SIE Important Dates and Terms

Authorized Stock - Outstanding Stock

What is Treasury Stock

45 Days

How long after opening must Rights be open

T + 2

How long does it take for Stocks and Non-Treasury Bonds to settle

T + 1

How long does it take for Options and Treasuries to settle

90 Days

How long are customer accounts frozen on failure to pay

$100

Par for Preferred Stock

$1,000

Par for Bonds

Annual Income (Coupon or Dividend)/Current Market Value

Current Yield Formula

75% of income from Real Estate

90% distribution income

REIT Requirements

Within 18 months of closing

Firms provide REIT Valuation when?

Semi-Annual

How often is bond interest paid

Nominal Rate - Expected Inflation

Calculation for Real Rate

Bond Price / Shares received on Conversion

Parity Price of a Convertible Bond

Holder gets 2 shares for ever single share of stock they own

Stock Split 2:1

$5,000,000

Trust indenture Act applies to bonds greater than what

Less than 270 days

Commercial Paper matures

Tax free yield / (1- Tax Rate)

Calculation for Tax Equivalent Yield

$500 - $10,000

Series HH bond denominations

4 to 52 weeks

T-Bill Maturities

1 to 10 years

T-Note Maturities

$100 to $100,000

Treasury Denominations

Done in 32nds

90.08 means 90 8/32 % of par= $902.50

Treasury Pricing

$5,000 to $1,000,000

CMO Denominations

1 day to 1 year

LIBOR term

two consecutive quarters with declining GDP (6 months)

What is the needed for a Recession

six consecutive quarters with declining GDP (18 months)

What is needed for a Depression

Balance Sheet: 90 days

Income Statement: last three years

Shareholders owning 10% or more

Registration Statement

minimum of 20 days

How long is a cooling off period

48 hours

How long must be given to a Preliminary Prospectus before a sale is confirmed

90 days after issued for OTCBB or Pink OTC

25 days for NASDAQ

After Market Prospectus delivery

up to 15% of the issue

Greenshoe

1 day for registered offerings

15 days for unregistered

Underwriting agreements to FINRA for review

Debt Less than 270 days

and

Greater than $50,000 denominations

Exempt Securities

6 months

How long must a private placement be held

$200,000 income

$300,000 income w/ spouse

or

$1,000,000 Net worth excluding primary residence

What constitutes an accredited investor

reporting company equity 6 months

Private equity 1 year

debt 30 days

Reg S offering resale restrictions

Tier 1: $20 mm, with $6mm to a single shareholder

Tier 2: $50mm, with $15mm to a single shareholder

Reg A offering

Market cap of $700mm

or

$1b of non-convertible securities

Well known seasoned issuer for a shelf registration

$250 per candidate per election. 2 year ban if violation

MSRB political rule

100 shares; s/s means round lot of 10 shares

Round Lot

transactions must be reported within 30 seconds

Consolidate Tape

5% as a guidline

FINRA markup policy

Net asset value (NAV) + Sales Charge

Public offering price (POP)

75% securities other than issuer, 5% or less of any one company, 10% or less of any company's stock

75-5-10 rule

must be updated every 13 months

Should be discarded after 16 months

How often do Mutual Fund Prospectus need to be updated

investors must be paid in 7 days

Mutual fund redemption

8.5% POP

Max sales charge for open end fund

0.25%

Max 12B-1 fee

before 59.5 there is a 10% fee

Penalty for withdrawals on IRA

Start April 1 following the year client turns 70.5

RMD age and start date

$2,000 or 50% of the margin

Reg T amount for initial margin of LMV or SMV

25% for long position

30% for short position

minimum maintenance for margin

$500,000 total, up to $250,000 in cash

SIPC Coverage

EQ= LMV - DR

Long Margin Equation

EQ= CR- SMV

Short Margin Equation

Rights Offering

Before a corporation issues shares to non-shareholders it offers the shares to existing shareholders at a fixed price (the "Subscription Price") for 45 days. During this 45 day period shareholders may choose to exercise their right to buy more shares. They could also sell their shares with the rights attached ("cum rights") or let the rights lapse. The rights are attached to the shares from the Declaration Date to the Ex Date.

Statutory Voting

Shareholders vote their shares for each board member individually. So, if a shareholder owns 100 shares and there are two board seats being voted on, the shareholder votes the 100 shares for board seat one and then again for board seat two.

Cumulative Method Voting

Shareholders can vote all their shares on a single board seat. This is beneficial to smaller shareholders.

Transfer Agent

manages the issuance and transfer of certificates

Registars

audits the Transfer Agent

Settlement Date

The day the buyer becomes the owner of record. "Regular Way" settlement for common stock, preferred stock, corporate bonds and municipal bonds is T + 2 or business two days after the trade date. Settlement of trades in Government bonds and options occurs on the next business day

Trade Date

The day the order is executed. This could be later than when the client places the order

Payment Date

The buyer of a security through a broker does not necessarily have to pay for the security on the settlement date. The Federal Reserve sets rules for when payment is due. The Payment Date for common, preferred, corporates and munis is T+4. Firms may require that the money is posted with the firm earlier than this date.

