Term
| EE and I U.S. Government savings bonds are what type of security? Markertable or non-marketable. |
|
Definition
|
|
Term
| What is the difference between a marketable and non-marketable Security? |
|
Definition
A marketable security can be converted to cash quickly.
Non-marketable is any type of security that is difficult to sell because it is not available on a normal market or exchange, such as an EE and US Government Bond. |
|
|
Term
| What is the difference between a stock warrant and a stock option |
|
Definition
| Stock warrants are long term, stock rights and options are short term. |
|
|
Term
| What is an advantage of a participating preferred stock. |
|
Definition
| Investors may receive a dividend in excess of what is stated on the certificate. |
|
|
Term
| Who sets monetary policy (increase or decrease of money supply) |
|
Definition
| The federal reserve board. |
|
|
Term
| If the current yield of a bond decrease what will happen to the yield to maturity and why? |
|
Definition
| The yield to maturity will decrease as well because they are systematic and move in the same direction. |
|
|
Term
| The return of principal is not ____________. |
|
Definition
|
|
Term
| If the federal government purchases securities in the open market what are they attempting to do? |
|
Definition
|
|
Term
| What is and isn't taxable on a municipal bond. |
|
Definition
| Interest is exempt from federal taxes, but capital gains are not. State income tax laws do apply. |
|
|
Term
| What does inflation do to the value of a common stock. |
|
Definition
| The value of common stock usually appreciates with inflation. |
|
|
Term
| What is a commercial paper policy and what is the maximum length of maturity? |
|
Definition
| Commercial paper is issued by corporations seeking to borrow money short term and is issued for no more than 270 days. |
|
|
Term
| If interest rate decrease, what happens to the price of the bond and current yield. |
|
Definition
| The price will increase, but the current yield will decrease |
|
|
Term
| Long term capital gains are typically held for how long? |
|
Definition
|
|
Term
| When are the profits of sales or gains taxes? if reinvested are they subject to taxation, if so when? |
|
Definition
| In the year of the sale. They are subject to taxation even if they are reinvested. |
|
|
Term
| US government and agency securities and municipal bonds are exempt from what. |
|
Definition
| Registration with the SEC. Us Government and Agency bonds are exempt from state and local taxes but not federal taxes, municipal bonds are exempt from federal taxes but not state taxes. |
|
|
Term
| if the value of stock decrease but the annual dividend stays the same what happens to the current yield? |
|
Definition
| The current yield will increase. |
|
|
Term
| What will a company offer if they wish to offer future stock at a fixed price as an incentive to an investor to take a lower interest rate? |
|
Definition
| The company would issue a warrant. |
|
|
Term
| Retained earning, the value of preferred stock and common stock are components of what? |
|
Definition
| The net worth or equity of a company. |
|
|
Term
| What must be shown on a confirmation? |
|
Definition
| Any commission paid. The amount of shares purchased, and the security purchased |
|
|
Term
| What type of bond is backed by the full faith and credit of the issuers taxing powers? |
|
Definition
| A municipal (muni go) bond. |
|
|
Term
| When does a T-bill mature? |
|
Definition
| T-bills are short term and can mature in 4, 13, 26, and 52 weeks.These are sold at a discount of par. |
|
|
Term
| When should a client invest in a long term bond? |
|
Definition
| When interest rates are high but are expected to drop. |
|
|
Term
| What are the payment options for common stock dividend? |
|
Definition
| Cash or additional stock. |
|
|
Term
| What is a risk for a bond holder? |
|
Definition
|
|
Term
| Is capital gain from the sale of a municipal bond taxable? |
|
Definition
| Yes, but the interest is not. |
|
|
Term
| Why are preemptive rights important and to who are they important. |
|
Definition
| Preemptive rights are important to commons stock holders because it gives them the opportunity to maintain their share of ownership in the company when the board elects to sell more shares. |
|
|
Term
| What is all or none underwriting |
|
Definition
| The type of underwriting where the entire issue must be returned to the issuer if it is not all sold out. |
|
|
Term
| What is the difference between a syndicate and a selling group? |
|
Definition
| The financial commitment. |
|
|
Term
|
Definition
Duration is a measurement of a bond's market price volatility
as interest rates change. |
|
|
Term
| What type of bond has the highest duration |
|
Definition
|
|
Term
| What type of investor would be suitable for a hedge fund? What is the fee structure on a hedge fund. |
|
Definition
| an accredited investor. There are no limits on fees that may levied. Hedge funds are very risky. |
|
|
Term
| How would you find the corporate equivalent of muni bond? |
|
Definition
| Divide the muni yield by the complement tax bracket. |
|
|
Term
| What type of security is considered to be marketable but not redeemable? |
|
Definition
|
|
Term
| What type of security would be the most affected by a change in interest rates? |
|
Definition
|
|
Term
| What does ETF stand for, where does it trade and who has permission to sell it. |
|
Definition
| Exchange Trade Funds are sold in the secondary market and you must have a series 7 license to buy or sell an ETF. |
|
|
Term
| What must an indenture to a callable bond state? |
|
Definition
| The call date and call price |
|
|
Term
| What are the two types of municipal bonds? |
|
Definition
| General obligation bonds (backed by taxes) Revenue bonds (backed by user fees, such as toll roads) |
|
|
Term
| Give an example of a general obligation bond and of a revenue bond. |
|
Definition
