Index
A
- account statements
- accredited investors, 35, 62, 274, 311, 328
- accretion, 260–262
- accrual bonds, 93
- accrued interest, 84–86, 307, 324
- accumulation units, 161
- Achieving a Better Life Experience (ABLE) accounts, 115
- acid-test (quick) ratio, 229
- active (earned) income, 254
- additional bonds test, 104
- adjustable preferred stock, 73, 319, 337
- ad-valorem taxes, 102, 109, 320, 338
- advance refunding, 107
- advance-decline ratio, 234
- advertising rules and regulations, 115, 119, 121, 165, 281, 314, 331, 361, 378
- advisory accounts, 276
- aftermarket (secondary market), 238
- age-based funds, 151
- agency securities, 91–92
- agency transactions, 242, 296
- agents (brokers), 241–242
- aggressive growth company, 32
- aggressive investment strategy, 224
- all-or-none (AON) orders, 56, 112, 247, 316, 334
- alpha measurement, 223
- alternative minimum tax (AMT), 103, 255
- alternative orders, 247
- alternative trading system (ATS), 251
- American Depositary Receipts (ADRs), 74, 313, 330
- American style-options, 208, 210
- Americans with Disabilities Act (ADA) candidates, 11
- amortization, 262
- annual reports, 233
- annuities. See also names of specific annuities
- anti-dilution, 76
- antifraud provisions, 64
- arbitrage, 90, 243
- assets, 222–223, 228
- assumed interest rate (AIR), 160
- at-the-money options, 181–183
- auction-rate securities, 111
- authorized shares, 67
- Automated Customer Account Transfer (ACAT) service, 294, 316, 334
B
- backing away, 242, 297
- balance sheets, 227–230, 348, 365, 392
- balanced funds, 150
- balanced portfolios, 225
- balloon issues, 111
- bank qualified bonds, 103
- Bank Secrecy Act (BSA), 275, 309, 326
- bankers’ acceptances (BAs), 96
- bearer (coupon) bonds, 289
- best efforts underwriting, 56
- beta measurement, 223, 315, 333
- Better Business Bureau (BBB), 20
- bid wanted orders, 248
- blotters, 298
- blue-sky registration, 53, 359, 375
- bona fide offering, 56
- bond (fixed-income) funds, 149
- bond anticipation notes (BANs), 112, 321, 339
- The Bond Buyer (newspaper), 123–124
- Bond Buyer’s Index (20-Bond GO Index), 124
- bond indenture, 78, 122, 319, 337, 353, 369
- bond interest coverage ratio, 231
- bond maturity, 82, 355, 372
- bond ratio, 229
- bonds. See also names of specific bonds
- accretion, 260–262
- amortization, 262
- comparing, 86–90
- corporate versus municipal, 116
- credit ratings for, 86–87
- in default, 118
- overview, 77
- price calculations for, 81–86
- secured versus unsecured, 79–80
- taxes, 260–262
- terminology for, 77–79
- types of, 80–83
- U.S. government securities, 90–95
- yield calculations for, 81–86
- book entry, 290
- brain dump, 29, 385
- break-even points, 195–199, 348, 353, 364, 369
- breakouts, 234
- breakpoints, 152–153
- brokerage firm element, 16
- broker-dealers
- brokers (agents), 241–242
- Build America Bonds (BABs), 112
- business (nonsystematic) risk, 225
- buy limit or sell stop (BliSS) orders, 245
- buy limit orders, 244
- buy minus orders, 247
- buy orders, 243
- buy stop orders, 244
- buying power, 139
- bylaws, 51, 67
C
- call features, 104, 108–109
- call options, 181, 361, 377
- call premium, 87
- call protection, 87
- call provisions, 358, 374
- call risk, 225
- call spreads, 196
- callable bonds, 87, 108–109
- callable preferred stock, 73, 351, 367
- calling up, 182–183
- calls same, 185
- capital appreciation, 312, 329
- capital asset pricing model (CAPM), 224
- capital gains and losses, 259–260, 356, 357, 372, 373
- capital risk, 225
- capital surplus, 68
- capital-appreciation bonds (CABs), 111
- career tips, 387–390
- cash accounts, 129, 352, 368
- cash dividends, 250, 255, 350, 359, 366, 376
- cash flow ratio, 231
- cash surrender value, 163
- cashless collars, 202
- catastrophe clause, 105
- Central Registration Depository (CRD), 9, 10, 16
- certificate of limited partnership, 171–172, 353, 369
- certificates of deposit (CDs), 22, 96
- certificates of participation (COP), 109
- Chicago Board Options Exchange (CBOE), 179, 207, 210, 273
- churning, 279, 297
- close (market-on-close) orders, 247
- closed-end (publicly traded) funds, 147, 148, 360, 377
- closing accounts, 275
- closing transactions, 191, 212
- code of arbitration, 293, 320, 339
- code of procedure, 293
- collars, 202
- collateral, 79
- collateral trusts, 79
- collateralized debt obligations (CDOs), 95, 308, 325
- collateralized mortgage obligations (CMOs), 93–95, 313, 318, 330, 337
- combination (balanced) programs, 177
- commercial paper, 360, 361, 376, 378
- commingling of funds, 36, 297
- commissions, 119–120
- Committee on Uniform Securities Identification Procedures (CUSIP), 119, 122
- common stock, 66–72, 307, 324
- common stockholders, 307, 324, 349, 366
- community property accounts, 277
- companion tranches (support bonds), 93
- competitive bids, 352, 368
- competitive offering, 55, 106
