Securities Regulations

Question 1

Securities Act 1933

Answer 1

Regulates new securities (Primary Market) (IPOs)

Question 2

Securities Act 1934

Answer 2

Regulates Secondary Market & trading of securities

Created the SEC

Question 3

Investment Company Act 1940

Answer 3

Authorized SEC to regulate investment companies

Open, Closed, and UITs

Question 4

SIPC (1970)

Answer 4

Protects investors if broker firm fails

Covers $500k, including $250k of cash

Don’t have to be US citizen

Question 5

Bankers Acceptance

Answer 5

Facilitates imports/exports

Question 6

Commercial Paper

Answer 6

Short term loans btw corporations

Maturities are 270 days or less, denominations of $100k

270 because it doesn’t have to be registered w/ SEC

Question 7

Investment Policy Statement Establishes:

Answer 7

Client Objectives
Limitations on investment manager
Used to measure investment manager’s performance
Does NOT include investment selection

Covers Risk, Return requirements, Time, Taxes, Liquidity, Legal

Question 8

Dow Jones

Answer 8

Simple Price Weighted Avg.

Does NOT incorporate market capitalization

Question 9

S&P 500

Answer 9

Value Weighted Index

Incorporates market capitalization of individual stocks into the average