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Series 7 > Trading Markets > Flashcards

Trading Markets Flashcards

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Series 7 Top-off Exam flashcards
1
Q

Stop Order

A

Becomes an order when the security trades at a specified price. Once market goes to stop price, becomes a market order.

Buy Stop Order - above market price

Sell stop order - below market price

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2
Q

Network C Tape

A

Reports of trades of NASDAQ issues

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3
Q

Network A Tape

A

Reports trades of NYSE-listed issues

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4
Q

Network B Tape

A

NYSE American (AMEX) and regional exchange-listed securities.

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5
Q

Size of Market

A

Highest Bid by the Lowest Ask

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6
Q

Specialist “Stops Stock”

A

Specialist guarantees the price of the stock for a short period of time

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7
Q

Trading halts

A

Regulatory halt imposed by regulator (SEC) or occurs because of circuit breaker was tripped. All trading in the stock must stop in all US markets

Non-regulatory halt only a certain exchange stops trading a stock.

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8
Q

Circuit breaker

A

7% drop in the S&P 500 Index

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9
Q

ACT

A

Automated Comparison of Funds. Reports all interdealer transactions

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10
Q

Customer Confirmations

A

Must disclose commission, mark-up, and amount of accrued interest.

Does not need to disclose the inventory position of the dealer.

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11
Q

Indication of Interest

A

Happens during cooling off period. Indication can be canceled by the customer and the brokerage firm.

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12
Q

Stand-by Underwriting

A

investor makes firm commitment to stand by ready to buy any unsold shares after the issuer attempts to sell to existing shareholders

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13
Q

All or None Underwriting

A

Best efforts underwriting in which investment banker agrees to underwrite but takes no financial liability if entire issue is not sold.

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14
Q

Firm Commitment Underwriting

A

Underwriter buys issue from issuer and takes full financial liability.

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15
Q

Western Syndicate

A

Responsible for certain percent of original amount. Only liable for their own shares.

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16
Q

Competitive Bid Auction

A

Bid placed on yield of US Gov securities. Winning bids are lowest interest rates.

Weekly auction conducted each Monday and Tuesday. Settlement occurs on the issue date.

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17
Q

Ask Price

A

Bid (NAV) over 100% - Sales Charge %

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18
Q

REIT

A

Real Estate Investment Trust

Closed-ended management company. purchase real estate and property and the security trades on exchanges or in the OTC market.

19
Q

Subchapter M

A

Regulated under this if mutual funds distributes 90% or more of net investment income to shareholders. Only taxed on retained income.

20
Q

Equity REIT

A

REIT that buys or leases real estate. Shareholders dividends paid from lease or rental income.

Income derived from difference between net rental income and interest paid on loans

21
Q

BDC

A

Business Development Company

Make “private equity” investments in start-up companies

Publicly traded on an exchange.

22
Q

Immediate or Cancel

A

Execute the whole order at certain price. If not, execute part and cancel the rest

23
Q

Fill or Kill

A

Execute entire order at one price. If not, entire order is cancelled

24
Q

All or None

A

Execute whole order at certain price. Can try multiple times.

25
Q

“Short tender “ rule

A

Net long position must be long - not short

26
Q

Opening sale

A

Short position

Closed with a closing purchase

27
Q

Closing purchase

A

Short sale

Opened with an opening sale

28
Q

Closing sale

A

Long stock

Opened with an opening purchase

29
Q

Opening purchase

A

Long stock

Closed with a closing sale

30
Q

Initial Margin Requirement

A

50% set by the FRB
75% for LEAPs

31
Q

Minimum maintenance requirement

A

25% for long stocks

30% for short stocks

Set by FINRA

32
Q

Keogh Plan

A

HR-10

Retirement plans for self-employed individuals

Fully deductible from income

Employer contributions limited to 20%

33
Q

Leveraged buy out

A

Public company is taken private

Financing for takeover provided by commercial bank or issuing junk bonds

Existing shareholders tender their shares

34
Q

Defined Benefit Plan

A

Pension plan where employer promises to provide covered person with pre-set amount upon retirement.

Older employees get more, younger ones get less.

Annual benefit amount fixed at retirement

Actuary determines annual contributions

Employer must contribute whether or not company is profitable

35
Q

Stabilizing Market Maker

A

Managing underwriter

36
Q

Short against the box

A

End-of-year tax strategy that enables investor to lock in a gain on a profitable long position

Sells short same number of shares equal to long profit at market price - locks in the gain

Performed in an arbitrage account

Does not defer taxes of a gain

37
Q

Inflation

A

Interest rates increase continuously for 3 consecutive quarters

38
Q

Interbank market

A

Unregulated global market in which large transactions occur between foreign and domestic banks

Spot and Forward settlement

39
Q

Risk less Transaction

A

No risk to the dealer. Dealer earns a mark up

40
Q

Stock dividend

A

Will dilute a company’s earnings per share

41
Q

Tombstone

A

Announcement of public offering of securities

Includes gross proceeds of a new issue offering and syndicate member names

42
Q

No load fund

A

Does not impose sales charges

All mutual funds charge an annual management fee

43
Q

Money market funds

A

Typically sold without sales charge

Fund dividends are taxable whether or not they are reinvested

44
Q

TRACE

A

Reports corporate, government, and agency trades

Muni bonds and reported on RTRS

Series 7 (6 decks)

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