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Series 6A
Key Concepts
| Question | Answer |
|---|---|
| Registered Representative | Licensed employee of a FINRA member firm. |
| Principal | Regestered supervisor at a B/D firm |
| Disqualification of RR | Any felony,securities, money related or misdemeanor convictions within the last 10 years |
| Variable Annuity | An insurance company contract, contributions invested in separate account, earnings are tax-deferred. |
| Product RR may sell | Mutual funds(Open Ended Funds); Unit Investment Trust, ETFs (new issue); Face Amount Certificate Companies; Closed-Ended Funds (new issues); Variable Insurance Products(with appropriate insurance license) |
| If RR quit | have two year grace period to rejoin the industry. After two years, must retake test. |
| Margin rate of Taxation | The amount paid on the last dollar earned. |
| Learning about Customer | Know you customer prior to making a recommendation.Discretionary Income =(Total income-expenses);Net worth = Assets-Liabilities |
| Bond Buyers | Like bankers, lend money and demand interest. |
| Stock Buyers | Business owners, invest money, hope for profits and price appreciation. |
| Market Risk (US government bonds) | Free of risk, not totally risk free. Could lose money due to interest rate risk, if bonds sold prior to maturity. |
| Bonds Investment | Do not protect customer against inflation. |
| Equity Holdings | May preserve customer s purchase power. |
| Suitability | The major regulatory concern when making recommendations. |
| Telephone Consumer Protection Act of 1991 | Customer Service/help information lines are Exempt from the imposed time constraints. |
| New Account Form: Minimum Required Information (Industry rule) | Name, Home address(no PO Box), DOB, SSN and Signatures open RR and approving Principal must be obtained. Customer's are not required to sign. |
| Recordkeeping | All Identification records from customer must be retained for five years after account closing; Verification of customer identity must be retained for five years after record made. |
| Customer Accounts | Consumers must be have the to ability to opt out of the firm's policies on disclosing nonpublic financial to affiliated third parties. |
| Tax Reporting Joint Accounts | All taxable events occurring in a joint account are reported under one SSN. |
| UGMA/UTMA: Custodial account | A model statue used to govern the giving of property to minors and the prtecton of those assets. |
| UGMA/UTMA: details to remember | Payment of taxes is the responsibility of the child; Earnings subject to "Kiddie tax"; Gifts are irrevocable; Assets are transferred at the age of majority. |
| Limited POA | Buy Stock, Sell Stock |
| Full POA | Buy Stock, Sell Stock, Remove money from account, Remove securities from account. |
| Discretionary Accounts | Giving a 3rd party the ability to buy and sell in a customer's account w/o prior permission before each transaction. Third party authorization is often given to investment advisor and brokers.. |
| "Blue Sky" | State registration, the firm,the RR and the security being sold may all have to be registered in a given state. |
| Financial Changes | RRs should amend/update account paperwork for any customer who has experienced a major financial change. |
| Money Market Fund | "safe Haven" for investors who are unsure of a proposed investment. |
| Account Information | Is confidential. It can only be released to a third party with the owner's permission or if the disclosure statement is demanded by a court order or government investigation. |
| Frozen Account | The account is frozen for 90 days for failure to pay for transactions on a timely basis. |
| Customer Account | must be written. Must be handled by a principal. |
| SIPC (Special Investor Protection Corporation) | A not-for-profit corporation funded through member assessments. NOT part of the US Government. Insures each separate account for up to $500,000(with a $100,000 limit on cash). |
| Nontaxable Interest Income | Tax exempted interest |
| Earned Income | Income received in returned for or through personal services, wages; salaries; also include self-employment income from a business. |
| Tax-deferred Income | Subject in income tax. A benefit to investor because the money that would have been paid in taxes remain invested, The taxpayer is often in a lower tax-bracket during retirement when the funds are usually withdrawn and subject to taxation. |