| Local bridge project would be built on a municipal bond and toll road would be built with a revenue bond. |
|
|
Term
| If an outstanding bond is selling in the secondary market at a discount what will happen to the current yield and yield to maturity with respect to the nominal yield. |
|
Definition
| The CY and YTM will be higher than the nominal yield. |
|
|
Term
| How many days does the federal reserve board under regulation T allow a customer to pay for a trade. |
|
Definition
| 5 days, if no extension is granted. |
|
|
Term
| A change in tax law is an example of what type of policy? |
|
Definition
|
|
Term
| A change in interest rates by the Federal Reserve Board is an example of what type of policy? |
|
Definition
|
|
Term
| A bond held to maturity is not at risk for what? |
|
Definition
|
|
Term
| In order to receive special tax treatment an investment company must be ________ in by the IRS. |
|
Definition
|
|
Term
| Clients using a traditional IRA must withdraw their funds by what age? |
|
Definition
|
|
Term
| What is the cost basis for a Tax Sheltered Annuity? Who can participate and what would be taxable upon distribution? |
|
Definition
| There is a zero cost basis for a TSA because funds are invested pre tax, employees of any public educational institution can participate. |
|
|
Term
| If you were to invest funds into a non-qualified annuity what would your tax basis be? And why? |
|
Definition
| Upon distribution, only the earnings are taxable. Funds invested into an non-qualified annuity are invested with after tax dollars. |
|
|
Term
| Public school teachers and employees of religious and charitable institutions and hospitals are elgibile for a 403 B__________ |
|
Definition
|
|
Term
| When must a new account form and a IRA adoption agreement be completed? |
|
Definition
| When opening an IRA funded by a mutual fund. |
|
|
Term
| When is a prospectus required? |
|
Definition
| when selling variable annuities, variable life insurance and or mutual funds. |
|
|
Term
| What does it mean for an employee to be vested? |
|
Definition
| that they have rights to funds deposited by their employer into the pension plan. |
|
|
Term
| On a Keogh plan who must be covered? |
|
Definition
| All full time employees, over 21 who have been employed for at least one year. |
|
|
Term
| Nurses are private hospitals are eligible to participate in a 403B______. |
|
Definition
| Tax sheltered annuity plan. |
|
|
Term
| Name 4 characteristics of a 529 plan. |
|
Definition
| 1. 529 plans vary by state. 2)529 plans may be set up for anyone. 3)the amount contributed to a 529 plan is done in after tax dollars and any earnings are federal income tax free if usedfor higher education purposes. The maximum contribution allowed by any one person into a 528 is 5 times the crrent year's gift tax exclusion. |
|
|
Term
| What are the age limits on a coverdell ESA. |
|
Definition
| Must be setup for a minor, under 18 and must be used prior to age 30. |
|
|
Term
| How is a Coverdell ESA funded and what is the maximum contribution for per year. |
|
Definition
| Coverdell ESA's are funded with after tax dollars. The maximum contribution is 2,000 per year per beneficiary. |
|
|
Term
| When are the earnings of a Coverdell ESA and a 529 college savings plan free from federal income tax? |
|
Definition
| When they are used for qualified educational expenses. |
|
|
Term
| ROTH IRA Contributions are always funded with _______ tax dollars. |
|
Definition
|
|
Term
| In a ROTH IRA what type of distribution would be exempt from federal income tax? |
|
Definition
| a quailified distribution. |
|
|
Term
| Unlike other IRA's a ROTH IRA participant does not have to wait until age ____ to withdrawal funds. |
|
Definition
|
|
Term
| Who is entitled to examine a broker/dealer's balance sheet? |
|
Definition
| Any customer upon request |
|
|
Term
| What act makes you liable for the acts of others you give inside information to. to the extent o your profits and to the extent of your losses avoided, plus possible imprisonment. |
|
Definition
| Insider trading act of 1988 |
|
|
Term
| What form must be sent to the client after the trade date but before the settlement date? |
|
Definition
|
|
Term
| SEC Statutory Disqualification means what to you? |
|
Definition
| That you cannot be affiliated with a broker/dealer in any capacity. |
|
|
Term
|
Definition
| REquired Minimum distribution. |
|
|
Term
| What does the required minimum distribution apply? What does it require? |
|
Definition
| RMS apply to traditional IRA but not a ROTH IRA. The RMD requires that participants begin withdrawls no later than April 1st of the year they turn 70 1/2. |
|
|
Term
| What is the penalty for under RMD if withdrawals have not begun by by Aprl 1st in the year the client turns 70 1/2. |
|
Definition
| a penalty of 50% is levied on the amount that should have been withdrawn. |
|
|
Term
| Agressive growth portfolios tend to have ______ yields. |
|
Definition
|
|
Term
| What type of stokc is the most risky to investors? |
|
Definition
|
|
Term
| Muni bonds are most suitable for what type of investors? |
|
Definition
| Investors in high tax brackets |
|
|
Term
| An equity mutual fund has a portfolio of ______ and _______ stocks. |
|
Definition
|
|
Term
| An income mutual fund has a portfolio of _____ and has a purchasing power risk. |
|
Definition
|
|
Term
| If an investor wants to invest for income and safety what should they invest in? |
|
Definition
|
|
Term
| A young couple plans on buying a house soon, what would their investment objective be? |
|
Definition
|
|
Term
| What is the most important factor when determining an investors suitability? |
|
Definition
| His investment objective. |
|
|
Term
| Fluciating share prices are not a risk for _____ _______ averaging? |
|
Definition
|
|
Term
| Dollar cost averaging will result in the average cost per share being lower than the average price per share but does not guarantee what? |
|
Definition
|
|
Term
| What is the greatest risk to a common stock holder? |