- complaint handling, 293–294, 313, 321, 330, 339, 349, 358, 365, 375
- concessions, 57
- consolidated quotation service (CQS), 241
- consolidations, 70, 234
- construction loan notes (CLNs), 321, 339
- contingent deferred sales charge (CDSC), 156
- continuing disclosure agreement, 106
- conversion price, 73
- conversion ratio, 73, 88
- convertible bonds, 88–90
- convertible preferred stock, 73
- cooling-off period, 52–53
- corporate accounts, 280
- corporate bonds, 116, 255
- corporate books, 66
- corporate charter (bylaws), 51, 67, 280
- corporate commercial paper, 96
- corporate ownership
- corporate resolution, 280
- correspondence, 281
- coupon (bearer) bonds, 289
- coupon (interest) rates, 33, 78, 101, 118
- coupon payments, 321, 339
- Coverdell Education Savings Accounts, 269
- covered call options, 199
- credit agreement section, 128
- credit balance (credit record; credit register), 134
- credit enhancements, 101, 105
- credit risk, 225
- credit spreads, 196, 359, 376
- crossover refunding, 107
- cum (with) rights formula, 75
- cumulative preferred stock, 72
- cumulative voting, 66–67, 313, 330, 348, 365
- currency risk, 225
- current liabilities, 228
- current ratio, 229
- current yield (CY), 82, 232
- custodial accounts, 278
- customer care
- Customer Identification Programs (CIPs), 275, 319, 337
- customer information, 308, 325
D
- dark pools of liquidity, 252, 316, 334, 356, 373
- dated date, 86, 355, 371
- day orders, 246
- day trading accounts, 131, 314, 332, 352, 368
- day-trading risk disclosure statement, 276
- dealers, 242, 347, 364. See also broker-dealers
- death benefit, 162
- debentures, 80, 356, 373
- debit record (DR), 132–133
- debit spreads, 196, 356, 373
- debt securities
- bond indenture, 78, 122, 319, 337, 353, 369
- bond maturity, 78, 111, 355, 372
- calculating accrued interest, 307, 324
- call provisions, 358, 374
- collateralized debt obligations, 308, 325
- collateralized mortgage obligations, 313, 330
- commercial paper, 360, 361, 376, 378
- coupon payments, 321, 339
- debentures, 356, 373
- income bonds, 356, 373
- issued on discount yield basis, 307, 324
- issues most likely to be refunded, 307, 323
- planned amortization class tranches, 354, 370
- quotes, 359, 375
- rating services, 312, 329
- secured bonds, 310, 327
- targeted amortization class tranches, 354, 370
- Treasury Inflation Protected Securities, 319, 338
- T-strips, 348, 364
- Z tranches, 354, 370
- debt service coverage ratio, 105
- debt to equity ratio, 231, 361, 377
- declaration date, 291
- default, 86, 111
- defensive investment strategy, 224
- deferred compensation programs, 267
- defined benefit plans, 265
- defined contribution plans, 265
- delivery verses payment (DVP), 276
- Department of Consumer Affairs, 20
- Department of Education, 20
- Department of Housing and Urban Development (HUD), 92
- depletion deduction, 176
- depreciation, 175
- derivatives, 33
- designated market makers (DMMs)
- developmental programs, 177
- diagonal spreads, 199
- digital securities, 290
- direct exchange of securities, 107
- direct participation programs (DPPs)
- blind pool, 175
- capital appreciation, 177, 312, 329
- certificate of limited partnership, 171–172, 353, 369
- equipment leasing programs, 175–176
- general partnerships, 170–171
- intangible drilling costs, 318, 336
- limited partnerships, 170–172, 358, 359, 360, 375, 377
- oil and gas wildcatting programs, 176–177, 319, 338
- overview, 169–170
- passive income and losses, 173
- private placements and public offerings, 173
- real estate, 174–175, 317, 335
- subscription agreement, 172, 353, 369–370
- taxes, 173, 176
- undeveloped land, 175, 351, 360, 367, 377
- verification of net worth, 315, 333
- discount yield, 83
- discounts, investment, 152–154
- discretionary accounts, 215, 279
- District Business Conduct Committee (DBCC), 293
- diversification, 226–227, 317, 321, 335, 339
- divided (Western) accounts, 58–59
- dividend payout ratio, 232, 320, 338
- dividends, 68–70, 205. See also names of specific dividends
- do not reduce (DNR) orders, 247
- dollar-cost-averaging, 154–155
- dollar-denominated bonds, 81, 109
- don’t know (DK) notices, 287
- double-barreled bonds, 109
- downtrends, 234
- due bills, 290
- due diligence meeting, 53
- durable power of attorney, 279, 355, 372
- Dutch auction, 111
E
- early withdrawal penalty, 162
- earned (active) income, 254
- earnings per share (EPS) formula, 232
- Eastern (undivided) accounts, 58–59
- Economic Recovery and Reinvestment Act of 2009, 112
- educational communication, 294–295
- effective date, 54, 59
- either/or (alternative) orders, 247
- electronic communications networks (ECNs), 252
- electronic municipal market access (EMMA), 101, 251, 313, 330
- electronic securities, 290
- 11GOBond Index, 124
- Empire Stockbroker Training Institute, 22
- Employee Retirement Income Security Act (ERISA), 264–266