| Federal Income taxes | Progressive taxes: rate of taxation increased as income increases. Other taxes are regressive; have a proportionately greater impact on those with lower income. Lower incomes spend more of their incomes for good/service than those w/ higher incomes. |
| Tax Credit | A dollar of tax credits is worth more to a taxpayer than a dollar of tax deductions: Reduces taxes directly. |
| Tax Deductions | Reduces taxable income. |
| Mutual Fund's Cost Basis made up of: | The original investment; Any additional investment; Any reinvestments |
| Holding Periods | The holding period of a capital asset is long term, it is more than one year. If the asset is held one year or less before it is sold, the holding period is short-term. |
| Short Selling | Is a bearish strategy; Has unlimited loss potential ( unlimited risk); Always results in a short term capital gain or loss. |
| Cash Dividend | Paid by corporation are taxed at a preferential rate. Under current law, the rate is the same as long-term capital gains. |
| Mutual Fund Dividend | Generally taxed at ordinary income. |
| Retirement Plan Taxation | The majority of plans grow on a tax-deferred basis; After tax contributions become part of the plan's cost basis; Plans funded exclusively with per-tax contributions have a zero basis; A return of capital (typically after tax contributions) is not taxed; |
| Retirement Plan Taxation (continued) | Retirement plans do not received preferential capital gains treatment |
| Types of Options | Options are sometimes called derivatives; Each options represents one round lot for (100 shares); Options buyers have rights; Options writers take on obligations. |
| Corporate Chart Stocks | Investor legal status: Owner; Maturity: None; Relative Bankruptcy claim: Junior: Investor Objective: Share potential profits & growth. |
| Corporate Chart Bonds | Investor's legal status: Creditor; maturity: fixed; Relative bankruptcy claim: senior; Investor Objective: Interest and repayment of principal |
| Sole Proprietorship | One Person ownership; unlimited liability; tax statues: P&L reported on owner's individual tax return; length of life dependent on events. |
| General Partnership | partner ownership; unlimited liability; tax status: P&L reported on partner's individual tax returns; length of life dependent on events. |
| Corporation | Ownership: Shareholders: Liability Limited: Tax status: P&L reported on Corporate tax return; Length of life unlimited. |
| Corporate Voting | Shareholders do NOT vote for dividends |
| Cumulative Voting | May benefit minority shareholders by allowing them possible board representation. |
| Stock Split/Stock dividend | No cash paid out, not considered to be taxable events. |
| Treasury Stock | Has no voting rights; Does not receive dividends; Is purchased by the issuer to increased earnings per share. |
| Option | Always expressed on a per share basis; to get dollar cost (multiple premium of $3 x 100=$300) cost of contract. |
| Rights | Expiration: Short-term(usually days); Exercise Price: Below the current market value; Secondary Market Trading: Yes; Issued by Company: Yes. |
| Options | Expiration: Middle Term(Usually up to 9 months); Exercise Price: Above or below the current market value; Secondary Market Trading: Yes; Issued by Company: No. |
| Warrants | Expiration: Long Term(years or perpetual); Exercise Price: Above the current market value; Secondary Market Trading: Yes; Issued by Company: Yes. |
| ADRs (American Depository Receipts) | Are dollar denominated; Pay dividends in US dollars; May be subject to foreign taxation on dividends; Are subject to currency risk; May lack voting rights. |
| Preferred Stock | Is considered equity; Trades like bonds; Is sensitive to interest rate changes; Lacks voting rights; Has dividend preference over common; Has liquidation preference over common. |
| Principal, par value, face amount | Are different ways of describing a bond's $1000 loan amount. |
| Coupon payments | Always based on a bond's $1000 principal balance. |
| Final payment due Bondholder | Is par value plus the final coupon. |
| Bond Pricing | One point in fixed income securities equals $10 per bond. One point is equities equals $1 per shares. |
| Bond Risk | Bonds with coupons below the current rate will probably sell at a discount. Bonds with coupons above the prevailing rate will probably sell at a premium. |
| Bond Trading at Par | A bond's current yield, nominal yield and yield to maturity will all be equal to the issue's coupon rate. |
| Relative Yield Ranking(Par Bond) | Nominal: Same; Current: Same; YTM Same. |
