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Securities and Exchange Commission (SEC)
Government oversight agency responsible for securities regulations in the U.S.
Securities Act of 1933
Federal legislation requiring issuers to disclose material company information to protect investors from fraud.
Securities Exchange Act of 1934
Federal legislation that regulates securities trading on the secondary market and requires certain issuers to file periodic reports with the SEC.
Investment Advisors Act of 1940
Federal legislation that sets forth regulations for investment advisors. It requires registration with the SEC and adherence to certain standards of conduct and fiduciary duties.
Investment Company Act of 1940
Federal legislation that regulates investment companies, such as mutual funds, and requires disclosure of financial condition and investment policies.
New York Stock Exchange (NYSE)
Largest stock exchange in the world with rigorous listing requirements for companies.
Chicago Board Options Exchange (CBOE)
Largest options exchange in the world, facilitating trading in put and call options.
Financial Industry Regulatory Authority (FINRA)
Not-for-profit organization overseeing broker-dealers in the United States, protecting investors and ensuring market transparency.
Municipal Securities Regulatory Board (MSRB)
Writes and enforces rules and procedures for firms and banks selling municipal bonds and other municipal securities.
United States Treasury
Executive department overseeing government revenue, including the Internal Revenue Service and the Financial Crimes Enforcement Network.
Internal Revenue Service (IRS)
Bureau of the United States Treasury responsible for collecting taxes and administering tax laws.
Federal Reserve (The Fed)
Central bank of the United States, responsible for monetary policy and regulating banks.
State Regulators
These are responsible for licensing securities firms, registering securities offerings, and enforcing state securities laws in each state.
Federal Deposit Insurance Corporation (FDIC)
Independent U.S. government agency providing deposit insurance to U.S. bank depositors.
Securities Investor Protection Corporation (SIPC)
Created to restore trust in the U.S. securities industry and insures eligible investors for up to $250,000 in cash in their brokerage accounts.
Foreign Country Regulators
Government regulatory agencies in other countries similar to the SEC.
Retail Investors
Individual investors who buy and sell securities for personal goals.
Accredited Investors
Individuals or entities meeting certain requirements to trade in private securities not registered with the SEC.
Institutional Investors
Legal entities such as banks, insurance companies, and mutual funds that trade in securities on behalf of clients or shareholders.
Broker-Dealers
Entities that trade in securities on behalf of clients or on behalf of themselves.
Introducing Brokers
Brokers that receive orders for securities but contract with a clearing firm to process them.
Clearing Firms
Firms that hold customer accounts and are responsible for clearing trades and ensuring settlement.
Prime Brokers
Brokers that provide services to large financial institutions, such as trade clearing and settlement.
Investment Advisors
Individuals or companies paid to provide advice about securities investments and manage investment portfolios.
Municipal Advisors
Firms that provide advice on municipal financial products and the issuance of municipal securities.
Issuers
Legal entities that fund their operations by selling securities to investors.
Underwriters
Individuals who facilitate the sale and distribution of an issuer's securities by pricing and purchasing the securities from the issuer.
Market Makers
Brokerage firms that provide availability for public investors to buy or sell stocks and bonds. They typically buy and sell securities of specific companies to provide liquidity in the market.
Custodians
Entities that hold and safeguard assets for safekeeping.
Trustees
Individuals or organizations responsible for governing a trust and managing assets on behalf of the beneficiary.
Transfer Agents
Intermediaries between securities issuers and holders, responsible for maintaining security holder records and distributing dividends.
Depository Trust & Clearing Corporation (DTCC)
Manages clearing and settlement processes for most securities transactions in the United States.
Primary Market
Market for newly created debt and equity securities, where investors purchase securities directly from issuers.
Secondary Market
Market where publicly traded securities are bought and sold between investors, facilitated by stock exchanges and brokerage firms.
Third Market
Over-the-counter trading of exchange-listed securities between institutional investors and broker-dealers.
Fourth Market
Market for the trading of large blocks of securities between institutional investors, processed through an Electronic Communications Network (ECN).
Foreign Markets
Markets that provide access to international securities, such as American Depositary Receipts (ADRs) and Regulation S Offerings.
Monetary Policy
Actions taken by the Federal Reserve to maintain the health of the U.S. economy, such as adjusting interest rates.
Fiscal Policy
Actions taken by Congress and the President to set tax rates and policies to influence the economy.
Leading Economic Indicators
Indicators that provide insight into the future direction of the economy, such as stock market returns and building permits.
Lagging Economic Indicators
Indicators that reveal trends in the economy after major events have occurred, such as unemployment rate and corporate profits.
Coincident Economic Indicators
Indicators that provide information about the current state of the economy, such as gross domestic product and retail sales.
Inflation
A decrease in the purchasing power of money due to an increase in the prices of goods and services.
Cyclical Industries
Industries that follow the standard business cycle, performing well in good economies and poorly in down economies.
Defensive Industries
Industries that provide goods we use in our daily lives and are not significantly impacted by the state of the economy.
Growth Industries
Industries expected to grow faster than the overall economy, such as technology and healthcare.
Keynesian Economic Theory
Theory that government expenditures and tax changes can prevent or repair economic recessions.
Monetarist Economic Theory
Theory that controlling the money supply and letting the market work itself out is essential for a healthy economy.
