Term
| No, the I in IRA stands for INDIVIDUAL |
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Definition
| Can a husband and wife open a joint IRA account? |
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Term
|
Definition
| What is the insufficient distribution penalty for not pulling out your money from an annuity by 70 1/2? |
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Term
the end of the year following the IRA owner's death
5 |
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Definition
| The first payment to the beneficiary of an IRA must begin by _________ or the beneficiary must take out the money over the next ________ years. |
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Term
| Higher contribution limits |
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Definition
| What is the advantage of a self-employed 401K (SOLO 401k)? |
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Term
| A. contents of a preliminary prospectus |
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Definition
The securities exchange act of 1934 covers all of the following except:
A. Contents of a preliminary prospectus
B. anti-fraud statutes
C. registration of persons
D. Reporting by public companies |
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Term
|
Definition
All of the following investments are redeemable except:
A. open-end funds
B. closed-end funds
C. Unit Investment Trusts
D. Series EE bonds |
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Term
| bring the complain to his principal's attention |
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Definition
| Whenever a registered representiative receives a written compliant from a customer, he must: |
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Term
| C. Jennifer has violated a rule against selling dividends |
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Definition
| Jennifer Johnson has a client who is an income-oriented investor. Knowing that the B-town Equity Income Fund is about to pay a dividend of $7.45 per share, Jennifer recommends that the client purchase the fund promptly in order to receive the upcoming dividend. What is true of this situation? A. The fund is unsuitable for an income investor B. Jennifer has made a suitable recommendation C. Jennifer has violated the rule against selling dividends D. Jennifer has committed a violation known as selling away |
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Term
| long term gain of $1.00 per share |
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Definition
| Grandma Sweeny purchased 10,000 sahres of the ABC Equity Income Fund back in 1984, with the NAV at $9.92 and the POP at $10. Grandma dies and wills all 10,000 shares to you. On the date of death the NAV is $12. If you redeem the shares 9 months later with the NAV at $13 and the POP at $13.25, your capital gain will be: |
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Term
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Definition
| The maximum gift that a donor may make to an UGMA account for tax year 2009 is: |
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Term
| B. $50,000 taxed as ordinary income |
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Definition
A school teacher participated in her school districts 403(b) plan for 23 years. During her employment the school district contributed $30,000 to the plan. At retirement the teacher takes a lump-sum distribution of $50,000. What is the tax treatment of this distribution?
A. $20,000 taxed as ordinary income
B. $50,000 taxed as ordinary income
C. $20,000 taxed at long-term capital gain rates
D. $50,000 taxed at long-term capital gain rates |
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Term
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Definition
Under the conduit theory which of the following would be taxable to the mutual fund?
I. Unrealized Capital Gains
II. Undistributed net income
III. Net income disributed to shareholders representing 90% + of net income
A. I only
B. II only
C. I, III
D. III only |
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Term
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Definition
Which of the following is a plan for state and local government employees?
A. 403b
B. Section 457
C. Traditional IRA
D. SIMPLE IRA |
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Term
| A. net income from dividends and interest paid on securities in the fund's portfolio |
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Definition
The net investment income from an open-end investment company equals:
A. net income from dividends and interest paid on securiteies in the fund's portfolio
B. Dividends, interest, and capital gains on sales of portfolio securites
C. only net capital gains on sales of portfolio securities
D. all profits from the investment company's operations |
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Term
|
Definition
| Gillian is a college student studying forensic account and art history at a large land grant university. Gillian earned $1,100 last year waiting tables. She also earned $500 delivering pizzas, using a company-owned vehicle. If Gillian also received $1,400 in T-bill interests, she may contribute how much to her Traditional Individual Retirement Account? |
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Term
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Definition
| a favorable tax treatment achieved if a company distributes 90%+ of net income to shareholders |
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Term
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Definition
| document stating the trade date, settlement date, and money due / owed for a securities purchase or sale. Delivered on or before the settlement date. |
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Term
|
Definition
| a defensive investment strategy in which an investor tries to maintain a constant dollar amount in the account, meaning that securities are sold if the account value rises and purchased if it goes down. |
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Term
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Definition
| the date the IRS considers an investor to have put his grubby little hands on a dividend, interest payment, retirement plan distribution, etc. |
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Term
| Consumer Price Index (CPI) |
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Definition
| a measure of inflation / deflation for basic consumer goods and services. When rising, represents the greatest risk to most fixed-income investors. |
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Term
|
Definition
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Term
| Contingent Deferred Sales Charge |