|
Definition
| Financial risk, they could lose all of their money if the company should default. |
|
|
Term
| Growth portfolios usually have what? |
|
Definition
| Low yields (no dividends paid out), keep up with the rate of inflation and have high appreciation potential. |
|
|
Term
| If an investor is seeking income without paying taxes what type of fund would you refer to him? |
|
Definition
|
|
Term
| What is advertising defined as? |
|
Definition
| any materials for use in a public medium to solicit business , such as radio, TV, newspaper etc. and myst be accompanied by a prospectus. |
|
|
Term
| What is sales literature? |
|
Definition
| is any written communication generall available to the public, other than advertising. |
|
|
Term
| Under a preliminary prospectus what can a RR do? |
|
Definition
| A RR can take indications of interest, but cannot take any new orders. |
|
|
Term
| What is "selling away" is it allowed? |
|
Definition
| Selling away is the act of selling securities for a firm which you are not registered with and is not allowed. |
|
|
Term
| What must be filed within 10 days of first use with FINRA. |
|
Definition
| Advertising, also any firm that has not advertised before would need to submit all advertising within 10 days to FINRA for approval for a period of 1 year. |
|
|
Term
| What is an SAI and who must it be given to upon request? |
|
Definition
| Statement of Additional Information, must be given to any client upon request. Must be given to any client who buy a variable product even if they elect to invest their monies in a fixed account. |
|
|
Term
| An investment company advertisement must never contain what? |
|
Definition
| An application to invest. |
|
|
Term
| Mutual funds containing quotations of current yield myst also contain what? |
|
Definition
| Total return information. |
|
|
Term
| When the SEC makes a new security effective what does this mean? |
|
Definition
| it means no ommissions were found in the registration statement. the SEC does not pass on the merits of a new security, approve the accuracy of the registration statement or approve its adequacy. |
|
|
Term
| your registered principal must approve all orders and all correspondence to ____. |
|
Definition
|
|
Term
| A fee table and the funds track record must be included in what? |
|
Definition
|
|
Term
| how long must a broker/dealer keep records of correspondence? |
|
Definition
|
|
Term
| An investor who buys bonds, preferred stock of a fixed annuity face what type of risk? |
|
Definition
| Inflationary or Purchasing power risk. |
|
|
Term
|
Definition
| a dollar that is adjusted for inflation. |
|
|
Term
| What is a current dollar? |
|
Definition
| A dollar that is not adjusted for inflation. |
|
|
Term
| What is liquidty risk and why is it important to your investor? |
|
Definition
| Liquidty risk is the ability to liquidate an investment for cash. Some bonds are easily marketed some are not. You must know what type of liduidity your client requires. |
|
|
Term
| What is a taxability risk? |
|
Definition
| The risk that congree may change an existing law concerning taxes, particularly on a bond that incurs interest free from federal income tax. |
|
|
Term
|
Definition
| The tendancy for secuirty prices to move together is known as systematic risk. |
|
|
Term
| How can systematic risk be be avoided? |
|
Definition
| The only way to avoid systematic risk is to diversify by asset class. |
|
|
Term
| The higher the Beta the higher the _____. |
|
Definition
|
|
Term
| Who sets Margin requirements? |
|
Definition
| The Federal Regulation Board under Regulation T. |
|
|
Term
| How do you find the average price per share? |
|
Definition
| Add up the prices paid each month and divide by the number of purchases. |
|
|
Term
| How do you find the average cost per share? |
|
Definition
| divide the amount invested by the total number of shares purchased. |
|
|
Term
| What is Capital Appreciation? |
|
Definition
| Growth, or appreication, refers to an increase in value of an investment over time. Common stock and stock mutual funds are the most comon growth oriented investments. |
|
|
Term
|
Definition
| when an investor seeks current income from interest of dividends to supplement other income. Typically retirees will be suitable for this type of investment return. |
|
|
Term
| Corporate bonds, municipal bonds, government and agency securities, income- oriented mutual funds, some stocks, money market funds, annuities and some direct participation programs can contribute what? |
|
Definition
|
|
Term
| Money market accounts and and mutual funds can be _____ easily. |
|
Definition
|
|
Term
| If a client was interested in tax exempt income what products could be referred to them? |
|
Definition
| IRAs and Annuities, interest accumulates tax deferred. Muni bonds offer tax free interest. |
|
|
Term
| Are Agressive growth funds risky? What would an agressive growth fund consist of? |
|
Definition
| Yes, the riskiest. The portfolio would consist of newer companies with low to no dividends but companies that represent greatest potential for appreciation. |
|
|
Term
| Who sets the ex-dividend date for a mutual fund? |
|
Definition
| the prinicpal underwriter |
|
|
Term
| For tax purposes how is the exchange of complex or conversison of shares in one mutual fund for shares of another within the same family of funds treated? |
|
Definition
| They are treated as a sale and repurchase. |
|
|
Term
| Is there a secondary market for open-end mutual fund shares? |
|
Definition
|
|
Term
| Where do close-end mutual funds trade and why? |
|
Definition
| The secondary market OTC market because they are not redeemable. |
|
|
Term
| NAV is another name for what? |
|
Definition
|
|
Term
| ASK is another name for what? |
|
Definition
|
|
Term
| Who pays for advertising and sales literature? The firm or the underwriter hired by firm. |
|
Definition
|
|
Term
| On a no loan fund what is the difference between NAV and ASK. |