- English as a second language (ESL) candidates, 11
- enrollment expiration, 10
- equipment leasing programs, 175–176
- equipment trusts, 79
- equity (EQ), 133, 134
- equity (stock) funds, 149
- equity REITs, 159
- equity-linked notes, 97
- escrow account, 56
- estate taxes, 264
- Eurodollar bonds, 81
- Eurodollars, 96, 108
- European style-options, 208, 210
- ex (without)-rights formula, 75–76
- excess equity, 138, 355, 372
- exchange-traded funds (ETFs), 158, 320, 338
- exchange-traded notes (ETNs), 97
- ex-date, 75
- ex-dividend date, 69, 291, 351, 367
- exempt securities, 61, 308, 325
- exempt transactions, 61–64, 71–72, 308, 325
- exercise (strike) price, 182
- exercise limits, 214
- exercising options, 210–211, 357, 374
- ex-legal stamp, 122
- expense ratio, 157
- expiration, 180, 358, 360, 374, 377
- expiration dates, 207–208, 210, 212
- extension risk, 92, 93
- extensions, payment, 287
- extraordinary calls, 108
F
- face-amount certificate companies, 157
- fail to deliver, 290
- Fannie Mae, 92–93
- Farm Credit Administration (FCA), 92
- Farm Credit System (FCS), 92
- Fed calls (federal calls), 130, 357, 373–374
- Federal Funds, 96
- Federal Home Loan Mortgage Corporation (FHLMC), 92, 93
- Federal National Mortgage Association (FNMA), 92, 93
- Federal Reserve Board (FRB), 1, 129–130
- fee-based accounts, 276
- fees, 161, 163
- fiduciaries, 279
- fill or kill (FOK) orders, 247
- final official statement, 123
- financial exploitations of specified adults, 282
- Financial Industry Regulatory Authority (FINRA), 1, 8, 10, 15, 17, 20, 45, 130–132, 272, 281, 295–296
- financial reports, 104
- firewalls (information barriers), 235
- firm commitment underwriting, 56
- First In, First Out (FIFO), 257
- first market trade, 238, 354, 370
G
- gains and losses, calculating, 190–192, 310, 316, 317, 318, 327, 333, 335, 336, 337
- general ledgers, 298
- general obligation (GO) bonds, 99–103, 124, 310, 328, 356, 372
- general partnerships, 170–171
- General Securities Registered Representative (stockbroker), 7
- gift taxes, 263
- gifts, 297
- Ginnie Mae, 91, 93
- global (international) funds, 151, 357, 373
- good delivery, 288–290, 348, 364
- good-till-canceled (GTC) orders, 247
- government loans. See debt securities
- Government National Mortgage Association (GNMA), 91, 93
- government securities, 255. See also municipal bonds
- government sponsored entities (GSEs), 91, 92
- government-assisted housing programs (public housing), 174
- grant anticipation notes (GANs), 112, 357, 374
- gross revenue pledge, 105
- growth funds, 150, 349, 366
- guaranteed bonds, 79
H
I
- immediate annuities, 161
- immediate or cancel (IOC) orders, 247, 352, 368
- inactive account statements, 291, 311, 329, 354, 371
- income bonds, 80, 356, 373
- income funds, 150
- income programs, 177
- income statements, 230–233
- indenture. See bond indenture
- independent brokers (two-dollar brokers), 239
- index futures, 234
- index options, 207–208, 211
- individual (single) accounts, 277
- individual retirement accounts (IRAs), 355, 361, 371, 378. See also names of specific IRAs
- industrial development revenue bonds (IDRs), 103, 110
- inflation risk, 160, 225, 307, 317, 324, 335
- information barriers (firewalls), 235
- initial margin requirements, 130–131, 132
- initial public offerings (IPOs), 60, 237, 354, 370
- initial transaction, 368–369
- inside market, 249
- insiders (shareholders), 52
- institutional accounts, 280
- institutional communication, 281
- intangible drilling costs (IDCs), 176, 318, 336
- interest, 78, 160, 215
- interest (coupon) rates, 33, 78, 101, 118
- interest (money rate) risk, 225
- interest income, 255
- interest-only (IO) tranches, 95
- Internal Revenue Service (IRS). See taxes
- internal transfers, 295
- international (global) funds, 151, 357, 373
- interpositioning, 297
- interstate offerings, 61
- interval funds, 149
- in-the-money, 181–183
- intrastate offerings, 61
- intrinsic value, 182
- inventory turnover ratio, 231
- inverted head and shoulders formation, 235
- inverted saucer formation, 235
- investment adviser representatives (IARs), 9
- investment advisers, 272, 276
- Investment Advisers Act of 1940, 272
- investment banking firm, 55
- investment clubs, 152
- Investment Company Act of 1940, 145–146, 165–167, 272
- investment company rules, 164–167
- investment grade bond credit rating, 87
- in-whole calls, 108
- irrevocable trusts, 278
- issued shares, 67
J
K
- know-your-customer (KYC) rule, 220
L
- last exercise, 210
- Last In, Last Out (LILO), 257
- last trade, 210
- lease revenue bonds, 109
- lease revenue bonds (LRBs), 359, 376
- ledgers, 298
- legal opinions, 122–123
- legend stock, 62
- legislative risk, 225–226
- lettered stock, 62
- letters of intent (LOI), 153–154
- liabilities, 228
- licensing fees, 102
- life annuity payout option, 162
- life annuity with period certain payout option, 162
