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153 Cards in this Set

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Effects on an SMA account in a long margin account
SMA Increases when....
- Mkt value goes up
- Stock is sold
- Dividends are paid

SMA Decreases when.....
- Stock is bought and SMA is used to meet Reg T requirement

No effect when.....
- Stock dividend paid
- Market value goes down
Conversions for Foreign Currency options
In general it is 0.01 for all

but, for French Franc's it is 0.001, and for Japanese Yen it is 0.0001
NASD Minimum Maintenance Requirement for margin accounts...
1. 25% of the market value in a long account
2. 30% of the market value in a short account
MMC or Maintenance Margin Call calculations
1. For a Long account-> Dr/.75 will give you the MV at which there would be a MMC
2. For short accts-> Cr/1.30 will give you the MV at which...yada yada
SMA
Special Memorandum Account
SMA Calculation
SMA = Equity - (MV X 0.50)
The SMA in a short account is affected when...
1. The MV of the stock goes down- SMA increases
2. When more stock is bought or sold short-> SMA decreases
Short Market Value Equation (margin)
SMV = Cr - E
Minimum maintenace on a short account?
$2000, or $5 per share for instance find the Min Maint on an acct with 300 shrs at $12 per....well 300 X 12 = 3600 X .30 = $1,080. Yet the min would really be $1500 since you cannot go below $5 per share or 300 X $5 = $1500
MMC
Maintenance Margin Call
MM (margin)
Minimum Maintenance
MM on a Long account (margins)
$2000 or 25% of MV
Can you buy options on margin?
Yes and no....If their expiration date is within 9 months....then NO NO NO. If they expire outside of 9 months (called leaps)then YES, but you must put 75% of the premium in the margin account as opposed to the 50% on Stocks and Bonds
Leaps
Long-term Equity AnticiPation Securities
Trading in the Equity markets is centered around this person?
The Specialist
Trading in the Options Markets is centered around?
The Order Book Official (OBO)
Describe the 3rd Market
3rd mkt transactions are trades in listed securities executed in the OTC market rather than exchange. Generally for large purchases 100,000 - 1mm shares or more. Done on OTC so as to not adversely affect the market price. Done through Broker/Dealers called 3rd mkt mkt makers
Describe the 4th market
involves trades between institutions that do not involve the use of a Broker/Dealer. They trade based on quotes showing on the Instinet (Institutional Network). By trading directly they avoid commisions and markups on the trade.
The requirements to be listed on NASDAQ are?
To have a large trading volume and at least 3 market makers in the stock. Although, only 2 are required to remain listed on NASDAQ
What are the 3 Levels of the Nasdaq Terminals?
Level 1- gives registered reps access to view inside quotes only. Available to anyone including the public. Level 2- Gives firm ability to view and to ENTER ORDERS, and to REPORT TRADES with other market participants. Available to NASD member firms and intended for use by traders to see high and low bid and ask and look up market maker information. Level 3- allows market makers to view, enter orders, and provide quotes. Only available to NASD registered and qualified market makers
NMS
National Market System (nasdaq trade reporting)
NSCC
National Securites Clearing Corp-> formed in 1976 to facilitate increasing volumes of trades and ensure that the trade goes through as planned
CNS
Continuous Net Settlement-> Process by which the NSCC ensures that what is on a ticket is what in fact changes hands
DTC
Depository Trust Corp-> Keeps records of who owns what stocks when
Uptick
An Uptick occurs when a trade of a stock is executed at a price that is higher than the previous trade of that stock.
Zero Tick
A ZERO TICK occurs when a trade of a stock is executed at the same price as the previous trade of that stock.
Zero Uptick
A ZERO UPTICK occurs when a zero tick takes place after an uptick.
Super DOT
Direct Order Turnaround-> system set up so orders from trading desk of B/D go directly to a specialist on the NYSE floor. ONly trades involving NYSE. Max trade is 30,099 shares, for market orders. 99,999 for limit orders
ORS
Options Routing System-> set up to facilitate trades on the CBOE (Chicago Board Options Exchange) where a OBO or Order Book Official completes the trade
CAES
Computer Assisted Execution System-> for trades of 1000 shares or more
SOES
Small Order Execution System-> for trades of 500 or less, in addition new system SUPER SOES allows for fast trading of up to 1mm shares
ACT
Automated Confirmation Transaction service-> Used to report and clear Nasdaq and Consolidated Quotation Services (CQS) stock trades that have taken place on both the NYSE and Nasdaq
Requirements to be listed on the NYSE
1. The number of shares of common outstanding and number of shareholders 2. Market Value of the Shares 3. The earnings of the Co.
How many corp bonds make up a round lot, and how are they traded?