|
Definition
|
|
Term
| on an open end investment fund, the public offering price includes what? |
|
Definition
|
|
Term
| A divserified fund must invest ____% of its assets so that no more than ___% of its assets are invested in any one company and they do not control more than ___% of the voting stock of any one company. |
|
Definition
|
|
Term
| What type of security attempts to maintain a stable NAV and is not insured by the government? |
|
Definition
|
|
Term
| Closed end mutual funds can issue senior securities (preferred stocks and bonds) but a ________ ______ mutual fund cannot. |
|
Definition
|
|
Term
| NAV is increased by what? |
|
Definition
| The appreciation of securities in the fund. |
|
|
Term
| If a dividend if paid out by the fund what happens to the NAV? |
|
Definition
|
|
Term
| How do you find the expense ratio of a fund? |
|
Definition
| divide the funds expenses by the average net asset value. |
|
|
Term
| What does LOI stand for, what is the expiration date? |
|
Definition
| Letter of intent. Good for 13 months and may be back dated 90 days. |
|
|
Term
|
Definition
| A Unit investment trust is an investment company that buys a fixed number of bonds until they reach maturity. There is no management fee. |
|
|
Term
| When can the maximum sales charge under FINRA be limited to 6 1/4%. |
|
Definition
| When the investment company does not offer: breakpoint, the rights of accumulation and the right to reinvest dividends at NAV. |
|
|
Term
| What is the maximum sales charge on a contractual plan under the Investment of Act of 1940? |
|
Definition
| 9% over the life of the plan (10years) |
|
|
Term
| When do net redemptions occur? |
|
Definition
| if the value of the shares redeemed exceeds the value of the shares being purchased. |
|
|
Term
| 12B1 distribution fees must be disclosed in the _____, approved ________ by shareholders and cannot exceed ____% of the average annual offering price of the fund. They are not paid out of the spread. They are an expesense of the fund, like the management fee. |
|
Definition
| disclosed in the prospectus, approved annually and cannot exceed 8 1/2% |
|
|
Term
| How often must the investment objective of the fund be approved, who approval is required? |
|
Definition
| Annually, the shareholders must approve of the change. |
|
|
Term
| A series 6 license will allow you to sell what? |
|
Definition
| new open or closed end funds with a prospectus. |
|
|
Term
| What can you not sell with a series 6? |
|
Definition
| REITs, close end funds in the secondary market, stocks, bonds or limited partnerships. |
|
|
Term
| Closed end mutual fund shares cannot be redemmed by the issuer. Where must they be be sold? |
|
Definition
| In the secondary market, OTC or on an exchange. |
|
|
Term
| The prices for closed end funds depend on what? |
|
Definition
|
|
Term
| Capital gains cannot be included with dividends when calculating ___ ____ of a mutual fund. |
|
Definition
|
|
Term
| What does the total return on a mutual fund include? |
|
Definition
| dividends, realized capital gain and unrealized captial gains. |
|
|
Term
|
Definition
| The difference between the public offering and what the issuer receives. |
|
|
Term
| Variable life insurance death benefits may vary ____ above the ______ _____. |
|
Definition
| above the minimum guaranteed. |
|
|
Term
| A variable life contract offers the right of conversion. What does this allow? |
|
Definition
| Conversion allows the policy to be exchanged for a fixed, or guaranteed contract for a specified period of time. |
|
|
Term
|
Definition
| Assumed investment rate aka assumed interest rate |
|
|
Term
| What is the name of the fee charged to an insured person for to cover expenses for increased longevity? |
|
Definition
|
|
Term
| What is the fee charged to an annuitant to cover expenses of operation the company? |
|
Definition
|
|
Term
| Variable life and universial life have both have what in common? |
|
Definition
| They both have a flexibile preimum and death benefit that can increase beyond the minium guaranteed in the policy. |
|
|
Term
| What is the tax difference between a variable annuity and variable life insurance? |
|
Definition
| If a variable annuity is cashed in early it is subject to a 10% early withdraw penalty. |
|
|
Term
| Fund total return figures must be show for what periods? |
|
Definition
| 1 , 5 and 10 year figures. |
|
|
Term
| 24 months is amount of time alloted to to convert a variable life insurance policy into a _____. |
|
Definition
|
|
Term
| What is the maximum sales charge for a single payment annuity? |
|
Definition
|
|
Term
| On a variable annuity, the monthly payment will remain the same as long as the ___ stays the same? |
|
Definition
|
|
Term
| If a client is concerned about inflation risk, what type of product could you suggest. |
|
Definition
|
|
Term
| The FINRA Code of Arbitration procedure is what? |
|
Definition
|
|
Term
| How much will SPIC cover if a broker/dealer becomes insolvent? |
|
Definition
| 500,00, 250K may be cash per seperate customer |
|
|
Term
| How long does a client have to file arbitration |
|
Definition
|
|
Term
| What is the maximum amount that can be arbitated under FINRA's simplified arbitration procedure? |
|
Definition
|
|
Term
| SIPC does not cover mutual funds, it covers? |
|
Definition
| broker/dealers who become insolvent |
|
|
Term
| Under the Uniform Gift to Minors Act, unearned income in excess of the current limit allowed, that is received by the child, if the child is under 19, a full time studeny and under age 24 whose tax rate are they subject to? |
|
Definition
| parent's top marginal tax bracket. |
|
|
Term
| What does UGMA stand for? |
|
Definition
| Uniform Gift to Minors Act. |
|
|
Term
| Gifts under UGMA are considered what? |
|
Definition
|
|
Term
| if traveling domestically how long can a broker/dealer hold mail? |
|
Definition
|
|
Term
| if traveling internationally how long can a broker/dealer hold mail? |
|
Definition
