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33 Cards in this Set
- Front
- Back
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Self-Regulatory Organizations function under whose oversight? |
SEC |
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Chicago Board Options Exchange |
All trades take place on this exchange |
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Municipal Securities Rulemaking Board (MSRB) |
Regulates all matters related to Underwriting and trading of state and municipal securities. Does NOT enforce. FINRA does. |
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What (7) actions does the Federal Reserve Board take? |
1. Acting as an agent for U.S. Treasury 2. Regulating money supply 3. Setting reserve requirements 4. Supervising printing of currency 5. Clearing fund transfers 6. Examining members to ensure compliance 7. Auditing deposit taking activities to member banks |
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Securities Investor Protection Corporation (SIPC) |
Under SEC. Nonprofit. Protects if liquidated. General insurance fund used to meet customer claims in event of a BD Bankruptcy |
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SIPC Coverage |
Up to $500,000 per separate customer. $250 cash. Commodities and commodities futures are not covered because they are not securities. |
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What happens if claim of customer account exceeds the SIPC coverage limit? |
The customer becomes a general creditor of the BD for the uncovered amount. |
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Market makers |
Ready to buy or sell in order to be profitable (goal). Also called market traders |
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Capital Markets |
Stock and bond markets. Both public and private sectors sell securities to raise funds. Can raise capital through sales of securities. Can be bought by individuals and institutions. |
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Primary market |
Securities are sold to the investing public in what are known as issuer transactions. Issuer receives proceeds generated from the sale of securities. |
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Secondary Market |
Securities trade between investors. No issuer included. Ex. NYSE |
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Third Market |
Exchange listed securities are traded in the OTC market. All securities listed on NYSE and most listed on regional exchanges are eligible for OTC trading. Must be reported to consolidated tape within 10 seconds of execution. Ex. NASDAQ Intermarket |
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Fourth Market |
Institutional investors which large blocks of stock, listed and unlisted, trade in transactions unassisted by BDs. Take place electronical communications networks (ECN) Open 24 hours a day to act as agents only. |
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The FRB affects the money supply by which three policy tools? |
1. Open market operations (buying/selling Gov. Securities) 2. Changing the discount rate 3. Changes in reserve requirements |
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Monetary vs Fiscal Policy |
Monetary: FRB engages to influence money supply (capital available to be lent to consumers and spent in the economy)
Fiscal: Governmental budget decisions by President and Congress. Assuming government can control forces like unemployment and inflation. Can increase or decrease the following: 1. Fed spending 2. Money raised through taxes 3. Federal surplus or deficits
Ex. Tax laws
Not the most efficient to solve short term economic problems. |
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What are other names for the Securities Act of 1933 |
1. Paper Act 2.Full Disclosure Act 3. New Issues Act 4. Truth in Securities Act 5. Prospectus Act |
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Who are the restricted persons not allowed to purchase shares at the POP (public offering price)? |
1. Member firms and their employees 2. Finders and fiduciaries acting on behalf of the managing underwriter. Ex. Attorneys, accountants, financial consultants, etc. 3. Portfolio managers or anyone who has the authority to buy or sell securities for a bank, insurance company, loan association, or investment company 4. Any person owning 10% or more of member firm 5. Any immediate family (parents, in laws, spouses, siblings. Children, or who that person provides material support) of any person 1-4 |
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Who is exempt from being a member for the SIPC? |
1. Banks that deal only with municipal securities 2. Deal exclusively with U.S. government securities 3. Deal exclusively in redeemable investment company securities |
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Securities offering may qualify for exemptions from the registration statement and prospectus requirements. What four are they? |
1. Regulation A 2. Regulation D 3. Rule 147 4. Regulation S |
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Rising inventories generally occur during what period? |
Contraction |
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What is a Carrying (Clearing) Firm |
Carries customer accounts and accept funds and securities from customers. They do trade executions, clear and settle transactions, take custody of customer funds and securities, and handle all back office tasks. Larger BDs. More risky. |
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Introducing Firms (Fully Disclosed) |
Introduces its customers to a clearing firm. May receive customer checks but they must be made out to the clearing firm. |
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Full-Service Firms |
Carrying firms or clearing firms who clear own transactions. |
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Accredited Investor |
1. Net worth over $1 million not including home 2. Annual income $200k (or $300k joint with spouse) past two years and should continue this year. |
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Expansions in the business cycle? |
1. Increased consumer demand, 2. Increase in Industrial production 3. Rising stock prices 4. Rising property values 5. Increasing GDP |
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Downturns in the business cycle |
1. Increased bankruptcies 2. Higher consumer debt 3. Falling stock prices 4. Rising inventories 5. Decreasing GDP |
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When would a contraction be considered a recession? |
2 quarters or six months |
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When would a contraction be considered a depression? |
6 quarters or 18 months |
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What happens when the U.S. Dollar is strong? |
Exports decrease, imports increase, and GDP decrease |
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What happens when the U.S. Dollar is weak? |
Exports increase, imports decrease, and GDP increase |
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Gross Domestic Product (GDP) |
A nation's annual economic output - all goods and services produced within the nation.
Ex. Personal consumption, gov spending, gross private investment, foreign investment, etc. |
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Gross National Product (GNP) |
Ownership based. All goods and services produced within the company. Ex. P&G location in Germany |
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What's included in M1 of the money supply? |
Now checks, credit union share drafts, demand deposits at savings banks, checking accounts, paper currency, coins, and all of M2 and M3 |