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Definition
| associated with B-shares, the sales charge is deducted from the investor's check with she redeems / sells her shares. The charge is deferred until she sells and is contingent upon when she sells - the sales charges decline over time, eventually disappearing after 7 years, at which point the B-shares become A-shares in order to keep everything nice and simple. |
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Term
|
Definition
| the practice of paying retired registered representatives and principals commissions on business written while still employed with the firm, e.g. 12b-1 fees on mutual funds and annuities |
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Term
|
Definition
| phase of the business cycle associated with general economic decline, recession or depression |
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Term
|
Definition
| a plan allowing the participant to gradually accumulate mutual fund shares by paying regular installments to a plan company. Not legal in all states due to complexity of rules and high sales loads. |
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Term
|
Definition
| the money you put into a retirement plan subject to the limits imposed by the plan. |
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Term
| Conversion / Exchange Privilege |
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Definition
| a feature offered by many mutual funds whereby the investor may sell shares of one fund in the family and use the proceeds to buy another fund in the family at the NAV (avoiding the sales load). All gains / losses are recognized on the date of sale / conversion for tax purposes. |
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Term
|
Definition
| the number of shares of common stock that the holder of a convertible bond or preferred stock would receive upon conversion. |
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Term
|
Definition
| A bond convertible at $50" has a conversion ratio of what? |
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Term
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Definition
| a preferred stock or corporate bond allowing the investor to use the par value to buy shares of the company's common stock at a set price. |
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Term
|
Definition
| a minimum 20-day period that starts after the registration statement is filed. No sales or advertising allowed during this period, which lasts until the effective or release date. |
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Term
|
Definition
| under FINRA rules = a letter / fax / email to existing clients, or a letter, fax, or email sent to fewer than 25 prospects in a 30-day period. |
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Term
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Definition
| the amount that has gone into an investment and has been taxed already. For stock, includes the price paid plus commissions. For variable annuity, equalsthe after-tax contributions into the account. Investors pay tax only on amounts above this. |
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Term
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Definition
| a.k.a. "nominal yield". The interest rate stated on a bond representing the percentage of the par value received by the investor each year. For example, a bond with one at 5% pays $50 per bond to the holder per year. Period. |
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Term
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Definition
| a position in which an investor generates premium income by selling the right to buy stock the investor already owns, and at a set price. |
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Term
|
Definition
| a.k.a. default of financial risk. The risk that the issuer's credit rating will be downgraded, or that the issuer will default on a debt security. |
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Term
| Cumulative Preferred Stock |
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Definition
| preferred stock where missed dividends go into arrears and must be paid before the issuer may pay dividends to other preferred stock and / or common stock. |
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Term
|
Definition
| the risk that the value of the US dollar versus another currency will have a negative impact on business and investors. |
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Term
|
Definition
| annual interest divided by market price of the bond. |
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Term
|
Definition
| an identification number / code for a security |
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Term
|
Definition
| an investment account in which a custodian enters trades on behalf of the beneficial owner, who is usually a minor child. |
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Term
|
Definition
| maintains custody of a mutual fund's securities and cash. Performs payable / receivable functions for portfolio purchases and sales. In an UGMA, the adult named on the account who is responsible for the investment decisions and tax reporting. |
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Term
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Definition
| a person who opens an investment account with a broker-dealer. |
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Term
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Definition
| a term of fundamental analysis for an industry that is sensitive to the business cycle. Includes steel, automobiles, mining, and construction equipment. |
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Term
|
Definition
| a person who buys or sells securities for his / its own account, taking the other side of the trade. Buys securites from and sells securities directly to a customer, as opposed to a broker, who merely arranges a trade between a customer and another party. |
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Term
|
Definition
| the amount payable to the beneficiary of a life insurance (or annuity) contract, minus any outstanding loans and / or unpaid premiums. |
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Term
|
Definition
| the schedule for repayment of interest and principal on a debt security. |
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Term
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Definition
| the date the Board declares a dividend. |
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Term
|
Definition
| when the issuer of the bond stiffs you. |
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Term
