate: Raw Land

A
  • Appreciation potential only objective
  • Very speculative
  • No depreciation deductions for raw land
82
Q

Real Estate: New Construction

A
  • No immediate cash flow
  • Rental income potential can only be estimated
  • Tends to appreciate faster than older properties
  • Depreciation deductions allowed
83
Q

Real Estate: Existing Properties

A
  • Immediate cash flow
  • Tends to be safer than new construction because cash flow is known
  • Depreciation deductions allowed
84
Q

Real Estate: Government Assisted Housing

A
  • Tax credits for investing in public housing
  • Cash flow via rental income can be suspect
  • Appreciation is minimal
85
Q

Equipment Leasing

A
  • Airline and railroad equipment or computers

- High depreciation potential of equipment due to obsolescence

86
Q

Oil & Gas Drilling: Exploratory

A
  • Drilling in new areas

- High risk and reward

87
Q

Oil & Gas Drilling: Developmental

A

Drilling in areas where resource has been previously found

88
Q

Oil & Gas Drilling: Balanced

A

Both exploratory and developmental drilling

89
Q

Oil & Gas: Income

A
  • Buying existing producing wells
  • Immediate production and income
  • Safest of all oil and gas partnerships
90
Q

Qualified Retirement Plan

A
  • IRS approval required
  • Contributions are tax deductible
  • Plan cannot discriminate
  • Tax on accumulation is deferred
  • All withdrawals are taxed
  • Plan is set up with a trustee
91
Q

Non-Qualified Retirement Plan

A
  • No IRS approval required
  • Contributions are not tax deductible
  • Plan may allow only certain employees to participate
  • Tax on accumulation may be deferred
  • Only excess over cost basis is taxed at time of withdrawal
  • No plan trustee is required
92
Q

Qualified Plans

A
  • IRA
  • Roth IRA
  • Simplified Employee Pension Plan (SEP) IRA
  • Tax-sheltered Annuities (TSAs), both 403(b) and 501(c)(3)
  • Savings Incentive Match Plans for Employees (SIMPLE)
  • 401(k); traditional and ROTH
93
Q

Non-Qualified Plans

A
  • Payroll deductions
  • Deferred compensation
  • Section 457 plans
94
Q

Regulation T

A
  • 50% initial margin

- Set by the Federal Reserve

95
Q

Long Margin Account

A
  • Long Market Value - Debit Balance = Equity
  • LMV - DR = Equity
  • Minimum maintenance call is 25%
96
Q

Short Margin Account

A
  • Credit - Short Market Value = Equity
  • CR - SMV = Equity
  • Minimum maintenance call is 30%
97
Q

Combined Account

A

LMV - Dr + CR - SMV = Equity

98
Q

Excess Equity

A
  • Equity above 50% of Reg. T

- Credits Special Memorandum Account (SMA)

99
Q

Restricted Account

A
  • Equity below 50% of Reg. T

- Buy, sell, withdrawal stock 50% of Reg. T

100
Q

Maintenance Call

A
  • Deposit Cash; 1 x call amount

- Deposit Stock; 2 x call amount

101
Q

Special Memorandum Account (SMA)

A
  • Applicable to long accounts
  • Line of credits for future purchases or loans
  • Buying Power = 2 x SMA
  • Loan Value = 1 x SMA
  • Generated by the increase in market value
  • Decreased by the purchase of securities or cash withdrawal

Market value increases, add to SMA. Market value decreases, do not take away from SMA. To lose SMA, account holder must use SMA.

