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Series 7 > 7 special cards > Flashcards

7 special cards Flashcards

1
Q

NAV, POP, SC%

A
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2
Q

parity

A

paritystock= bond price/ conversion rate

parity of bond= stock price* conversion rate

conversion rate= par/ conversion price

conversion price= par/ conversion rate

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3
Q

nominal yield

current yield

A
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4
Q

Regulation T

Regulation U

Initial vs Min

A

Reg T- FRB, intial customer broker dealer. hypothecation

Regulation U- broker dealer rehypothecates. bank to broker

maitenance margin- FINRA

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5
Q

Simple IRA

SEP IRA

KEOGH HR10

403b

A

Simple IRA- 14k max salary reduction 2-3% match

SEP IRA- contibute less when needed, 25% of employee income

KEOGH HR10- 61k max contribution 20%

403b

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6
Q

accumulation unit vs

annuity units

A

accumulation unit- accounting measure of owners of owners interest in seaprate account. shares that a customer aquires

annuity- accounting measure of annuity amount to be received by customer. once contract is annuized, accumulation units converted to annuity units determine annuity payments to be made

Payments received by owner of non-tax qualified variable annuity are only taxable to extent of earnings above cost basis. not tax deductible. earnings build up tax deferred

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7
Q

147

A

intra state issues

issuer can advertise in any state, msut be resident where its sold

cannot sell out of state for 6 months after effective date

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8
Q

Regulation A

A

start up companies to raise capital- smaller dollar amounts in 12 months

tier 1- 20 million no audited

tier 2 75 million audited

1A- SEC and circular not prospectus

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9
Q

415

A

shelf registration.

3 year shelf life,blue chip companies

used by seasoned ocmpanies to issue shares quickly. blanket registration with SEC

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10
Q

regulation D

A

private placements.

accredited investor- net worth 1 mil, 200k income, 5 mil for instutition

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11
Q

regulation M

A

public offerings. prohibitions on syndicate members

stabilization rules, market manipulation

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12
Q

144

A

exempt transactions, sale of restricted stock

unregistered held for 6 mo before they can be sold

form 144 with sEC.

1% outstanding shares, 4 weeks trading vol, 4x a year

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13
Q

144a

A

QIB qualified insitutitional buyers. 100 mil assets

large blocks. PORTAL. illiquid, inactive

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14
Q

145

A

SEC statements with merger, divesture, spinoff

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15
Q

crowdfunding

A

max 1 mil, don’t need to be accredited.

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16
Q

10b-5

A

catch all fraud rule

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17
Q

form 13 d

A

proxies. SEC 5% or more of companys stock

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18
Q

1939

A

trust indenture act.

protect bond holders. covenants SEC.issuer appoints trustee

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19
Q

1940

A

investment advisors act.

not required to register. banks, attorneys, accountant

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20
Q

Serbanes Oxley

A

faster reporting.

analysts separated from broker dealer investment banking function

10k and 10Q

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21
Q

term

serial

series

A

term- same time, same maturity. dolalr percentage of par PRICE quotes. Corp + muni DOLLAR bonds 1/8, US gov bonds 1/32nd

serial- same time, different maturities, BASIS YIELD quote, BASIS points. money markets. muni bonds, corp equipment and trust certificates.

series- different time, same maturity

for premium bonds quote YTC

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22
Q

primary vs secondary

ex date and record date

what are dated date, settlement date, record date

A

primary: DREP
secondary: DERP

dated date- day bond start to accrue interest. up to settlement

trade date- agree to terms

settlement date- ownership trades

record date- looks to see if owner dividend

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23
Q

debt to equity ratio

A

debt to equity ratio: long term debt/ capitalization

capitalization= long term debt +shareholder equity

solvency

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24
Q

working capital

A

working capital= current asssets- current liabilities

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25
Q

current ratio

A

current assets/current liabilities

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26
Q

acid or quick ratio

A

quick assets/ current liabilities

quick assets= - inventory

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27
Q

Bond vs basis points

A

bond points= $10, 1% of par

basis point= .10$, 01% of par. 100 basis=1%, $1 per 1k

if spread is 1.25 points, 1 1/4% of par= $12.50 per 1k, 125 basis points

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28
Q

credit ratings. long term vs short term debt

A

long term: Moodys Baaa, S&P BBB

shor term: Municipal- MIG 1,2,3 SG,B

commercial paper: A1,2,3 B,C/ P1,2,3 NP

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29
Q

1st, 2nd, 3rd, 4th markets

A

1- inside quote, auction. physical location. exchanges

2- market makers and quotes. negotiated. unlisted electronic. PINK OTC

3rd- NYSE secuirities traded away OTC global market 24hrs

4th- direct instutitional investors ECN

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30
Q

TRACE

EMMA

OATS

ACT

TRF

OSS

ADF

A

TRACE- debt/corp reported no later than 15 min

EMMA-muis

OATS- NASDAQ, synchronized

ACT- nasdaq confirmation

TRF- third market

OSS- options bypass communication posts

ADF- ECNs

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31
Q

introducing vs clearing agent

A

intorducing- cannot take custody. clearing can

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32
Q

new account verification within how many days of opening

A

30 days

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33
Q

written complaint

retention of customer accounts

arbitration statue of limitations

retail communications retained

account record verification

transfer of assets

options communications

A

written complaint- 4 years. reported 15 days of quarter

retention of customer accounts-6

arbitration statue of limitations- 6

retail communications retained- 3 years

within 30 days of opening and change. 36 months after

carrying firm 1 business day to validate. complete in 3 days

any options commuincation not occompanied by ODD disclosure be fille dwith exchange 10 days in advance of use