| Although the Fund seeks to preserve the value of your investent at $1.00 er share, it is possible to lose money by investing in the fund. |
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Definition
| A money market fund that does not present itself as a stable value does not need to disclose what information? |
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Term
| At or before the presentation |
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Definition
| When should a prospectus be delivered? |
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Term
|
Definition
| Correspondence sent to 25 prospects or more is considered |
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Term
|
Definition
| What is the length of time that communications with the public must be kept by a firm? |
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Term
| the person has either made a transaction with your firm in the past 18 months, currently holds a secuirty position with your firm, or is the broker-dealer of record for an account of the person you are pestering |
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Definition
| What does it mean to have a business relationship with a firm? |
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Term
|
Definition
| Any firm that has been busted by the SEC, any SRO, or the Commodity Futures Trading Commission and is thereby required to taperecord all telephone conversations between registered persons and customers and store those recordings for 3 years, monitor them, and send reports to FINRA every quarter. |
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Term
| Office of Supervisory Jurisdiction (OSJ) |
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Definition
| any office of a member at which any one of the following functions take place: order execution / market making, structureing of public offerings, maintaining custody of customers' funds, etc. |
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Term
| Office of Supervisory Jurisdiction |
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Definition
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Term
| name, address, whether customer is of legal age, signatures of rep and member, and names of persons authorized to transact business on behalf of the account. |
|
Definition
| What information must you gather when opening an account for a customer? |
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Term
| up to 2 months in country, 3 months out of country |
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Definition
| How long can a member hold a customers mail? |
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Term
| because it gives your principal / firm no opportunity to supervise your activities |
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Definition
| Why is selling away a violation? |
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Term
| A. List of all portfolio holdings |
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Definition
All of the following information is typically found in a mutual fund prospectus except:
A. list of all portfolio holdings
B. dividend and capital gains distribution policy
C. Performance figures for 1, 5, 10 years and "life of fund"
D. top 10 portfolio stocks |
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Term
|
Definition
A registered representative works for XYZ Broker-Dealers, a firm with a dealer agreement with the ABC Mutual Fund complex. The registered representative will host a seminar this week at which she plans to use a computer slide show and a prepared script. If the representattive also plans to distribute a prospectus, which of the following must be filed with FINRA as sales literature?
I. The slide presentation
II. The Script
III. The prospectus
A. I only
B. II only
C. I, II, III
D. I, II |
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Term
|
Definition
| How frequently should mutual funds report to shareholders? |
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Term
| D. Also referred to as "asset-based sales charges" |
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Definition
Which of the following statements is true concerning 12b-1 fees?
A. may not be charged by any "no load company"
B. also referred to as "custodial charges"
C. may be used to cover management fees
D. also referred to as "asset-based sales charges" |
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Term
|
Definition
| the risk that the issuer of the bond will stiff you. Measured by S&P and Moody's with their fancy little lettering system (AAA, Aaa, and down the scale). |
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Term
|
Definition
| A company that can perform well even during rough economic times. For example, food and basic clothing represent two products purchased through both good and bad economic times. |
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Term
|
Definition
| an annuity that delays payments of income, installments, or a lump sum until the invetor elects to receive it. Usually subject to surrender charges during this period. |
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Term
| Deferred Compensation Plan |
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Definition
| a non-qualified business plan that defers some of the employee's compensation until retirement. |
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Term
|
Definition
| SEC notification of additions or corrections that an issuer must make to a registration statement before the offering can be cleared for distribution. |
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Term
|
Definition
| a qualified corporate pension plan that, literally defines the benefit payable to the retiree. |
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Term
| Defined Contribution Plan |
|
Definition
| a qualified corporate plan that defines the contriution made on behalf of the employee e.g. profit sharing, 401(k) |
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Term
|
Definition
| a general drop in the level of prices across the economy, usually connected to an economic slump |
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Term
|
Definition
| the change in ownership of a security that takes place when the ransacion setles. |
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Term
| Department of Enforcement |
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Definition
| FINRA enforcers of the member conduct rules, a group you never want to hear from, especially by certified mail |
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Term
|
Definition
| 6 quarters (18 months) or longer of economic decline |
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Term
| Designated Examining Authority |
|
Definition
| another name for an SRO or Self-regulatory organization, e.g., CBOE or FINRA |
