series 6 exam unit one

0.0(0)
studied byStudied by 0 people
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/49

encourage image

There's no tags or description

Looks like no tags are added yet.

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

50 Terms

1
New cards

Capital Appreciation

Increase in the market price of shares.

2
New cards

Realized Capital Gain

When an investor sells a security that’s exceeded its market price.

3
New cards

Realized Capital Loss

When an investor sells a security for less than what they paid for it.

4
New cards

Unrealized Capital (Gain or Loss)

The value of the security has changed, but the investor hasn’t sold it yet.

5
New cards

Adjustable-rate Preferred Stock

The dividend payments adjust based on interest rates.

6
New cards

Are corporations required to issue preferred stock?

No, just common stock.

7
New cards

Preferred stocks are suitable for what type of investor?

Income-orientated investors.

8
New cards

Common stocks are suitable for what type of investor?

Growth-orientated investors who are willing to assume moderate risk.

9
New cards

What is the par value of a preferred stock?

$100.

10
New cards

Straight/Noncumulative Preferred

Pays a fixed dividend; if the company misses a dividend, the shareholder losses out.

11
New cards

Cumulative Preferred

The company pays back accumulated dividends they’re able to pay them.

12
New cards

Convertible Preferred

An investor can convert each share of preferred stock for common stock.

13
New cards

Participating Preferred

Shareholders can have a piece of the corporation’s profits after dividends and interest rates after they’ve been paid.

14
New cards

Callable Preferred

The company can call back the stock at a set price after a certain date.

15
New cards

Put Feature

Investor sells back security to the issuer when interest rates rise.

16
New cards

Convertible Feature

Allows the investor to convert a preferred stock or bond into a fixed number of common shares.

17
New cards

Which feature(s) benefit the issuer?

I. Put Feature and Convertible Feature

II. Put Feature

III. Call Feature

III. Call Feature and Put Feature

III. Call Feature

18
New cards

Which feature(s) benefit the bondholder?

I. Put Feature and Convertible Feature

II. Put Feature

III. Call Feature

III. Call Feature and Put Feature

I. Put Feature and Convertible Feature

19
New cards

Does the issuer pay a higher or lower coupon rate with a call feature?

Higher.

20
New cards

Does the issuer pay a higher or lower coupon rate for Convertible and Put Features?

Lower.

21
New cards

Money Market Instruments

Debt securities with less than a year of maturity.

22
New cards

Bankers’ Acceptance

Used by American corporations to finance international trade where the bank guarantees the payment.

23
New cards

What are Money Market Instruments suitable for?

Emergencies and taking advantage of investing opportunities,

24
New cards

What risk do money market instruments have?

Inflation risk.

25
New cards

BA Maturity

1 to 270 days.

26
New cards

Commercial/Prime Paper

Short-term unsecured promissory note (loan) issued by corporations to raise quick cash.

27
New cards

When do Commerical Papers mature?

1 to 270 days—usually 90 days.

28
New cards

Negotiable CDs

Issued by the bank—a large-denomination certificate of deposit (usually $100,000 or more).

29
New cards

Index Options

Investors can profit from the movements of markets or market segments and hedge against market swings.

30
New cards

When do index options settle?

Next business day.

31
New cards

When do equity options settle?

One business day.

32
New cards

How do you calculate capital gains and losses?

Sales proceeds - Adjusted cost basis

33
New cards

Securities Act of 1933

Require issuers of new securities to file registration statements with SEC to provide investors with accurate information about the investment.

34
New cards

What is allowed during the cooling off period?

Distributing red herrings, publishing tombstone advertisements, and gather indications of interest.

35
New cards

Can you offer securities for a sale during the cooling-off period?

No.

36
New cards

Can you disseminate sales literature and advertising material during the cooling-off period?

No.

37
New cards

Can you take orders during the cooling-off period?

No.

38
New cards

Preliminary Prospectus

Used to gauge investor interest and indicators of interest after filing with the SEC.

39
New cards

Final Prospectus

Official document investors receive before purchasing shares of a new offering.

40
New cards

What 6 issuers are exempt from registration?

  1. U.S. Government

  2. Municipalities

  3. National and State Bank securities

  4. Building, savings, and loan securities

  5. Charitable, religious, educational, nonprofit securities

  6. Interests in common carriers

41
New cards

Regulation A

Eases registration requirements for medium to small-sized companies to raise capital.

42
New cards

Regulation A Tier 1

  1. Securities offerings up to $20 million

  2. No more than $6 million can be sold on behalf of existing selling shareholders

43
New cards

Regulation A Tier 2

  1. Securities offerings up to $75 million

  2. No more than $22.5 million can be sold on behalf of existing selling shareholders.

44
New cards

Rule 147

Company sells securities within one state.

45
New cards

What are the qualifications for Rule 147?

  1. Company must be based in the state

  2. 80% of revenue, assets, and proceeds must be in that state

  3. Majority of its employees work within the state

46
New cards

What’s the 6 month rule for Rule 147?

Securities can’t be resold to out-of-state residents for 6 months.

47
New cards

Regulation D

A company sells securities privately to specific investors (35 accredited), not the general public.

48
New cards

Who has to approve changes made to an order?

A principal or branch manager.

49
New cards

Cash Settlement

Delivery of securities from the seller and payment from the buyer on the same day a trade is executed if it occurs before 2:30 pm EST.

50
New cards

Interpositioning

Adding another broker-dealer to a transaction when there is no benefit to the buyer or seller.