Series 7 Part 2

Front 1

Option even stock split effects (strike price, shares, contracts)

Back 1

Shares stays same

Contracts and strike changes

Front 2

Option ODD stock split effects

Back 2

Shares and strike changes

Contracts stay the same

Front 3

ODD option split what to do

Back 3

Assume 100 shares for original

Find new # of shares

Find new strike price

Front 4

Position limits for options

Back 4

250,000 contracts for buy calls, or sell puts

250,000 buy puts sell puts and or sell puts

Front 5

Options tax consequence if expires

Back 5

Premium recognized as gain/loss in month of expiration

Front 6

Narrow based stock index option (sector) has max how many stocks?

Back 6

<= 9 stocks

Front 7

Stock index option multiplier per contract

Back 7

$100/contract

Front 8

3 Types of investment companies

Back 8

1. Face Amount Certificate

2. Unit investment Trust

3. Management Company

Front 9

Unit Investment Trust (UIT) Characteristics

example:

Back 9

Fixed Portfolio, no active management

No BOD

Redeemable sec. undivided interest in portfolio

Ex: ETF, Muni Bond Trust

Front 10

ETF Characteristics

Back 10

Can short, can buy on margin

Front 11

Management company characteristics

Back 11

Actively manages portfolio, stated investment objective

Hires an investment adviser

Closed and open-end( MF)

Front 12

Single highest expense to investor of management company

Back 12

Management Fee

Front 13

Closed-end funds trade in _____ market:

Price determined by:

Back 13

Trade in secondary market

Priced by supply and demand

Front 14

Mutual funds:

Back 14

Register continuous offering of redeemable shares

Front 15

Mutual Funds have_____ value:

Back 15

Loan value

Front 16

Price of mutual funds uses:

Back 16

forward pricing - reprices at market close

Front 17

How to calculate sales charge for mutual funds

Back 17

POP - NAV/POP

Front 18

Max sales charge for MF is:

Set by:

Back 18

8.5%

Set by FINRA

Front 19

Benefit of Mutual fund breakpoints:

Back 19

More money invested, less sales charge %

Front 20

MF Letter of intent

Time horizon?

Back 20

Discount on sales charge if you say you'll invest more within 13 months

30 now, pledge 30 later

Front 21

How long can you backdate the letter of intent?

Back 21

90 days

Front 22

Rights of accumulation:

Time horizon

Back 22

Pay breakpoint level including capital gains, not just original invested

No time horizon

Front 23

What do class - A shares do? (MF)

Back 23

Up front sales charge

Front 24

12b-1 fees?

Back 24

MF marketing fees

Front 25

Tax rate on mutual fund based on:

Back 25

MF's holding period (how long they hold it not you)

Front 26

Switching (MF)

Back 26

Same as churning (illegal)

Front 27

Annuities are a legal contract between:

Back 27

You and life insurance company

Front 28

Purpose of annuities

Back 28

Supplement retirement income

Front 29

Variable annuities must be registered with:

Back 29

SEC

Front 30

What is a 403(b) plan?

Back 30

Variable annuity for non for profit workers

Front 31

A 403(b) plan is a type of:

Back 31

Qualified Variable Annuity

Front 32

Qualified Variable annuity tax structure:

Back 32

Pre-tax contribution

Tax-deferred growth

Whole thing taxed as ordinary income at withdrawal

Front 33

Non-qualified variable annuities tax structure

Back 33

after-tax contribution

tax-deferred growth

only growth is taxed (not principal) at withdrawal

Front 34

During accumulation stage of VA, contributions are placed in:

Back 34

Separate account

Front 35

In separate account (VA), investor purchases units in the annuity's:

Back 35

Sub accounts (like MF)

Front 36

Variable Annuity death benefit:

Back 36

If die before annuitization period, will get the larger of current value or amount invested

Death benefit ends at annuitization

Front 37

When does annuitization start for variable annuities

Back 37

59 1/2

Front 38

Number of annuity units depends on:

Back 38

Contract value, payout option

Age, gender, and AIR amount int. rate

Front 39

VA payout option which gives the largest cash flow per paymen

Back 39

Straight line (no more payments after die

Front 40

Next months payment will be higher if

Separate account performance > AIR

Back 40

Statement

Front 41

Regulations set by FRB that deal with extension of credit for buying on margin

Back 41

Regulation T, U, X

B/d, Bank, foreign bank to US investors

Front 42

Porfolio margin customer must be qualified to:

Back 42

Write uncovered calls ( high net worth)

Front 43

Non - marginable securities

Back 43

MF

New issue (wait 30 days after issue)

Penny Stock

9 month option

Front 44

When is account put on restricted list regarding margin

Back 44

Equity is less than Reg T (50%)

Front 45

How low can LMV go before margin call

Back 45

MIN LMV = DR/0.75