Bounce Back 2.0 Flashcards by Christopher Norcross

Defined _____ plans are where the ___ promises to pay each eligible employee a specific periodic benefit for life, starting at retirement

Benefit, Employer

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Defined ____ plan is a retirement plan in which the employee determines the level of their contribution

Contribution

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Defined ____ plans can pay in lump some, installments, or as an ___

Contribution, annuity

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Defined ___ plans see participants contribute a portion of their earnings on a ____ basis

Benefit, Pre-tax

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Taxes in a ___ plan grow on a tax deferred basis

Defined contribution plan

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Examples of non defined contribution plans include

401K
403B
Tax sheltered annuities

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Max contribution to a sep IRA IS __% of gross income

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Simple IRA’s are structured like

401k’s

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____ annuities do not guarantee a rate of return

Variable

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If the annuitant of a variable annuity dies during the accumulation period, the beneficiary will receive a payment from the insurance company, which bears the mortality risk. This is known as as the ___

Death benefit

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___ annuities pay a large lump some and begin in ___ days

Immediate, 30

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What kind of annuities are more geared towards someone willing to take risk?

Variable annuities

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Costs deducted from variable life premiums include-

Mortality and expense risk charges, sales fees, admin fees, rider feeds, state premium fees, investment management fees

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___ are exempt from SEC Act of 1934

Muni bonds

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In a ___ account, you can name yourself as the beneficiary

529

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Once a ___ account is open, anyone can contribute and there are no ___ limits

529, income

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LGIPS offer ___ a place to invest their money and they pool their funds

Municipal entities

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___ securities are exempt from federal regulations

Municipal

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Muni debt securities can be ___ term or ___ term

Long, short

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Muni bonds are issued at ___ and pay how often?

Par, semi annually

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Muni bonds are exempt from ___ but not from ____ requirements

Registration, anti-fraud

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Muni bonds come with a ____ not a __

Official statement, prospectus

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Government securities are exempt from ___ tax

State and local

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___ calls allow the issuer to call a bond in whole or in part, at its discretion for any reason

Optional

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____ or sinking fund redemption means that the bond issues with sinking fund provisions require the issuer to set aside periodic payments aimed at ____ or reducing its debt

Mandatory call, Amortizing

An alternative to refunding is a ___

Tender

A ___ means that the issuer will contact existing bond holders to see if they are willing to exchange their bonds for new refunding bonds

Tender

Municipal bonds are broadly categorized into ____, _____, ____, ____

GO bonds, revenue bonds, special types of bonds, short term notes

Any muni call features must be disclosed and noted on a ____

municipal customer confirmation

When a bond is subject to a ___ call, you must disclose the yield to worst

In-whole

Refunded bonds are said to be __ meaning that they are removed from the issuers balance sheet

Defeased

___ bonds are backed by the full faith, credit, and taxing power of the issuer

___ are municipal zero coupon bonds that are usually sold at a deep discount to par and only the discounted principal amount is counted against the issuers debt limit

CABs- Capital appreciation bonds

Long term C’D’s are called

Broker CD’s

When a retail customer buys a long term CD they must be informed that

- CD’s are subject to market risk -The prematurity sales price of CD’s may be less than the purchase price - CD’s have a limited secondary market -Callable CD’s are subject to reinvestment risk - the step up/step down CD yield may not reflect the current market rate -CD’s are FDIC insured only if they are titled in the customer’s name

The ___ details the official statement details, the purposes and essential terms and conditions of the bond issue, such as the loan amount, maturity structure of the bond, and redemption provisions

Preliminary official statement

Preliminary official statement is final in all respects except the _____ price of the bonds

Offering

The SEC requires that ____ receive a preliminary official statement from the issuer ____ making a bid

Underwriters, before

Underwriters are also required to receive a _____ agreement from the issuer before making a bid or accepting a sale

Continuing disclosure

Factors that impact municipal bond liquidity include

Rating Maturity Call features Coupon rate Block size Issuer name and geographical location Credit enhancement Credit and liquidity support Denominations

To fully hedge a long stock position, you’d

Buy a put Worried bull buys a put

To fully hedge a short stock position, you’d

Buy a call Worried bear buys a call

Long call is

Bullish

Long put is

Bearish

Short call is

Bearish

Short put is

Bullish

To fully hedge a short put you’d

Buy a call

To fully hedge a long put you’d

Buy a call

If a client has a portfolio of blue chip stocks and is worried about the market, the could use a ___ to hedge against a downward movement

Index option

____ track a basket of stocks like an index fund but trade on the stock market like an individual stock

ETF’s

Like ____ options, ___ can be used to hedge against systematic risk

index, ETF’s

The number of shares that can be issued for a mutual fund is ___

Unlimited

___ funds have a one time issuance and are not ___

CEF’s, redeemable

___ are a portfolio of securities

UIT’s

___ trade like negotiable securities on exchange

CEF’s

Hedge funds hold ___ investments

Illiquid

Hedge funds have minimal ___

Regulatory oversight

Hedge funds are available for ___ investors

Accredited

Hedge funds use ___ and other ___ strategies

Leverage, speculative

Another term for combination is a ___

Strangle

What is a strangle?