10 corp bonds represent a round lot. Any trade of less than 10 need to be offered on the floor first and then after 1 hour can be traded OTC. A round lot or more can be traded OTC right off the bat. This is called the Nine-Bond Rule (Rule 369)
3 types of brokers on the exchange floor
1. Competative Traders 2. Commission House Brokers (CHBs) 3. Two-Dollar Brokers
Competative Traders
Are people who buy the priviledge to trade on the floor for their own account therefore they do not pay commission. They also have the freedom to move from trading post to trading post.
Commission House Brokers (CHB's)
Also called Floor Traders, they work for a B/D that has a seat on the exchange. Orders are transmitted from their various offices down to the CHB to be filled
Two Dollar Brokers
Are brokers who trade on the floor for their own account but will also assist the CHB's when they get too bogged down
Floor Specialist
Is someone who works for themselves or a partnership and holds a large position in anywhere from 20-100 stocks. They are required to buy when sell orders outnumber buys, and vice versa. They are in essence the bookies of the exchange.
Authority of the Specialist
1. Stopping Trading-> to halt trading of a stock when the trades get too numerous that they cannot be processed at one time, keeps order in the market 2. They may not accept Not Held Orders 3. Stopped Stock or guaranteeing a specific trader a set price
OPD (ticker tape)
OPD when shown on the ticker tape stands for Delayed Opening
how would a trade of 9000 shares be listed on ticker tape? And 10,000?
9000 would show as 90s of IBM at 28, or something to that effect. 10,000 would show as 10,000s, and 20,000 would be 20,000s. you only drop the last two 0's on trades of less than 10,000.
SLD (ticker tape)
Stands for "being reported out of sequence" meaning that the trade happened and due to some snag did not print out on the tape immediately, so they put the SLD pre-fix on there to show that it is old info and should not affect the last or next trade
Pr (ticker tape)
stands for preferred stock
A Zero-Plus tick
Used to describe a trade that is equal to the previous price, yet still higher than the last trade of a different price. Meaning trade one is at 1.25, trade two is at 1.50 and trade three is also at a 1.50. Since the price didn't go higher it is really a zero tick, but since it is preceded by an uptick it is a zero uptick. The opposite of which is a zero downtick or zero minus tick
Buy Limit order
purchase price always set at a level lower than the market value
Buy Stop Order
Purchase price always set at a level above the market value
GTC (stock orders) & when must the B/D review these orders?
Good till canceled. B/D's are responsible to review these orders every 6 months
FOK (stock orders)
Fill or Kill-> customer wants a large order bought or sold immediatly, ie.... X amount of shares at a specific price right now or no deal at all
IOC (stock orders)
Immediate or Cancel-> similar to a FOK order only the entire order does not have to be filled in it's entirety. If the B/D can only get so many shares of the large order immediatly, then they buy them and cancel the rest of the order (the outstanding shares that they didn't get)
AON (stock orders)
All or None-> very similar to FOK, only the order does not have to be filled immediatly. The investor usually specifies the time in which it is to be completed and if it is not specified then it is considered to be a day order
GT Order
Good Till Order-> meaning it's good till a certain time, week, month or specific date
Either-Or Orders
Either-Or Orders is an order for someone who either wants a set amount of stock bought at a certain price, or the entire position sold at a certain price. This is to straddle the market per se, where if the price is going up, buy more, going down, sell it all
Which stock orders will have thier execution price reduced by the announcement of a cash dividend on the ex-dividend date
1. Buy Limit order 2. A Sell Stop order 3. A Sell Stop Limit order. The reason is all of the above are entered at a price below the current market price. Except in the case of a DNR (Do not Reduce) designation on the orders.
At what time (EST) does a cash trade settle?
A cash trade settles at 2.30 (EST) or a half hour after the trade if it occurs after 2 o'clock but the important thing to remember is settlement at 2.30PM EST on the same day as the trade
What is the settlement window on a buyer or sellers option settlement?
The trade settles anywhere from 4 business, to 60 calender days after the trade. Since regular way settlement on a gov't bond is 1 day the buyer or sellers option is a settlement anywhere from 2 business to 60 calender
What, if any, extensions are allowed on settlement of a transaction?
Under Reg T, the FRB allows for the extension of credit by the B/D to the purchasing customer for a total of 2 business days to remit payment on thier stock or bonds. The NASD on the other hand regulates the delivery of the stock or bonds and allows for 10 extra business days to deliver. In either scenario if the time is exceeded the account is frozen for a period of 90 days during which any and all transactions must be done on a same day cash trade basis
