Official Flash cards
(375 cards)
1
Q
An ORDER to BUY A SECURITY that is ENTERED AT THE PRICE ABOVE THE CURRENT OFFERING PRICE and that is TRIGGERED when the MARKET PRICE TOUCHES OR GOES THROUGH THE BUY STOP PRICE.
A
buy stop order
2
Q
street name.
A
book-entry
3
Q
An AMENDMENT enacted in 1938 to BROADEN SECTION 15 of the Securities Exchange Act of 1934.
The amendment provided for the CREATION OF A SELF-REGULATORY ORGANIZATION for the specific purpose of SUPERVISING THE OVER-THE-COUNTER SECURITIES MARKET.
A
Maloney Act
Named for its SPONSOR, the late SENATOR FRANCIS MALONEY of Connecticut.
See also National Association of Securities Dealers, Inc.,
precursor to FINRA.
4
Q
(1) The PRICE OF THE LAST TRANSACTION for a PARTICULAR COMMODITY OR COMMODITY OPTION on a PARTICULAR DAY.
(2) The MIDPRICE of a CLOSING TRADING RANGE.
A
close
See also CLOSING RANGE.
5
Q
An EXCHANGE MEMBER who EXECUTES TRANSACTIONS FROM THE FLOOR OF THE EXCHANGE only for HIS OWN ACCOUNT.
A
floor trader
6
Q
The PROFIT realized when a CAPITAL ASSET is SOLD FOR A PRICE HIGHER THAN THE PURCHASE PRICE.
A
capital gain
See also
capital loss;
long-term gain.
7
Q
Reg T
A
Regulation T.
8
Q
A PROVISION in a BOND INDENTURE stating that the ISSUE IS NONCALLABLE for a CERTAIN PERIOD (e.g., 5 or 10 years) AFTER the ORIGINAL ISSUE DATE.
A
call protection
See call provision.
9
Q
The SIMULTANEOUS PURCHASE of a STOCK and a PUT ON THAT STOCK specifically identified as a HEDGE.
A
married put
10
Q
TAXABLE INCOME that is NOT CONSTRUCTIVELY RECEIVED but TAXED AS IF IT WERE.
A
phantom income
See also CROSSOVER POINT
11
Q
A FINRA exam for prospective securities industry professionals. This introductory-level exam assesses a candidate’s knowledge of basic securities industry information.
A
SIE
The Securities Industry Essentials Exam is a corequisite for the many representative-level FINRA exams.
12
Q
A MONEY MARKET INSTRUMENT used to FINANCE INTERNATIONAL TRADE.
This is a TIME DRAFT DRAWN ON A BANK by AN IMPORTER OR EXPORTER OF GOODS, and it REPRESENTS THE BANK’S CONDITIONAL PROMISE TO PAY the FACE AMOUNT OF THE NOTE at MATURITY (normally LESS THAN THREE MONTHS).
A
banker’s acceptance (BA)
13
Q
The OFFICIAL NAME for the FULL DISCLOSURE DOCUMENT for MUTUAL FUNDS.
A
statutory prospectus
14
Q
The RATE OF RETURN ON A BOND that accounts for the DIFFERENCE BETWEEN THE BOND’S ACQUISITION COST AND ITS MATURITY PROCEEDS, including INTEREST INCOME.
A
yield to maturity (YTM)
See also BOND YIELD
15
Q
A GRAPHIC REPRESENTATION of the ACTUAL OR PROJECTED YIELDS of FIXED-INCOME SECURITIES in relation to their MATURITIES.
A
yield curve
See :
flat yield curve;
inverted yield curve.
16
Q
The STANDARD FOR JUDGING whether AN INVESTMENT COMPANY qualifies as DIVERSIFIED under the INVESTMENT COMPANY ACT OF 1940.
A
75-5-10 test
SEVENTY-FIVE PERCENT of a FUND’S ASSETS must be INVESTED IN SUCH A WAY that
NO MORE THAN 5% OF ITS TOTAL ASSETS are INVESTED IN ANY ONE COMPANY’S VOTING SECURITIES,
and NO SINGLE INVESTMENT may represent ownership of MORE THAN 10% OF ANY ONE COMPANY’S OUTSTANDING VOTING SECURITIES.
There are NO RESTRICTIONS on the REMAINING 25% of the FUND’S ASSETS.
17
Q
A DEBT SECURITY requiring THE ISSUER TO PURCHASE THE SECURITY at the HOLDER’S DISCRETION or WITHIN A PRESCRIBED TIME.
A
put bond
Syn. tender bond.
18
Q
The FIRST NATIONALLY RECOGNIZED SECURITIES EXCHANGE LISTING AND TRADING OPTIONS.
The SELF-REGULATORY ORGANIZATION with JURISDICTION over ALL WRITING AND TRADING OF STANDARDIZED OPTIONS AND RELATED CONTRACTS LISTED on THAT EXCHANGE.
A
Chicago Board Options Exchange (CBOE)
19
Q
red herring
A
See PRELIMINARY PROSPECTUS.
20
Q
An EQUITY MUTUAL FUND that attempts to COMBINE THE OBJECTIVES of GROWTH and CURRENT YIELD by DIVIDING ITS PORTFOLIO between companies that show LONG-TERM GROWTH POTENTIAL and companies that PAY HIGH DIVIDENDS.
A
combination fund
21
Q
An account in which the principal (beneficial owner) has given the registered representative authority to enter transactions at the representative’s discretion.
A
discretionary account
The registered representative may, if so directed by the customer, use the discretion about price (buy or sell), time, and choice of securities (bought or sold).
22
Q
Shortened term for the Securities and Exchange Commission, which was created by Congress to regulate the securities markets and protect investors.
A
Commission
Composed of five commissioners appointed by the President of the United States and approved by the Senate.
The SEC enforces, among others, the Securities Act of 1933, Securities Exchange Act of 1934, Trust Indenture Act of 1939, Investment Company Act of 1940, and Investment Advisers Act of 1940.
If in context the subject is commodity futures, the word refers to the CFTC.
23
Q
An NYSE American Exchange member who stands ready to provide AUTOMATICALLY UPDATED TWO-SIDED MARKET QUOTATIONS with size in all the appointed option series.
A
specialist
The specialist’s role is to maintain a fair, orderly, and competitive market.
Formerly used on the NYSE.
Syn. eSpecialist; specialist unit.
See Designated Market Maker.
24
Q
COMMUNICATIONS WITH THE PUBLIC that PROMOTE SECURITIES AS INVESTMENTS but DO NOT REFER to PARTICULAR SECURITIES.
A
generic advertising
25
tax-free bond fund.
