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SIE Flashcards

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SIE Exam flashcards
1
Q

ETN (Exchange Traded Notes)

A

-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

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2
Q

Treasury Notes

A
  • interest is paid semiannually
    -quoted by whole and fractional bond points
    -1/32
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3
Q

Treasury Stock

A
  • issued stock subsequently reacquired by a corporation
    -par value
    -it is authorized, issued, and owned but NOT outstanding
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4
Q

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

A

risk

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5
Q

Securities Act of 1933

A

-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

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6
Q

Ginnie Mae (GNMA)

A

-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

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7
Q

Hypothecation

A

-pledging of securities as collateral
-margin account
-make loans to banks

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8
Q

Treasury Bonds

A

-exposed to inflationary risk
-issued by US. gov. in book entry

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9
Q

Debenture

A

-unsecured bond
-promised by issuers promise to pay
-seeking income

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10
Q

DDP (Direct Participation Programs)

A

-provide exposure to non-correlated assets
-offers professional management
-high risk, high reward
-illiquid
-passive income

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11
Q

12b-1 Fee

A

-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%

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12
Q

Preferred Stock

A

-Cumulated, participating, convertible, callable, straight
-can be converted to common stock not bonds

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13
Q

HSA (Health Savings Account)

A

-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

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14
Q

ODD (Options Disclosure Document)

A

-customer must be sent options agreement for signature and returned within 15 days of first options transaction
bust be sent at or prior to account opening

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15
Q

(REIT) Real Estate Investment Trusts

A

-non-exempt under Securities act 1933
-traded on stock exchange or OTC

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16
Q

GNP (Gross National Product)

A
  • includes American companies doing business in other countries
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17
Q

GDP (Gross Domestic Product)

A
  • business conducted between American boarders
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18
Q

Qualified Institutional Buyers (QIB)

A
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19
Q

UTMA (Uniform Transfers to Minors Act)

A

-opened under Tax ID of the minor
-owned by minor

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20
Q

FDIC (Federal Deposit Insurance Corporation)

A
  • savings account at a bank is guaranteed by FDIC
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21
Q

Regulation D

A

-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

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22
Q

Regulation T

A

-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

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23
Q

Regulation A-offering circular

A
  • up to $75 Million
    -can still be public offering
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24
Q

529

A

-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

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25
Q

Rule 147

A

-interstate offering
-offers cannot be sold out of state for +6 months after initial sale date
-subject to blue sky laws

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26
Q

DTC (Depository Trust Company)

A
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27
Q

SIPC (Securities Investor Protection Corp)

A

-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

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28
Q

MSRB (Municipal Securities Rulemaking Board)

A

-

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29
Q

FinCEN

A

-mission is to safeguard financial system from abuses of financial crime, terrorist financing, and money laundering
-enforces Bank Secrecy Act

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30
Q

Rule 144a

A

-issuers of restricted stock must sell to QIBs
-allows QIBs to buy and trade between each other in large blocks of privatly placed issues

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31
Q

Regulation S-P

A
  • 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
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32
Q

Rule 145

A

-merger w/ another publicly held company requires registration statement filing w/ SEC
-exempts corp. action

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33
Q

Form Registration

A

What Requires
-stock split
-reverse stock split
-stock dividend
-mergers where shareholders are part

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34
Q

Regulation S

A

-

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35
Q

Rule 144

A

-unregistered Restricted Securities (6 months)

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36
Q

TIPS (Treasury Inflation Protection Securitues)

A

-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

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37
Q

STRIPS (Separate Trading of Registered Interest and Principal of Securities)

A

-discount to par
-0 coupon bond
-separates interest and principal components
-pay interest at maturity
-insuated investor of reinvestment risk

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38
Q

504

A
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39
Q

506(b)

A
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40
Q

506(c)

A
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41
Q

Trust Indenture Act of 1939

A
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42
Q

Form 1099-DIV

A

-cash dividends

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43
Q

Ad Valorem

A

-real estate taxes backed by debt Secuities issuers by town, cities, or counties (never states) local municipalities

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44
Q

Municipalities

A
45
Q

Basis Points

A

100 Basis Points= 1%
1%=.01
10%=.1
100%=1

46
Q

403(b) Plan

A

-schools and non-profit
-not corps.

47
Q

457(b)

A
48
Q

412

A
49
Q

T-Bills

A

-10U
-Conservative Short Term
-B/D would get them from a primary dealer
-max maturity of 1 year
-sold at discount to par
-can be purchased directly at weekly option
-most actively traded money market instrument
-zero coupon security
-quoted in terms of a discount yield or basis quote

50
Q

C-Ds

A
51
Q

Corp. Resolution

A

-needed when corp. opens account with B/D

52
Q

Open-End

A
  • the NAV is the min price at which a share can be purchased
53
Q

Close-End

A

-can sell at a discount or premium to its NAV depending on investor perception of the fund
-they are negotiable because the are traded in secondary market and their ownership can be transfered across individuals

54
Q

Warrants

A
55
Q

Rights

A
56
Q

Oh

A

Dow-30
NYSE-250
Index-1700
Wilshire-3500

57
Q

ADR (American Depositary Receipts)

A

-common shares
-securities you buy in American with US dollars that represents stock in foreign countries
-if US goes down it is good
-non-exempt
-subject to currency/exchange risk
-when us dollar goes up, price of receipt will fall
-money market fund wont invest in this
-equity security that is the vehicle for foreign stocks to trade

