Securities

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Security

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An investment of money, in a common enterprise, with the expectation of profits to be derived primarily from the efforts of a person other than the investor.

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Equity Securities

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Conservative for the issuer and risky for investors, once corporations have the investors money, they are in no obligation to give any of it back.

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Debt Securities

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When investors lend money to companys which they are obligated to pay it back. Considered risky for issuer and conservative for investors.

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Member

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A member of FINRA is any individual, partnership, corporation, or legal entity admitted to membership in FINRA.

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Associated Person (AP) of a Member

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Broker

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1. A broker includes: an individual or a firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm; 2. The role of a brokerage firm when it acts as an agent for a customer and charges the customer a commission for its services; and 3. Any person engaged in the business of effecting transactions in securities for the accounts of others that is not a bank.

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Dealer

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1. A dealer includes: the role of a brokerage firm when it acts as a principal in a particular trade. A firm acts as a dealer when it buys or sells a security for its own account and at its own risk, then charges the customer a markup or markdown; and 2. Any person engaged in the business of buying and selling securities for their own account, either directly or through a broker, that is not a bank.

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Prospectus

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Any notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security.

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Common Stock: 4 ways

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1. Authorized

2. Issued

3. Treasury

4. Outstanding

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Authorized Stock

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A corporation receives authorization from the state to issue, or sell, a specific number of shares of stock.

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Issued Stock

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Stock that is distributed to investors.

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Treasury Stock

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Stock that a corporation has issued and subsequently repurchased from the public. The corporation can hold, reissue, or retire it.

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Outstanding Stock

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Shares that a company has issued but has not repurchased. Investor owned stock.

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NASDAQ

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National Association of Securities Dealers Automated Quotation system. Nasdaq is an electronic stock market and it originated in 1971. Nasdaq does not have a physical trading floor that brings together buyers and sellers; it is an automated computerized information system that provides price and inventory information for market makers of securities traded over-the-counter (OTC)

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Preferred stock

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Preferred stock is an equity security because it represents ownership in the corpora- tion. Like a bond, a preferred stock is issued with a fixed (stated) rate of return. In the case of the preferred stock, it is a dividend rather than interest that is being paid.