See tax-exempt bond fund
26
NFA Rule 2-30
See "Know Your Customer".`
27
An ABBREVIATED PROSPECTUS that is distributed while the SEC is reviewing an issuer's registration statement.
It contains all of the essential facts, but it DOES NOT CONTAIN PRICING OR THE EFFECTIVE DATE.
preliminary prospectus
28
Regulations designed to ensure that FINRA member firms and their representatives follow fair and ethical trade practices when dealing with the public.
FINRA Conduct Rules
The rules complement and serve as extensions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940.
29
LOI
See letter of intent.
30
A component of a customer's margin account agreement, outlining the conditions of the credit arrangement between the brokerage firm and customer.
credit agreement
31
An investment company that issues a fixed number of shares in an actively managed portfolio of securities.
closed-end management company
The shares may be of several classes, and they are traded in the secondary marketplace, either on an exchange or over the counter.
The market price of the shares is determined by supply and demand.
Syn. publicly traded fund.
32
As defined in securities law, an individual, corporation, partnership, association, fund, joint stock company, unincorporated organization, trust, government, or political subdivision of a government.
person
33
A person who has passed an examination evidencing the knowledge and qualifications necessary to sell certain specified investment products (e.g., Series 6).
limited representative
34
A document that a customer must sign when opening a margin account with a broker-dealer. It allows the firm to liquidate all or a portion of the account if the customer fails to meet a margin call.
customer agreement (margin agreement)
35
eligible security
See margin security.
36
The standardized application form for termination of an associated person.
Form U5
37
An optional contract between a brokerage firm and a margin customer that permits the firm to LEND margin securities to other brokers.
loan consent agreement
The contract is part of the margin agreement.
Syn. consent to lend agreement.
38
A term describing one side of a POSITION with TWO OR MORE SIDES
leg
For example, a short straddle with a leg in the stock.
39
AWC
See acceptance, waiver, and consent.
40
A point on the income-tax rate schedule.
tax bracket
Syn. marginal tax bracket.
41
AIR
See assumed interest rate.
42
COMPENSATION ISSUED by an enterprise to an employee in the form of COMPANY STOCK.
Units
RESTRICTED STOCK UNITS are subject to a VESTING SCHEDULE.
43
EQ
See equity.
44
A non-NMS stock.
OTC equity security
45
A SECURITY representing the RIGHT TO BUY OR SELL common stock at a specified price within a specified time.
equity option
See also nonequity option; option.
46
underwriting syndicate
See syndicate.
47
An individual who solicits customers, orders, or funds on behalf of a futures commission merchant (FCM) and is controlled by that member or an introducing broker (IB).
associated person of a member (AP)
48
A prolonged period of general economic decline.
Specifically, the GDP declines for at least six quarters in a row and is accompanied by high unemployment.
depression
49
TIC
See
tenants in common;
true interest cost.
50
FOMC
See Federal Open Market Committee.
51
Legally known as the Uniform Prudent Investors Act of 1994 (UPIA).
A modern adaptation of the PRUDENT MAN RULE, which, as a result of the development of modern portfolio theory, applies the STANDARD OF PRUDENCE to the ENTIRE PORTFOLIO rather than to INDIVIDUAL INVESTMENTS.
It requires the fiduciary to MEASURE RISK with respect to RETURN.
prudent investor rule
52
An off-the-trading-floor (upstairs) market maker who is incented by the NYSE to add liquidity.
supplemental liquidity provider (SLP)
The SLP trades only for its proprietary account and may compete with the on-floor Designated Market Maker in a stock listed on the NYSE.
The SLP must maintain a bid or an offer in an assigned stock at least 10% of the trading day.
53
Mainly wages, salaries, commissions, and interest income (as from bonds) taxed at the individual's marginal rate tax bracket.
ordinary income
54
A debt instrument issued by a bank that pays a fixed interest rate over a specific time period.
certificate of deposit (CD)
CDs are insured up to $250,000 by the FDIC. See negotiable certificate of deposit.
55
A retirement plan available to any individual with earned income.
traditional IRA
56
A type of 529 plan that allows contributors to purchase tuition credits or certificates at today's prices. Contributors bear no investment or inflation risk because the accounts are generally guaranteed to grow at a rate equal to college tuition increases.
prepaid tuition plans
57
Method of purchasing an annuity in which the annuitant deposits one lump sum of money into the account and elects to have the money remain in the account and accrue tax deferred until the annuitant elects to begin the payout phase at a later time (deferred).
single payment deferred annuity
58
(1) An individual or firm that charges a fee or commission for executing buy and sell orders submitted by a customer. (2) The role of a firm when it acts as an agent for a customer and charges the customer a commission for its services. See also agent; broker-dealer; dealer.
broker
59
The point at which gains equal losses.
breakeven point
60
An investment company to which Subchapter M of the Internal Revenue Code grants special status that allows the flow-through of tax consequences on a distribution to shareholders.
regulated investment company
61
A customer account established to provide retirement funds.
retirement account
62
An organization of 73 customer-owned lending institutions that provide credit services to farmers and mortgages on farm property.
Included in the system are the Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives.
See also Federal Intermediate Credit Bank.
Farm Credit System (FCS)
63
A form of plea bargaining under the Code of Procedure.
FINRA's Enforcement Department brings disciplinary actions against a respondent and, if the respondent agrees, the proposed settlement is accepted, all rights to a hearing are waived, and the respondent consents to the penalty submitted.
acceptance, waiver , and consent
64
Income derived from investments and other sources not related to employment services.
Examples of unearned income include interest from a savings account, bond interest, and dividends from stock.
See also earned income; passive income; portfolio income.
unearned income
65
The price of one country's currency in terms of another currency.
foreign exchange rate
Syn. exchange rate.
66
The careful investigation by the underwriting participants necessary to ensure that all material information pertinent to an issue has been disclosed to prospective investors.
due diligence
67
DMM
See designated market maker.
68
The account that holds funds paid by variable contracts issued by insurance companies. The funds are kept separate from the insurer's general account.
separate account
69
An accounting MEASURE used to determine an annuitant's proportionate interest in the insurer's separate account during a variable annuity's accumulation (deposit) stage.
accumulation unit
See also accumulation stage, annuity unit, separate account.
70
Dividing an investment portfolio among different asset categories such as stocks, bonds, cash, and tangible assets, such as real estate, precious metals, and other commodities.
asset class allocation
Syn. asset allocation.
71
An organization associated with an exchange to promptly and efficiently handle the confirmation, settlement, and delivery of securities transactions.
clearing corporation
Clearing corporations are also referred to as clearing firms or clearinghouses.
See clearinghouse.
72
A person who has passed an examination evidencing the knowledge necessary to supervise the business of a broker-dealer in a limited area of expertise such as investment company shares (e.g., Series 26).
limited principal
73
The term used to describe a bond that prints the name of the owner on the certificate but that has unregistered coupons payable to the bearer.
registered as to principal only
Syn. partially registered. See coupon bond; fully registered bond.