Shorting against the box is?
Is selling short the same postion that the investor already owns
When is the ex-dividend date for most mutual funds and who determines it?
In the case of mutual funds the ex-dividend date is determined by the board of directors! Unlike stocks where the only thing the board doesn't determine is the ex-dividend date. With mutual funds the ex date is usually the day after the record date, and leading up to the payment date I'd assume?
Stock Dividends of less that 25% usually have an ex-dividend date of what?
2 business days before the record date like cash dividends, BUT...when they are of more than 25% they have an ex-date of the day after the Payment date
Name the corresponding year to these Securities Acts: 1. Securities Act of.. 2.Sec. exchange act of... 3. Maloney Act of... 4. Trust Indenture Act of... 5. Securities Acts Ammendments of... 6. The investment Company act of... 7. The investment advisors act of... 8. Securities Investors Protection Act... 9. Telephone Consumer Protection Act
1. 1933, 2. 1934, 3. 1938, 4. 1939, 5. 1975, 6. 1940, 7. 1940, 8. 1970, 9. 1991
What securities are exempt from registering with the SEC? (8 Total)
1. U.S. government or its agencies
2. States, Municipalities, or Public Authorities
3. Maturities of LESS THAN 270 days (e.g. commercial paper, banker’s acceptance, etc.)
4. Issues of $5 million or less (Regulation A offerings)
5. Private Placements (Regulation D offerings)
6. Securities sold Intrastate (Rule 147 offerings)
7. Sales of RESTRICTED AND CONTROL SECURITIES (Rule 144 offerings)
8. Miscellaneous offerings like Religious, Charitable, and Educational Institutions
When is the ex-dividend date for most mutual funds and who determines it?
In the case of mutual funds the ex-dividend date is determined by the board of directors! Unlike stocks where the only thing the board doesn't determine is the ex-dividend date. With mutual funds the ex date is usually the day after the record date, and leading up to the payment date I'd assume?
Stock Dividends of less that 25% usually have an ex-dividend date of what?
2 business days before the record date like cash dividends, BUT...when they are of more than 25% they have an ex-date of the day after the Payment date. These stocks will trade with a Due Bill attached from the record date through the payable date.
Regulation A pertains to ?
Reg A covers initial offerings of $5mm or less done in a 12 month period. They are not required to fully register, but must submit to the SEC a registration letter (as opposed to a registration statement) and must wait out a 10 day cooling off period. Once that is done they can issue thier shares along with a offering circular.
Regulation D pertains to ?
Private Placement of Securities. It governs the size (rule 504-> 1mm or less; rule 505-> 5mm or less; rule 506-> unlimited offering) and who the offering can be sold to.
Reg D- Rule 506 restrictions?
1. Can only be sold to a max of 35 Un-accredited investors and an unlimited amount of accredited investors, 2. They do not permit advertising, 3. Resales are done under rule 144
Accredited investors ?
are INSTITUTIONS, DIRECTORS, OFFICERS or GENERAL PARTNERS of the issuer, or INDIVIDUALS with a net worth of 1 mm or more, or one that makes over 200 thousand in each of the last 2 years and is on pace to do so again in the current year
Rule 147 Offerings?
Are made by issuers HQ'ed in a particular state to residents of that state alone-> INTRASTATE OFFERINGS. The issuer must meet the following requirements....80% of thier gross revenues must come from operations in the state, 80% of proceeds from issue must be used for operations in the state, 80% of the issuers assets must also be in the state. And again 100% of the purchasers must be residents of the state. They also must be held for 9 months before they can be sold to someone outside of the state. Also Rule 147 offerings only need to be registered with the state they're issued in not the SEC.
Rule 144 Offerings
Are for the sale of previously unregistered securities (stocks bought in a private placement), or for sale of securities held by affiliated or control persons (an officer or controler of a company, or a person who owns 10% of the outstanding stock of the company). These shares are called restricted and control stock
Difference between Restricted and Control Stock
Restricted stock has a one year mandatory holding period
How many shares can be sold in a Rule 144 offering?
In a 90-day period, the amount of stock that can be sold under Rule 144 is limited to the greater of 1% of the outstanding shares or the average weekly trading volume of the four calendar weeks preceding the filing of the notice of sale.
When is filing with the SEC required in a Rule 144 Sale?
A FORM 144 must be filed with the SEC if the amount of securities sold is in excess of 500 shares or the proceeds greater that 10,000 in that 90 day sale period.
Reg T
Reg U
Reg G

