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Tutoring For 65 > 4/10/2023 > Flashcards

4/10/2023 Flashcards

(65 cards)

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1
Q

Which Act Does Rule 144 fall under

A

The Securities Act of 1933

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2
Q

Restricted Stock

A

Follows Rule 144

Deals with Stock acquired Through Private Placement

Cant Be Re-Sold for 6 months

One sold it becomes apart of the public float

If Affiliated with the Issuer You have Restrictions on how much you can sell at 1 time

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3
Q

Rule 144

A

Rules for Restricted Stock

Deals with Stock acquired Through Private Placement

Cant Be Re-Sold for 6 months

One sold it becomes apart of the public float

If Affiliated with the Issuer You have Restrictions on how much you can sell at 1 time

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4
Q

Form 144

A

Must be filed with SEC when the Investor owning Restricted Stock Or Controlled Stock wants to sell it

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5
Q

Rules for Broker-Dealers and Rule 144

A

They cant Buy or Solicit Restricted Stock

BUT can call back
Investors who expressed Interest in the past 10 days

other BD’s who expressed interest in the past 60 days

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6
Q

Rule 144a

A

Execption to the 6 month waitting preiod if you sell the restricted Stock to a QIB
(Qualified Institutional Buyer)

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7
Q

QIB

A

(Qualified Institutional Buyer)

Person/Entity who
has at least $100 million in Assets

OR

BD who
has at least $10 million in Assets

Rule 144a says:
Restricted Stock can be sold to them without waiting the 6 months period

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8
Q

Private Placements

A

Also called Limited Offering Exemption

The Sale of a Newly issued Security to an Accredited Investor

Doesn’t require SEC Registration

Advisors cannot get commissions on these sales

After buying the investor is Subject to
Rule 144
the Stock is Now Restricted Stock
Cannot be resold for 6 months

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9
Q

Accredited Investor

A

Individual who makes $200k/yr
or
Couple who makes $300k/yr

OR

has $1million in Net Worth other than their Home

Then
They file as accredited Investor with SEC

Can then Buy Private Placements

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10
Q

Limited Offering Exemption

A

Another word for

Private Placements

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11
Q

Control Person

A

Different From Affiliate
(all controlled persons are affiliates, but not all affiliates are controlled persons)

Control - Director, Officer, or 10% ownership of company
(if the question asks under the:
-Investment Advisers Act of 1940
or
-Investment Company Act of 1940
its changed to 25%)

(Affiliated - Director, Officer, employee, or 5% ownership of company)

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12
Q

Hedge Fund

A

ALMOST ALWAYS ORGANIZED AS A LIMITED PARTNERSHIP

Usually:
-aggressively managed fund
- high management fee’s
-uses options futures and leveraging (borrowing)
-less liquid than a mutual fund

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13
Q

Forwards

A

Contract between producer and buyer of commodities (wheat, grain, etc) to buy the commodities at a specified Price and day

Helps Producers hedge against price changes in their commodities during production

Illiquid
No Secondary Market (Can be bought or sold but not traded)
IS A DERIVATIVE
unregulated

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14
Q

Futures

A

Just like Forwards (there is a contract and an actual exchange of the commodity at expiration)

Investors Essentially betting on the price of Commodities in the future

Liquid
Has a Secondary Market (The contract can easily be traded)
Is a Derivative (Very Similar to an Option)
Is Regulated

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15
Q

Viaticals and Life Settlements

A

People with Life Insurance Policy can sell the Death Benefit for more than Cash Value and Less than Death Benefit

Viatical - Have to Be Terminally/Chronically Ill
Life Settlement - Don’t have to Be Terminally/Chronically Ill

The contract is considered a Security

Purchaser agrees to pay any additional Premiums on the contract required

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16
Q

On the Sale of Viaticals / Life Settlements what on the policy changes

A

Grantor (Owner)
Beneficiary

Insured does NOT Change

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17
Q

AIR

A

Assumed Interest Rate

USED FOR VARIABLE ANNUITIES

The Minimum Interest rate needed to ensure Annuity Income Payments are consistent