74
Template legislation written by the NCCUSL to serve as the basis for a STATE'S securities legislation if the state wished to adopt it.
It regulates securities, persons (broker-dealers and their agents and investment advisers and their representatives), and transactions in the securities markets within the STATE.
Uniform Securities Act (USA)
75
FHLMC
See Federal Home Loan Mortgage Corporation.
76
A trust that can be altered or canceled by the grantor.
During the life of the trust, income earned is distributed to the grantor, and only after death does property transfer to the beneficiaries.
revocable trust
77
The magnitude and frequency of changes in the price of a security or commodity within a given time period.
volatility
78
LONG OPTION HEDGE in which the investor neither gains nor loses.
The BREAKEVEN POINT is reached when the market price of the stock equals its purchase price PLUS the premium paid for the put.
breakeven long hedge
79
conversion rate
See conversion ratio.
80
ODD
See options disclosure document.
81
The measures taken by a broker-dealer firm to verify the identity of each customer.
Measures include obtaining unexpired photo identification, such as a valid driver's license or passport, and determining whether the customer's name appears on the U.S. Treasury's lists of known or suspected terrorists.
customer identification program (CIP)
82
The total market value of common stock into which a corporate debt instrument is convertible.
conversion value
83
A contract between an individual and an employer, labor union, government entity, or other institution that provides for the distribution of pension benefits at retirement.
pension plan
84
The potential for an investor to incur a loss as a result of buying or selling a particular security at an unfavorable time.
timing risk
85
The risk that an investment's returns could suffer as a result of political changes or instability in a country, such as from a change in government, nationalization of industries, military control, or tax codes.
political risk
86
See Treasury bill.
T-bill
87
A mutual fund commission or sales charge that is INCLUDED in the purchase price.
front-end load
See also back-end load; Class A share
88
A term commonly used in legal situations to describe a prohibited action.
proscribed
89
ADS
See American Depositary Receipt.
90
A legal power given to a third party to trade an account and add or withdraw funds.
full trading authorization
91
An account where a customer selects a member firm (the prime broker) to provide custody and other services, while other firms (the executing brokers) handle all trades placed by the customer.
prime brokerage account
92
Former name of the NYSE American Stock Exchange. This exchange should not be confused with the NYSE Amex Options Exchange.
American Stock Exchange
93
GNMA
See Government National Mortgage Association.
94
CUSIP
Committee on Uniform Securities Identification Procedures. A CUSIP number is a unique alphanumeric code assigned to that specific security by the CUSIP Global Services. The CUSIP number is used to expedite and reduce the risks associated with timely clearance and settlement.
95
The annual rate of return on a security, calculated by dividing the interest or dividends paid by the security's current market price. See also bond yield.
current yield
96
An order resulting from a broker-dealer recommendation. The resulting trade must be suitable for the investor.
solicited order
97
A nonprofit membership corporation created by an act of Congress to protect clients of brokerage firms that are forced into bankruptcy. Its membership includes all brokers and dealers registered under the Securities Exchange Act of 1934, all members of national securities exchanges, and most FINRA members.
Securities Investor Protection Corporation (SIPC)
98
A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares remains the same. See also stock split.
reverse split
99
A determination made by a registered representative as to whether a particular security matches a customer's objectives and financial capability. The representative must have enough information about each customer to make a reasonable judgment.
suitability
100
A method to electronically transfer funds from one person or institution to another.
wire transfer
101
A 401(k) plan for self-employed persons who have no other business plan in place, and whose only full-time employees are the proprietor and spouse.
self-employed 401(k) plan (solo 401(k))
102
A type of bond issued with a provision allowing the issuer to redeem the bond before maturity at a predetermined price. See also call price.
callable bond
103
FOK
See fill-or-kill order.
104
equity index annuity
See index annuity.
105
Empowers individual members to act on behalf of the partnership as a whole.
partnership account
106
An institutional investor permitted under SEC rules to trade privately placed securities with other QIBs without registering the securities with the SEC. A qualified institutional investor must have at least $100 million under management.
qualified institutional investor or buyer (QIB)
107
The fraudulent practice of simultaneously entering identical or nearly identical buy and sell orders for a security to create the appearance of active trading in that security.
matched order
108
The term used to describe an option that has no intrinsic value (e.g., a call option when the stock is selling below the exercise price, or a put option when the stock is selling above the exercise price). Seealso at-the-money; in-the-money; intrinsic value.
out-of-the-money
109
limited trading authorization
See limited power of attorney.
110
Any organization, association, or group of persons that maintains or provides a marketplace in which securities can be bought and sold. Examples include the New York Stock Exchange (NYSE), the London Stock Exchange (LSE), and the Tokyo Stock Exchange (TSE).
stock exchange
111
NMS
See National Market System.
112
This includes current stock price, the strike price, the time of expiration, the volatility of the stock price, the risk-free interest rate, and dividends expected during the life of the option.
factors affecting option pricing
113
stockholders' equity
See net worth.
114
The potential for an investor to experience losses owing to day-to-day fluctuations in the prices at which securities can be bought or sold. See systematic risk.
market risk
115
daily journal
Day book or diary. See blotter.
116
underwriting discount
See underwriting spread.
117
An insurance contract used to fund retirement. Cash values vary with the performance of a portfolio of investments. An insurance and securities license is required to present variable contracts.
variable annuity
118
Composite Average
See Dow Jones Composite Average.
119
A debt security issued by an authorized agency of the federal government. Such issues are backed by the issuing agencies themselves, not by the full faith and credit of the U.S. government (except GNMA and Federal Import Export Bank issues). See government security.
agency issue
120
A person who is supported financially by a person associated with the securities industry, including a parent, mother- or father-in-law, husband or wife, child, and any other individual to whom the person provides material support.
immediate family
121
Investment Company/Variable Contract Products Limited Principal
See Series 26.
122
The price being offered or bid by a market maker or broker-dealer for a particular security. Syn. quote. See also ask; bid; bond quote; stock quote.
quotation
123
The increase in value of an asset.
appreciation
124
(1) A violation of securities industry rules by selling securities and simultaneously agreeing to repurchase the securities in the future in an unbooked transaction. (2) The prohibited practice of maintaining the registration of an associated person who has left the securities business.
parking
125
An options transaction in which the buyer sells an option in the same series; the two transactions effectively cancel each other out, and the position is liquidated. See also closing purchase; opening sale.
closing sale
126
A limited partnership that aims to locate and recover undiscovered reserves of oil, gas, or minerals. Syn. wildcatting. See also developmental drilling program; income program.
exploratory drilling program
127
collateral trust certificate
See collateral trust bond.