TUG
Reg T -> margin requirements for accounts with, or credit extended by BROKER/DEALERS for the purpose of purchasing securities. Reg U-> for BANKS doing same. Reg G-> for all other financial institutions
SEC Rule 15c2-6 pertains to?
DESIGNATED SECURITIES or Penny Stocks that are OTC traded securities that are unlisted and trade for less than $5/share
What are the rules governing Sec Rule 15c2-6 securities?
Penny Stocks can be sold to clients who are suitable who have been clients with the firm for over one year or who has made at least three previous trades in designated securities.
The Maloney Act covers?
An ammendment to the '34 act made in 1938 that created the NASD
Passive Income and Losses
Passive Income and Losses are the result of investments in Limited partnerships. In 1986 the tax laws were changed on these to stipulate that Passive Income needs to be treated as Ordinary income in the year realized, and can only be offset by Passive Losses from another limited partnership and vice versa. Passive Losses cannot be deducted from Ordinary Income, but can be realized as a capital loss when selling or ending a partnership
A limited partnership can be dissolved when?
1. The remaining General Partners take action to liquidate the assets, 2. The Limited Partners sue in a court of law for the dissolution of the LP, 3. The courts step in (BK) and liquidate it
What is the order of payout when an LP is dissolved
1. Secured Lenders
2. General Creditors
3. Limited Partners
4. General Partners
Non-Managed Offerings -vs- Managed
(Limited Partnerships)
Non-Managed are sold to the public through a General Parner/Sponsor's own sales staff, or sometimes B/D's that report to the Sponsor/General Parner. Managed offerings are handled much like a stock underwriting where a firm handles everything for the issuer
The tax preference items for the alternative minimum tax are:
1. Intangible drilling costs — known as “IDCs”
2. The amount of percentage depletion in excess of cost depreciation — known as “depletion”
3. Accelerated depreciation — known as “depreciation”
4. Interest on municipal bonds subject to the AMT (Private Activity Bonds)
5. Other excess expenses or deductions that are being taken at an accelerated amount
6. The accelerated depreciation amount over the straight line amount
What is the Constant Yield Method or the Constant Interest Method?
The Constant Yield method is an equation used to determine the cost basis for bonds bought at a discount or premium, or Original Issue Discount (OID) also known as zero coupon bonds. This method only applies to bonds issued after 1985. Prior to 1985 you would use a straight-line method.
What is the equation used to determine the accretion or amortization based on the Constant Yield Method?
The first period's accretion/amortization (6mos) is determined by multiplying the offering price by one half the yield to maturity and then subtracting the actual amount of interest recieved
How is the cost basis calculated on options that are exercised?
Premiums are added to strike price on CALLS. Subtracted from strike on PUTS, to give you a cost basis for tax purposes. REMEMBER-> CALL UP, PUT DOWN
The current ratio and the acid test ratio are...
ways of determining a companies liquidity from it's balance sheet
To calculate the Current Ratio....
Divide Current Assets by Current Liabilities
What is the basic formula underlying a "double-entry balance Sheet"
Total Assets= Total Liabilities + Net Worth
Determine Working Capital from a balance sheet...
Working Capital = Current Assets - Current Liabilities
What is the debt/equity ratio?
Debt/Equity Ratio = Total long term debt (bonds) divided by total Net Worth
What is the Divident-Payout Ratio?
Total common dividend, divided by available income.....OR.....Common dividend per share divided by earnings per share
Time Value of options equation
Time Value = Premium - intrinsic value
Intrinsic Value of options equation?
Intrinsic Value= AMOUNT IN THE MONEY= Strike price - market value (for puts) or Market Value - Strike Price (for Calls). NOTE: options only have intrinsic value if they're in the money
Calculate Net Premium
Same equation as Time Value since the two terms are used to describe the same thing
If an Index option is exercised at 11am when the index price is at $125. At what price is the option exercised?
INDEX OPTIONS ALWAYS EXERCISE AT THE MARKET CLOSING PRICE
How long after a new issue is registered will it be shown on the Nasdaq system?
THE EFFECTIVE DATE
If a spread is a debit spread, does the investor want the spread to widen or narrow?
Widen....because a debit spread is a negative net number. If it were a positive you'd want it to narrow. Remember Narrow Ahead, Wide Behind. Ahead on premiums or behind on premiums
A US Govt bond is selling in the market at 97.8 The dollar value of this bond is?
972.50....remember GOV'T BONDS are quoted in 1/32nds so 8/32nds is 1/4 or .25
Strips stands for
Separate Trading of Registered Interest and Pricipal of Securities
What are the current maturities for T-Bills?
Currently an investor can buy T-Bills with maturities of One month (4 weeks), Three months (13 weeks), or Six months (26 weeks)