| Relative Yield Ranking(Premium Bond) | Nominal:Highest; Current:Middle; YTM Lowest. |
| Relative Yield Ranking(Discount Bond) | Nominal: Lowest; Current:Middle; YTM Highest. |
| Duration | Measures the degree to which a bond's price changes when interest rate change. |
| Callable issues | Are subject to early retirement at issuer's discretion; Will often more than $1000 if called; Are typically called when interest rates are low; Usually carry higher coupons when compared with non-callable issues. |
| US Government Securities | Are virtually free of default risk, but are still subject to interest rate risk. |
| Treasury Bills | (Initial maturity) 30 days to 1 year; Interest Payment: None-issued at a discount;Pricing: Discounted Yield basis. |
| Treasury Notes | (Initial maturity; 2-10 years; Interest Payment: Semiannual; Pricing: Percentage of par and 1/32nd. |
| Treasury Bonds | (Initial maturity: 10-30 years; Interest Payments: Semiannual; Pricing: Percentage of par and 1/32nds. |
| Treasury Strip | Discounted security; Issued by the US Government; Direct obligation of the US Government. |
| Treasury Receipt | Discounted security; Issued by broker/dealer; NOT A direct issue of the US Government. |
| GNMA Pass Through Certificates | Make monthly payments to investors; Make payment made up of interest and principal; Pay rates are often highest than treasuries; Are guaranteed by the US Government. |
| General Obligations (GO) | State of; county of; City of; Town/Township; School district. |
| Revenue | Transportation Terms(turnpike, bridge,; Hospital/Health Care; Water/Sewer; College/Dormitory; Authority. |
| Series EE Bonds | Are purchased at 1/2 of face value and accrue interest. Non-negotiable |
| Series HH Bonds | Are purchased at face value and pay interest semiannually. Non-negotiable |
| Municipal Bonds | Not backed by the federal government. Are subject to both default and interest rate risk. |
| Debenture Bond | Unsecured; issuer promise |
| Guaranteed Bond | Unsecured; issuer and another corporation's promise. |
| Mortgage | Secured, Land and building |
| Equipment Trust | Secured, Machinery(planes, trains, railroad equipment) |
| Collateral Trust | Secured, Securities or royalty payments. |
| US Treasury Bills | Interest Payments: None-Issued at a discount; Pricing: discount Yield basis; Federal Taxation: Yes; State/Local tax: NO |
| Treasury Notes and Bonds | Interest Payments: Semiannual; Pricing: 1/32s; Federal Taxation: Yes; State/Local tax: NO |
| Municipal Bonds | Interest Payments: Semiannual; Pricing: Decimal; Federal Taxation: NO; State/Local tax: Varies |
| Corporate Bonds | Interest Payments: Semiannual; Pricing: Decimal; Federal Taxation: Yes; State/Local tax: Yes |
| Investment Companies | Are packages of securities. Brokerage and other financial service providers distribute these packages. |
| UITs (Unit Investment Trust | Invest in a fixed portfolio of securities; Are referred to as shares of beneficial interest(SBs); Are redeemable; have finite life; Are supervised as opposed to actively managed;DO NOT offer direct reinvestment back into the original trust. |
| Closed End Funds | Buyers in secondary market DO NOT receive a prospectus. |
| Mutual Fund buyers | Are always purchasing new shares and must receive prospectus at or before the time of sale. May sell(redeem) their shares back to the fund. Closed-end shareholders must find a buyer for their on the open market. |
| Sales charges | Are levied against mutual fund buyers; Are expressed in % terms |
| Commissions | Are charged to closed-end fund buyers and sellers in the secondary market. They are expressed in dollar terms. |
| Subchapter M | Investment companies that distribute a minimum of 90% of the net investment income will only be taxed on their undistributed or retained earnings Companies that meet this minimum standard are referred to s regulated investment companies. |
| Investment Company tax Information | Investors receive tax information via form 1099-Div. |
| Board of Directors | Shareholders vote for, CAN NOT vote to receive more dividends |
| Investment Advisory Contracts must be initially approved by: | A majority of the voting shares; A majority of the disinterested board members. |
| Investment Advisory Contracts Renewal | Must be renewed annually; by a majority of the voting shares or board members; A majority of the disinterested board members. |
| Transfer Agent/Custodian | Are NOT involved in making investment decisions regarding changes to the portfolio. |