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Term
|
Definition
| a reduction in the earnings per share of comon stock, often due to convertible bonds or preferred stock being converted to common stock |
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Term
|
Definition
| the difference between the (lower) market price for a bond and the par value |
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Term
|
Definition
| any bond traded below the par value |
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Term
|
Definition
| interest rate charged by the 12 Federal Reserve Banks to member banks who borrow from them |
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Term
|
Definition
| authority given to someone other than the account owner to make trading decisions for the account |
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Term
|
Definition
| the money you take out of a retirement plan |
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Term
|
Definition
| the period during which an individual receives payments from an annuity |
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Term
|
Definition
| the cost of distributing / marketing a mutual fund, including selling, printing prospectuses and sales literature, advertising and mailing prospectuses to new / potential clients. Covered by sales charges / 12b-1 fees. |
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Term
|
Definition
| a FINRA member firm that bears distribution costs of a fund upfront, profiting from the sales charges aid by the investors. AKA "sponsor" "underwriter" "wholesaler" |
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Term
|
Definition
| purchasing securities from many different issuers, or industries or geographic regions to reduce nonsystematic risk |
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Term
|
Definition
| complies with an SEC rule so that no more than 5% assets are invested in a particular stock or bond and so that the fund does now own more than 10% of any issuer's outstanding stock. Often called the 75-5-10 rule, where the 75 means that only 75% of the assets have to be diversified this way. |
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Term
|
Definition
| money paid from profits to holders of common and preferred stock whenever the Board of Directors is feeling especially generous |
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Term
|
Definition
| the amount of dividends paid divided by the earnings per share. |
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Term
|
Definition
| annual dividends dividd by market price of the stock. Equivalent to currently yield for a debt security |
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Term
| Dividend / Income Distributions |
|
Definition
| disributions from a fund to the investors made from net investment income |
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Term
|
Definition
| investing fixed dollar amounts regularly, regardless of share price. Usually results in a lower average cost compared to average of share prices, as investors' dollars buy majority of shares at lower prices. |
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Term
|
Definition
| a person who makes a gift of money or securities to another |
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Term
| Dow Jones Industrial Average |
|
Definition
| an index comprised of 30 large companies |
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|
Term
| Down Jones industrial Average |
|
Definition
|
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Term
|
Definition
| a closed-end fund with two classes of stock: income shares and capital shares. The income shares receive dividends and interest, while the capital shares receive capital gains distributions. |
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Term
|
Definition
| meeting between issuer and underwriters with the purpose of verifying inforation contained in a registration statement / prospectus |
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Term
|
Definition
| income derived from active participation in a business, including wages, salay, tips, commissions, and bonuses. Also, alimony. |
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Term
|
Definition
| the amount of earnings or net income available for each share of common stock. A major driver of the stock's price on the secondary market. |
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Term
|
Definition
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Term
|
Definition
| the risk of the overall market dropping |
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Term
|
Definition
| the risk that any one security could plummet |
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Term
|
Definition
| A company with serious credit / default risk is said to be |
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Term
|
Definition
| how we measure a bond's price volatility given a small change in interests rates (Interest rate risk). I.e. If a bond has one of 10 that means if rates go up by 1%, then the price would drop by 10% |
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Term
|
Definition
| Which would have a higher duration? a 10-year zero coupon or a 10 year bond that pays interest every 6 months |
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Term
|
Definition
| If a customer has $100,000 to invest and wants to save for retirement, but also needs $10,000 back in the near future to make a down payment, what percentage should she invest in the money market fund? |
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Term
| Speculation, Growth, Safety |
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Definition
| What are the 3 parts of the investment pyramid? (Start at the top and work your way down) |
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Term
| US Government / Treasury, Ginnie |
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Definition
| Give the best recommendation when the investor's objective is Capital Preservation, Safety of Principle |
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Term
|
Definition
| Give the best recommendation when the investor's objective is liquidity |
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Term
|
Definition
| Give the best recommendation when the investor's objective is to have tax-exempt income |
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|
Term
| Low-rated corporate or municple bonds |
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Definition
| Give the best recommendation when the investor's objective is to have a high yield income |
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|
Term
| preferred stock, utilities, equity income funds |
|
Definition
