Unit 3 Flashcards
What is ordinary income taxes based on
- Dividends
- Interest
- Earning from employment
What is in place to set out fair and ethical trade practices that member firms must follow when dealing with the public?
Conduct Rules
What is in place to establish the Uniform Trade Practices, incl settlement, good delivery, ex-dates, confirmations, and other guidelines for BD’s when they do business with other member BD firms?
Uniform Practice Code
Who governs the resolution of disagreements and claims between members, RRs and the public; and addresses monetary claims?
Code of Arbitration Procedures
What describes how FINRA hears and handles member violations of the conduct rules
Code of Procedure (COP)
Who is responsible for the activities of RRs and APs housed in a branch office and within a region?
Office of Supervisory Jurisdiction (OSJ)
What is FINRAs U4 registration requirements?
Name, address and aliases
5 year residence history
10 yr employment history (3 years verified)
Info on any charges, arrests, convictions relating to investments
How long do you have to file U4 changes with the CRD?
no later than 30 days after the member becomes aware of the change
What kind of products can a Series 6 RR sell?
Open End Investments
New issues for Closed End Investments and
Variable products, if the hold an insurance license
Customer complaints on a RR must be kept for how long
4 years
Regulatory element of continuing ed must be completed within what timeframe?
120 days after 2nd anniversary of registration and every 3 years after
What is the role of the investment BANKER?
Help issuers raise money through the sale of securities
What is another name for investment BANKER?
Underwriter
What type of UW Commitment contract is the most commonly used?
Firm Commitment
What type of UW Commitment contract assumes the financial risk of incurring losses in the event they are unable to distribute all the shares to the public they purchased?
Firm Commitment
What type of UW Commitment contract unconditionally agrees to buy all shares that remain unsold in an additional issue?
Standby UW
What type of UW Commitment contract they sell as much as possible, without financial liability for what remains unsold?
Best Efforts
Term used for compensation paid to UWs in a new issue
Spread
What act was instituted for full and fair disclosure and requiring registration statement and prospectus
Securities Act of 1933 (Paper Act)
What document can be used to indicate interest in a new security?
Red Herring (AKA Preliminary Prospectus)
Regulation D, under the Securities Act of 1933 allows what?
The offer and sale of securities to accredited investors WITHOUT registration. They are called Private Placements.
What is the criteria for an accredited investor?
- $1 million net worth (excluding primary residence)
- $200,000 in adjusted gross income for last 2 years
- $300,000 for a married couple
They can be an insider at the issuer, a professional, sophisticated or institutional investor
What is another term for auction market?
Exchange
Which interdealer market trades unlisted securities?
OTC
Name the negotiated markets?
OTC, 3rd market and 4th (Institution)
When must a customer receive confirmation of a trade?
No later than the settlement date.
What was established to give the authority to maintain fair and orderly market for the investing public?
Securities Exchange Act of 1934 (People & Places Act)
Funds that comply with Subchapter M (conduit theory) are know as…
Regulated Investment Companies (R.I.C.)
How do you calculate a Mutual Funds current yield?
Divide the annual dividend by POP
Who determines the ex-date of a Mutual Fund?
Board of Directors
When is the ex-date of a Mutual Fund?
The business day after the record date (DREP)
Dividends and capital gains are taxable whether reinvested or taken in cash. True/False
True
The IRS always chooses what method for share distribution if the investor didn’t choose a different method?
FIFO
What amount of net capital loss may be used as a deduction against ordinary income each tax year?
$3,000
