Wiley Series 7 Securities Licensing Exam Review 2019 + Test Bank
John Wiley & Sons Inc (Verlag)
978-1-119-55275-8 (ISBN)
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Public offerings and/or private placements of corporate securities (stocks and bonds)
rights
warrants
mutual funds
money market funds
unit investment trusts
REITS
asset-backed securities
mortgage-backed securities
options
options on mortgage-backed securities
municipal securities
government securities
repos and certificates of accrual on government securities
direct participation programs
securities traders
venture capital
ETFs
hedge funds
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ABOUT THE SERIES 7 EXAM xxiii
ABOUT THIS BOOK xxvii
ABOUT THE TEST BANK xxviii
ABOUT THE SECURITIES INSTITUTE OF AMERICA xxix
CHAPTER 1 EQUITY SECURITIES 1
What Is a Security? 1
Equity = Stock 2
Common Stock 2
Preferred Stock 14
Currency Risks 22
Functions of the Custodian Bank Issuing ADRs 23
Real Estate Investment Trusts (REITs) 23
Non-Traded REITs 24
Pretest 25
CHAPTER 2 DEBT SECURITIES 29
Corporate Bonds 29
Types of Bond Issuance 30
Bond Certificate 31
Bond Pricing 31
Corporate Bond Pricing 32
Bond Yields 32
Yield Spreads 36
The Real Interest Rate 37
Bond Maturities 37
Types of Corporate Bonds 38
Converting Bonds into Common Stock 41
Advantages of Issuing Convertible Bonds 42
Disadvantages of Issuing Convertible Bonds 42
Convertible Bonds and Stock Splits 42
Reverse Convertible Securities 42
Forced Conversion 43
The Trust Indenture Act of 1939 43
Bond Indenture 43
Ratings Considerations 44
Retiring Corporate Bonds 44
Collateralized Mortgage Obligation (CMO) 46
CMOs and Interest Rates 47
Types of CMOs 47
Private-Label CMOs 49
Exchange-Traded Notes (ETNs) 49
Euro and Yankee Bonds 50
Variable Rate Securities 50
Pretest 51
CHAPTER 3 GOVERNMENT SECURITIES 55
Series EE Bonds 55
Series HH Bonds 56
Treasury Bills, Notes, and Bonds 56
Treasury Bond and Note Pricing 57
Treasury STRIPS 58
Treasury Receipts 58
Treasury Inflation-Protected Securities (TIPS) 59
Agency Issues 59
Government National Mortgage Association (GNMA) 59
Federal National Mortgage Association (FNMA) 60
Federal Home Loan Mortgage Corporation (FHLMC) 60
Federal Farm Credit System (FFCS) 60
Sallie Mae 61
Pretest 63
CHAPTER 4 MUNICIPAL SECURITIES 65
Municipal Bonds 65
Types of Municipal Bonds 66
Issuing Municipal Securities 70
Selecting an Underwriter 70
Creating a Syndicate 71
Syndicate Accounts 72
Submitting the Syndicate Bid 73
Determining the Reoffering Yield 73
Awarding the Issue 74
Underwriter’s Compensation 74
Order Period 76
Allocation Municipal Bond Orders 76
Sale Date 77
When Issued Confirmations 78
Final Confirmations 78
Other Types of Municipal Underwritings 79
Syndicate Operation and Settlement 79
The Official Statement 80
Bond Counsel 81
The Legal Opinion 81
Potential Conflicts of Interest for Municipal Bond Underwriters 82
Acting as a Financial Adviser to the Issuer 82
Information Obtained While Acting as a Fiduciary 82
Acting as a Financial Adviser and an Underwriter 83
Political Contributions 83
Municipal Bond Trading 85
Bona Fide Quotes 85
Informational Quotes 86
Out Firm Quotes 86
Executing a Customer’s Municipal Bond Orders 87
Customer Confirmations 88
Yield Disclosure 89
Sources of Municipal Bond Market Information 89
Recommending Municipal Bonds 90
Taxation of Municipal Bonds 90
Tax Equivalent Yield 91
Purchasing a Municipal Bond Issued in the State in which the Investor Resides 91
Triple Tax Free 92
Original Issue Discount (OID) and Secondary Market Discounts 92
Amortization of a Municipal Bond’s Premium 92
Bond Swaps 93
Analyzing Municipal Bonds 93