102
Q

Credit Agreement

A
  • Required when opening a margin account
  • Truth in lending statement
  • Details all margin account requirements and obligations
103
Q

Hypothecation Agreement

A
  • Required when opening a margin account

- Investor pledges collateral (securities) to BD

104
Q

Loan Consent

A
  • Optional when opening a margin account

- Allows BD to lend customer securities to other customers

105
Q

Exchange Market

A
  • Listed securities
  • Physical location
  • Auction market
106
Q

Over-The-Counter (OTC)

A
  • Unlisted securities

- Negotiated market

107
Q

Day Orders

A

Cancel any unexecuted portion at the end of day

108
Q

Good Til Canceled (GTC) Orders

A

Any unexecuted portion remains working until the last trading day of April or October

109
Q

Market Limit & Stop Orders

A

BL | SS | SSL Below Market Price

    • SL & BL execution is not guaranteed**
    • BS & SS execution immediately at the next available price**
    • BSL & SSL are triggered at price**
110
Q

Market Order

A

Execute immediately at the next available price

111
Q

Fill or Kill (FOK)

A

Execute entire order immediately or cancel entire order

112
Q

Immediate or Cancel (IOC)

A
  • Execute any portion available immediately

- Cancel any balance remaining

113
Q

All or None (AON)

A
  • Execute all if available

- If entire order cannot be executed, hold order GTC

114
Q

Market at Open

A
  • Execute at or near the open of the day

- Not guaranteed exact opening price

115
Q

Market on Close

A
  • Execute at or near the close of the day

- Not guaranteed exact closing price

116
Q

Order Tickets

A
  • Approved by principal promptly after execution

- Changes to tickets must be approved by a principal

117
Q

Order Department or Wire Room

A

After execution of with trade details returns to the order department

118
Q

Purchase & Sales Department

A

Issues confirmation with trade details to customer

119
Q

Margin Department

A

Calculates any margin requirements due

120
Q

Cashier

A

Takes receipt and delivery of cash and securities

121
Q

Regular Way Settlement

A
  • T + 2 ; All corporate and municipal securities

- T + 1 ; All government securities

122
Q

Cash Settlement

A

Same day ; BD approval required

123
Q

Receipt or Delivery vs. Payment ( RVP or DVP) Settlements

A

Up to 35 calendar days

124
Q

Seller’s Option Settlement

A

No sooner than the first day after regular way (3rd business day for corporate and municipal); no later than date specified in settlement contract

125
Q

Fundamental Analysis

A
  • Net worth
  • Book value (per share)
  • Current Assets (cash, accounts receivable, inventory)
  • Current liabilities (accounts payable, accrued wages, taxes payable)
  • Current ratio
  • Total capitalization
  • Debt ratio
  • Earnings per share (EPS)
  • Price to earnings (PE)
  • Dividend payout ratio
126
Q

Technical Analysis

A
  • Uses price and volume history to forecast future price movements
  • Use of charts to plot movement and establish points of entry or exit

Examples: trend lines, levels of resistance and support, breakouts, consolidation, and head and shoulder patterns

127
Q

Securities Act of 1933

A
  • Paper Act ; Prospectus Act

- Regulates new issues ; requires registration of securities

128
Q

Securities & Exchange Act of 1934

A
  • People and Places Act
  • Regulates BDs and associated person’s ; requires registration
  • Anti-fraud provision ; defined inside information
129
Q

Trust Indenture Act of 1939

A
  • Applicable to corporate bond offerings of greater than $50 million in 12 months
  • Establishes a contract between the issuer and the trustee of the bondholder’s benefit
130
Q

Investment Company Act of 1940

A

Classifies and regulates the three types of Investment Companies

  1. Management Companies ; open-end, closed-end, Mutual Funds
  2. Face Amount Certificate
  3. Unit Investment Trusts (UIT)
131
Q

Employee Retirement Income Security Act of 1974 (ERISA)

A
  • Established to prevent abuse or misuse of pension funds
  • Applicable to private sector retirement plans
  • Mandates guidelines for plan, participation, funding, vesting, communication, non-discrimination, and benefits
132
Q

Regulation S-P

A
  • Enacted by the SEC to protect the privacy of customer information
  • Requires privacy notice describing policies
133
Q

Regulation SHO

A

Mandates a locate requirement for securities to be sold short before the short sale