|
|
Term
|
Definition
| An accounting measurement that represents an annuity contract owner's proportionate unit of interest in a separate account (the portfolio) during the pay-in period. |
|
|
Term
|
Definition
| any material designed for use by newspapers, magazines, radio, television, telephone recordings, or any other public medium to solicit business. Advertising may not be sent to clients considering a new issue unless accompanied by a prospectus. |
|
|
Term
|
Definition
| as defined by the Investment Company Act of 1940, an affiliated person includes an investment adviser, officer, director, partner, or employee of another person. |
|
|
Term
|
Definition
| Debt obligations of agencies of the federal government. Although backed by the US government, the debt is not a direct obligation of the government. Agency debt can be in the form of notes or bonds issued at face value and can carry a stated interest rate payable semi-annually. Agency debt is often called indirect debt. |
|
|
Term
| Aggressive Growth Portfolio |
|
Definition
| Portfolio characterized by high turnover of holdings; attempts to cash in on higher-risk capital appreciate situations, Usually pays no dividends. |
|
|
Term
| Aggressive Investment Policy |
|
Definition
| A policy concentrating on maximum return. Such a policy entails increased risks such as buying on margin, using options, or buying stocks with high beta factors. |
|
|
Term
|
Definition
| one form of best-efforts underwriting, The underwriter agrees to sell all the shares (or a prescribed minimum) or none of the shares. This type of agreement may arise when the issuer requires at least a minimum of capital raised. I the minimum is not reached, the securities sold and the money are returned. Commissions will not be paid unless the offering is completed. |
|
|
Term
|
Definition
| Payment of debt (principal) over a period of time in periodic installments. |
|
|
Term
|
Definition
| the annuity contract holder |
|
|
Term
|
Definition
| A contract between an insurance company and an individual. An annuity generally guarantees lifetime income to the person on whose life the contract is based in return for a lump sum or a periodic payment to the life insurance company. See also, fixed annuity, variable annuity, deferred annuity, immediate annuity. |
|
|
Term
|
Definition
| he accounting measure used to determine the amount of each payment to an annuitant during the pay out period. |
|
|
Term
|
Definition
| The increase in value of an asset; sometimes called growth. |
|
|
Term
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Definition
| The price at which the dealer is willing to sell the stock to an investor or another dealer. See offering price. |
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Term
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Definition
| a base for illustrating payments from a variable annuity where the assumed interest rate is not a guarantee. Assumed interest rates offered by company vary. Naturally, the higher the assumption, the higher the initial benefit and vice versa. The separate account would need to earn that same rate in order to maintain the initial benefit level. |
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Term
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Definition
| A stock exchange where the securities are sold to the highest bidder. It is a two way auction since some brokers are bidding to sell at the highest possible price while others are bidding to buy at the lowest price possible. The NYSE is a auction market. |
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Term
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Definition
| Authroized stock is the maximum number of shares a corporation may issue under the terms of its charter. The number of shares authorized may be changed with the approval of the stockholders. |
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Term
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Definition
| A type of mutual fund whose stated investment policy is to have some portion of its investment assets in bonds and stocks at all times, thereby creating a balance between the two types of the stockholders. |
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Term
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Definition
| Essentially a letter of credit from a bank guaranteeing payment of a debt. Generally, bankers acceptances are used in the import and export business. They are short term, money market instruments |
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Term
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Definition
| A market in which prices of securities are falling or are expected to fall. |
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Term
| Best-efforts underwritings |
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Definition
| Acting as an agent for the issuer, the underwriter puts forth their best efforts to sell as many shares as possible. The issuer pays the underwriter a commission for the shares sold. The underwriter does not have the liability for unsold shares as in the case of a firm commitment agreement. |
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Term
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Definition
| The price at which a dealer is willing to buy stock from an individual or another dealer. See also net asset value, mutual funds |
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Term
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Definition
| the issues of normally strong, well established companies that have demonstrated their ability to pay dividends in good times and bad times. such as general motors. |
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Term
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Definition
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Term
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Definition