128
The lowest price a security or commodity reaches during a specified time period. See also high.
low
129
The nickname for state regulations governing the securities industry.
blue-sky laws
130
A form of investment company that, as a regular policy, hedges its market commitments. It does this by holding securities it believes are likely to increase in value, and at the same time, is short other securities it believes are likely to decrease in value. The sole objective is capital appreciation. This type of fund is highly aggressive and generally available to sophisticated investors.
hedge fund
131
A security representing a loan by an investor to an issuer such as a corporation, municipality, the federal government, or a federal agency.
debt security
132
The acronym for the Financial Industry Regulatory Authority and the result of the cooperative effort of NASD and the NYSE to harmonize regulation in the securities industry.
FINRA
133
That portion of authorized stock not distributed (sold) to investors by a newly chartered corporation.
unissued stock
134
Not being required to do something that others are required to do.
exempt
135
The source of an investment company's dividend payments.
net investment income (NII)
136
Any goal a client hopes to achieve through investing. Examples include current income, capital growth, and preservation of capital.
investment objective
137
A qualified retirement plan that specifies the amount of money that the employer will contribute annually to the plan.
defined contribution plan
138
Companies that are listed on the Nasdaq Global Market that meet financial and liquidity requirements and agree to specific corporate governance standards.
Nasdaq Global Market Companies
139
face value
See par value.
140
Any unearned income in excess of a designated amount ($2,100 in 2019) received by a minor under age 19 (or 24 if full-time student) that is taxed to that minor, but at trust rates
kiddie tax
141
Generally, an instrument evidencing debt of, or equity in, a common enterprise in which an investment is made with the expectation of financial return.
security
142
A broker acting as an agent for another broker or dealer in trading municipal securities providing liquidity and anonymity. The broker's broker does not take positions in a security or transact orders for the public. See also broker's broker.
municipal broker's broker
143
A marketable U.S. government debt security with a maturity of 52 weeks or less. Syn. T bill.
Treasury bill
144
The interest rate that commercial banks charge their prime or most creditworthy customers—generally large corporations.
prime rate
145
(1) A supervisory employee at a broker-dealer. (2) A party in a transaction who is trading for the party's own account.
principal
146
The portion of the industry continuing education program that requires each firm to annually survey its needs and provide training relevant to those needs to all registered persons who have contact with the public. Those who supervise the aforementioned are covered as well. Any medium may be used to deliver the training, so long as it can be reasonably demonstrated to have been delivered.
firm element
147
UIT
See unit investment trust.
148
An account held in a corporation's name specifying which officers are authorized to trade in the account. A corporation must provide a copy of its charter and bylaws authorizing a margin account.
corporate account
149
The annuitization selection made by a holder of an annuity.
settlement option (variable or fixed annuity)
150
The loss incurred when a capital asset is sold for a price lower than the purchase price. See capital gain; long-term loss.
capital loss
151
FCA
See Farm Credit Administration.
152
The lowest of the yields calculated to the pricing to maturity, par, or call. A discount bond, for example, would be priced to maturity.
yield to the worst
153
An issuer with at least $75 million in public float value.
seasoned issuers
154
Certain assets set aside and pledged to a lender for the duration of a loan. If the borrower fails to meet obligations to pay principal or interest, the lender has claim to the assets.
collateral
155
A book of original entry in which a broker-dealer records on a daily basis every transaction, movement of securities, and cash receipt and disbursement. Syn. daily journal; diary; day book.
blotter
156
A financial instrument, which is included in the definition of a security, that contains a written promise by one party to pay another party a definite sum of money, either on demand or at a specified future date. The most common form on the exam is commercial paper.
promissory note
157
Corporations created by Congress to foster a public purpose such as affordable housing. Examples include the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage (Freddie Mac).
government-sponsored enterprises (GSEs)
158
A short-term debt security, usually maturing in five years or less. See municipal note; Treasury note.
note
159
The Federal Reserve Board's demand that a customer deposit a specified amount of money or securities when a purchase is made in a margin account; the amount is expressed as a percentage of the market value of the securities at the time of purchase. The deposit must be made within one payment period. Syn. Fed call; federal call; federal margin; Reg T call; T call. See also initial margin requirement; margin.
margin call
160
YTC
See yield to call.
161
Being morally and ethically above reproach; having integrity. A necessary trait for someone in this business.
probity
162
A specified collection of underlying assets that backs the income and/or principal payments of an asset-backed security (ABS). The pool of assets may be made up of mortgages, credit card receivables, leases, royalties, auto loans, or other receivables.
pool (asset-backed securities)
163
Private placement stock. Stock certificates are issued with a stamped notification that requires the fulfillment of a holding period before transfer. Syn. lettered stock; restricted security; Regulation D.
legend stock
164
Provides death benefits and cash values that vary with the performance of a portfolio of investments. An insurance and securities license is required to present variable contracts.
variable life insurance
165
A characteristic that permits the owner to assign, give, transfer, or sell it to another person without a third party's permission.
negotiable security
166
In accordance with SEC 15c2-11, firms that wish to make market in Pink Open Market or OTC Bulletin Board securities must file Form 211 with FINRA. See OTC Bulletin Board; piggyback exception.
non-Nasdaq registration
167
CPI
See Consumer Price Index.
168
A retirement plan that combines the characteristics of a Roth IRA with a corporate 401(k) plan.
Roth 401(k) Plan
169
A qualified retirement plan allowing employers to contribute to traditional IRAs (SEP-IRAs) set up for employees.
simplified employee pension plan (SEP)
170
Legislation adopted in most states that permits a gift of money or securities to be given to a minor and held in a custodial account that an adult manages for the minor's benefit until the minor reaches a certain age (not necessarily the age of majority). See Uniform Gift to Minors Act.
Uniform Transfers to Minors Act (UTMA)
171
The best price at which a stock can be bought and sold. The best ask price is the lowest. The best bid price is the highest. The difference between the two prices is also called the spread.
inside market
172
A term referring to the interchangeability of financial instruments having effectively identical features. Cash is fungible, as are most securities.
fungible
173
Printed document stating the trade date, settlement date, and money due from or owed to a customer. It is sent or given to the customer on or before the settlement date. See also dealer confirmation; duplicate confirmation.
customer confirmation
174
TIF
See transfer initiation form.
175
The transfer of funds from one qualified retirement plan to another. If this is not done within a specified time period, the funds are taxed as ordinary income.
rollover
176
A fee that is charged when mutual fund shares or variable annuity contracts are redeemed. It is typically found with Class B shares (and for one year with Class C shares). It declines annually, decreasing to zero over an extended holding period—up to eight years—as described in the prospectus. Syn. contingent-deferred sales load.
back-end load
177
house maintenance call
See margin maintenance call.
