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Series 7 > SIE chapter 1 > Flashcards

SIE chapter 1 Flashcards

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Series 7 Top-off Exam flashcards
1
Q

Securities and exchange commission(SEC)

A

is the securities industry’s primary regulatory body

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2
Q

Although a broker dealer must register with the SEC, The broker dealer may not claim that

A

this registration in any way Implies that the SEC has passed upon or approved the BDS financial standing, business and conduct. Any such claim would be misrepresentation

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3
Q

FINRA

A

regulates all matters related to investment banking(securities underwriting), trading in the over the counter market, trading in the NYSE listed securities, and the conduct of finra member firms and associated persons.

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4
Q

conduct rules

A

establish the relationship between firms and their customers

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5
Q

uniform practice code

A

these rules cover technical aspects of trading and payment for securities transactions

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6
Q

Code of procedure

A

covers the enforcement of FINRA rules and details the punishment of member who incur rule violations

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7
Q

the code of arbitration

A

is a finra run dispute resolution process to settle monetary disputes

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8
Q

Chicago board options exchange

A

regulates all matters related to trading standardized options and related contracts listed on that exchange

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9
Q

municipal securities rulemaking board

A

regulates all matters related to the underwriting and trading of state and municipal securities

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10
Q

federal reserve board

A

consists pf 12 regional federal reserve banks and hundreds of national and state banks that belong to the system

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11
Q

securities investor protection corporation was created under the ___________ the corporation is a____

A

securities protection act of 1970

non profit membership organization

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12
Q

all Broker Dealers with the SEC must be SIPC members except

A

banks that deal exclusively in municipal securities

firms that deal exclusively in the US government securities

firms that deal exclusively in redeemable investment company securities

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13
Q

cash and margin accounts for the same customer are combined for

A

the purposes of determining sipc coverage,

however only the equity in a margin account is covered, not the full market value.

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14
Q

federal deposit insurance corporation

A

is an independent agency of the us federal government that preserves public confidence in the banking system by insuring deposits.

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15
Q

retail investor

A

is an individual who makes investments such as the purchase of securities for her own personal account rather than for an organization.

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16
Q

institutional investor

A

is an entity that pools money to purchase securities and other investment assets.

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17
Q

some institutional investors are referred to as

A

qualified institutional buyers

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18
Q

an accredited investor has

A

has a net worth of over $1 million not including net equity in a primary residence; or

has had an annual income of over $200,000 in each of the two most recent years (or over $300,000 jointly with a spouse) and who has a reasonable expectation of reaching the same income level during the current year.

Officers, general partners, and directors of an issuer of securities are also considered accredited.

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19
Q

Carrying(clearing) firm

A

carries customer accounts and accepts funds and securities from customers.

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20
Q

carrying firms must

A

segregate customer funds and securities held in their custody

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21
Q

fully disclosed firm(introducing BD)

A

is one that introduces its customers to a clearing firm

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22
Q

An introducing firm may

A

receive customer checks, but they must be made out to the clearing firm

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23
Q

acting as a registered representative does or does not require registration as an advisor

A

does not require registration as an advisor

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24
Q

arbitrage

A

attempts to profit from pricing differentials that may temporarily exist between markets

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25
Q

underwriters

A

are groups of BDs or investment bankers that work with an issuer to bring its securities to the market and sell them to the investing public.

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26
Q

issuers

A

An entity, such as a corporation or municipality, might offer or propose to offer its securities for sale to the investing public for the purpose of raising capital.

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27
Q

market trader /trader

A

Any entity, individual, or institution willing to accept the risk of holding a particular security in its own account to facilitate trading and provide liquidity in that security is known as a market maker or trader

28
Q

custodian

A

An institution or a person responsible for making all investment, management, and distribution decisions in an account maintained in the best interests of another

29
Q

trustee

A

Manages assets for the beneficiaries of a trust, estate or other party.

