ALL TERMINOLOGY FOR SIE

SEC Securities and Exchange Commission; primary federal securities regulator.

FINRA Financial Industry Regulatory Authority; SRO regulating broker-dealers.

SRO Self-Regulatory Organization operating under SEC oversight.

MSRB Municipal Securities Rulemaking Board; creates muni securities rules.

SIPC Securities Investor Protection Corporation; protects customer assets if BD fails.

FDIC Federal Deposit Insurance Corporation; insures bank deposits up to $250,000.

Federal Reserve Central bank controlling monetary policy and interest rates.

Treasury Department Manages U.S. government debt and finances.

IRS Internal Revenue Service; federal tax authority.

NASAA North American Securities Administrators Association; state regulators.

Broker Acts as agent executing trades for customers.

Dealer Acts as principal trading for own account.

Broker-Dealer (BD) Firm acting as both broker and dealer.

Principal BD trading for its own account.

Agent BD executing trades for customers.

Market Maker Dealer providing continuous bid and ask quotes.

Underwriter Firm that helps issuers sell securities.

Syndicate Group of underwriters sharing risk.

Selling Group Group that sells securities without underwriting liability.

Transfer Agent Maintains shareholder records and transfers.

Custodian Safeguards customer securities.

DTCC Depository Trust & Clearing Corporation; clears and settles trades.

DTC Depository Trust Company; holds securities electronically.

OCC Options Clearing Corporation; guarantees options contracts.

Primary Market Market where new securities are issued.

Secondary Market Market where existing securities trade.

Third Market OTC trading of exchange-listed securities.

Fourth Market Direct institution-to-institution trading.

ECN Electronic Communication Network; automated order-matching system.

Dark Pool Private trading venue for institutions.

OTC Over-the-counter market.

NBBO National Best Bid and Offer.

Common Stock Equity representing ownership and voting rights.

Preferred Stock Equity with fixed dividends and priority over common.

Cumulative Preferred Missed dividends must be paid before common.

Convertible Preferred Can be exchanged for common stock.

Callable Preferred Issuer may redeem before maturity.

ADR American Depositary Receipt; foreign stock traded in the U.S.

Rights Short-term right to buy shares at a discount.

Warrants Long-term option to buy shares at a set price.

Treasury Stock Previously issued shares repurchased by company.

Market Capitalization Share price multiplied by shares outstanding.

EPS Earnings Per Share; (Net income – preferred dividends) ÷ shares.

Bond Debt security paying interest and returning principal.

Par Value Bond face value, usually $1,000.

Coupon Rate Annual interest based on par value.

Current Yield Annual interest ÷ market price.

Yield to Maturity (YTM) Total return if held to maturity.

Yield to Call (YTC) Yield if bond is called early.

Discount Bond Bond trading below par.

Premium Bond Bond trading above par.

Zero-Coupon Bond Issued at discount; no periodic interest.

Callable Bond Issuer may redeem early.

Putable Bond Investor may redeem early.

Convertible Bond Convertible into common stock.

Debenture Unsecured corporate bond.

Secured Bond Bond backed by collateral.

Senior Bond Priority in liquidation.

Subordinated Bond Ranks below senior debt.

Treasury Bill U.S. Treasury maturing under 1 year.

Treasury Note U.S. Treasury maturing 2–10 years.

Treasury Bond U.S. Treasury maturing 20–30 years.

TIPS Treasury Inflation-Protected Securities.

Agency Security Debt issued by government-sponsored entities.

GNMA Ginnie Mae; government-backed mortgage securities.

FNMA Fannie Mae; GSE mortgage issuer.

FHLMC Freddie Mac; GSE mortgage issuer.

Municipal Bond Bond issued by state or local governments.

GO Bond General Obligation bond backed by taxes.

Revenue Bond Bond backed by project revenue.

Double-Barreled Bond Backed by revenue plus taxing power.

Special Tax Bond Backed by a specific tax source.

Special Assessment Bond Backed by assessments on benefiting property owners.

Moral Obligation Bond Legislature may choose to support payments.

Industrial Development Bond Muni bond benefiting a private company.

Build America Bond (BAB) Federally taxable municipal bond.

TAN Tax Anticipation Note.

RAN Revenue Anticipation Note.

BAN Bond Anticipation Note.

TRAN Tax and Revenue Anticipation Note.

VRDO Variable Rate Demand Obligation with put feature.

Auction Rate Security (ARS) Long-term bond with auction-reset rates.

Commercial Paper Unsecured short-term corporate debt.

Banker’s Acceptance Short-term trade finance instrument.

Repo Repurchase agreement; short-term collateralized loan.

Certificate of Deposit (CD) Bank time deposit with fixed maturity.

Systematic Risk Market-wide risk that cannot be diversified away.

Unsystematic Risk Company-specific risk that can be diversified away.

Interest Rate Risk Risk bond prices fall when rates rise.

Credit Risk Risk issuer defaults.