178
A U.S.-based cash equities stock exchange.
National Association of Securities Dealers Automated Quotations (Nasdaq)
179
ADR
See American Depositary Receipt.
180
Equity securities issued by a corporation and in the hands of the public. Issued stock that the issuer has not reacquired. See also treasury stock.
outstanding stock
181
A predictable long-term pattern of alternating periods of economic growth and decline. The cycle passes through four stages: expansion, peak, contraction, and trough.
business cycle
182
RR
See registered representative.
183
Selling options or futures as protection against a decrease in the value of a long securities or actuals position. See also buying a hedge; hedge; long hedge; selling a hedge.
short hedge
184
An industry that is growing faster than the economy as a whole as a result of technological changes, new products, or changing consumer tastes.
growth industry
185
A short-term municipal debt security issued in anticipation of revenue to be received.
revenue anticipation note (RAN)
186
(1) A director, officer, or other affiliate of an issuer. (2) A stockholder who owns at least 10% of any class of a corporation's outstanding voting securities. See also affiliate; insider.
control person
187
Any article reprint that meets certain standards designed to ensure that the reprint was issued by an independent publisher and was not materially altered by the member.
independently prepared reprint (IPR)
188
SAI
See statement of additional information.
189
LLC
See limited liability company.
190
A printed advertisement that solicits indications of interest in a securities offering. The text is limited to basic information about the offering such as the name of the issuer, type of security, names of the underwriters, and where a prospectus is available. See omitting prospectus.
tombstone
191
The body of rules that describes how FINRA functions, defines its powers, and determines the qualifications and registration requirements for brokers.
FINRA bylaws
192
Amendments to the Investment Company Act of 1940 requiring, in particular, that sales charges relate to the services a fund provides its shareholders. See Investment Company Act of 1940.
Investment Company Act Amendments of 1970
193
A person may be subject to a statutory disqualification (not permitted to work in the securities industry) if the person is enjoined temporarily or permanently from violating securities laws by a court of competent jurisdiction; is barred or suspended from association with a broker-dealer by the SEC, the Commodities Futures Trading Commission (CFTC), a self-regulatory organization (SRO), or foreign equivalent; or has been convicted of any felony or certain misdemeanors within the past 10 years. See Securities Exchange Act of 1934.
statutory disqualification
194
The rate of interest a brokerage firm charges its margin account clients on their debit balances.
call loan rate
195
See return on investment.
ROI
196
The potential that an investor might not be able to sell an investment when desired without adverse price disruption. Syn. marketability risk.
liquidity risk
197
A market indicator composed of 20 transportation stocks. See also average; Dow Jones Composite Average; Dow Jones Industrial Average; Dow Jones Utilities Average.
Dow Jones Transportation Average (DJTA)
198
JTWROS
See joint tenants with right of survivorship.
199
T-bond
See Treasury bond.
200
A measure of a securities price. (For example, a bond's price of 1 point is equal to 1% of the par value of $1,000, or $10. In stock, 1 point is $1 per share.) See also basis point.
point
201
A municipal bond that is exempt from federal income tax, as long as no more than 10% of the proceeds benefit private entities.
public purpose bond
202
A market-value-weighted index that offers broad coverage of the securities market. It is composed of 400 industrial stocks, 40 financial stocks, 40 public utility stocks, and 20 transportation stocks. The index is owned and compiled by Standard & Poor's Corporation. See also index; Standard & Poor's Corporation; Standard & Poor's 100 Index.
Standard & Poor's Composite Index of 500 Stocks (S&P 500) (SPX)
203
An accounting method used to assess a corporation's inventory in which it is assumed that the last goods acquired are the first to be sold. The method is used to determine cost basis for tax purposes. The IRS designates last in, first out as the order in which sales or withdrawals from an investment are made.
last in, first out (LIFO)
204
IRC
See Internal Revenue Code.
205
A mutual fund that invests its assets in a wide range of common stocks. The fund's objectives may be growth, income, or a combination of both. See also growth fund; mutual fund.
diversified common stock fund
206
A firm's designated proprietary trader on the Chicago Board Options Exchange (CBOE) who is required to maintain continuous two-sided bid and ask quotes in all the option series in all of the allocated option classes.
designated primary market maker (DPM)
207
Gives an employee the right to purchase a specified number of shares of the employer's common stock at a stated price over a stated time period.
stock options
208
(1) The date on which the Internal Revenue Service considers a taxpayer to have received dividends or other income. (2) Determined by when the recipient, company, or individual of the income has control over it.
constructive receipt
209
trade blotter
See blotter.
210
A mutual fund whose stated investment policy is to have, at all times, some portion of its investment assets in bonds and preferred stock, as well as in-common stock, in an attempt to provide both growth and income. See also mutual fund.
balanced fund
211
The interest rate charged by one institution lending federal funds to another.
federal funds rate
212
A corporation or trust that uses the pooled capital of many investors to invest in direct ownership of either income property or mortgage loans. REITs that are traded on exchanges or OTC are considered very liquid. Real estate is not.
real estate investment trust (REIT)
213
Circumstances or conditions that oppose the client's best interest, thus enabling a member or AP to benefit from a relationship with a client.
conflict of interest
214
The Code of Procedure, Code of Arbitration Procedure, and Uniform Practice Code by which FINRA regulates its member firms.
FINRA Rules
215
A debt security of lower-than-investment grade offering higher yields with greater risk.
high-yield security
216
syndicate manager
See underwriting manager. Syn. Bookrunner; main underwriter.
217
An institution in the business of raising capital for corporations and municipalities. An investment banker may not accept deposits or make commercial loans. Syn. investment bank.
investment banker
218
The charge for the privilege of borrowing money, usually expressed as an annual percentage rate.
interest
219
stated value
See par value.
220
The contract that establishes guidelines for the operation of a direct participation program, including the roles of the general and limited partners.
agreement of limited partnership
221
A portion of a whole share of stock most commonly found with mutual funds.
fractional share
222
An SEC rule that sets the requirements for selling or purchasing restricted, unregistered, or control securities.