When is a corporation subject to the Trust Indenture Act of 1939?
Whenever a company is issuing more than $10mm in debt they must provide an indenture(agreement) between the issuer and a trustee who will act on behalf of the bondholders
When must a firm supply someone with a privacy notice?
When that person establishes a relationship with the firm, ie. opens an account and becomes a customer. Someone inquiring about the firms products and services is mearly a consumer and does not need to recieve the Privacy Notice
Why must a firm supply a privacy notice?
When the firm intends to disclose any nonpublic personal information to any nonaffilited third party. The Notice must state the types of info they collect and the categories of third parties that they may potentially disclose this information to
Interest earned on the securities of what 3 Government Sponsored Enterprises is exempt from State and Local taxes?
FFCB's (Federal Farm Credit Banks), FHLB's (Federal Home Loan Banks, SLMA's (Student Loan Marketing Association)
What are the 3 rules regarding CMO ads?
1. They must be filed with the NASD at least 10 days before use. 2. If Disapproved they must be refiled and approved before thier use. 3. They may not be compared to other types of investments.
Can muni's be fully taxable?
Yes. Taxable Muni's are bonds issued by the state or an organization, like a university, that exceed a threshold for outstanding issues (generally 150mm) set by the Tax reform act of 1986. This also applies to issues labled private activity bonds like those used to finance a sports arena.
The final prospectus must be distributed to any purchaser for how many days from the effective date?
If the security is to be listed on a national exchange or NASDAQ....25 days from the effective date. If it is OTC and unlisted then it is either 90 days if the company has never issued stock before, or 40 days if they have
What result would a 3/2 stock split have on 10 call contracts with a $60 strike?
On odd stock splits the contract amount stays the same, the strike price gets dropped and the premium gets dropped, but the number of shares each contract can purchase gets adjusted by the split. In this case a 3/2 split would allow the holder to purchase 150 shares vs 100
What is a Subscription Agreement?
A Subscription Agreement is the document that allows an investor to participate in a limited partnership. The SA must be accepted/signed off on by the General Partner for the investor to become a limited partner
Recourse Loan
In a Recourse Loan the lender has the right to any asset of the individuals in the partnership. Therefore the investors/partners share of that loan gets added to thier basis.
Non-Recourse Loan
In this case a lender has no recourse to go after the individual partners is a business defaults on the loan. These are usually secured by an asset of the partnership. Therefore this does not increase the partners basis, unless the company is involved in real estate.
A Functional Allocation agreement in a LP is a...
Is an agreement where deductible program expenditures are charged to the investors, and all nondeductible costs are borne by the sponsor
An Overriding Royalty Interest in a LP is a...
is an agreement where the sponsor does not share in any of the program's costs but shares in revenues from the start of the oil well's production. The interest is usually small ranging from 5 to 10% of gross production
A Revisionary Working Interest in a LP is a....
is an agreement where the sponsor does not share in the programs costs, and DOES NOT SHARE in the production revenues until the investors have recovered their costs. This is also referred to as a Subordinated Working Interest
A Disproportionate Sharing Arrangement in an LP is a...
an agreement where the Sponsor bears a portion of the costs in return for a higher proportion of the revenues
What are the tax implications of common and preferred stock dividends for corporations
Corps are able to exclude dividends earned on stock issued by other corps based on the following equation....if the company owns less than 20% of the issuer's stock it must declare 30% of the income and 70% is excluded. If they own more than 20% then they declare 20% and exclude 80%
Option Cap Contract
Is an index option that has a cap of a certain amount of points in the money at which it will automatically exercise. With a max of 30 points. This is the only option that will automatically exercise prior to expiration....equity options automatically exercise AT expiration
Dow Theory
A theory of market analysis based on the performace of the Dow Jones Industrial and Transportation stock price averages. What the theory basicly says that when these two averages move in the same direction and while one or the other passes an important high water mark, then the market is moving along with it.
Intangible Drilling Costs
Can be characterized as items having no salvage (residual) value. These costs would include..site prep costs, labor, chemicals, testing and core analysis, drilling mud, supplies, fuel. In essence it's anything that CANNOT BE USED AGAIN and CANNOT BE DEPRECIATED
Strategy:
Bullish or Bearish?

