Random #8

Question 1

stock bashing

Answer 1

Stock bashing occurs when false information is used in ads in order to cause stock prices to decrease

Question 2

bear raiding

Answer 2

Dumping shares on the market to lower price then buying back to manipulate the market

Question 3

Interest rate swap

Answer 3

an agreement between two parties to exchange one stream of interest payments for another, over a set period of time. Swaps are derivative contracts and trade over-the-counter. No cash changes hands

Question 4

private fund advisors are exempt from registering with the SEC unless their assets =

Answer 4

Over 150M; Small advisor exemption is under 25M

Question 5

FINRA 3240

Answer 5

prohibits FINRA member firms or individuals from loaning or accepting loans from clients unless they are their parents, siblings, in-laws, or any other immediate family. Co-workers can loan each other money only if advisory business and/or investing are conducted.

Question 6

4 elements of technical analysis

Answer 6

price and volume, indicators, identification, and charts

Question 7

Emerging affluent category

Answer 7

$75,001-$150,000 and does not factor in net worth.

Question 8

Arbitrage

Answer 8

when investors buy mutual fund assets at cheap prices and then sell them elsewhere at higher rates. This can occur when an investor has an exchange traded fund.

Question 9

The Securities Act of 1933

Answer 9

first federal law to establish regulations for securities. The Securities Act of 1933 was created by legislators with the intent of assisting investors in making more educated investment decisions.

Question 10

current ratio

Answer 10

liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year.

Question 11

Systematic Risk

Answer 11

Natural disaster, pandemic, etc.

Question 12

Un-systematic Risk

Answer 12

Something within the company, litigation, regulatory changes, etc.

Question 13

Calculate sustainable growth rate

Answer 13

taking the company’s return on equity times the result of 1 minus the dividend payout ratio.

Question 14

Rule 4370

Answer 14

Firms that are members of FINRA must sustain a written business continuity program that outlines how the firm will fulfill its existing commitments to its clients.

Question 15

Diffreniate between strong-form, semi-strong form and weak form efficient market hypothesis

Answer 15

Strong form EMH is the theory that all information, including private information, is already factored into market prices of securities. Semi-strong form EMH is similar, but states that private information may be used to predict future price movements (although insider trading is still illegal). Weak form states that some publicly available information related to fundamental analysis may be used to predict future price movements.

Question 16

When an IA leaves a firm and the industry who has to inform the state administrator?

Answer 16

When an investment adviser representative leaves a federally registered investment adviser it is the investment adviser representative’s responsibility to notify the state securities Administrator.

Question 17

ETF trades most like

Answer 17

common stock

Question 18

How do hedge funds differ from a mutual fund?

Answer 18

Hedge funds are not regulated under securities law. They are not required to determine their share price daily. Open-end mutual funds are required to determine their share price a minimum of once every business day, at the close of the NYSE.