Failure to pay violation

- If the customer does not pay by the payment date, on the following day the brokerage firm will "sell out" the securities and the customer will be liable for any loss. The firm can sell other securities held by the client to cover this loss. The customer account is also frozen for 90 day, meaning money must be deposited prior to any trade.

Residual Claims

On liquidation of a company, for example in bankruptcy, the claim that common shareholders have to the assets after the creditors and preferred shareholders have been paid

Dividend Declaration Date

The date on which the board of directors declares that a dividend will be paid and sets the record date. The company must notify the regulators about the dividend at least 10 days period to the record date.

Ex Dividend Date

Without the dividend. If a share of stock is purchased ex-dividend it means the buyer will not receive the next dividend. Since it takes time to settle a stock purchase, the date on which shares start to trade ex-dividend is set prior to the record date.

Dividend Record Date

The date that is used for determined who receives the dividend. Owners of the shares on this date receive the dividend.

price of the stock will fall by the amount of the dividend, the day the stock starts to trade ex-dividend

What is the price effect of the dividend payment

Qualifying dividends are currently taxed at a rate below that of ordinary income.

How are dividends taxed?

Warrants

Options to purchase a security often given to investors as a "sweetener". The strike or subscription price of a warrant is typically at or above the current price. The exercise period of a warrant is often long, for example ten years. Warrants can trade on their own or attached to other securities.

American Depository Receipts (ADRs)

used by foreign companies to access the US securities market. They represent ownership of shares of the foreign company that are held by a foreign branch of a US bank. Holders of these receive dividends and vote the shares. They may also request delivery of the actual shares. Note that many foreign shares are denominated

Real Estate Investment Trust (REIT)

A special purpose investment entity created to invest in real estate assets. these are used by investors who want exposure to real estate but do not want to hold real estate directly. They are much more liquid than direct ownership. these hold both real estate and real estate related debt instruments. Many of these trade on exchanges, but there are also some that are nontraded

Highly Illiquid

Fees can be very high

lack of liquidity considered in suitability

Non-tradeable REITs

REITs are taxes as passthrough entities so long as 75% of its income is from real estate and it distributes 90% of it taxable income to shareholders. REITs do not passthrough losses. Distributions may constitute ordinary income, capital gains or return of capital. REITs taxation is found in Subchapter M of the Internal Revenue Code (IRC). Broker dealers must provide a valuation of the REIT within 18 months of closing.

How are REITs taxed

Direct Participation Program (DPP)

This is a broad term for pool private investment vehicles set up to achieve pass through tax treatment. These are often structured as limited partnerships.

creditor

The holders / owners of a debt obligation

Obligor

The borrower / issuer of a debt obligation

Creditors typically do not vote on corporate matters so long as principal and interest payments are being made in a timely manner. Creditors may gain a vote in the event of a default.

What are the Creditors rights

Covenants

Debt obligations often contain covenants which require the obligor to do or not do certain things. Breach of a covenant can result in default

Interest is typically taxed at ordinary income rates. Interest on certain municipal obligations may be tax free at the Federal and state level.

How is interest on bonds taxed

Coupon on Bond

An interest payment on a debt instrument. The coupon is stated in terms of a percent of the par amount of the instrument.

Bearer Bond

The bond certificate does not include the name of the owner. Whoever possesses the certificate will receive the payments. These types of bonds often have physical coupons that are tendered for each coupon payment. It is not common for bonds to be issued in bearer form.

primary market

Initial issuance of the security

secondary market

Trading of the securities once they have been issued

Nominal and real rates

Nominal rates are rates expressed without considering the effect of inflation. The "real rate" is the nominal rate minus the expected rate of inflation

Balloon Maturity

A principal repayment schedule in which the final payment is significantly larger than the payments during the term.

Term Maturity

Also referred to as a bullet maturity. All of the principal is due on the maturity date.

Serial Maturity

A single issuance of bonds with different maturity dates

The Trust Indenture Act of 1939

This law requires that corporate bonds in excess of $5,000,000 with a maturity greater than one year use a trustee to act on behalf of the bondholders. The trustee is usually a band or trust company. The trustee monitors compliance with all covenants made to bondholders

Series EE bond

Savings Bonds issued by US Treasury. no discount, no coupons

Series HH bonds

ten year US treasury bonds with denominations of $500- $10,000. may be redeemed at any time for the face amount

bid

Price to buy

Ask

Price to sell

Treasury Bonds

Long term debt instruments issued by the US Treasury. Maturities range from 10 to 30 years. Interest is paid semiannually. Denominations range from $100 to $1,000,000. Treasury Bonds may be callable on 4 months' notice.

Discount Rate

The rate a central bank charges on loans to member banks

Federal Funds Rate

The rate that member banks of Federal Reserve system can charge one another for overnight loans of excess reserves.

Prime Rate

A benchmark rate that banks use for consumer loans such as credit cards.

Broker Call Loan

Bank loans to broker dealers to fund margin accounts. The loans are callable, meaning payable on demand by the bank. The rate these loans is the Broken Call Loan Rate.

London Interbank Offered Rate (LIBOR)

A common floating rate benchmark for debt instruments and derivatives. Stated in terms from 1 day to 1 year. Calculated by the British Banker's Association.