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34
Q

initial margin vs maitenance

A

iniital- REg T FRB

maitienance- FINRA

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35
Q

departments for flow of funds (margin etc_

A

Margin departments- all accounts maintained under margin regulations of FRB and FINRA

Purchase and sales- processing orders

Reorganization- securities changes in capitalization due to mergers, aquesistions, stock splits

Order department- routing buy and sell orders

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36
Q

accumulation unit

annuity units

A

accumulation units- shares. interest in separate account

annuity units- fixed annuity to be received by owner. accumulation converted into annuity

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37
Q

defined benefit vs contribution

A

benefit- employer assumes risk. known beenfit. high salaried

defined contribution- employee assumes risk. formula based.

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38
Q

SAR vs CTR

A

SAR- 5k within 30 days

CTR- 10

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39
Q

technical analysts vs fundamental

A

Technical- market price, trading changes in dow jones, reversal, support and resistance levels. Advance/ decline lines, short intereset. Selling and buying decisions

Fundamental- intrinsic quality, PE ratios, earnings per share

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40
Q

recession vs depression

A

recession- 6 mo

depression- 6 quarteres

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41
Q

leading and lagging indicators

A

Leading

S&p 500

Housing starts

Unemployment claims

Durable good orders, consumer good orders

Money supply levels

Coincident

GDP

Employment levels

Personal income- number of hours

Industrial production

Leading

S&p 500

Housing starts

Unemployment claims

Durable good orders, consumer good orders

Money supply levels

Coincident

GDP

Employment levels

Personal income- number of hours

Industrial production

Lagging

Corporate profits

Duration of employment

Inventory to sales ratio

Labor cost per unit

Commercial loans

Consumer credit to income ratio

Corporate profits

Duration of employment

Inventory to sales ratio

Labor cost per unit

Commercial loans

Consumer credit to income ratio

42
Q

allocations and strategies

portfolio rebalancing

strategic assets

tactical

active

A

Portfoio rebalacing- reallocation of funds ioveperforming, under

Strategic asset- determination of percentage of assets in each class

Tactical- permited variation from percentages

Active- returns excess benchmark, undervalued stocks

43
Q

foreign currency optins vs foreign currency trades

A

options- same day or regular way

secuirities- forward or spot (1 or 2 day)

44
Q

municipal taxes. one mil

A

.001 assessed value

45
Q

special tax bonds

A

backed by taxes other than ad valorem. usually excise taxes

46
Q

ARS vs VRDR

A

both weekly

VRDR- put option. 25k long term debt 20-30 years. reset to benchmark.

ARS- dutch. long term debt. no put

47
Q

ETN

A

unsecured debt issued by baank, linked to market.

no periodic interest. trades like stock, can be redeemed

48
Q

eurodollar

A

issued in bearer form.

not subject to US withholding taxes. not issued by US gov

49
Q

CDs

A

money market instrument

jumbo 100k 1 year or less. FIC- 250k

50
Q

income/ adjustment bond

A

pays interest with earnings. Bankrupt ccompanies. trade flat due to uncertainty of future payment

51
Q

funded vs unfunded debt

A

funded- long term corp debt

unfunded- short

52
Q

taxation + amortization and accredtion

A

OID muni bond- not taxable

OID corp must

MArket discount muni may

53
Q

fed funds vs clearing house funds

A

gov bonds- fed funds actual day/month

clearing house- trace, corp

54
Q

financial risk

A

Debt financing or utilizing debt leverage too much can lead to the inability to meet principal and interest payments on a company’s debt obligations.

55
Q

dark pool

A

private trading for listed secuirities operated by major broker dealer

56
Q

gray market

A

smaller bankrupt companies. market illiquid. dont report to SEC, but regulated by finra

57
Q

Tapes

A

tickets sent to exchange and stamped with order entry, order execution and cancellation

specialists report trades to tapes

NASDAQ- C tape

NYSE- A tape

AMEX- B tape

58
Q

NASDAQ

A

single book system vs NYSE super display book

market maker- finra firm tha t buys and sells secuirities out of its own inventory

59
Q

letter of intent

A

investors agree to buy additional shares and is given reduced charge.

good for 13 months. backdated 90 days

60
Q

ETFs vs Index mutual fund

pricing

commisisons

margin

shorting

capital gains

A

pricing: ETF continuous/ mutual- forward pricing
commissions: ETF commission/ mutual none
margin: ETF yes/ mutual no
short: ETF yes/ mutual no
gains: ETF taxed when sold/ mutual- taxed annually