Reinvestment Risk Risk proceeds reinvested at lower rates.

Liquidity Risk Risk of not being able to sell quickly.

Call Risk Risk bond is redeemed early.

Prepayment Risk Risk principal returned early (MBS).

Extension Risk Risk principal returned later than expected.

Inflation Risk Loss of purchasing power.

Market Order Executes immediately at best price.

Limit Order Executes at specified price or better.

Stop Order Becomes market order when triggered.

Stop-Limit Order Becomes limit order when triggered.

Buy Stop Triggered when price rises.

Sell Stop Triggered when price falls.

GTC Good-til-canceled order.

Day Order Expires at end of trading day.

AON All-or-none order.

IOC Immediate-or-cancel order.

FOK Fill-or-kill order.

Not-Held Order Allows intraday discretion.

Solicited Order Recommended by broker.

Unsolicited Order Initiated by customer.

Settlement Date trade is completed.

T+2 Settlement two business days after trade.

T+1 Settlement one business day after trade.

Option Contract giving right to buy or sell.

Call Option Right to buy stock.

Put Option Right to sell stock.

Strike Price Exercise price of option.

Expiration Date Last day option may be exercised.

Premium Price paid for option.

Intrinsic Value In-the-money amount.

Time Value Premium minus intrinsic value.

ITM In-the-money.

ATM At-the-money.

OTM Out-of-the-money.

American Option May be exercised anytime.

European Option Exercised only at expiration.

Equity Option Option on stock.

Index Option Option based on index value.

Cash-Settled Option Settled in cash.

Assignment Obligation of option seller.

Exercise Using option right.

Breakeven Call Strike + premium.

Breakeven Put Strike – premium.

Max Loss Long Option Premium paid.

Max Gain Long Call Unlimited.

Max Gain Long Put Strike – premium.

Covered Call Call sold against owned stock.

Protective Put Put bought to hedge stock.

ODD Options Disclosure Document.

Mutual Fund Investment company pooling investor money.

NAV Net Asset Value; (Assets – liabilities) ÷ shares.

POP Public Offering Price; NAV ÷ (1 – sales charge).

Breakpoint Sales charge discount.

12b-1 Fee Marketing and distribution fee.

ETF Exchange-Traded Fund.

ETN Exchange-Traded Note; unsecured debt.

UIT Unit Investment Trust; fixed portfolio.

Variable Annuity Security with investment subaccounts.

Fixed Annuity Insurance product with guaranteed return.

Surrender Charge Penalty for early withdrawal.

1035 Exchange Tax-free annuity exchange.

REIT Real Estate Investment Trust.

Equity REIT Owns income-producing properties.

Mortgage REIT Invests in mortgages.

DPP Direct Participation Program.

Limited Partnership Pass-through tax structure.

Hedge Fund Private investment fund with high minimums.

AML Anti-Money Laundering laws.

SAR Suspicious Activity Report.

CTR Currency Transaction Report.

OFAC Office of Foreign Assets Control.

Structuring Breaking transactions to avoid reporting.

Insider Trading Trading on material nonpublic information.

Front Running Trading ahead of customer orders.

Churning Excessive trading for commissions.

Free Riding Buying and selling without paying.

Selling Away Unauthorized private securities transactions.

Marking the Close Manipulating closing prices.

Painting the Tape Fake trades to mislead market.

Margin Account Account allowing borrowing.

Reg T Federal Reserve margin rule (50%).

Maintenance Margin Long 25%, short 30%.

DERP Dividend dates: Declaration, Ex, Record, Payable.

Securities Act of 1933 Regulates primary markets and new issues.

Securities Exchange Act of 1934 Regulates secondary markets.

Investment Company Act of 1940 Regulates mutual funds.

Investment Advisers Act of 1940 Regulates investment advisers.

SIPA Securities Investor Protection Act.

Regulation D Private placement exemption.

Rule 144 Resale of restricted securities.

Rule 147 Intrastate offering exemption.

Regulation A Simplified small offering registration.

Regulation M Prevents manipulation during distributions.

Regulation T Margin requirements.

Regulation S-P Customer privacy rule.

FINRA Rule 2010 Standards of commercial honor.

FINRA Rule 2090 Know Your Customer.

FINRA Rule 2111 Suitability.

FINRA Rule 2210 Communications with the public.

FINRA Rule 3310 AML compliance.

FINRA Rule 4370 Business Continuity Plan.

FINRA Rule 5130 IPO purchase restrictions.

MSRB G-17 Fair dealing.

MSRB G-30 Pricing and commissions.

MSRB G-32 Primary offering disclosures.

MSRB G-37 Political contribution rule.

MSRB G-41 AML rule.

MSRB G-47 Time-of-trade disclosure.

Form U4 Registration of representatives.

Form U5 Termination notice.

BrokerCheck FINRA public disclosure system.

Statutory Disqualification Felony or securities-related misdemeanor.