58
Q

UIT (Unit Investment Trust)

A

-not actively management
-passively managed
-lower fees

59
Q

ERISA

A

-rules regarding retirement plans stress that investments should be safe
–safety of principle

60
Q

CRD (Central Registration Depositary)

A
61
Q

Buyer

A

Holder, Owner, Long

62
Q

Seller

A

Short, Writer

63
Q

Monetary Theory

A

-control money supply
-FED

64
Q

Supply-Side

A

-Individual/tax rate reductions

65
Q

Keynesian Theory

A

Fiscal Policy-the use of government spending and tax policies to influence economic conditions

66
Q

Commercial Paper

A

-Short term
-matures in 270 days
-exempt security under 1933
-smooths out cash flow used by corps

67
Q

LGIP (Local Gov. Investment Pool)

A

-municipal entity
-trust established by local gov. that allow Municiple entities to invest their money in a variety of securities
-managed by gov. employees or investment management firms
-purchase interest in trust, and assets are investment to trust stated objectives to benefit from economies of scale, diversification, professional portfolio management, and liquidity
-regulated by MSRB

68
Q

Custodian

A

Type of cash account

69
Q

Unlimited Loss for call not put

A

What loss does Short/Short have?

70
Q

AML (Anti Money Laundering)

A

records held for 5 years

71
Q

Form CRS

A
72
Q

USA (Uniform Securities Act)

A
  • legal framework for registration of securities at stae level
73
Q

6 years

A

How Many Years?
-customer account statements
-new account forms

74
Q

3 years

A

How Many Years?
-ads
-correspondence
-customer orders
-registration statement w SEC that uses a method only available for seasoned
issuers
-U4 must be kept after termination
-U5 record kept for

75
Q

4 years

A

How Many Years?
-written customer complaints
-approval in advance of use by principal

76
Q

5 years

A

How Many Years?
-Anti- money laundering records
customer identification records
-distributions are subject to penalty taxed in a Roth Ira if taken out within…
-RR outside of industry out for 5 years then have to retake exam

77
Q

Lifetime Records of firm

A

How Many Years?
-articles of incorporation
-partnership articles
-minutes of partners or directors’ meetings
-stock certificate books
-Form BD

78
Q

Clearing Agent

A

-middle man

79
Q

Regulation M

A
80
Q

RMD (Required Min. Distribution)

A

-amount of money needed to be taken out in ira after 73

81
Q

Coverdell Account

A

-$2k max a year
-Cant contribute if rich

82
Q

Treasury/ US Gov

A

actual/actual

83
Q

Corp/Muni

A

30/360

84
Q

Systematic

A

all investors
market risk

85
Q

Unsystematic

A

credit/politcial/liquid risk
not all investors

86
Q

MFP (Municipal Finance Professional)

A

any person who is primarily engaged in or supervises the activities of underwriting, trading, or selling municipal securities

87
Q

Solicited

A

-valid trade
-non-exempt ruling
-RR believes its fair
-initiated by RR

88
Q

Unsolicited

A

-not recommended by B/D
-must go through if customer says and is sure-client specifically specifies the bonds/stocks he wants purchased

89
Q

CRD (Centeral Registration Depository)

A
90
Q

ABLE Account

A

-beneficiary is always accounts owner
–individual disability must begin before 26
-tax deferred
-can have up to $100k
-can still qualify for federal supplemental security income benefits
-regulated by MSRB

91
Q

Street name

A

-stock shares having a nominal owner and a beneficial owner

92
Q

Bond Identure

A

contract between bond issuer and a trustee for the benefit of the bondholders

93
Q

Shelf Offering

A

-issuer files one registration statement for a large number of securities and does not sell than immediately

94
Q

Follow-on

A

-when a company decides to sell additional shares to public after IPO

95
Q
A
96
Q

Current Yield

A

Annual Coupon Rate/Current Market Price of Bond

97
Q

Real Interest Rate

A

Nominal Yield-Inflation Rate

98
Q

Interbank market

A

where foreign Exchange rates are set

99
Q

Variable Annuity Contract

A

-non-exempt for 1933
-basically, buying a mutual fund in an insurance company wrapper
-number of annuity units is fixed
-does NOT need to delect period certain payout option

100
Q

Fixed Annuity

A

-not a secuity and does not need to register w 1933
-grows at a guaranteed rate

101
Q

OFAC

A

-office of foreign assets control
-maintains a list of known and suspected terrorists called Specially Designated Nationals lists

102
Q

Certificate of Deposit (CDs)

A

-a “step down” cd means the interest payment may be reduced

103
Q

Securities Exchange Act of 1934

A

-Stabilization of new issues
-registration of exchanges
-registration of broker/dealers
-front running

104
Q

Form CRS (Customer Relationship Summary)

A

-must be provided at or prior to the making of a recommendation or account opening only for retail clients
-if firm is acting as broker-dealer
-fees and cost customer will pay
-conflicts on interest

105
Q

BAN-bond anticipation Note
RAN-revenue anticipation note
Tan-Tax anticipation Note
TRAN- tax revenue anticipation note

A
106
Q

Series Bond Offering

A

-bond issue where the bonds have the same maturity but different dates of issuance

107
Q

Form D

A

-must be filed with SEC to claim private placement within 15 days of the offering to claim the exemption

108
Q

Regulation U

A

-credit from bank to broker

SIE (2 decks)

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