- life-cycle funds, 151, 310, 326, 354, 370
- limit orders, 244–245
- limited partnerships, 170–172, 353, 358, 360, 369, 375, 377
- limited power of attorney (limited trading authorization), 279
- limited-tax general obligation bonds (LTGO), 109
- liquidity, 69
- liquidity (marketability) risk, 225
- listed securities, 239
- living (revocable) trusts, 278
- loads, 156–157
- loan consent agreement, 128, 350, 367
- loan value, 137–138
- local government investment pools (LGIPs), 115
- London Interbank Offered Rate (LIBOR), 74
- long (debit) spreads, 196
- long call option, 308, 325
- long combinations, 193–194, 311, 329
- long coupons, 86
- long margin accounts
- long market value (LMV), 132, 140, 347, 363
- long straddles, 192–193, 357, 374
- long-term capital gains/losses, 257, 259, 314, 318, 331, 336
- Long-Term Equity AnticiPation Securities (LEAPS), 33, 205
- long-term liabilities, 228
- losses. See gains and losses, calculating
M
- make whole call provision, 87
- management investment companies, 308, 325
- breakpoints, 152–153
- closed-end funds, 147–148
- diversified investment company, 149
- dollar-cost-averaging, 154–155
- expense ratio, 157
- forward pricing, 147
- fund objectives, 150–151
- fund performance, 151
- hedge funds, 151–152
- letters of intent, 153–154
- loads, 156–157
- open-end funds, 146–148, 149
- overview, 145–146
- packaged securities, 308, 325
- public offering price, 155–156
- regulated investment companies, 148
- sales charge, 155
- systematic withdrawal plans, 148
- volatility ratings, 149–150
- mandatory redemptions, 108
- margin accounts
- calculating equity in long margin account, 311, 328
- day-trading account, 314, 332
- excess equity, 355, 372
- exercising options, 357, 374
- Federal Reserve Board rules for, 129–130
- initial margin requirements, 130–132
- initial transaction, 368–369
- loan consent agreement, 350, 367
- long, 128–133, 142–143, 314, 331–332
- long market value, 132, 140, 347, 363
- margin agreement, 128
- margin calls, 130, 357, 373–374
- Margin Disclosure Statement, 128
- minimum maintenance, 142–144, 357, 374
- opening, 131, 132, 312, 329
- overview, 127
- portfolio margin, 358, 374
- restricted accounts, 140–142
- short, 129, 132–135, 143–144
- special memorandum accounts, 135–139, 316, 334
- tendering stock, 312, 329
- margin agreement, 128
- margin calls, 130, 357, 373–374
- Margin Disclosure Statement, 128
- margin on options, 211–212
- margin-of-profit ratio, 231
- market (systematic) risk, 225, 310, 327
- market indices, 233
- market makers. See dealers
- market not held orders, 279
- market orders, 243. See also orders and trades
- market sentiment, 233
- marketability (liquidity) risk, 225
- marketability of municipal bonds, 100–101
- market-on-close (close) orders, 247
- market-on-open (open) orders, 247
- marking open/close of market, 297
- married puts, 213
- matching orders, 297
- maturity date, 78
- maturity value, 111
- mediation, 293–294
- military ID, 43
- mini-max offering, 56
- minimum maintenance, 142–144, 357, 374
- mixed lots, 250
- modern portfolio theory (MPT), 223
- money laundering, 275, 309, 326
- money market funds, 149
- money market instruments, 95–96
- money rate (interest) risk, 225
- monthly account statements, 71
- moral obligation bonds, 109
- mortality guarantee, 162
- mortgage bonds, 79
- mortgage-backed securities (MBS), 92
- moving averages, 234
- multiple option contracts, 202–205
- municipal bond counsel (attorney), 122
- Municipal Bond Index, 124, 312, 329
- municipal bonds. See also names of specific municipal bonds
- ad-valorem taxes, 320, 338
- bond anticipation notes, 112, 321, 339
- bringing to market, 106–109
- construction loan notes, 321, 339
- dated date of bond issue, 355, 371
- diversification, 317, 321, 335, 339
- Electronic Municipal Market Access, 313, 330
- factors determining markup or commission on, 313, 330
- finding additional information about, 122–124
- fund generators, 321, 339
- grant anticipation notes, 357, 374
- high income investors, 355, 372
- interest income, 255
- issuing, 77
- margin and maintenance requirement on, 130
- Municipal Bond Index, 312, 329
- municipal fund securities, 114–115
- official statement, 315, 333, 348, 365
- overview, 99
- qualified tuition plans, 310, 327
- quotations on, 118
- revenue anticipation notes, 112, 321, 339
- rules relating to, 118–122
- tax anticipation notes, 321, 339
- taxable equivalent yield, 308, 324, 359, 376
- taxes on, 116–118, 351, 367
- types of, 109–113
- municipal discount bonds, 320, 338
- municipal equivalent yield (MEY), 116
- municipal fund securities, 114–115
- municipal notes, 112–113
- municipal securities, 111, 112
- Municipal Securities Rulemaking Board (MSRB), 106, 119, 273
- mutilated certificates, 288, 349, 365
- mutual funds, 60. See also names of specific mutual funds
N
- naked position, 187, 190