| Bonds represent the borrowing of money by a corporation or government. The bond is a legal obligation of the company or government to repay principal at the maturity of the bond. Terms of the repayment and any interest to be paid are stated in the indenture. Bonds are issued with a par value representing the amount of money borrowed by the company. The issuer promises to pay a percentage of the par value as interest on the borrowed funds. the interest rate is stated on the face of the bond at issue and is called the nominal or coupon rate. |
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Term
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Definition
| A type of mutual fund whose investment policy is to provide stable income with minimum capital risks. |
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Term
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Definition
| the quality of a bond issue as determined by independent bond rating services. AAA is the highest quality. Both Moody's investors service and standard & poors corporation have such services. |
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Term
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Definition
| The schedule of sales charge discounts offered by a mutual fund for lump sum or cumulative investments. Eligibility requirements must be disclosed in the prospectus. |
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Term
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Definition
| the sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions so as to share in the higher applicable sales charges. This is a violation of the FINRA Rules of Fair Practice. |
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Term
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Definition
| The role of the brokerage firm when it acts as an agent for a customer and charges the customer a commission for its services. |
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Term
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Definition
| a market in which prices of securities are moving higher or are expected to move higher. |
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Term
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Definition
| A day the new york stock exchange is open for business (trading) |
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Term
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Definition
| An option to buy a specified number of shares of stock at a definite price within a specified period of time. See put option. |
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Term
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Definition
| The price paid (usually a premium over the par value of the issue) for callable preferred stock or bonds redeemed by the issuer prior to maturity of the issue beause interest rates have fallen. |
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Term
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Definition
| the long term gain (selling cost minus cost basis) on an asset held for a period of longer than 12 months. Short term gains (12 months or less) are taxes as ordinary income. |
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Term
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Definition
| The amount of debt and or equity issued by a corporation |
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Term
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Definition
| Issued by most commercial banks and representing bank borrowing for a period of time. |
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Term
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Definition
| Excessive trading in a customer's account. The term suggests that the representative ignores the objectives and interests of clients and seeks only to increase commissions. Often done in discretionary accounts. This is a violation of FINRA Rules of Fair Conduct. |
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Term
| Closed-End Investment Company |
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Definition
| A management investment company operated in much the same manner as a conventional corporation. The closed - End fund will issue a fixed number of shares for sale. The shares may be of several classes. Shares may be bought and sold in the secondary market. The fund does not offer to redeem shares. |
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Term
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Definition
| provides a method of handling securities disputes or clearing controversies between members, public customers, clearing corporations, or clearing banks. FINRA members and registered representatives must arbitrate. The customer may arbitrate. There is no appeal. |
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Term
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Definition
| FINRAs procedure for handling practice complaints |
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Term
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Definition
| Form of debt backed by stocks and/or bods of another corporation The collateral is held b a trustee for safekeeping. |
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Term
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Definition
| An annuity combining the features of fixes and variable annuities. |
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Term
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Definition
| a corporate money market instrument which consists of signed promissory notes issued by the corporation to raise short term funds. The notes sell at a discount with full payment on demand at maturity. Not required to be registered with the SEC if nine months or less to maturity. |
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Term
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Definition