Balance of Payments
Net transactions between one country's government bodies, companies, and individuals and those of outside countries.
Gross Domestic Product (GDP)
Total value of all goods and services produced within a country by its nationals and foreigners alike.
Gross National Product (GNP)
Total value of all goods and services produced by the citizens of a country, regardless of where they live.
Exchange Rates
Rates at which one currency can be converted to another.
Public Offerings
Offerings of securities to the general investing public, including initial public offerings (IPOs) and follow-on offerings.
Private Offerings
Offerings of securities to a narrowly defined group of investors who meet strict wealth and sophistication requirements.
Shelf Registrations
Registration of securities offerings on a delayed or continuous basis, allowing issuers to sell securities quickly when market conditions are favorable.
Offering Documents
Documents provided to investors in securities offerings, such as prospectuses, private placement memoranda, and official statements.
Exempt Securities
Regulatory Filing Requirements - Securities not required to be registered with the SEC.
Common Stock
Provides fundamental ownership position in a corporation
Common Stock Equivalents
Securities that can be converted into common stock
Preferred Stock
Stock with certain advantages, including fixed cumulative dividends and priority liquidation
Pre-emptive Rights
Rights of existing shareholders to maintain their share ratio
Warrants
Certificates that give the holder the right to buy common shares at a fixed price on a set date.
Stock Options
Can provide rights to buy common shares at a set price
Repurchase Agreement (Repo)
Agreement to purchase and repurchase securities
American Depository Receipts (ADRs)
Certificates representing shares of a foreign company's stock
Voting
Right of common shareholders to have a say when choosing the Board of Directors
Restricted Stock
Stock acquired in private, unregistered sales by an issuer or an affiliate of the issuer.
Control Stock
Equity shares owned by major shareholders of a publicly traded company.
Interest Rate Risk
Risk of bond value decreasing due to fluctuations in interest rates
Inflation Risk
Investment risk involving the declining purchasing power of money
Credit Risk
Risk of issuer defaulting on loan payments
Liquidity Risk
Risk of difficulty selling a security quickly
Political Risk
Risk of default or debt downgrade due to political challenges
Callable Bonds
Bonds that can be paid off by the issuer before maturity
Puttable Bonds
Bonds that can be sold back to the issuer before maturity
Zero-Coupon Bonds
Bonds that do not pay interest, but are sold at a discount
Variable Life Insurance
Permanent life insurance policy with cash value invested in securities
Separate Accounts of Variable Annuities
Accounts where variable annuity investments are held
529 College Savings Plans
Municipal securities used to save for qualified post-secondary educational expenses. Account earnings grow federally tax-free, with potential state tax deductions.
Municipal Fund Securities
Savings plans sponsored by states to save for qualified educational or disability expenses.
Advisor-Sold Plans
Plans offered through registered broker-dealers or RIAs. Offer better portfolio flexibility but higher fees
Direct-Sold Plans
Plans offered directly by the state. Include fixed portfolios with lower fees.
Achieving a Better Life Experience (ABLE) Accounts
Municipal fund securities that allow Americans with disabilities to save for disability-related expenses. To be eligible, individuals must receive Supplemental Security Income (SSI) and/or Social Security Disability Insurance (SSDI) or have a documented diagnosis of blindness or other disability prior to the age of 26.
Local Government Investment Pools (LGIPs)
Investment vehicles established by state governments to pool resources of local governmental entities.
Direct Participation Programs (DPPs)
Limited liability corporations, real estate investment trusts (REITs), or limited partnerships that act as limited partnerships all fall in this program category.
Investor
DPP profits are taxed only once at the ________ level.
Tenants in Common (TIC)
Fractional ownership interests in real estate through co-ownership investments.
Real Estate Investment Trusts (REITs)
Companies that either pool money from investors and invest in income-producing real estate assets, or lend money to real estate buyers.
Types of REITs
Publicly Traded REITs, Public Non-listed REITs, and Private REITs are all ______ __ ______.
Equity REITs
Trusts that acquire and manage commercial real estate properties.
Mortgage (Debt) REITs
Trusts that lend money to real estate buyers.
Hedge Funds
Investment funds that pool money from sophisticated investors and aim to generate large returns.
Hedge Funds
These funds are structured as limited partnerships, with managers acting as general partners and investors acting as limited partners.
Leverage
Hedge funds often use borrowed money, referred to as ________ to increase investment returns.
Private Equity Funds
Invest directly into companies by purchasing private companies or acquiring controlling interests in publicly traded companies.
Exchange-traded Products (ETPs)
Bought and sold like individual stocks on an exchange, tracking underlying securities or indices. Can be passively or actively managed.
Exchange-traded Funds (ETFs)
Packaged portfolios with real-time pricing and lower investment minimums and brokerage commissions.
Mutual Funds
Stock ETFs are more tax-efficient than __________.
Exchange-traded Notes (ETNs)
Senior, unsecured debt obligations that track a benchmark index and do not hold a portfolio of assets or securities.
Investment Risks
Market Risk, Business Risk, Inflationary/Purchasing Power Risk, Interest Rate/Reinvestment Risk, Credit Risk, Foreign Currency Risk, Liquidity Risk, Prepayment Risk, and Political Risk are all _________ _______.