- Nasdaq (NASD Automated Quotation service), 239–240
- National Securities Clearing Corporation (NSCC), 294
- negotiable instruments drawn from customer’s account, 299
- negotiated offerings, 55, 106
- net asset value (NAV), 146–147
- net asset value per bond formula, 231
- net direct debt, 102
- net interest cost (NIC), 107
- net overall debt, 102
- net profit ratio, 231
- net revenue pledge, 105
- net revenues, 105
- net worth (stockholders’ equity), 228
- networking regulations, 299–300
- neutral position, 194
- new account form information, 273–274, 317, 335
- new highs/lows, 234
- new housing authority (NHA) bonds, 109
- New York Stock Exchange (NYSE), 54, 97, 130–132, 273, 314, 332
- NHA bonds, 109
- nominal yield (NY), 81–82
- noncumulative (straight) preferred stock, 72
- nonequity options, 207–209
- nonexempt securities, 318, 336
- nonfinancial factors, 222, 355, 371
- non-Nasdaq securities, 240–241
- nonqualified cash dividends, 255
- non-qualified retirement plans, 267
- nonsystematic (business) risk, 225
- nonsystematic risk, 226
- nonvoting common stock, 66
- North American Securities Administrator Association (NASAA), 9
- not held (NH) orders, 247
- Notice of Sale advertisement, 106, 107
- numbered account (street name), 275
O
- odd lot trades, 234, 250, 289
- offer wanted orders, 248
- offering circulars, 62
- Office of Foreign Assets Control (OFAC), 275
- official notices of sale, 123
- official statement, 315, 333, 348, 365
- official statements, 123
- OID bonds, 108, 111
- oil and gas partnerships, 176–177, 319, 338
- one cancels the other (OCO) orders, 247
- online courses, 22
- online testing, 22
- open (market-on-open) orders, 247
- open interest, 215
- open-end funds, 60. See also mutual funds
- opening purchases, 190
- opening sales, 190
- opposite transactions, 190–191
- optional redemptions, 108
- options
- additional information on, 209–210
- assigning, 210–211
- at-the-money, 181–183
- break-even points, 195–196, 348, 353, 364, 369
- buying, 180
- calculating gains and losses, 310, 316, 317, 318, 327, 333, 335, 336, 337
- calculating maximum gain, 354, 370–371
- combinations, 193–195
- covered call, 199
- credit spread, 359, 376
- defined, 33
- exercising, 179, 210–211, 213
- expiration of, 210, 212, 358, 360, 374, 377
- hedging, 317, 336
- in-the-money, 181–183
- investment suitability, 313, 330–331
- last exercise of, 210
- last trade of, 210
- LEAPS, 205
- limits on transactions of, 214
- long combination, 311, 329
- long straddle, 357, 374
- margin on, 211–212
- maximum loss on debit spread, 356, 373
- multiple option contracts, 202–205
- naked position, 187, 190
- nonequity, 207–209
- option contract, 348, 365
- Options Clearing Corporation, 357, 373
- options risk disclosure document, 34, 210, 314, 332
- out-of-the-money, 181–183
- overview, 179–180, 192
- premiums, paying for, 183–184
- protecting against major loss, 315, 333
- protective puts, 200
- reading, 180–181
- regular forward splits, 206
- revere splits, 206–207
- rules for, 214–215
- selling, 180
- selling call options, 361, 377
- short combination, 353, 369
- spreads, 196–199
- standard math, incorporating, 185–190
- stock dividends, 205
- stock option contracts, 199–202
- straddles, 192–194
- taxes on, 212–214
- time value, 359, 375
- uncovered position, 187
- uneven splits, 206–207
- unlimited maximum loss potential, 313, 330
- writing a straddle, 319, 337
- options account agreement (OAA), 34, 210
- Options Clearing Corporation (OCC), 209, 357, 373
- options risk disclosure document (ODD), 34, 210, 314, 332
- Order Audit Trail System (OATS), 251, 358, 375
- order tickets, 284–285, 286, 312, 330
- orders and trades. See also names of specific orders and trades
- broker-dealers, 241–242, 354, 370
- dark pools of liquidity, 252, 316, 334, 356, 373
- dealers, 347, 364
- designated market makers, 248–252, 311, 314, 320, 328, 332, 339, 356, 373
- exchanges, 238–239
- NYSE, 314, 332
- Order Audit Trail System, 358, 375
- over-the-counter market, 239–241, 243–248
- primary market, 237–238
- Regulation NMS, 251–252
- Regulation SHO, 244, 315, 319, 332, 337
- secondary market, 238
- Super Display Books, 248–251
- trade reporting systems, 251–252
- trading halts, 251–252
- original issue discount (OID) bonds, 108, 111, 262
- OTC Best Market, 241
- OTC market makers, 240
- OTC Markets Group, 241
- OTC Pink market, 241
- OTC reporting facility (ORF), 251
- OTC Venture Market, 241
- out-of-the-money, 181–183
- outside audits, 104
- outstanding shares, 67, 391
- Over The Counter Bulletin Board (OTCBB), 239, 241
- overbought market, 235
- overlapping debt, 102
- oversold market, 235
- over-the-counter (OTC) market, 54
P
- packaged securities. See also management investment companies; mutual funds
- annuities, 159–163, 315, 333
- calculating sales charge percentage of funds, 352, 368
- capital gains, 357, 373