| Sales Literature | There is no requirement for brokerage firm to resubmit"unapproved" sales literature to FINRA prior to distribution. RRs are still required to get these material reviewed internally prior to distribution. |
| Confusing Situations | RRs are advised to consult with their principal. |
| Money Market Funds | Are often a suitable location for investors to park assets during periods of uncertain market conditions or when they are considering their next investment. |
| US Government Funds | Are not direct obligations of the government, are not guaranteed by the US Government. Investors may lose money due to interest rate risk. |
| Index Funds | Are passively managed and typically have very low cost structures. |
| Precious Metal & Natural resources | May provide a hedge against inflation. |
| Covered Call Writing | Portfolio managers may employ an income generation options strategy, in an attempt to increase a fund's overall return |
| NAV (Net Average Value | is the fund's bid price. It is what customers receive when they redeem(sell) shares. |
| POP (Public Offering Price) | Is the fund's Ask or offer price. It is what customers pay when they buy shares. |
| Price Forwarding | Sellers of mutual funds receive the next day calculated NAV. Buyers pay the next calculated POP. |
| To Charge the maximum 8.5% Sales charge | A fund must offer: Reinvestment of NAV; Rights of Accumulation; Breakpoints. |
| Letter of Intent | Have a maximum life of 13 months; May be backdated for up to 90 days; Are NOT binding on the investor. |
| Breakpoint discounts | Are based on the dollar amount invested. |
| Rights of Accumulation Discounts | Are usually based on the greater of the dollar amount invested or the market value of the account. |
| Front-end Load(1940 Plan)Sales Charge Limits | Maximum 50% of first year's payments; Maximum of 9% over the life of the plan. |
| Spread Loan (1970 Plan) Sales Charge Limits | Maximum of 20% of any one payment; Maximum o 16% average of the first year's payment; Maximum of 9% over the life of the plan. |
| Front Load Contractual Plan Refund | Within 45 days: Full refund of sales charges plus current NAV; 46 days to 18 months: Refund of all sales charges above 15% plus current NAV; after 18 months: Current NAV. |
| Spread Load Contractual Plan Refund | Within 45 days: Full refund of sales charges plus current NAV; 46 days to 18 months: Current NAV; after 18 months: Current NAV. |
| Dollar Cost Averaging: | Is the purchase of the same dollar amount at fixed intervals; Provides no guarantee of profitability; Will result in an average cost that is lower than the average price (assuming a fluctuating market). |
| Mutual Fund Federal Regulation | Must send out liquidation proceeds within 7 calendar days of receipt of a customer's redemption request. |
| Exchanges | Switching or Exchanging between various funds within a fund complex(family) is a taxable event. |
| Prospectus | may NOT be modified, summarized or altered in any manner. |
| Mutual funds | Required to furnish Annual reports to the SEC; Semiannual reports to shareholders; Prospectus at or before time of purchase; Statement of additional information upon request. |
| Reinvestment | of dividends and capital gains is taxable and increases the cost basis. |
| No reinvestment | dividends and capital gains is taxable impact on Cost basis stays the same |
| 12b-1 Fees Approval | Initial approval: by majority of the Board, disinterested board members and voting shareholders; Annual Renewal: Majority of board,and disinterested board members. |
| Life Insurance Premiums pay: | Sales charges; State premium taxes; Administration fees. |
| Insurance General Account | Receives premiums from traditional insurance products such as fixed annuities; Conservative investment profile; An investment risk to the Insurance Company. |
| Insurance Separate Account | Receives premium from variable products, such as variable annuities; Investment profile varies by sub-account; An investment risk to the contract owner. |
| Term Life Insurance Features | Temporary insurance; Subject to rising premiums; No investment or savings features; Offers "pure protection" only. |
| Whole Life Insurance Features | Permanent insurance; Level premiums; Fixed death benefits; Builds cash value; Invest in the general account. |
| Universal Life Insurance Features | Permanent insurance; Flexible premiums; Flexible death benefits; Build cash value; Invested in the general account. |