Rule 144
223
All tangible property, including securities, real estate, and other property, held for the long term.
capital asset
224
In an exchange market, the hierarchy of bid and offer ranking according to the number of shares involved. See also parity; priority.
precedence
225
To effect the transaction offered by an option, right, or warrant. For example, an equity call holder exercises a call by buying 100 shares of the underlying stock at the agreed-upon price within the agreed-upon time period, or the use of a right granted under a contract. For example, a futures call holder exercises by buying the underlying futures at the agreed-upon ("exercise") price within the agreed-upon time period.
exercise
226
A term used in the Internal Revenue Code to describe any trust over which the grantor or other owner retains the power to control or direct the trust's income or assets.
grantor trust
227
The amount an investor pays for an option above its intrinsic value. It reflects the amount of time left until expiration. The amount is calculated by subtracting the intrinsic value from the premium paid. See also intrinsic value.
time value
228
Legislation that permits a gift of money or securities to be given to a minor and held in a custodial account that an adult manages for the minor's benefit. Income and capital gains transferred to a minor's name are usually taxed at the minor's rate. However, if the child is under a specified age and has unearned income above a certain level, those earnings are taxed at the parent's rate. See Uniform Transfers to Minors Act.
Uniform Gifts to Minors Act (UGMA)
229
A legal authorization for someone other than the beneficial owner of an account to make investment decisions in the account.
limited power of attorney
230
The amount added to a mutual fund share's net asset value to arrive at the offering price. See also mutual fund; net asset value; no-load fund.
sales load
231
An accounting process whereby the initial cost of a bond purchased at a premium is decreased to reflect the basis of the bond as it approaches maturity. See also accretion of bond discount.
amortization of bond premium
232
The first date on which a security is traded without entitling the buyer to receive distributions previously declared. Syn. ex-dividend date; ex-warrants; ex-rights; ex-distribution.
ex-date
233
A security that need not be in formal compliance with a given piece of legislation, such as the Securities Act of 1933 or the Uniform Securities Act as adopted by a state. Examples include U.S. government and municipal securities. No security is exempt from the antifraud provisions of any securities legislation.
exempt security
234
The procedure by which investment bankers channel investment capital from investors to corporations and municipalities that are issuing securities.
underwriting
235
Any employee, manager, director, officer, or partner of a member broker-dealer or another entity (e.g., issuer or bank), or any person controlling, controlled by, or in common control with that member, is considered an associated person of that member.
associated person
236
An accounting method, used to assess a company's inventory, in which it is assumed that the first goods acquired are the first to be sold. The same method is used by the IRS to determine cost basis for tax purposes. See also average basis; last in, first out; share identification.
first in, first out (FIFO)
237
Long-term debt with demand "put" provision requiring the issuer to repurchase the bonds on notice from the bondholder at a price equal to the principal and accrued interest.
demand bonds
238
(1) A tax deduction that compensates a business for the cost of certain tangible assets. (2) A decrease in the value of a particular currency relative to other currencies.
depreciation
239
A mutual fund whose investment objective is to provide stable income with a minimal capital risk. It invests in income-producing instruments that may include corporate, government, or municipal bonds.
bond fund
240
A form of joint ownership of an account whereby a deceased tenant's fractional interest in the account passes to the surviving tenant(s). See also tenants in common.
joint tenants with right of survivorship (JTWROS)
241
The form supplied by a partnership, LLC, or S corporation to owners indicating their proportionate share of income/loss to be reported on their Form 1040 tax returns.
Schedule K-1
242
CMO
See collateralized mortgage obligation.
243
Any person who opens an account with a broker-dealer. A customer may be classified in terms of account ownership, trading authorization, payment method, or types of securities traded.
customer
244
An investor who acts on the belief that a security or the market is falling or is expected to fall. See bull.
bear
245
The collective online communications channels dedicated to community-based input, interaction, content-sharing, and collaboration.
social media
246
An order that is left on the specialist's book until it is either executed or canceled. Syn. open order.
good-till-canceled order (GTC)
247
Fannie Mae
See Federal National Mortgage Association.
248
An option contract that may be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American-style.
American-style option
249
An unsecured promissory note issued with a minimum face value of $100,000. It evidences a time deposit of funds with the issuing bank and is guaranteed by the bank. Syn. Jumbo CD.
negotiable certificate of deposit (CD)
250
quote
See quotation.
251
The redemption by an issuer of a portion of an outstanding bond issue before the maturity date. See also catastrophe call; in-whole call; mandatory call.
partial call
252
NAV
See net asset value.
253
BD
See broker-dealer.
254
MSRB
See Municipal Securities Rulemaking Board.
255
A written authorization for someone other than the beneficial owner of an account to make deposits and withdrawals and execute trades in the account. See also limited power of attorney
full power of attorney
256
The time when standard securities transactions are settled. The Uniform Practice Code sets the standard payment period. The type of security being traded determines the amount of time allowed for regular way settlement. See also cash transaction; settlement date.
regular way settlement
257
marketability risk
See liquidity risk.
258
A direct participation program that purchases equipment for leasing to other businesses on a long-term basis. Tax-sheltered income is the primary objective of such a partnership.
equipment leasing limited partnership
259
FINRA rules permit payment of commissions to retired registered representatives or their beneficiaries that accrue from certain ongoing investments, as long as such compensation is called for in a bona fide contract.
continuing commissions policy
260
The price paid for an asset, including any commissions or fees, used to calculate capital gains or losses when the asset is sold. Also includes any reinvested distributions.
cost basis
261
A trust or bank engaged by a company to maintain records of investors.
transfer agent
262
An investment company that sells redeemable shares in a professionally selected portfolio of securities. See fixed unit investment trust; nonfixed unit investment trust; unit of beneficial interest.
unit investment trust (UIT)
263
A margin account in which the equity is less than the Regulation T initial requirement. See also equity; initial margin requirement; margin account; retention requirement.
restricted account
264
A debt obligation backed by the issuing corporation's general credit. Syn. unsecured bond.
debenture
265
The day-to-day costs incurred in running a business, such as out-of-pocket expenses for labor, materials, supplies, and so forth.
operating expenses
266
FINRA rules that outline ethical trade practices to be followed by member firms in their dealings with the public.
Member Conduct Rules
267
The expected number of months, years, or decades over which the investments will be made to achieve a particular financial goal.
time horizon
268
Financial institutions, such as broker-dealers, banks, thrifts, casinos, must file a suspicious activity report (SARs) with the Treasury Department's Financial Crimes Enforcement Network (FinCEN) whenever customer activity appears out of the ordinary or illegal.
suspicious activity report (SAR)
269
The amount of equity a customer must deposit when making a new purchase in a margin account. See also margin; margin call.
initial margin requirement
270
Investment Company/Variable Contract Products Limited Representative
See Series 6.
271
See OTC Bulletin Board.
bulletin board
272
Of the three Nasdaq market tiers, has the least stringent listing requirements.
Nasdaq Capital Market
273
The price, usually a premium over par value, at which a bond or preferred stock may be redeemed at the discretion of the issuer.
call price
274
A member of an exchange who is eligible to execute orders for customers of a member firm on the floor of the exchange. Syn. floor broker.
commission house broker (CHB)
275
A tax-deferred defined contribution retirement plan offered by a private-sector employer.