The purchase of an out the money call and the purchase of an out the money put

Straddles have the same ___ and ___

Strike price, expiration date

Strangles have different ___ and ___

Strike prices, expiration

Collar options strategy ___ both gains and losses

Limits

______ involve a long position in the underlying stock as well as the sale of a covered call and out of the money put option

Collars

___ is an annual report

10k

10Q is a ___ report

Quarterly

A technical analyst looks at ___

Chart patterns

The ___ measures assets and liabilities

Balance sheet

A ___ investor believes markets are efficient

Index

___ analysis is used to determine a securities value based on the company’s financial statement and annual report. They use the income statement, balance sheet, and __ statement

Fundamental, cash flow

___ report provides a comprehensive overview of a public companies financial performance, operations and future outlook

Annual report

___ and ___ are different because one is marketing oriented and the other is a detailed financial statement

Annual (marketing), 10k (detailed)

To open an individual account, a rep must complete the ____, which is kept at the ____

New account form, brokerage firm

New account info required to be be maintained by FINRA is (PLANRR) + corp and who’ll transact

- Customer name - Customer address - Whether the customer is legal age (date of birth not initially required to open an account) - Name of registered rep who is handling the account - Principals signature - Reps signature - If the customer is a corporation- name of person who will transact business in the account PLANRR + corp and who’ll transact Principal sig Legal age Address Name Rep sig Rep name

If the account is for an individual (who is not simply purchasing unsolicited mutual funds), the broker should make reasonable efforts to obtain the following information before settlement of the first transaction (7)

- SSN or Tax ID (to verify identity) - occupation of a customer and address of employer - whether the customer is employed by a bank or BD - whether the customer is an officer or director at a publicly held company - citizenship - whether it’s a cash or margin account - Third party affiliation (if any)

For suitability purposes, a reasonable effort must be made to obtain what information for a new account (ATLANTIRF)

- Customers age (A) - Tax status (T) - liquidity needs (L) - Estimated annual income (A) - needs and objectives (N) - time horizon (T) - Investment experience and holdings (I) - Risk tolerance (R) - Financial situations (F)

Copy of new account form must be sent to the customer within how many days after opening the account?

Copy of a new account form must be sent to the customer at least how many years thereafter to verify and update the customer’s information

At least every 3 years

A copy of the new account form must be sent to the customer within how many days of any updates?

30 days

Most new account forms include a ____, and it is not mandatory that customer signs this

Predispute arbitration agreement

If a ___ is signed a customer gives up their right to sue, arbitration is final and binding

Predispute arbitration agreement

Arbitration panels include a _____ of individuals who were, or are, affiliated with the securities industry but they have to be ____

Minority, disinterested

Customer identification can be done with what docs (5)

- Current drivers license - Passport - Alien registration card - Green card - Another government issued ID

___ requires broker dealers to use reasonable diligence in collecting and maintaining essential information on their customers

KYC (know your customers)

KYC maintains (4) (CIIS)

C- Customer ID I- Investment histories I- Investment objectives S- Sources of funds

Even if the customer does not provide all the required information on a new account dorm, the account can still be _____

Opened Facts needed include the facts to effectively service a customers account, carry out special handling, instructions, understand who has trading authority, and comply with securities laws, regs, and rules

3 phases of money laundering are

Placement Layering Integration

In money laundering, ___ is the initial entry of illicit cash into the financial system

Placement

In money laundering, ____ is when they cash has been deposited and are wired to a series of other financial institutions making it difficult to trace back to the source

Layering

In money laundering, ___ is the final stage where the funds are returned to the criminal from what appear to be legitimate sources

Integration

For AML, the firm must appoint a ___ who creates written ____ procedures

Designated AML Compliance Officer, supervisory

For AML, the program is independently tested how often?

At least annually

In AML programs, what do they do for appropriate personnel?