30
Q

fully disclosed BD

A

is an introducing firm clearing its transactions through a carrying firm

31
Q

clearing agent

A

An intermediary between the buy and sell sides of a transaction

32
Q

Securities investor protection corporation

A

A nonprofit organization requiring members to pay assessments into a general insurance fund used to meet customer claims in the event of a BD bankruptcy is

33
Q

The FDIC provides insurance guaranteeing the safety of a depositor’s accounts in FDIC member banks for each deposit up to

A

250,000

34
Q

Determining monetary policy and taking actions to implement those policies is the responsibility of

A

Federal Reserve Board

35
Q

Market

A

used to describe any physical or electronic venue where buyers can come together for the purpose of trading assets

36
Q

capital markets

A

broadly defined as the stock and bond markets

37
Q

primary market

A

where securities are sold to the investing public in what are known as issuer transactions

38
Q

secondary markets

A

where securities trade between investors

39
Q

third market (nasdaq intermarket )

A

trading market in which exchange listed securities are traded in the etc market

40
Q

4th market

A

market for institutional investors in which large blocks of stock, both listed and unlisted, trade in transactions unassisted by broker- dealers

41
Q

monetary policy

A

are those enacted by the FRB to influence the money supply

42
Q

fiscal policy

A

refers to governmental budget decisions enacted by our president and congress such as tax laws and federal spending appropriations

43
Q

m1 consist of

A

currency

demand deposits

44
Q

m2 includes

A

everything in m1 + time deposits less than 100k

45
Q

m3 includes

A

everything in m1 and m2 plus time deposits more than 100k and repurchase agreements with terms longer than 1 day

46
Q

Federal open market committee

A

meets regularly to direct the governments open market operations

47
Q

Federal Reserve banks buying

A

securities come out of the economy and money goes in. Money supply goes up, ir down, borrowing and spending for consumers is easier and economy expands

48
Q

Federal reserve bank selling

A

securities go into the economy and money comes out,
ms goes down
ir goes up, borrowing and spending for consumers becomes more difficult.

49
Q

interest

A

cost of money

50
Q

federal funds rate

A

rate the commercial money center banks charge each other for overnight loans of 1 mill or more.

51
Q

discount rate

A

rate the federal reserve charges for short term loans to member banks

52
Q

prime rate

A

interest rate that large us money center commercial banks charge their most creditworthy corporate borrowers of unsecured loans

53
Q

broker loan rate

A

the interest rate banks charge broker-dealers on money that they borrow to lend to margin account customers

54
Q

broker loan rate is also known as the

A

call loan rate or call money rate

55
Q

when a bank needs to borrow money it can borrow from the ____ or it can

A

federal reserve

borrow from another member bank like itself

56
Q

borrowing from the frb=

A

bank pays the discount rate

57
Q

borrowing from another member bank

A

bank pays the federal funds rate

58
Q

financial statements

A

provide a fundamental analysis with the raw material needs to assess that corporations profitability, financial strength, and operating efficiency.

59
Q

balance sheet provides

A

snapshot of a company financial position at a specific time

60
Q

equity or net worth is difference in

A

assets and liabilities

61
Q

assets- liabilities=

A

net worth

62
Q

does the depository trust and clearing corporation act as a retail bank servicing savings and checking accounts

A

no

63
Q

Your bd acts as a prime broker for an institutional account. In this arrangement you bd is likely to be providing which of the following services

A

a. execute of all transactions
b. Maintenance of a trading floor operation on an exchange
c. ensure that all exchange trading rules are complied with
d. clearing and transaction settlement services for executing brokers.

64
Q

Market maker

A

individual or institution willing to hold securities positions in its own proprietary account for the purpose of providing liquidity to the marketplace.

65
Q

depository trust and clearing corporation

A

provides automated clearing and settlement services in book entry format to banks and bds for stock and bond trades and employs a continuous net settlement system.

Series 7 (27 decks)

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