401(k) plan
276
The securities market that deals in short-term debt, such as debt maturing in less than one year (e.g. Treasury bills, commercial paper).
money market
277
publicly traded fund
See closed-end investment company.
278
An annuity payout option that covers two or more people, with annuity payments continuing as long as one of the annuitants remains alive.
joint life with last survivor
279
A market in which buyers enter competitive bids and sellers enter competitive offers simultaneously. The NYSE is an auction market. Syn. double auction market.
auction market
280
A form of business organization in which its total worth is divided into shares of common stock, with each share representing a unit of ownership. A corporation is characterized by a continuous life span and its owners' limited liability.
corporation
281
A long-term debt security issued by a corporation to finance its capital improvements and operations.
corporate bond
282
The information return filed by a partnership or LLC. Because income and losses flow through to owners, the entity pays no tax.
Form 1065
283
One of several types of zero-coupon bonds and notes "stripped" of their coupons and issued by brokerage firms and collateralized by Treasury securities. See also Treasury receipt.
Treasury Investors Growth Receipt (TIGR)
284
To convey ownership of a security or another asset for money or value.
sale
285
A financial statement spanning a period showing the accounting profit or loss for the period.
income statement
286
minimum margin requirement
See margin maintenance requirement.
287
A corporate debt security, such as a bond or debenture, that is exchangeable for the equity securities of the issuing corporation at a specified price or rate.
convertible bond
288
A fraud committed or attempted using the identifying information of another person without authority.
identity theft
289
Adjusted basis is used to compute the gain or loss on the sale or other disposition of the asset or security.
adjusted (cost) basis
290
The sale of a security that the seller does not own, or any sale consummated by the delivery of a security borrowed by or for the account of the seller.
short sale
291
The potential for an investor to be adversely affected by changes in investment or tax laws.
legislative risk
292
DPP
See direct participation program.
293
Bonds issued in a series over a given period. All the bonds in the series have the same priority claim against assets. See also serial bond.
series bond
294
house maintenance requirement
See margin maintenance requirement.
295
A general economic decline lasting from 6 to 18 months (at least two consecutive quarters of declining or negative GDP growth).
recession
296
An account at a broker-dealer where a number of the firm's services, including advisory service, custody, and trading, are wrapped together for an annual charge based upon the assets in the account.
wrap account
297
Under Rule 415, an SEC provision allowing issuers to register a new issue security without selling the entire issue at once. The issuer can sell limited portions of the issue over a two-year period, and for WKSI companies, a three-year period without reregistering the security.
shelf registration (offering)
298
STRIPS
See Separate Trading of Registered Interest and Principal of Securities.
299
An unregistered, nonexempt security acquired either directly or indirectly from the issuer—or an affiliate of the issuer—in a transaction that does not involve a public offering.
restricted security
300
A period of high unemployment in the economy accompanied by a general rise in prices. See also deflation; inflation.
stagflation
301
An order to sell a security that is entered at a price below the current market price and that is triggered when the market price touches or goes through the sell stop price.
sell stop order
302
A form of business organization requiring a minimum of two participants.
partnership
303
An investment company, such as an open-end management company (mutual fund) or closed-end management company, that is registered with the SEC.
registered investment company
304
Allow an investor to qualify for reduced sales charges. They are available for subsequent investment and do not apply to initial transactions; allow the investor to use prior share appreciation and reinvestment to qualify for break-points; and do not impose time limits.
rights of accumulation
305
An options (or futures) transaction in which the seller buys back an option in the same series; the two transactions effectively cancel each other out, and the position is liquidated. See opening purchase.
closing purchase
306
A provision of an issue's registration statement that allows an underwriter to buy extra shares from the issuer (thus increasing the size of the offering) if public demand proves exceptionally strong. The term derives from the Green Shoe Manufacturing Company, which first used the technique.
green shoe option
307
Facilitate trading in foreign securities in the U.S. domestic markets. Sometimes these are shown as ADS (American Depositary Shares) and are similar to a GDR (Global Depositary Receipt), which is traded outside the United States.
American Depositary Receipt (ADR)
308
FINRA's formal method of handling securities-related disputes or clearing controversies between members, public customers, clearing corporations, or clearing banks. Any claim, dispute, or controversy between member firms or associated persons is required to be submitted to arbitration. The MSRB has no arbitration rules except to say its members are subject to FINRA's Code of Arbitration.
Code of Arbitration Procedure
309
IRA
See individual retirement account.
310
An annuity that does not qualify for tax deductibility of contributions under IRS codes.
nonqualified annuity
311
An individual's total earnings derived from wages, passive business enterprises, and investments. See also disposable income.
personal income (PI)
312
A tax that takes a larger percentage of income from high-income earners than that of low-income earners (e.g., the graduated income tax). See regressive tax.
progressive tax
313
A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years.
Treasury bond
314
DJTA
See Dow Jones Transportation Average.
315
sales charge
See commission.
316
A standard form that duplicates the back of a stock certificate and is used for transferring the stock to the new owner's name. Syn. irrevocable stock power; power of substitution.
stock power
317
In a qualified retirement plan, a formula for calculating contributions and benefits that must be applied uniformly so as to ensure that all employees receive the same treatment. See also qualified retirement plan.
nondiscrimination
318
A part of the U.S. Department of the Treasury that collects information from financial institutions and coordinates with law enforcement to combat money laundering.
Financial Crimes Enforcement Network (FinCEN)
319
PE ratio
See price-earnings ratio.
320
The Registered Options Principal License qualifies the holder to supervise the sale and trading of options. A Series 7 is a prerequisite. Every FINRA member firm engaged in trading options must employ at least one registered options principal.
Series 4
321
The annual rate of return on a common or preferred stock investment. The yield is calculated by dividing the annual dividend by the stock's purchase price. See also current yield; dividend.
dividend yield
322
A repayment schedule for a bond issue in which the entire issue comes due on a single date. Syn. term bond. See maturity date.
term maturity
323
FINRA's formal procedure for handling trade practice complaints involving violations of the Member Conduct Rules. FINRA's Department of Enforcement is the first body to hear and judge complaints. Appeals and review of Department of Enforcement decisions are handled by the National Adjudicatory Council.
Code of Procedure (COP)
324
A fund and management style that focuses on undervalued companies.
value fund
325
A person or organization that trades securities in larger share quantities or dollar amounts. Institutional investors are covered by fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves. Examples would be member firms, banks and savings and loan associations, insurance companies, mutual funds, government entities, any entity with $50 million or more in total assets, or any person acting solely on behalf of an institutional investor.
institutional investor
326
CTR
See currency transaction report.
327
COP
See Code of Procedure.