| Variable Life policy Loans | Insurance companies typically allow the policy holder to borrow at least 75% of the cash value; If separate account performance deteriorates, policy holders have a limited time period(often 31 days) to repay at least a portion of the outstanding loan. |
| Variable Life Insurance Features | Permanent insurance; Fixed premiums' Build cash value; Invested in the separate account; Fluctuating death benefits, but with a guaranteed minimum. |
| Variable Universal Life Insurance Features | Permanent insurance; Fixed premiums; Build cash value; Invested in the separate account; Guaranteed minimum death benefits. |
| Conversion Privilege | Variable contract owners may convert their policy to whole life within two years from the date of issuance, often without presenting evidence of insurability. |
| Variable Contract Sales Practices | Projections are prohibited; Rates used in illustrations are not guaranteed; 12% is the maximum rate of growth that may be used in an illustration. |
| Life Insurance Death Benefits | Pass free to taxation to the beneficiary; Are potentially subject to estate taxation. |
| Accumulative Units | Are purchased by investments made into variable contracts. (annuities) |
| Variable Annuities and Sub-account Investments | Are not a separate category of investment company. They are set up as open-end management companies or as Unit Investment Trust. |
| Fixed Annuities | Insurance Product only; State Insurance Regulated; Placed in General Account; State Insurance license required; Invest in Fixed income securities and real estate; Is not inflation protected; Deferred tax. |
| Variable Annuities | Securities and Insurance product; Regulated by SEC/FINRA/state insurance; State insurance and Series 6 or 7 license required; Investment varies(depending on sub-account selections); Potentially inflation protected; Tax deferred. |
| Payout options | May NOT be changed once a contract has been annualized. |
| Straight Life Payout Options | is appropriate for an investor who is looking to maximize the periodic payout on a given sum of money and has no concerns about residual payment to a spouse or other beneficiary. |
| Annuitized Contract Tax Treatment | Annuities do NOT generate capital events and therefore, do NOT receive preferential long term capital gains treatment. The taxable portion of a distribution will be subject to ordinary income tax rates. |
| Annuitized Contract Tax Treatment (after Tax) | Contracts funded with after-tax dollars may be a combination of the original principal and earnings. The original principal is distributed tax free and the earnings are taxable as ordinary income. |
| Single Distributions | From an annuity are taxed on a LIFO basis. Earning are withdrawn prior to contributions and are taxable as ordinary income. |
| Early Distribution | Annuity holders making premature distributions may be subject to a 10% penalty on the taxable portion of the distribution. |
| Death Benefits | On an Annuity during the accumulation period is the greater of the current market value or the contributions made into the contract. Death benefits do NOT apply once the contract has been annuitized. |
| Death Benefits Tax Treatment | On annuity contracts do NOT pass tax free to the beneficiary. Any benefit above the contract's cost basis is taxable. |
| Retirement Plans Pre-Tax Contributions | Reduces a customer's reported income and lowers his current tax bill; Are taxable as ordinary income upon distribution. |
| ERISA | Regulates private sector retirement plans. |
| Defined Benefits | Benefit;Employer bears the Investment risk; Employer funded. |
| Defined Contributions | Contributions; Employee bears the investment risk; Funded by employee and/or employer |
| Qualified Annuity | Assume zero cost basis. |
| IRA acceptable Investments | Stocks, bonds, Mutual funds, Annuities, and US minted coins. |
| IRA Prohibited Investments | Insurance, Collectables (art, stamps, gems and antiques); Short-term stocks, Margin trading, and Speculative option trading. |
| 2011 Tax Status of Contributions | Fully deductible (56,000 or less(dingle) 90,000 or less (joint) All pretax; Partially Deductible: between $56,000 and 66,000(single); 90,000 and 110,000(joint)Pretax and after tax ; Non Deductible: Over 66,000 (single) over 110,000(joint)all after tax. |
| IRA- Work Sponsored Plan | Workers how are not active participants may always deduct IRA contributions. Deductibility of contributions made by workers who participate in qualified plans is dependent on their income level. |
| Preferential Capital Gains Treatment | Never received by IRA and other retirement accounts Any tax liability is payable at ordinary income rates. |