BUYING CALLS
Bullish
Strategy:
Bullish or Bearish?

BUYING PUTS
Bearish
Strategy:
Bullish or Bearish?

WRITING UNCOVERED CALLS
Bearish
Strategy:
Bullish or Bearish?

WRITING UNCOVERED PUTS
Bullish
Strategy:

WRITING COVERED CALLS
Limited hedge + income
Strategy:

WRITING COVERED PUTS
Limited hedge + income
Strategy:

BUYING A PUT TO PROTECT A LONG POSITION
Fully Hedge
Strategy:

BUYING A CALL TO PROTECT A SHORT STOCK POSITION
Fully Hedge
Strategy:

LONG STRADDLE
Expects Price Volatility (widen)
Strategy:

SHORT STRADDLE
Expects Price Stability (Narrow)
Strategy:

All Spreads
Bulls are long the lower Strike

Bears are short the lower strike
Short Swing Profit
Is a profit from sale of shares HELD BY INSIDERS FOR LESS THAN 6 MONTHS. This profit must be forfeited back to the issuing company, or the company has the right to sue for those profits
When a Bond Sells at a Premium how is it quoted?
If there is no call it is quoted as a YTM. If there is a call it depends on if the call is at par or at a premium. IF CALLED AT PAR then it is quoted at YIELD TO CALL. If CALLED AT PREMIUM then it can be YTC or YTM depending on which is less. IF THE BOND SELLS AT A DISCOUNT it is ALWAYS represented as YTM.
At what age does someone qualify for the IRA Catch Up Provision? And how much is it?
At 50 an investor can contribute 500 over the current allowable amount of of 4000
What is the penalty for over-contributing to an IRA?
There is a 6% penalty on the overage, and the amount is not tax deductible, not tax deferred in any way.
What types of early withdrawals are allowed in an IRA without a 10% penalty? (5 of them)
1. Death
2. Disability or mental incompetence of the account owner
3. Payment of certain medical expenses
4. Payment of qualified higher education expenses
5. Payment of first-time home buyer expenses
What is the max contribution a person can make to a 529 without incurring a gift tax?
Currently it is $55,000 on an initial gift which is treated as if it were made over a 5 year period at $11,000 a pop (the current gift tax trigger)
What is the max Keogh contribution amount?
Either 100% off earned income or $40,000 (now $41,000) whichever is less
If an individual works at a company that has a retirement plan, can they make an IRA contribution?
Yes. As long as they don't make 75k a year. IF THEY DO make more, but their company doesn't have a retirement plan they they can contribute.
If a married couple both have retirement plans at work can they contribute to and IRA?
Yes as long as thier joint income is not more than 150k a year. If one spouse doesn't work....ie. doesn't have earned income to qualify to contribute, their working spouse can contribute into a spousal IRA for them, provided the joint income is not more than 150k then it makes sense to do that...if it's over 150, then it doesn't.
What is the longest maturity that a negotiable CD can have?
There really isn't one. Most are for 1 year or less, but there is no rule stateing that they have to be.
How do % changes in the DJIA affect trading on the markets?
1. If it changes 2% from prev. close TRADING CURBS are put in place on program trading and index arbitrage.
2. If it drops 10% trading is halted for 1 hr
3. 20% ...trading halted for 2 hrs
4. 30% down and they shut er down for the day
What is a SHELF REGISTRATION?
Shelf Registration allows the issuer to file a registration statement on a new issue and then to sell the securities in a 2 year window when the firm feels it is appropriate