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18
Q

Annuity Payout Options

A

Single Life - lasts one person’s life

Joint and Survivor - last’s 2 peoples life

Period Certain - lasts a specified # of years (whether a person is dead or alive)

Life with Period Certain - Lasts personal Life OR Certain Nubmer of years whichever lasts longer

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19
Q

Annuities (things to remember for the test)

A

-Grow Tax Deferred - Remember that money contributed is considered Post Tax Unless otherwise stated

-Variable Annuities Fee are Usually higher than Mutual fund

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20
Q

Life Insurance (things to remember for the test)

A

Younger People Should buy Term because its cheaper

Variable Life:
cannot be loaned out for the first 3 years
then 75% or more can be loaned out

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21
Q

Should you use Accretion Amortization for all Bond Total Gain/ Loss Questions?

A

No

Only those where you help the Bond for longer than 1 year

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22
Q

Technical Analysis

A

Cares about the Stock

Focuses on the graphs and charts of securities

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23
Q

Fundamental Analysis

A

Cares about the health of Company

Looks at:
Income Statement
Balance Sheet

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24
Q

Mutual Fund

A

A pool of investors funds invested and managed by a company

Portfolio and NAV calculated at the end of every market day

ON THE TEST IS ALWAYS CONSIDERED AND OPEN END A CLASS FUND UNLESS OTHERWISE STATED

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25
Management Company
Another word for Mutual Fund
26
NAV
Net Asset Value Used in Mutual Funds calculated at the end of every trading Day Portfolio Value / # Shares Outstanding (Value = Assets - Liabilities) (it's the dollar amount each share is worth)
27
POP
Public Offering Price The price the fund is offered to the public NAV + Sales Charge = POP
28
A B and C shares are for what type of Mutual Fund
Open End Fund
29
Class A Shares
Front End Loaded Buy Shares @ POP Sell Shares @ NAV Good for Long Term Investing (8+ years)
30
Class B Shares
Also Known as Contingent Sales Charge Back End Loaded Buy @ NAV Sell @ NAV - Sales Charge (If they have one. The longer you invest, usually the smaller the Sales charge on these) Good for Mid Term Investing (5-8 years)
31
Class C Shares
Small Management Fee Called Level Load Funds Buy @ NAV Sell @ NAV Charged a small annual fee based on the size of the account Good for Short Term Investing (1-5 Years)
32
What are Closed-End Funds bought and sold at
the CMV of shares in the secondary market not POP or NAV!!!
33
Class I Shares
Open-end Fund Shares Used for Institutional Investors (i shares) minimum of $250k needed to invest into these shares
34
What is the sales charge when swapping from one fund to another in the same investment company?
$0 They can only charge a sale charge once. New fund is always bought and sold at NAV (or CMV if closed-end fund)
35
Front end Loaded Also Called What?
Class A Shares
36
Back End Loaded Also Called What
Class B Shares
37
Breakpoints
The more money you have in the account = the smaller the sales charge Like a bracket system For A Class Shares Only
38
Breakpoint Sales Violations
If a client is close to a breakpoint you need to make that known to them so that if they want they can contribute more money and have a smaller fee. If you dont that is a violation
39
ROA
Rights of Accumulation Open-end Investment companies consider all accounts someone has with them together when calculating their breakpoint for fee's
40
LOI
Letter Of Intent You Submit an LOI to Investment Company Promising to contribute more money to a fund for the purpose of adding to the breakpoints and reducing your fee. They will consider those funds as ALL READY IN the fund for the sake of fee's and breakpoints Good for 13 months Can be backdated for 90 days
41
Open End Fund Max Sales Charge
8.5% if on test a sales charge is higher than this that means its a Closed-End Fund
42
12B1 Fee's
For Open End Funds ONLY A fee that pays for anything to do with the Distribution (Selling and Marketing) of the fund Paid Quarterly Max 12B1 Fee: Load Fund => .75% No Load Fund => .25%