| Rollover | Customers wishing to move assets from a work sponsored plan to an IRA may wish to do a trust-to trustee transfer to avoid the 20% withholding requirement. |
| Roth IRA | Income limit: Phase Out (single) 107,000-122,000(joint 169,000-179,000AGI;$5000 contribution limit; Always Post tax; tax-deferred; No mandatory distributions; tax free if withdrawal is qualified. |
| Traditional IRA | No income limit; contribution limit 2011 5,000 up to age 701/2; pre tax or post tax (income dependent); tax deferred; Age 701/2 Mandatory distribution; Taxable portion is ordinary income. |
| Coverdell Education Savings Plan | Maximum contribution is $2,000 per year; Contributions are nondeductible; No taxation on earnings used for a qualified education; Account balances may be transferred to another relative;Eligibility is subject to income limits. |
| Section 529 Plans | Maximum contribution determined by individual plan; Contributions are nondeductible; No taxation on earnings used for a qualified education; Account balances may be transferred to another relative; No income limits for eligibility. |
| The Securities Act of 1933 | Regulate Primary(new issue) Market activity |
| The Securities Act of 1934 | Regulate Secondary(current/trading Market activity |
| SROs | Do NOT have power to imprison rule breakers. |
| Registration Statement | Exempt issuers are not required to file with the SEC; Non-Exempt issuers must file with SEC. |
| Firm Commitment Underwriter | Act as Principal; retain unsold shares; Sale will not be canceled if minimum amount is not sold; |
| Best Effort Underwriter | Act as Agent; return unsold shares; Sale will not be canceled if minimum amount is not sold. |
| All or None Underwriter | Act as Agent; return unsold shares; Sale will be canceled if minimum amount is not sold. |
| Minimax | Act as Agent; return unsold shares; Sale will be canceled if minimum amount is not sold. |
| Agent (new issues) | are middlemen who do not take risk. |
| Principal/dealers | Purchase shares for inventory and take risk. |
| Underwriter Procedure | Preregistration period( prepare registration statement seek other to join syndicate); Cooling off period(sends preliminary prospectus to potential purchaser, may not sell offering expected price); post registration period ( final prospectus sent) |
| Indication of Interest | RRs may not accept any part of the purchase price from the customer during the waiting period. The firm will return any money sent in by customer during the cooling-off period if the funds were meant as a deposit on the new offering. |
| Post Registration Period | At or prior to completing the transaction, custs must be sent a copy of the final prospectus, containing the public offering price. "completion: of the transaction": happens on the day the cust pays for the new issues & the shares placed in the account. |
| Exempt Issuers and Securities | US government(T-bills, notes, bonds); US government agencies ( GNMA. FNMA. SLMA); Municipal issuers( state and local governments/authorities); Nonprofit/religious Org. No Exemption for Anti-fraud rules; Short-term securities w/maturity of 270 days or less |
| Regulation D | Most private offers are sold, may not be sold to more than 35 non-accredited purchasers |
| Registered Securities at State Level | Filing(called Notification in some states); Coordination; Qualification. |
| FINRA IPO Rule | A brokerage firm's employees are prohibited from buying shares of an initial POP of equity securities at the POP. |
| Stabilization | The syndicate may NOT purchase stock in the secondary market at a price that exceeds the POP. Stabilization may occur at prices at or below the Public offering price |
| Back away | A market maker fails to honor its quote is committing a FINRA rule infraction |
| NASDAQ | To facilitate trading is broken down into three distinct tiers with different listing requirements. These are the Global Select Market(largest companies) , Global Market and Capital market (smallest companies) |
| FINRA Financial Industry Regulatory Authority | Resulted from the Maloney Act in 1938. |
| Insider Trading | SC rules prohibit anyone from buying or selling a security in possession of material, nonpublic information about the issuer. Applies not only to those who work for an issuer, but to anyone who is tipped off by an insider. |
| Insider Trading Penalty | fine up to $5,000,000 and/or twenty years in prison. |