- closed-end funds, 360, 377
- exchange-traded funds, 158, 320, 338
- face-amount certificate companies, 157
- growth funds, 150, 349, 366
- hedge funds, 151–152, 360, 377
- hybrid REITs, 159, 311, 329
- international funds, 152, 357, 373
- investment company rules, 164–167
- life insurance, 163–164
- life-cycle funds, 310, 326, 354, 370
- management companies, 308, 325
- overview, 145
- real-estate investment trusts, 158–159, 315, 332, 350, 353, 366, 369
- registering variable annuities, 309, 325
- sector funds, 318, 336, 361, 378
- unit investment trust, 157–158
- paid-in capital (paid-in surplus), 68
- painting the tape, 297
- paperless securities, 290
- par value, 68, 78
- parity, 88
- parity price, 73, 88
- partial calls, 108
- participating preferred stock, 73
- participating trusts, 158
- partnership accounts, 280
- partnership agreement, 171
- passive income, 173, 254, 360, 376
- passive losses, 173
- pass-through certificates, 92
- pattern day trading, 131, 139, 275–276
- pay-in phase, 161
- payment (payable) date, 286, 291
- payout options, 162
- penny stocks
- periodic payment deferred annuities, 161
- physical fitness, 25–26
- placement ratio, 123
- plain vanilla offering, 93
- planned amortization class (PAC) tranches, 93, 354, 370
- political (legislative) risk, 226
- political contributions, 297
- portfolio analysis
- aggressive investment strategy, 224
- asset allocation, 222–223
- balanced portfolio, 225
- beta, 315, 333
- calculating yield, 307, 324
- capital asset pricing model, 224
- changing investment objectives, 361, 377
- defensive investment strategy, 224
- factors influencing, 221–222
- inflation risk, 317, 335
- investment objectives, 220–221
- modern portfolio theory, 223
- nonfinancial influences, 355, 371
- overview, 219–220
- retirement objective, 312, 329
- standard asset allocation model, 318, 336
- portfolio margin, 131, 358, 374
- position limits, 214
- position records, 298
- prearranged trades, 297
- preemptive rights, 66, 74
- preferred stocks, 71–74, 307, 324
- preliminary official statement, 123
- premiums, 183–184, 207, 209
- prepaid tuition plans, 114
- prepayment risk, 92–93, 226
- pre-refunded municipal bonds, 108
- price/earnings (P/E) ratio, 232, 317, 335, 358, 360, 374, 376, 392
- primary market, 237–238
- primary share offerings, 238, 347, 363
- prime brokerage account, 276, 317, 335
- principal-only (PO) tranches, 93
- principals. See also dealers
- prior (senior) preferred stock, 73
- private offerings, 107
- private placements, 173
- pro rata share, 68
- proceeds transactions, 296
- profits, 57–58, 68–70
- progressive taxes, 254, 263
- Prometric Testing Center, 10
- property (ad valorem) taxes, 102, 109
- property forms, 69
- prospectuses
- protective put options, 200
- proxy voting, 66
- public communications, 281, 282
- public housing authority bonds (PHAs), 109
- public housing (government-assisted housing programs), 174
- public offering price (POP), 57, 59, 146–147, 155–156
- put/call ratio, 234
- puts
- putting down, 182–183
Q
R
- ranking data, 165
- rating services, 312, 329
- Real Time Reporting System (RTRS), 124, 251
- real-estate investment trusts (REITs), 158–159, 315, 332, 350, 353, 366, 369
- reallowance, 57
- receive verses payment (RVP), 276
- record date, 291
- record keeping, 119, 298–299
- referrals, 297
- Reg A+ offerings, 61–62
- Reg D offerings, 62, 351, 367
- Reg S offerings, 62
- Reg T calls, 130, 357, 373–374
- registered investment adviser (RIA), 276
- registered options principal (ROP), 34, 209
- registered representatives, 318, 336, 350, 366
- registering securities, 51–54
- registrars, 352, 368
- registration statements, 52, 308, 325
- regressive taxes, 254
- regular (statutory) voting, 66
- regular forward splits, 206
- Regulation FD, 297–298
- Regulation NMS, 251–252
- Regulation SHO, 244, 315, 319, 332, 337
- Regulation S-P, 282, 309, 326
- Regulation T, 129–130
- regulatory risk, 225, 352, 368
- reinvestment risk, 225
- required beginning date (RBD), 319, 338
- research reports, 235–236
- restricted margin accounts
- retail communication, 281
- retirement plans. See also individual retirement accounts
- return of capital, 260
- return on common equity formula, 232
- RevDex (25 Revenue Bond Index), 124
- revenue, 103–106
- revenue anticipation notes (RANs), 112, 321, 339
- revenue bonds
- revere splits, 206–207
- revocable (living) trusts, 278
- rights of accumulation, 152
- risk. See names of specific types of risk
- riskless (simultaneous) transactions, 296
- rogue-elephant investing, 32
- rollovers, 269
- Roth IRAs, 268–269, 349, 361, 365, 378
- round lot, 250
- rumors, 297
- RVP (receive verses payment), 276
S
- S&P 100 Index Options (OEX), 207
- S&P 500 Index Options (SPX), 207
- S&P 500 Volatility Market Index (VIX), 207
- sales charge, 155
- sales per capita (per person), 102
- saucer formation, 235, 354, 370