43
When Calculating Sales Charge What do you Apply that to?
What it cost you for that share THAT MAY OR MAY NOT BE THE NAV
44
On questions with A B or C share or Open End Fund Questions, what should you remember?
Always assume its an A share unless it says differently AND open and closed end funds can invest in common, preffered and bonds AND they can only charge a sales charge once so if you move from one fund to another in the same company they cant charge you another sales charge
45
Are Closed-End Funds Activly or Passivly Managed?
Passively Managed will make trades 2-3 times per year
46
On a Question that asks you if something is an Open or Closed Fund What do you need to remember
Closed End can have: POP greater than 8.5% (Sales Charge) and POP less than NAV
47
Are ETF and ETN the Same Thing
No
48
Are ETF's a Type of Open or Closed End Fund
Closed End
49
ETF
Type of Closed-End Fund Passively Managed Invested Like an Index Fund
50
2 EXTREMELY IMPORTANT things about ETF's questions on the Test
If Ticker Symbol starts with an S that means Short - you have to times all returns from it by -1 (inverse them) AND If you see 3X or 2X etc the fund is leveraged by that amount - you have to times the return by the number
51
ETN
Exchange Traded Note Issuer purchases Bonds and packages then as notes then sells it to investors Biggest Risk: The Credit Quality Of The Issuer
52
Are UIT's Investment Companies
Yes BUT NOT REGULATED BY THE INVESTMENT COMPANY ACT OF 1940 (THEY ARE STILL A INVESTMENT COMPANY THEY JUST ARNT GOVERNED BY THE ACT) Not classified at one under Investment Company Act of 1940 Instead classified under Each UIT's Individual Trust
53
RIET's
Pool of investor funds Invested into Real Estate Can Be Listed (Trades on an Exchange) or Unlisted (Doesnt Trade on an Exchange) Can only distribute gains to Share holders NO LOSSES
54
Difference Between Private Equity and Hedge Funds
Hedge Funds Managers typically put some of their own $ into the Fund Private Equity Managers Do NOT
55
Venture Capital Funds
Invests In Young Start Up Companies Hoping 1 or 2 of them will turn into HUGE businesses that they can then sell (Its OK that the rest fail)
56
Similarities Between: Private Equity Funds Hedge Funds Venture Capital Funds
Very Illiquid Fund can invest the money however it wants (very low transperancy) Can be very Risky but might make huge reward aswell Usually have very high mnnimums to enter the fund
57
How Annuities Distributions are taxed
LIFO - Last In First OUT 2 Parts of the Annuity Money What you Contributed (considered After Tax Already) What Growth the Account Had (considered Pre Tax or Tax Deffered) Which amount came in Last? Usually the Growth of the account. so that gets taxed First
58
How Annuities Annuitization is taxed
Part Tax - The Growth and Part POST TAX (already paid taxes on) - What You Contributed To It
59
What to remember about Annuities With a Bonus
You don't get the bonus up front you have to be vested through the life of the plan
60
All Business Entities Flow the Taxes on to the individual EXCEPT
C-Corps and Trusts That means that except for these 2 the taxes will show up on your personal tax return
61
What to remember about Sole P.
On the test the Sole P and Individual are considered 2 different entities and so it does "Flow" the taxes on to the individual
62
Max Loss for a Limited Partner
Their Investment (they can't come after their house or car or other money etc...)
63
Max Loss for a General Partner
Everything (they CAN come after their house or car or other money etc...)
64
List the different Types of Joint Tennet Accounts
JT with Rights of Survivorship -if you die => 100% goes to the remaining tenants -if sued => they can come after 100% of the account JT in Common -if you die => your % goes to Beneficiaries/ Estate -if sued => they can come after ONLY you % of the account JT by Entirety -if you die => 100% goes to the remaining tenants -if sued => they can only come after the person and none of the JT Account (Married Couples ONLY) (The JT Account is considered its own Entity separate from both individuals)
65
Affiliates
Affiliated - Director, Officer, employee, or 5% ownership of company Different from Control Person!!!!!

Tutoring For 65 (11 decks)

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