| Give the best recommendation when the investor's objective is to have income from stock |
|
|
Term
| blue chip stocks, large cap funds |
|
Definition
| Give the best recommendation when the investor's objective is moderate growth |
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|
Term
| bonds (other than 0-coupons) |
|
Definition
| Give the best recommendation when the investor's objective is income |
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|
Term
|
Definition
| Give the best recommendation when the investor's objective is Growth |
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|
Term
| technology stocks, sector funds |
|
Definition
| Give the best recommendation when the investor's objective is Aggressive Growth |
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|
Term
| bonds, stck, and money market as needed to diversify invesments among different instruments, industries, maturities... |
|
Definition
| Give the best recommendation when the investor's objective is portfolio diversification |
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Term
| options, high-yield bonds, precious metals funds |
|
Definition
| Give the best recommendation when the investor's objective is speculation |
|
|
Term
| recommend mone market mutual funds |
|
Definition
| What is the best recommendation for a customer who has not disclosed his financial information or investment objectives? |
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Term
| have a decent amount of money to invest and have a long time horizon |
|
Definition
| a shares are for people who... |
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|
Term
| don't have a lot of money to invest and can't take advantage of break-points |
|
Definition
| B shares are for people who... |
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Term
|
Definition
|
|
Term
|
Definition
| another name for the Coverdell Education Savings Account in which aftr-tax contributions may be made to pay qualified education expenses for the beneficiary. |
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Term
|
Definition
| date established by SEC as to when the underwriters may sell new securities to inestors A.k.a. release date |
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Term
|
Definition
| a section of ERISA that outlines who is / is not eligible to participate in a qualified plan. Those 21 years old who have worked "full time" for one year (1,000 hours or more) are eligible to participate in the plan |
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Term
|
Definition
| the financial markets ofa developing country. Generally, a small market with a short operating history, nost as efficient or stable as developed markets. I.e. Brazil, China, India |
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|
Term
| Equipment Trust Certificate |
|
Definition
| a corporate bond secured by a plege of equipment e.g., airplanes, railroad cars |
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Term
|
Definition
| a mutual fund that purchases common stocks whose issuers pay consistent and perhaps increasing dividends. Less volatile that growth funds. |
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Term
|
Definition
| Employee Retirement Income Security Act of 1974 that governs the operation of most corporate pension and benefit plans |
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|
Term
|
Definition
| a legal entity / person that represents all assets held by a deceased person bere he, you know, died |
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Term
|
Definition
| an annoying tax on estated over a certain amount, often called the death tax by those who don't like it |
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|
Term
|
Definition
| A fund that trades on an exchange, typically an index fund tracking the S&P 500, the Dow Jones Industrial Average, etc. Unlike an open-end index fund, the ETF allows investors to sell short, trade throughout the day, andeven purchase shares on margin. |
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Term
|
Definition
|
|
Term
|
Definition
| any electronic or physical marketplace where investors can buy and sell securities. For example, NASDAQ, NYSE, AMEX |
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|
Term
|
Definition
| a security that has met listing requirements to trade on a particular exchange such as NYSE, AMEX, OR NASDAQ |
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|
Term
|
Definition
| method of determining which part of an annuity payment is taxable, and which part represents the tax-free return of the annuitant's after-tax cost basis |
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Term
|
Definition
| two days befor the Record Date for corporate stock. The date upon which the buer is not entitled to the upcoming dividend. Note that for mutual funds, this date is established by the board of directors, usually the day after the Record Date. |
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|
Term
|
Definition
| a security not required to be registered under the Securities Act of 1933. Still subject to anti-fraud rules; not subject to registration requirements, e.g., municipal bonds and bank stock |
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|
Term
|
Definition
| a transactional exemption from registration requirements based on the manner in which the security is offered and sold, e.g., private placements under Reg D |
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|
Term
|
Definition
| phase of the business cycle associated with increased activity |
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|
Term
|
Definition
| a fund's expenses divided by / compared to average net assets. Represents operating efficiency of a mutual fund, where the lower the number the more efficient the fund. |
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|
Term
| Face-Amount Certificate Company |
|
Definition
| a debt security bout at a lower price than the face- |
|
|
Term
| Face-Amount Certificate Company |
|
Definition
| a debt security bought at a lower price than the face-amount. An investment company. |
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|
Term
|
Definition
| organization of privately owned banks providing credit to farmers andmorgages on farm property. |
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|
Term
|
Definition
| federal government agency that provids deposi insurance for member banks and prevents bank and thrift failures. Bank deposits are currently insured up to $250,000, a number that could have changed by the time you read this definition. A trip to your local bank will give you the updated number. |
|
|
Term
| Federal Deposit Insurance Corporation |
|
Definition
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