SIE Flashcards
ETN (Exchange Traded Notes)
-adversely impacted if issuers credit rating is downgraded
-debt Secuity
-issued by banks or financial institutions and typically track an index or benchmark
-can go long or short
-does NOT pay dividends or interest
-debt instrument
Treasury Notes
- interest is paid semiannually
-quoted by whole and fractional bond points
-1/32
Treasury Stock
- issued stock subsequently reacquired by a corporation
-par value
-it is authorized, issued, and owned but NOT outstanding
Credit risk=Default Risk
Market Risk is the highest for variable life
Market risk=liquidity risk
marketability ricst=liquidity risk
currency risk=non-systematic risk
Purchasing Power risk= inflation risk
risk
Securities Act of 1933
-All gov. agency issues are exempt
-Registration is required for ADRs
-registration is not required for securities by gov. muni bons, Eurodollar
-Registration is required for new issues
-registration Is listed it of non-expect new issues
-prohibit fraud and deceit in the marketing of securities
-financial statements certified by independent accountants
-registration not required for small business investment companies
Ginnie Mae (GNMA)
-interest payments on pass through are made monthly
- mortgage
-conservative investments that may be suitable for senior investor
-payment due T+1
-pass through certificate has no credit risk as it is backed by us gov
Hypothecation
-pledging of securities as collateral
-margin account
-make loans to banks
Treasury Bonds
-exposed to inflationary risk
-issued by US. gov. in book entry
Debenture
-unsecured bond
-promised by issuers promise to pay
-seeking income
DDP (Direct Participation Programs)
-provide exposure to non-correlated assets
-offers professional management
-high risk, high reward
-illiquid
-passive income
12b-1 Fee
-Sales and Advertising
-includes cost of marketing and distributing a mutual fund is collected
-expenses of selling, marketing, distributing fund
-salaries of fund salespeople
-Highest can be 1%
-No-load fund cannot be greater than .25%
-if fund has 12b-1 fee the max sales charge is 7.25%
Preferred Stock
-Cumulated, participating, convertible, callable, straight
-can be converted to common stock not bonds
HSA (Health Savings Account)
-funded w/ tax-deductible contribution
-established by corporate employees as part of their health insurance plans
-sponsored by employer so qualified
-plans w/ high deductibles
-$4,150 for 1, $8,300 for family
-tax deferred
-withdrawals for medical is tax-free
ODD (Options Disclosure Document)
-customer must be sent options agreement for signature and returned within 15 days of first options transaction
bust be sent at or prior toaccount opening
(REIT) Real Estate Investment Trusts
-non-exempt under Securities act 1933
-traded on stock exchange or OTC
GNP (Gross National Product)
- includes American companies doing business in other countries
GDP (Gross Domestic Product)
- business conducted between American boarders
Qualified Institutional Buyers (QIB)
UTMA (Uniform Transfers to Minors Act)
-opened under Tax ID of the minor
-owned by minor
FDIC (Federal Deposit Insurance Corporation)
- savings account at a bank is guaranteed by FDIC
Regulation D
-504, 506(b), 506(c)
-regulation dont need to be registered under 1933 if these rules are followed
-Private Offering
-no limit for accredited investors
-no more than 35 non accredited investors
-refers to private placements
-how restricted shares are normally acquired
Regulation T
-a 90-day restriction occurs when a customer opens and closes the same stock in a cash account without paying in full
-applies to corporate bonds OTC, common stock, and preferred stock OTC but NOT municipal bonds OTC
-max time peripd to collect monies owned by customer prior to extension request is 3 buisness days
-rules cover both cash accounts and margin accounts
-payment for trade must be made 3 business days after trade
-set by Fed
-broker to customer
-does NOT apply to us gov bonds
-exntension for payment is S+2
payments must be made in 3 days
apples to listed and unlisted securities
applies to non expempt securities
Regulation A-offering circular
- up to $75 Million
-can still be public offering
529
-potential deductibility of contributions from state taxes
-changes state to state
-must inform contribution must be deductible at state level
-tax-free Distrubutions
-amount contributed won’t be deductible from federal income tax but possibly state income tax
-donor and beneficiary can be the same person
-donor maintains control over assets
Rule 147
-interstate offering
-offers cannot be sold out of state for +6 months after initial sale date
-subject to blue sky laws
DTC (Depository Trust Company)
SIPC (Securities Investor Protection Corp)
-must be made available at account opening only and annually after
-must be provided with phone number and website address prior to accounts open
-insures customer accounts against B/D fail
-backed financially by B/D that are members
-protects against bankruptcy
MSRB (Municipal Securities Rulemaking Board)
-
FinCEN
-mission is to safeguard financial system from abuses of financial crime, terrorist financing, and money laundering
-enforces Bank Secrecy Act
Rule 144a
-issuers of restricted stock must sell to QIBs
-allows QIBs to buy and trade between each other in large blocks of privatly placed issues
Regulation S-P
- a firm must include the policies to protect security of nonpublic info in its customers privacy and opt-out notices
-covers notification to customers of a member firms privacy policies and practices
Rule 145
-merger w/ another publicly held company requires registration statement filing w/ SEC
-exempts corp. action
Form Registration
What Requires
-stock split
-reverse stock split
-stock dividend
-mergers where shareholders are part
Regulation S
-
Rule 144
-unregistered Restricted Securities (6 months)
TIPS (Treasury Inflation Protection Securitues)
-principal amount if adjusted upwards with the rate of inflation
-interest rate *is fixed
-no purchasing power risk
-deflation does NOT make maturity price drop below par
STRIPS (Separate Trading of Registered Interest and Principal of Securities)
-discount to par
-0 coupon bond
-separates interest and principal components
-pay interest at maturity
-insuated investor of reinvestment risk
504
506(b)
506(c)
Trust Indenture Act of 1939
Form 1099-DIV
-cash dividends
Ad Valorem
-real estate taxes backed by debt Secuities issuers by town, cities, or counties (never states) local municipalities