| The basic stock issued by a corporation representing shares of ownership. Its dividend rights are subordinate to preferred stock and its dividend is not fixed. |
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Term
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Definition
| A theory behind Subchapter M under which distributions to shareholders are not taxes to the investment company. The distribution are deemed to only pass through the company if 90% or more of net investment income is distributed. |
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Term
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Definition
| dollars adjusted to show the same purchasing power from one period to another. They are indexed for inflation. |
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Term
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Definition
| Investment plan allowed under the investment company act of 1940 (amended in 1970) also called the periodic payment plan. Contractual plans enable the investor who wants to accumulate a sum of dollars over a fixed period of time to invest in a mutual fund on a perioric basis (usually monthly). Investors sign a contract to invest for 10 years. Contractual plans are set up as either 50% front end load plans or spread loan plans. |
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Term
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Definition
| a unit investment trust with whom an investor may contract to buy mutual fund shares at fixed intervals over a fixed period of time. |
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Term
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Definition
| A bond that may be exchanged for some other security of the issuer at the option of the holder. It is usually converted into common stock based upon a fixed conversion ratio. |
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Term
| Convertible Preferred Stock |
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Definition
| Preferred stock that may be converted into common stock at the option of the holder. |
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Term
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Definition
| Traditionally, the 20 day period between the filing date of a registration statement and the effective date of the registration. In practice, this period varies in length but 20 days is the minimum period of time. |
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Term
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Definition
| Money on which taxes have been paid. A return of cost basis is a return of capital and not subject to tax. |
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Term
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Definition
| Has the right to receive skipped or missed dividends. Dividends in arrears do not have to be paid; however distribution to common stock holders cannot be paid until any arrears is paid. |
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Term
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Definition
| A type of shareholder voting in which the number of shares held is multiplied by the number of directors to be elected to determine he number of votes a shareholder may cast. He r she may alloctae the votes in any way he or she see fir including casting them all for one director. |
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Term
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Definition
| Actual dollar amounts, not adjusted for inflation |
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Term
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Definition
| The investment company act of 1940 requires the funds assets be held by an independent custodian. The custodian is responsible for the safekeeping of all securities and cash held by the fund. Typically, the function of custodian is geld by a commercial bank appointed by the directors |
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Term
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Definition
| One who deals in securities as a principal, buying, selling for his or her own account. |
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Term
| Debenture (unsecured bond) |
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Definition
| bond backed only by the good faith of the corporation. Repayment of debt is based on the company's promise to repay. |
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Term
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Definition
| The date on which the company declares an upcoming dividend. |
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Term
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Definition
| an investment method through which investors try to minimize the risk of losing principal. One example is the policy of making purchases and sales according to predetermined objectives without regard for market changes such as dollar cost averaging. Diversification of investment vehicles is a defensive strategy. |
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Term
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Definition
| An annuity contract that repays principal and interest in the future. Interest earned during accumulation (pay in) period is tax deferred. |
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Term
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Definition
| the difference price paid for a security and its face amount at issue or in the secondary market. |
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Term
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Definition
| An account permitting a client to designate an individual such as a broker/dealer to excercise authority over the selection, timing and amount of investment for the client. The authorization for the discretionary account must be in writing and the account must be approved and accepted by a principal of the broker/dealer firm. |