134
Q

FINRA Rule 2330

A
  • Applies to recommended purchases and 1035 exchanges of deferred variable annuities (not immediate) and initial sub-account allocations
  • Disclosure of features, costs, and surrender charges
  • Must note if a 1035 exchange of a variable annuity has occurred in the last 36 months
135
Q

Regulation A+

A
  • Small and medium offerings exempt transaction allowing issuers to raise up to $50 million in a 12 month period without full registration
  • Tier 1 ; allows offerings up to $20 million
  • Tier 2 ; allows offerings up to $50 million

Max 30%

136
Q

Regulation D

A
  • Private placement exempt transaction
  • Up to 35 non-accredited investors
  • Accredited investors must meet a minimum net worth or annual income criteria
137
Q

Retail Communication

A

Available to more than 25 retail investors within any 30 calendar-day period

138
Q

Correspondence

A

Available to 25 or fewer retail investors within any 30 day calendar day

139
Q

Institutional Communication

A

Available only to institutional investors

Examples: member firms, insurance companies, banks, registered investment companies, any entity with $50 million or more in assets

140
Q

0.25%

A
  • Maximum 12b-1 fee for no load fund
141
Q

1%

A
  • 100 basis points for bonds
  • Rule 144 sale volume limit
  • Maximum 12b-1 fee (.75 for advertising and promotion, .25 for shareholder services)
142
Q

5%

A
  • Markup policy guideline

- No more than 5% of a diversified investment company’s assets can be invested in any one company

143
Q

6%

A
  • Penalty for excess IRA contributions
144
Q

8.5%

A
  • Maximum sales charge for open-end (mutual fund) company
145
Q

10%

A
  • Penalty for premature IRA distribution
  • Affiliate or control person if owning 10% or more of outstanding shares
  • Maximum sales charge on public limited partnerships
  • Maximum amount of one company’s stock that a diversified investment company can own
146
Q

25%

A

Minimum Maintenance for long stock position

147
Q

30%

A

Minimum maintenance for short stock position

148
Q

40%

A

Minimum percentage of mutual fund board members must be non-interested members

149
Q

50%

A
  • Regulation T
  • Penalty for insufficient IRA distribution after age 72 (71 1/2 before 2020)
  • Amount of sales proceeds credited to SMA in a margin account
  • Required cash deposit when withdrawing stock from a margin account
  • Corporate dividend exclusion
150
Q

75%

A
  • Minimum amount of Investment Company’s asset that must be invested in securities of other issuers for the Investment Company to be classified as diversified
  • Amount of limited partnerships assets that must be identified to be a specified program
151
Q

90%

A
  • Minimum of net investment income that a mutual fund must distribute by year-end under Subchapter M
  • Minimum amount of profits that must be distributed by a REIT by year-end
152
Q

100%

A
  • Required equity when purchasing new issues, option, and mutual fund shares
  • Amount of non-required cash deposit credited to SMA in margin accounts
153
Q

Same Business Day

A

Settlement date for cash transactions

154
Q

1 Business Day

A
  • Regular way settlement for US government securities and options
  • Ex-dividend date relationship to record date for stock
155
Q

2 Business Days

A

-Regular way settlement for corporate and municipal securities (T+2)

156
Q

4 Business Days

A
  • Regulation T: cash purchases must be paid in full (regular way settlement (T+2) and Regulation T payment (S+2)
157
Q

15 Calendar Days

A

Maximum length of time a customer can place options orders before the signed option agreement is required

158
Q

20 Calendar Days

A

Cooling off period: minimum time between filing date and registration

159
Q

30 Calendar Days

A

IRS wash sale period before and after a trade

160
Q

60 Calendar Days

A

Minimum time to rollover holdings from one qualified plan to another without penalty

161
Q

90 Calendar Days

A

Maximum time for a letter of intent to be backdated

162
Q

13 Months

A

Length of time covered by a letter of intent

Series 7 (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions