Chapter 1

Question 1

Securities and exchange commission

Answer 1

Also known as the SEC
It functions as a ultimate enforcer of federal security laws, and is responsible for protecting US investors.
Provides investors with full and fair disclosure, accurate, and balanced information regarding the securities

Question 2

SRO

Answer 2

Self regulatory organization, such as a Chicago bored, options, exchange, and the municipal securities rule making board

Question 3

Chicago Board exchange options

Answer 3

This is the examining authority for broker dealers, engaging in options market. The CBOE is an exchange the trade in standardized option contracts. It is charged with regulating the training activities and tails practices of its member firms

Question 4

Municipal securities rulemaking board

Answer 4

Also known as MSRB
This SRO regulate broker dealers and thinks that engage in municipal securities business. Overseas that underwriting trading of municipal securities and 529 college savings plans.

Question 5

Federal federal deposit insurance corporation

Answer 5

The FDIC is an independent federal agency, protecting bank account deposits in US Banks from bankruptcy

The FDIC is a primary regulator of banks and provides each depositor insurance protection for 250,000 per account holder per bank

Question 6

The department of treasury

Answer 6

The treasury department is the executive agency responsible for promoting economic, prosperity and ensuring the financial security of the United States

Question 7

Internal revenue service

Answer 7

The internal revenue service is the agency under the treasury department that is responsible for collecting taxes and enforcing tax laws. The IRS has the authority to issue monetary fines and punishment for violating the internal revenue code IRC.

Question 8

Internal revenue code

Answer 8

The IRC covers rules concerning taxation, including income, gift, estate, and capital gains

Question 9

Capital markets

Answer 9

The securities markets are often referred to as capital markets

Question 10

Define a person

Answer 10

A person is defined as a natural individual or legal entity that can transact securities business

Question 11

Define a security

Answer 11

Hey, security as an investment contract offer through a legal entity managing the effort for expected profits. Examples include stocks, bonds, and mutual funds.

Question 12

Define a common stock

Answer 12

Hey, stock is an equity securities that represents ownership of a corporation

Question 13

Define bond

Answer 13

A bond is a debt security represents a creditor relationship with the issuer

Question 14

Mutual funds

Answer 14

Mutual funds are pools investments that can hold a variety of stocks, bonds, and other securities

Question 15

Define securities exchange

Answer 15

Hey securities exchange our auction market where exchange list insecurities are bought and sold. Exchanges have a listed requirements that is yours must meet if they do not meet the listing requirements or do not want the securities listed they will have to trade insecurities over the counter. Over the counter, OTC market is a negotiated market where on the securities are bought and sold.

Question 16

Over-the-counter market

Answer 16

The over-the-counter market is also known as the OTC market and is negotiate a market or on the securities are bought and sold

Question 17

Retail investor

Answer 17

A retail investor is an individual that purchases securities for their own account
A retail investor is part of the general public

Question 18

Accredited investor

Answer 18

Under federal law , rule 501 of regulation D defined an accredited investor as an investor to meet one of the following
Individual or joint net worth of $1 million
Individual with an annual income of $200,000 for the past two years or a couple with a joint income of 300,000
Individual holding a series 7 series 65 or series 82 license
And employee of private funds, if deemed knowledgeable
Investment advisors
Rural business investment companies
Any bank, investment company and insurance company
Any entity with assets and excess $5 million, including limited liability, companies, family offices in their clients nonprofit institutions

Question 19

Institutional investor

Answer 19

An institutional investor is an entity that makes security transactions on a large scale for their own accounts or four institutional clients, such as insurance or investment companies, trust, broker dealers, investment, advisors, banks, savings, government agencies, or employee benefit plans

Question 20

Qualified institutional buyer

Answer 20

A qualified institutional buyer is an institutional investor that owns and invest a minimum of $100 million in securities on a discretionary basis. An individual cannot qualify as a QIB

Question 21

Issuer

Answer 21

An issuer is a legal entity, including a corporation, municipality or federal government offering securities to the public to raise capital. They may sell stocks or bonds to raise

Question 22

Underwriter or investment banker

Answer 22

Insecurities broker dealer that administers the public insurance and distribution of securities for a corporation or other issuing body.

Question 23

Custodian

Answer 23

A firm such as a trust, company, commercial bank, or similar financial institution hired by the issuer to physically safeguard cash and securities for the for the buying public

Question 24

Trustee

Answer 24

A firm such as a truss company, commercial bank, or similar financial institution hired by bond, is yours to protect the bond holders interest

Question 25

Transfer agent

Answer 25

A firm that performs all recordkeeping and customer service functions processes, name, and address changes and keeps track of the number of shares owned by each investor. Typically the transfer agent will act as a ping, agent distributing dividends and capital gains.

Question 26

Registrar

Answer 26

An entity that works with the transfer agent to keep current files of bonds and stock owners. They ensure that the amount of stock in circulation does not exceed the authorized amount

Question 27

Broker dealer

Answer 27

Is a firm in the business of executing securities trade for compensation

Question 28

Broker

Answer 28

A broker is a firm acting as an agent, executing orders on behalf of customers and gets paid commission.

Question 29

A dealer

Answer 29

A dealer is a firm acting as a principal trading for its own account, and charges a markup on purchases, or mark down on sales, instead of being paid commission, dealers act in a principal capacity 

Question 30

Investment banking

Answer 30

The department of a broker dealer that negotiate with insurance when selling securities to the public

Question 31

Research

Answer 31

The department of a broker dealer that investigate is yours and the merits of their securities to make buy and sell recommendations

Question 32

Trading

Answer 32

The department of broker dealer that handles trade executions for clients and the firm 

Question 33

Operations

Answer 33

The department of broker dealer that insurance accurate recordkeeping within the firm

Question 34

Margin

Answer 34

The department of a broker dealer that oversees the extension of credit to investors. This department ensures the firm and investors follow federal regulations concerning the extension of credit allowed within margin account

Question 35

What are the five department for broker dealers?

Answer 35

Investment banking Research Trading Operations Margin