- Schedule A, 52
- Schedule B, 52
- secondary market (aftermarket), 238
- sector (specialized) funds, 150, 318, 336, 361, 378
- secured bonds, 79–80, 310, 327
- securities. See also names of specific securities; underwriting securities
- Securities Act of 1933, 54, 61, 64, 308, 325, 353, 369
- securities analysis
- balance sheet equation, 348, 365
- calculating current yield, 360, 376
- calculating net worth, 358, 374
- cash dividends, 350, 359, 366, 376
- collateralized mortgage obligations, 318, 337
- debt to equity ratio, 361, 377
- dividend payout ratio, 320, 338
- fundamental analysis, 227–233
- fundamental analysts, 347, 354, 364, 370–371
- head and shoulders bottom formation, 315, 333
- PE ratio, 317, 335, 358, 360, 374, 376
- preferred stock, 307, 324
- regulatory risk, 352, 368
- research reports, 235–236
- risk, 225–227
- saucer formation, 354, 370
- systematic risk, 225, 310, 327
- technical analysis, 233–235
- Securities and Exchange Commission (SEC), 20, 51–53, 173, 271–272, 308, 325
- Securities Exchange Act of 1934, 54, 63
- security guidelines, 11
- seesaw calculations, 83–84
- self-regulatory organizations (SROs), 272, 273
- sell limit or buy stop (SLoBS) orders, 245
- sell limit orders, 244
- sell orders, 243
- sell stop orders, 244
- seller’s option contract, 286
- selling (writing) a straddle, 319, 337
- selling group agreement, 56
- selling groups, 55
- selling short, 243, 245, 352, 368
- seminars, 282
- senior (prior) preferred stock, 73
- separate accounts, 160
- Separate Trading of Registered Interest and Principal of Securities (T-STRIPS), 91
- SEP-IRAs (simplified employee pensions), 269
- serial bonds, 111
- Series 7 exam
- arriving for, 45–46
- common mistakes to avoid, 383–386
- disqualification from, 8
- distribution of questions, 13
- eating before, 28, 44–45
- exam-takers, 8
- length of, 13
- overview, 7–8
- preparing for, 30, 43–45, 383
- reasons for failure, 16
- registration process for, 9–12
- reminders when taking, 46–47
- rescheduling, 13
- scores, 47
- Special Accommodations Verification Request Form, 11
- study tips, 19–26
- testing details for, 14–17
- test-taking tips and strategies, 26–29, 384–386
- topics covered by, 12
- settlement date, 207–208, 286–287, 315, 332
- shareholders (insiders), 52
- shelf registration, 52
- short (credit) spreads, 196
- short combinations, 194–195, 353, 369
- short coupons, 86
- short interest, 234
- short margin accounts
- short market value (SMV), 134, 141
- short straddles, 194
- shorting power, 139
- short-term capital gains, 256
- short-term capital losses, 259
- short-term rights, 75
- simplified employee pensions (SEP-IRAs), 269
- simultaneous (riskless) transactions, 296
- single (individual) accounts, 277
- single life IRAs, 268
- single payment deferred annuities, 161
- sinking fund, 73, 101, 108, 111
- sole proprietorship, 277
- sophisticated investors. See accredited investors
- sovereign bonds, 81
- Special Accommodations Verification Request Form, 11
- special assessment (special district) bonds, 109
- special memorandum accounts (SMAs), 135–139, 316, 334
- special tax bonds, 109
- specialists. See designated market makers
- specialized (sector) funds, 150, 318, 336, 361, 378
- speculation, 243
- splits, 206–207
- spreads, 57, 107, 196–199, 250, 316, 334. See also names of specific spreads
- stabilizing bids, 56–57
- standard asset allocation model, 318, 336
- stand-by underwriting, 56
- state licensing exams, 8–9
- state securities registration types, 313, 330
- state security registration methods, 54
- statement of additional information (SAI), 60, 147
- statements of account. See account statements
- statutory (regular) voting, 66
- step coupon bonds, 87
- stock (equity) funds, 149
- stock dividends, 250, 255
- stock option contracts, 199–202
- stock option plans, 266
- stock purchase plans, 266
- stock splits, 251, 361, 377, 391
- stockholders, 66–67, 75, 324, 349, 366
- stockholders’ equity (net worth), 228
- stocks. See also names of specific types of stocks
- stop limit orders, 245–246
- stop orders, 53, 244–245
- straight (noncumulative) preferred stock, 72
- strategic asset allocation, 222–223
- street name (numbered account), 275
- strike (exercise) price, 182, 209
- structured products, 96–97
- Student Loan Marketing Association (SLMA), 92
- sub-penny rule, 252
- subscription agreement, 172, 353, 369–370
- subscription rights, 74
- Super Display Books (SDBK), 248–251
- supervision of accounts, 215, 300
- support bonds (companion tranches), 93
- surrender value (cash surrender value), 163
- sweeteners, 76
- syndicate agreement. See Underwriting Agreement
- syndicate bids, 55
- syndicate managers, 55, 56, 58
- syndicate members, 56
- syndicates, 55, 58–59, 106
- syndicators (underwriters), 173
- systematic (market) risk, 225, 310, 327
T
- tactical asset allocation, 223
- takedown, 57