Reg T applies to?
I. Cash Accounts
II. Margin
III. Commodity Accts
IV. Munibond Margin Accounts?
I&II Reg T does not apply to any other accounts. Commodity deposit requirements are set by thier respective markets, and on Municipals the NYSE requires a 7% of MV margin deposit.
A customer is considered a patterned day trader if...?, and what is the min equity they must carry if they are one?
4 or more day trades are executed over any 5 day period. If they fall under the heading of a pattern day trader they must have a min equity of 25k.
In an ADVANCED REFUNDING, what type of bonds must be deposited in escrow
only TREASURY BONDS are acceptable deposit for advanced refunding.
What is a Married Put?
A Married put is what happens when an investor buys stock and in the same day buys a put. The reason is the premium paid for the put gets added to the cost basis of the stock. If they're not purchased on the same day, then they are treated separately. Additionally buying a put can destroy the holding period of a stock that you've held for a while and is approching the year holding or long term capital gain phase. If you buy a put on that security after you've held it for 9 months that 9 months is thrown out the window and your holding period doesn't start again until the put expires.
A Recapture Provision is?
Recapture refers to any depreciation, depletion, or tax credits that were taken on a DPP property that were later disallowed by the government. This usually occurs when the property is sold and a portion of the gain then has to be considered ordinary income and not capital gain....for instance when a company uses accelerated depreciation, but then sells too soon for IRS to accept the accelerated depreciation.
The Leading Market Indicators are? (11 total)
1. Avg workweek for production workers in manufac
2. Avg weekly initial claims for unemployment
3. New orders for consumer goods and materials
4. Vendor Performance
5. Cantracts and orders for plants and equipment
6. New building permits for private houseing
7. Changes in inventories on hand and on order
8. Changes in sensitive material prices
9. Prices of S&P 500 Common
10. The money supply
11. Changes in credit extended to business and consumers
The Lagging Market Indicators are? (7 total)
1. Corp profits
2. Avg duration of employment
3. Relationship of inventories to sales to trade
4. labor cost per unit of output for manfactured goods
5. Avg prime rate
6. Commericial and industrial loans outstanding
7. relationship of consumer installment credit to personal income
For INITIAL TRANSACTIONS in margin accounts, the minimum deposit is What? for long and short accounts?
For Long accounts it is the lesser of 100% or $2000

For Short accounts the min is $2000.
If a customer has not yet returned a signed options agreement form within the 15 days after the account has been approved what actions may they take in the account?
They can only close out existing postions until the form is returned. They cannot open any new ones until the rep has that form.
A Corp Bond portfolio can be diversified by looking at these 4 aspects?
1. Issuers
2. Coupons
3. Maturities
4. Geographic Locations
What are the filing rules for Advertisements when it comes to investment products, and investment companies??
The Products ads must be filed with the NASD 10 days prior to use.

The Investment Co. ads (mutal funds, UIT's, etc.) must be filed w/i 10 days of thier initial use.