Provide ongoing training

For AML there are procedures to reasonably detect and report suspicious activity, and the firm must also have a _____ program

CIP (customer ID program)

Reg SP limits the ability of broker dealers, investment companies, and investment advisers to disclose ____

PII (personal identifiable information)

When it comes to privacy policies and procedures (Reg SP) notices for ____, an initial notice is required if the firm wants to disclose information

Consumers

When it comes to privacy policies and procedures (Reg SP) ___ must be given initial and annual notices

Customer

When it comes to privacy policies and procedures (Reg SP), for ____ opt out provisions are required if the firm wants to ____ information

Consumers, Disclose

When it comes to privacy policies and procedures (Reg SP), for ____ opt out provisions are ____ required

Customers, Always

A ___ questionnaire should be provided at account opening and kept in the customers file. It should also be revisited and updated at least every ___ months

Suitability, 36

A ___ analysis should be conducted before a representative can make any recommendations

Suitability

What products are suitable for older investors

-US Treasuries -Treasury bond funds and ETF’s -Highly rated corporate bond funds and ETF’s -High Paying Blue Chip dividend stocks -Dividend funds and ETF’s -Bank CD’s -Immediate annuities

What products are suitable for investors in a high income tax bracket

-Municipal securities - Investments where income is deferred such as private placements, limited partnerships, and DPP’s - Tax advantaged accounts as appropriate, IRA’s, 401K’s, 529 accounts

What products are suitable for long term investors

-Equities - equity index mutual funds and equity index ETF’s -balanced funds -real estate - annuities - tax advantaged accounts, as appropriate IRA’s, 401K’s, 529’s - REIT’s - Buy and hold strategies

A ___ must be delivered to a customer in summary of their relationship with them at the ___ of the relationship .

Form CRS, beginning

If the orders are placed on the phone and the rep knows the customer, this counts as ____

Verification

If the order is placed via call center of the phone, the customer must answer ____ to verify identity

Security questions

Orders via email or text ___ be accepted

Cannot

If the price is incorrectly reported, the customer must pay the ___ price at which the trade was executed

Actual

If a trade was incorrectly executed, the original trade date will be _____ and rebilled in the ____ amount

Cancelled, correct

Typical UNSUITABLE products for Senior Citizens include

Variable annuities Equity indexed annuities Real estate limited partnerships Variable life settlements Complex structured products such as CDO’s Recommendation to mortgage their residence to obtain funds Recommendations to use retirement savings, including early withdrawals of IRA’s

RMD’s for IRA’s must be taken no later than April 1st if the year after the participant turns ___

A person can ___ transfer their IRA to another IRA at a bank of a different BD. When doing so there is no ____. The number of transfers that may be made are ___

Directly, tax liability, unlimited

If an IRA holder dies, the recipient of the IRA must __ the assets over _ years but no tax penalty occurs if recipient is under 59 1/2

Deplete, 10,

Another method of transferring retirement assets is a ___. In this case, a check is sent directly to the participant and ___ % will be withheld but must be redeposited within __ days of the distribution date

Rollover, 20%, 60

If an IRA owner dies and the beneficiary is the spouse, they have 3 choices and 1 of them is that the younger spouse can roll over the account into their ___ IRA

Existing

If an IRA owner dies and the beneficiary is the spouse, they have 3 choices and 1 of them is that if it is an older spouse with different income, they may open an ___ IRA, which will deplete over a ___ year period

Inherited, 10

If an IRA owner dies and the beneficiary is the spouse, they have 3 choices and 1 of them is that if it is a wealthy person, they can __ to accept, or disclaim the IRS

Refuse

If the owner of an IRA dies and you are not then spouse, you can do 3 things, and 1 includes being able to transfer the IRA into an ___ IRA and deplete the assets within __ years

Inherited, 10

If the owner of an IRA dies and you are not then spouse, you can do 3 things, and 1 includes being able to ____ the IRA and pay taxes due

Cash out

If the owner of an IRA dies and you are not then spouse, you can do 3 things, and 1 includes being able to ___ to accept the IRA

refuse

Roth IRA contributions are ___ tax deductible

Never

Roth IRA’s contributions are ___ to earned income

Limited

Roth IRA’s contribution limits are the same as ______

Traditional IRA’s

Roth IRA contributions can be withdrawn ___ without penalty at ___

Tax free, any time

Participants with income over certain levels can’t invest in ___ IRA’s

Roth

There are no required ____ distributions in ____ IRA’s

Minimum distributions, Roth

Traditional IRA contributions may be ____ and must be _____

Tax deductible, earned income

In both traditional IRA’s and Roth IRA’s, there is a _____% penalty for early withdrawals

In traditional IRA’s, both pre-tax contributions and earnings are taxed at _____ rates

Ordinary

In traditional IRA’s, if non-deductible contributions are made (after tax), they can be withdrawn ____, subject to age requirements

Tax free

In Roth IRA’s, contributions (principal) and earnings can be withdrawn ____. Subject to age and holding period requirements

Tax free

Earnings in traditional IRA’s are ___ until withdrawal

Tax deferred

Earnings in Roth IRA’s may grow ___ and are generally ___

Tax deferred, tax free

You cannot hedge against ___ risk

Nonsystematic

After a trade is sent, you have ____ to report the trade to FINRA/Nasdaq

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Bounce Back 2.0 Flashcards

(137 cards)