- tangible drilling costs (TDCs), 176
- targeted amortization class (TAC) tranches, 93, 354, 370
- targeted funds, 151
- tax and revenue anticipation notes (TRANs), 112
- tax anticipation notes (TANs), 112, 321, 339
- tax equivalent yield (TEY) calculation, 116, 308, 324, 359, 376
- tax shelters, 173
- taxes. See also names of specific taxes
- bonds, 260–262
- calculating tax consequence, 309, 326
- capital gains/losses, 256–260, 314, 318, 331, 336, 356, 372
- converting bond into shares of common stock, 320, 339
- direct participation programs, 173
- dividends, 255–256, 348, 365
- earned income, 254
- hedge funds, 152
- immediate-or-cancel orders, 352, 368
- intangible drilling costs, 318, 336
- interest income, 255
- IRAs, 319, 338, 349, 355, 361, 365, 371, 378
- municipal bonds, 112, 116–118
- municipal discount bonds, 320, 338
- options, 102–103, 212–214
- overview, 253
- passive income, 254, 360, 376
- portfolio income, 254
- progressive, 254, 263
- qualified cash dividends, 309, 326
- qualified retirement plans and, 308, 325
- real-estate investment trusts, 159
- regressive, 254
- retirement plans, 264–269
- return of capital, 260
- selling short, 352, 368
- TRACE system, 347, 364
- variable life insurance, 351, 355, 367, 371
- tax-exempt commercial paper, 112
- tax-qualified retirement plans, 264
- technical analysis
- Telephone Act of 1991, 295
- 1035 tax-free exchange, 164
- tender options, 109
- term, 110
- term bonds, 110
- test center amenities, 11
- test-taking strategies, 384–386
- third market, 238
- third party accounts, 279
- third-party research reports, 236
- time value, 183, 359, 375
- timing risk, 226
- tombstone ads, 53
- trade confirmation, 287–288, 309, 326, 350, 366
- Trade Reporting and Compliance Engine (TRACE) system, 251, 347, 364
- trade reporting facility (TRF), 251
- trade reporting systems
- trades. See orders and trades
- trading channels, 234
- trading halts, 251–252
- trading posts, 238
- traditional IRAs, 267–268
- training material, 21
- tranches, 93, 95
- transfer agents, 290
- transfer instruction form (TIF), 294
- transferring accounts
- Treasury bills (T-bills), 91, 96
- Treasury bonds (T-bonds), 90–91
- Treasury Inflation Protected Securities (TIPS), 91, 319, 338
- Treasury notes (T-notes), 32, 91
- Treasury securities, 130, 354, 371
- Treasury stock, 67, 354, 371
- trendlines, 233
- trends, 234–235
- true interest cost (TIC), 107
- trust accounts, 278
- Trust Indenture Act of 1939, 54, 320, 339
- trustees, 78–79
- Truth in Securities Act. See Securities Act of 1933
- T-strips, 348, 364
- T-STRIPS (Separate Trading of Registered Interest and Principal of Securities), 91
- two-dollar brokers (independent brokers), 239
U
- U-4 registration form, 9
- UGMA accounts, 278, 280
- uncovered position, 187, 190
- underwriters, 55, 173. See also broker-dealers
- Underwriting Agreement, 55
- underwriting securities
- accredited investors, 311, 328
- blue-sky registration, 359, 375
- competitive bids, 352, 368
- customer confirmation, 308, 325
- distributing profits, 57–58
- Eastern accounts, 58–59
- equity, 65–74
- exempt securities, 308, 325
- exempt transactions, 308, 325
- exemptions, 61–64
- nonexempt securities, 318, 336
- overview, 51
- preliminary prospectus, 311, 328, 352, 368
- primary share offerings, 347, 363
- prospectuses, 59–60
- registering securities, 308, 325
- registration process, 51–54
- registration statement, 308, 325
- Regulation D offering, 351, 367
- Securities Act of 1933, 353, 369
- selling group agreement, 56
- spread, 316, 334
- stabilizing bids, 56–57
- state securities registration types, 313, 330
- Underwriting Agreement, 55–56
- Western accounts, 58–59
- undeveloped land, 175, 351, 367, 377
- undivided (Eastern) accounts, 58–59
- uneven splits, 206–207
- unification of gift and estate taxes rule, 264
- Uniform Forms Reference Guide, 17
- Uniform Gifts to Minors Act (UGMA) accounts, 40
- uniform lifetime IRAs, 268
- Uniform Practice Code (UPC), 300
- Uniform Securities Act (USA), 54
- unincorporated associations, 280
- unit investment trust (UIT), 157–158
- units, 76
- unlimited maximum loss potential, 313, 330
- unsecured bonds, 79–80
- unsolicited order tickets, 285, 309, 326, 347, 360, 364, 376
- uptrends, 234
- U.S. government securities, 90–91. See also debt securities
- UTMA accounts, 278
V
- value funds, 150
- variable annuities, 160
- variable life insurance (VLI), 163, 351, 355, 367, 371
- variable preferred stock. See adjustable preferred stock
- variable universal life (VUL) insurance, 163–164
- variable-rate securities, 111
- vertical spreads, 199
- visible supply, 123
- VIX (S&P 500 Volatility Market Index), 207
- volatility ratings, 149–150
- voting rights, 66–67
W
Y
Z
..................Content has been hidden....................
You can't read the all page of ebook, please click here login for view all page.