| Diversified Investment Companies | No more than 25% of board may be interested persons, at least 75% must be disinterested board members. no more than 5% of total assets may be invested in securities of any 1 corp. Diversified portion will not cause it to own more than 10% of voting stock. |
| Federal Telemarketing Rule | Existing customers and help/information lines are exempt from the time constraints imposed by the Telephone Consumer Protection Act of 1991 |
| Conduct Rules | FINRA rule related to the fair and ethical treatment of customers and on the personal activities of RRs. |
| Code of Procedure | Due process for disciplinary actions against RRs and member firms. govern sanctions for rule breakers. |
| Code of Arbitration | Dispute resolution process to settle disputes between member firms, between member firms and customer, between member firm and RR. Money disputes. No appeal process. |
| Principal | Must approve advertising and Sales literature prior to use by RR. |
| Customer Communication | Correspondence, sales literature, advertising. |
| FINRA Supervisor Rule | Caller Principal; must carry out responsibilities as described in broker/dealer written procedures, RR must be assigned to a specific principal for supervision. |
| FINRA Rule (Investment co and variable contract Sales Literature and advertising) | The Max. rate of return may be used in a variable product illustration ins 12%. |
| Outside business activity | RR engaged in outside business activity to provide prior written notification to their firm. (Exclude volunteer work) |
| RR Opening Account at Another Firm | Notify the employer B/D of the intent to open the account(prior to opening); Disclose to the RR that the employer will be notified; Furnish copies of trade confirmations and/or account statements to the employer firm upon request. |
| Customer payment under Regulation T | A customer is required to pay for his transaction with 5 business days,habitually late customers will have their accounts FROZEN for 90 days. |
| Regulation T Customer payment | Payment date is settlement date +2 business days. REMEMBER: Settlement date and payment date are both based on the security's trade date, as long as we know the settlement date, we can also figure out the payment date. |
| The Ex-Dividend Date | For stocks is two business days prior to the record date. For Mutual funds is whatever date is determined by the fund's BOD. For most fund, this is usually the day after the record date. |
| Good Delivery Rule (certificates) | Must be properly endorsed(signed) on the back; If unsigned, must be accompanied by a signed stock power.; Must be delivered in acceptable denominations(100 share "round lot" or "odd lot divisible by 100; Must be in good physical form( by transfer agent) |
| Simple Arbitration | The amount under dispute does not exceed $100,000. |
| Business Cycle | Expansion, peak, Recession, Trough |
| Recession | When there a two consecutive quarters of declining Gross domestic Products. |
| Hedging Against Inflation | Investors would purchase variable insurance/annuity products or precious metals mutual funds. |
| Keynesian Economic Theory | Fiscal Policy; controlled by Congress,signed by the President; Pass bills to decrease or increase spending and taxes. Recession-increase gov spending to stimulate economy; reduce spending to reduce inflationary pressure. |
| Monetary Economic Theory(Monetarism) | Money supply is key to events like business cycle; Increased money supply results in inflation(more money fewer goods) decrease money supply results in recession (rise in interest rates) Set by FRB(Fed Reserve Board) |
| Fed Fund | When Feds increase the money supply, interest rates fall, when decreased interest rates rise. When feds sell gov securities in open market operations the money supply decreases and interest rates rise. |
| Open Market Operations | Are the most frequently used monetary policy tool of the Fed. |
| Discount Rated | Set by the FRB. The Fed funds rate is determined by market forces. |
| Exchange Rate & International Trade | US importer prefer a "strong "dollar;(foreign goods are cheaper to purchase for US consumers) US exporters prefer a "weak" dollar.(foreign goods more expensive to purchase) |
| Principal | A term used to describe the original investment amount of a customer position. |
| Principal | Also known as par value and face value, the amount a bond-holder received when a bond matures. |
| Principal | The role that an underwriter assumes in a firm commitment underwriting. |
Created by:
coderman
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