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Term
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Definition
| the practice of spreading ones investments among the securities of different industries. |
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Term
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Definition
| The portion of the earnings of a corporation declared by the board of directors to be paid to shareholders. Each shareholder receives a pro rata distribution based on this or her share of ownership. In a mutual fund, a d dividend is a distribution of net investment income usually paid quarterly. |
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Term
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Definition
| a method of investing that requires a specified number of dollars to be invested over consecutive periods. By investing the same dollar amount, the investor will purchase more shares when prices are low. When shares are priced high, fewer shares are purchased. Over a period of time, the average cost per share may be lower than the average price. DCA does not guarantee a profit. |
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Term
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Definition
| A duty of the underwriter to conduct an inquiry into circumstances surrounding the issue of the secuirty. The underwriter(s) or party chared with discovery must not be negligent in its attempt to discover and disclose relevant facs that would affect the offering. |
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Term
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Definition
| The risk related to international developments and domestic events. |
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Term
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Definition
| Non-negootiable government debt issued at a discount from face value. The difference between purchase price and the value of the bond upon redemption determines the interest rate. Currently, EE bonds pay a variable rate of interest linked to the rate paid on five year treasury securities. |
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Term
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Definition
| the date the registration of a n issue of securities becomes effective with the SEC. The underwriter confirms sales of the newly issued securities after this date. |
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Term
| Equipment Trust Certificate |
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Definition
| A bond backed by equipment such as airplanes or railroad cars. The title to the equipment is held by a trustee until the company pays off the bonds. |
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Term
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Definition
| Stock (common or preferred) sold to individuals and institutions. In return for the money paid, the individual or institution receives an ownership interest in the corporation. |
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Term
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Definition
| Right of an investor who has invested in one fund to transfer to another fund under the same management without incurring an additional sales charge. The exchange is considered a sale and repurchased under the tax code. |
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Term
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Definition
| The amount of momney that the employer may withhold for the employee for the purchase of a (TSA) 403B tax-sheltered annuity. |
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Term
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Definition
| the date on or after which purchasers of a secuirty are not entitled to a declared dividend. the price of the secuirty is reduced by the amount of the dividend on the ex-date. normallt this date is two business days prior to the record date on the stock. |
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Term
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Definition
| Parat of a variable anniuty contract that guarantees that the amount of the net annuity payment will not be reduced by increased operating expense of the company. |
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Term
| Face-amount certificate company |
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Definition
| investment companies that issue certificates; usually purchased on an installment basis at a discount and mature after a period of years for the face amount. |
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Term
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Definition
| A federal governmental body responsible for the country's monetary policy. |
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Term
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Definition
| Any person legallt appointed and authorized to represent and act in another person's behalf. A "custodain of a minors account is a fiduciary. |
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Term
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Definition
| the prospectus delivered by an issuing corporation that includes the price of the securities, the delivery date, and the underwriting spread. |
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Term
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Definition
| a type of direct investment risk involving uncertainty about the prospectus of the company that issued the security. Also known as the "risk of default" |
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Term
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Definition
| the body of laws that describes how FINRA Functions. Such laws define its powers and determine the qualifications and registration requirements for brokers. |
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