61
Q

open end vs closed end

offerings vs shares

prospectus

types of shares

charges

A

open- continuous primary offering/ closed- number of shares fixed

prospectus:open yes. closed- no prospectus afte IPO

shares- open: common/ closed- common, preferred, bonds

charges- 8.5% max sales/ closed- commissions

62
Q

VC vs BDC

A

venture capital fund. limited partnership only sold in private placements to wealthy accredited investors

BDC

invests in private start up and financially troubled companiesbusines. private equity investments development company

registered investment 1940, trades like other stock

distribute 90% of taxable net income

to qualify 70% of assets msut be in small or troubled companies

conduit tax treatment 90% taxable income must be from dividends, interest and capital gains on investments

63
Q

time vs intrinsic

A

intrinsic= amount an option is in the money

time/extrinsic value premium- intrinsic

64
Q

options price/ covered call

A

max life 9 months, near expiration is less expensive

long call protect- same or lower strike price, same or longer expiration

65
Q

portfolio margening

A

lower margin requirements for stock positions that are hedged by options

min equity 100k. must be approved for naked options

seaprate approval from registered options principal

66
Q

fail to deliver

A

10 days. frozen for 90 days. can trade, fully paid

67
Q

official notice of sale

A

advertising in bond buyer and newspaper to solicit competitive bids.

type of bond, dollar amount, secuirty backing, rreputation, good faith deposit

68
Q

tombstone

A

announcement of Public offering in newspaper

gross offering size, POP, names of members

69
Q

official statement

A

prospectus like document, disclosure.

delivered by settlement

70
Q

level of options

A
  1. covered calls
  2. buy calls and puts
  3. spread positions
  4. naked
71
Q

options agreement

A

sign within 15 days. conditions change also 15 days

72
Q

competitive vs non competitive bids

A

compeitive bid- primary dealers, gov secuirities dealers, other institutions

max bid 35% of total offering

noncompeitive bid- small insutitional investors. Max $5 million

73
Q

priority order for municipal markets

A

PGDM

presale, group, designated orders, member

74
Q

spread components

A

management- syndicate manager

underwriting fee- syndicate members

selling concession- seller earns

75
Q

regulation FD

A

prohibits issuers from making dslective disclosure to reasearch, mutual fund, and other professionals

fair disclosure inside trading

76
Q

stabilization

A

satbilization of new issue in secondary market.

underwriter can stabilize price at or below POP

notice of stabilization in prospectus

77
Q

reg sho

A

before it can be sold short, locate requirement

rules for selling secuirities short

78
Q

10b-18

A

allow issuer to buy shares at highest bid or last reported sale price

1 broker dealer, cannot be opening transaction, executed within 10 min of close activity, must not be higher than market price or exceed 25% of trading valme

79
Q

tender offer

A

attempting to buy majority stake in company

makers offer prices at premium, contigent on min number of shares being tendered

initial offer 20 business days SEC rules, each sweetening extends by 10 days

80
Q

corp characteristics

A

unlimited life- can avoid

free trasnferability of shares- can avoid

limited liability

centralized managment- hardest to avoid

-if avoid 2, conduit taxation, not taxed as corp

81
Q

estate taxes

A

progressive tax 11.58 million

23 million if married

82
Q

bullet

barbell

ladder

A

bullet- same target date, bought over time. beneficial- interest rise. not lower

barbell- short and long term bonds average life near target date. best with variable interest rates

Ladder- bonds purchased one time with maturities at regular intervals. protects in rising interest rates

83
Q

‘frb monetary tools

A

discount rate
open market operations- daily buying and selling treasury secuirities between fed dealers
Reserve requirement

84
Q

scale in municipal

A

reoffering scale. listing by maturity or yields the issue will be offered

85
Q

communications

A

correspondence

instututional communication

retail communicationmore than 25 people in 30 day calendar period

86
Q

customer identification programs

A

CIPs

financial instutiions maintain for money laundering

SDN maintained by OFAC

87
Q

dividends in margin

A

withrdrawn within 30 days or become equity

88
Q

recomendations for suitability 3 types

A

Quantitative, reasonable basis, customer specific

89
Q

eastern vs western

A

eastern undivided- responsbile for its original percentage regardless

90
Q

FDIC

A

does not protect money markets. only avaiable to banking acccounts

91
Q

cav

A

cost basis

92
Q

who enforces and who doesn’t

A

enofrce: OCC, FIC, FRB, FINRA

does not: MSRB

93
Q

continuing education

A

second year anniversay and every year after

94
Q

foreign puts and aclls

A

EPIC

exporters buy puts on foreign

importer buy calls

95
Q

LEAP

A

long term options contract. 38 months.

96
Q

options price

A

longer term options contarcts are always more

97
Q

premium vs discount bonds quotes

A

discount- YTM

premium- YTC

98
Q

all or none

fill or kill

immediate or cancel

not held

market on close

A

all or none- all, can wait

fill or kill- entirety not willing to wait

immediate or cancel- immediate, partial execution fine

not held

market on close

99
Q

decline closings

A

7% 15 min

13% 15 min

20% end of trading session

100
Q

inside quote

A

highest bid, lowest ask

101
Q

index that most closely approximates market

A

willshire index

Series 7 (3 decks)

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