328
A balloon maturity refers to a large number of an issuer's bonds that become due at the same time. Compare term bonds.
balloon maturity
329
Delivery of the certificate by the seller and payment by the buyer on settlement date—currently T+2 for the regular way.
good delivery (time)
330
Options of the same class that have the same exercise price and the same expiration date. See also class; type.
series
331
general securities sales supervisor
See Series 9; Series 10.
332
Web CRD
See Central Registration Depository.
333
The difference in price between the public offering price and the price an underwriter pays to the issuing corporation. The difference represents the profit available to the syndicate or selling group. Syn. underwriting discount; underwriting split.
underwriting spread
334
The second level of Nasdaq service. Through a desktop quotation service, it provides up-to-the-minute inside bid and ask quotations and the bids and asks of each market maker for a security. See also National Association of Securities Dealers Automated Quotation System.
Level 2
335
A sum of money left with a bank (or borrowed from a bank and left on deposit) that the depositing customer has the right to withdraw at any time.
demand deposit
336
See margin maintenance call.
maintenance call
337
The annual rate of return on a bond investment. Types of yield include nominal yield, current yield, yield to maturity, and yield to call. See current yield, nominal yield.
bond yield
338
The invitation to bid on a municipal bond issue. The invitation is sent to prospective underwriters and specifies, among other things, the date, time, and place of sale; description of the issue; maturities; and call provisions, as well as the amount of good faith deposit required.
official notice of sale
339
(1) The payment to the sponsor of a direct participation program for managing and administering the program. (2) Fees that are paid out of fund assets to its investment adviser for investment portfolio management. (3) The portion of the underwriting spread paid to the managing underwriter.
management fee
340
A mutual fund that seeks to provide stable current income by investing in securities that pay interest and/or dividends.
income fund
341
A broker-dealer that clears its own trades as well as those of introducing (correspondent) brokers. A clearing broker-dealer can hold customers' securities and cash. Syn. carrying broker.
clearing broker-dealer
342
The segment of the securities market that deals in instruments with more than one year to maturity—that is, long-term debt and equity securities.
capital market
343
The basic level of Nasdaq service. Through a desktop quotation service, it provides registered representatives and public subscribers with up-to-the-minute inside bid and ask quotations on over-the-counter stocks.
Level 1
344
The potential profit to be made from exercising an option. A call option is said to have intrinsic value when the underlying stock is trading above the exercise price. See also time value.
intrinsic value
345
SEC rule allowing nonregistered foreign and domestic securities to be sold to certain qualified institutional investors in the U.S. without a holding period. See ORF; QIB.
Rule 144A
346
The number of shares of stock that a corporation may legally issue. This number is stipulated in the corporation's state-approved charter and may be changed by a vote of the corporation's stockholders.
authorized stock
347
"A registered trader that is obligated to maintain a fair and orderly market for specific securities assigned to the firm. Formerly known as specialists, they provide NBBO quotes, facilitate liquidity, open and close securities and furnish trading feedback to brokers."
designated market maker (DMM)
348
An unsystematic risk. Generally, the concern is that an issuer will be unable to meet its debt obligations as they come due. See credit risk.
financial risk
349
The risk that changes in regulations may negatively affect the operations of a company.
regulatory risk
350
Money paid for work performed or a service provided.
remuneration
351
MA
See municipal advisor.
352
The amount of a security either owned (a long position) or owed (a short position) by an individual or a dealer.
position
353
The amount of money remaining in a customer's account after all commitments have been paid in full. Syn. credit record; credit register. See also debit balance.
credit balance (CR)
354
A public offering of securities that combines aspects of both a primary and a secondary offering. A portion of the issue is a primary offering, the proceeds of which go to the issuing corporation. The remainder of the issue is a secondary offering, the proceeds of which go to the selling stockholders. Syn. combined distribution. See also primary offering; secondary offering.
split offering
355
A promise made to bondholders found in a debt issue's trust indenture that identifies bondholders' rights and other provisions. Examples include rate covenants that establish a minimum revenue coverage for a bond; insurance covenants that require insurance on a project; and maintenance covenants that require maintenance on a facility constructed by the proceeds of a bond issue.
covenant
356
contingent deferred sales load
See back-end load.
357
A procedure that the buyer of a security follows when the seller fails to complete the contract (fails to deliver the security). The buyer closes the contract by buying the security in the open market (buy-in) and charges the account of the seller for transaction fees and any loss caused by changes in the markets (if any). See sell-out.
buy-in
358
The minimum equity that must be held in a margin account, determined by the broker-dealer and FINRA. The amount of equity required varies with the type of security bought on margin, and the broker-dealer's house requirement is usually higher than that set by FINRA. Syn. house maintenance requirement; maintenance requirement; FINRA maintenance requirement.
margin maintenance requirement
359
Mandates a locate requirement with regard to short sales. Before entering a short sale order, members are required to locate the security to be assured that delivery can be made on the settlement date. The locate requirement applies to short sales in all equity securities.
Regulation SHO
360
CHB
See commission house broker.
361
The specified date on which an option buyer no longer has the rights specified in the option contract.
expiration date
362
T-note
See Treasury note.
363
A feature offered by a mutual fund allowing an individual to transfer an investment in one fund to another fund under the same sponsor without incurring an additional sales charge.
exchange privilege
364
Material nonpublic information (MNPI) a person obtained or used for the purpose of trading in securities. See also material fact.
inside information
365
The number of shares of common stock per par value amount that a holder would receive following a conversion of a convertible bond or preferred share. Syn. conversion rate.
conversion ratio
366
An SEC regulation that fosters competition between markets/exchanges and competition among orders.
Regulation NMS
367
The strike price expressed in total dollars. The aggregate exercise price for a standard July 40 call contract is $4,000 (100 shares at $40 per share).
aggregate exercise price
368
Party initiating a demand for arbitration to FINRA or the NFA.
claimant
369
An evaluation of a corporate or municipal bond's relative safety, according to the issuer's ability to repay principal and make interest payments. Bonds are rated by various organizations such as Standard & Poor's and Moody's. Ratings range from AAA or Aaa (the highest) to C or D (company in default).
rating
370
A period of general economic decline, which is one of the business cycle's four stages. See business cycle.
contraction
371
See Securities and Exchange Commission.
SEC
372
See sector fund; specialized fund.
foreign fund
373
A stockholder's legal right to maintain a proportionate ownership by purchasing newly issued shares before the new stock is offered to the public. See also right.
preemptive right
374
A qualified retirement plan that specifies the total amount of money that the employee will receive at retirement.
defined benefit plan
375
An annuity payout option that guarantees the annuitant a monthly check for the longer of a certain period or the annuitant's death. If the annuitant dies before the period expires, the payments go to the annuitant's named beneficiary for the duration of the certain period.
life annuity with period certain
