Series 7 Terms Flashcards
Acceptance Ratio
see Placement Ratio
Acceptance, Waiver, and Consent
A form of plea bargaining under the Code of Procedure. FINRA’s Enforcement Department brings disciplinary actions against a respondent and, if the respondent agrees, the proposed settlement is accepted, all rights to a hearing are waived, and the respondent consents to the penalty submitted.
Account Executive
See Registered Representative
Accredited Investor
Any institution or individual meeting minimum requirements for the purchase of securities qualifying under the Regulation D registration exemption.
Accretion of Bond Discount
An accounting process whereby the initial cost of a bond purchased at a discount is increased annually to reflect the basis of the bond as it approaches maturity.
Accrual Accounting
A method of accounting where income is reported when it is earned (instead of when the payment is received) and expenses are reported when they are incurred (instead of when they are paid).
Accrued Interest
The interest that has accumulated since the last interest payment, up to but not including the settlement date, and that is added to the contract price of a bond transaction. See also Flat.
Accumulation Stage
The period during which contributions are made to an annuity contract. See also Accumulation Unit
Accumulation Unit
An accounting measure used to determine an annuitant’s proportionate interest in the insurer’s separate account during a variable annuity’s accumulation (deposit) stage. See also Accumulation Stage, Annuity Unit, Separate Account
Acid-Test Ratio
A measure of a corporations liquidity, calculated by adding cash, cash equivalents, and accounts and notes receivable, but not inventory, and dividing the result by total current liabilities. It is a more stringent test of liquidity than current ratio. See also Current Ratio
ACT
See Automated Confirmation Transaction Service
Adjusted (cost) Basis
Adjusted basis is used to compute the gain or loss on the sale or other disposition of the asset or security.
Adjusted Gross Income (AGI)
Gross income from all sources minus certain adjustments to income, such as deductible contributions to an IRA and net capital losses. It is the amount of income that will be subject to tax. See Tax Liability
Administrator
(1) The official or agency administering the securities laws of a state. (2) A person authorized by a court of law to liquidate an intestate decedent’s estate.
ADR
American Depositary Receipt
Advance Refunding
Refinancing an existing municipal bond issue before its maturity or call date by using money from the sale of a new bond issue. See also defeasance; refunding
Advance / Decline Line
A technical analysis tool representing the total of the differences between advances and declines of security prices. The advance/decline line is considered the best indicator of market movement as a whole. See also Breadth-of-market Theory
Advertisement
Any promotional material where the firm has little control over the type of individuals being exposed to the material.
Affiliated Person
Anyone in a position to influence decisions made in a corporation, including officers, directors, principal stockholders, and members of their immediate families. Their shares are often referred to as CONTROL STOCK.
Agency Basis
See Agency Transaction
Agency Issue
A debt security issued by an authorized agency of the federal government. Such issues are backed by the issuing agencies themselves, not by the full faith and credit of the U.S. Government (except GNMA and Federal Import Export Bank Issues). See Government security
Agency Transaction
A transaction in which a broker-dealer acts for the accounts of others by buying or selling securities on behalf of customers. Syn. Agency Basis. See also Agent; Broker; Principal Transaction
Agent
(1) An individual or firm that effects securities transactions for the accounts of others. (2) A securities salesperson who represents a broker-dealer or issuer when selling or trying to sell securities to the investing public; this individual is considered an agent whether he actually receives or simply solicits orders. See Broker; Broker-Dealer; dealer; prinicipal
Aggregate Exercise Price
The strike price expressed in total dollars. The aggregate exercise price for a standard July 40 Call contract is $4,000 (100 shares at $40 per share).
Aggressive Investment Strategy
A method of portfolio allocation and management aimed at achieving maximum return. Aggressive investors pursue aggressive policies, including margin trading, arbitrage, and option trading. See also balanced investment strategy, Defensive investment strategy
Agreement Among Underwriters (AAU)
The agreement that sets forth the terms under which each member of an underwriting syndicate will participate in a new issue offering and states the duties and responsibilities of the underwriting manager. See syndicate; underwriting manager
AIR
See Assumed Interest Rate
All-or-None Order (AON)
An order that instructs the firm to execute the entire order. Firm does not have to execute immediately.
All-or-None Underwriting (AON)
A form of best efforts underwriting in which the underwriter agrees that, if it is unable to sell all the shares (or a prescribed minimum), the issuer will cancel the offering.
Alpha
The risk-adjustment returns that a portfolio manager generates in excess of the risk-adjusted returns expected by the capital asset pricing model (CAPM)
Alternative Minimum Tax (AMT)
An alternative tax computation that adds certain tax preference items back into adjusted gross income. If the AMT is higher that the regular tax liability for the year, the regular tax and the amount by which the AMT exceeds the regular tax are paid. See Tax preference item
Alternative Order
An order to execute either of two transactions (e.g. placing a sell limit [above the market] and a sell stop [below the market] on the same stock). If one order is executed, all other linked orders are canceled. Syn. either/or order, one cancels other order.
AMBAC Assurance Corporation (AMBAC)
A corporation that offers insurance on teh timely payment of interest and principal obligations of municipal securities.
American Depository Receipt (ADR)
Facilitate trading in foreign securities in the U.S. domestic markets. Sometimes these are shown as ADS (American Depository Shares) and are similar to a GDR (Global Depositary Receipt), which is traded outside the United States.
Amortization
(1) The paying off of debt in regular installments over a period of time. (2) The ratable deduction of certain capitalized expenditures over a specified period of time.
Amotization of Bond Premium
An accounting process wherby the inital cost of a bond purchased at a premium is decreased to reflect the basis of the bond as it approaches maturity. See also Accretion of bond discount
Annual Compliance review
An annual meeting that all registered representatives and principals must attend, the purpose being to review compliance issues.
Annual Return on Investment (ROI)
For example, the annual return on a bond investment, which equals the annual interest and either plus the prorated discount or minus the prorated premium
Annuitant
A person who receives an annuity contracts distribution
Annuitize
To change an annuity contract from teh accumulation (pay-in) stage to the distribution (pay-out) stage