Analyzing General Obligation Bonds 93
The Debt Statement 94
Community Factors 95
Sources of Tax Revenue 95
Determining Property Taxes 96
Important Financial Ratios for General Obligation Bonds 96
Analyzing Revenue Bonds 97
Types of Revenue Pledge 97
Municipal Fund Securities 98
Municipal Securities Rulemaking Board (MSRB) 99
Pretest 103
CHAPTER 5 THE MONEY MARKET 109
Money Market Instruments 109
Corporate Money Market Instruments 109
Government Money Market Instruments 111
Municipal Money Market Instruments 112
International Money Market Instruments 112
Interest Rates 112
Pretest 115
CHAPTER 6 ECONOMIC FUNDAMENTALS 117
Gross Domestic Product (GDP) 117
Recession 119
Depression 119
Economic Indicators 119
Schools of Economic Thought 121
Economic Policy 122
Tools of the Federal Reserve Board 122
Fiscal Policy 125
Consumer Price Index (CPI) 126
Inflation/Deflation 126
Real GDP 126
International Monetary Considerations 127
Yield Curve Analysis 127
Pretest 129
CHAPTER 7 OPTIONS 133
Option Classification 133
Option Classes 134
Option Series 134
Bullish vs. Bearish 134
Possible Outcomes for an Option 135
Characteristics of All Options 136
Managing an Option Position 136
Buying Calls 137
Selling Calls 138
Buying Puts 140
Selling Puts 141
Option Premiums 143
At the Money Options 143
Out of the Money Options 144
Intrinsic Value and Time Value 144
Using Options as a Hedge 145
Long Stock Long Puts/Married Puts 145
Long Stock Short Calls/Covered Calls 147
Maximum Gain Long Stock Short Calls 148
Maximum Loss Long Stock Short Calls 149
Short Stock Long Calls 149
Maximum Gain Short Stock Long Calls 150
Maximum Loss Short Stock Long Call 151
Short Stock Short Puts 151
Maximum Gain Short Stock Short Puts 152
Maximum Loss Short Stock Short Puts 153
Multiple Option Positions and Strategies 154
Long Straddles 154
Short Straddles 156
Spreads 158
Combinations 169
Using a T Chart to Evaluate Option Positions 170
Index Options 174
Interest Rate Options 176
Price-Based Options 176
Rate-Based Options 178
Foreign Currency Options 178
The Option Clearing Corporation 180
The Options Markets 181
The Chicago Board Option Exchange 181
Opening and Closing Option Prices 183
Order Execution 183
Expiration and Exercise 184
American vs. European Exercise 184
Market Volatility Options/VIX 185
Flex Options 185
Weekly Options 186
Mini Options 186
Position and Exercise Limits 187
Stock Splits and Stock Dividends 187
Taxation of Options 188
Closing an Option Position 188
Exercising a Call 188
Exercising a Put 189
Protective Puts 189
Covered Calls 189
Retail Communication 189
Option Agreement 189
Pretest 191
CHAPTER 8 MUTUAL FUNDS 199
Investment Company Philosophy 199
Types of Investment Companies 200
Open-End vs. Closed-End Funds 201
Diversified vs. Nondiversified 202
Investment Company Registration 203
Investment Company Components 205
Mutual Fund Distribution 207
Selling Group Member 207
Distribution of No-Load Mutual Fund Shares 208
Distribution of Mutual Fund Shares 208
Mutual Fund Prospectus 208
Characteristics of Open-End Mutual Fund Shares 210
Mutual Fund Investment Objectives 211
Other Types of Funds 212
Alternative Funds 212
Floating Rate Bank Loan Funds 213
Bond Funds 213
Valuing Mutual Fund Shares 215
Changes in the NAV 216
Sales Charges 216
12B-1 Fees 219
Calculating a Mutual Fund’s Sales Charge Percentage 219
Finding the Public Offering Price 220
Sales Charge Reductions 220
Breakpoint Schedule 221
Letter of Intent 221
Backdating a Letter of Intent 222
Breakpoint Sales 222
Rights of Accumulation 222
Automatic Reinvestment of Distributions 223
Other Mutual Fund Features 223
Cost Base of Multiple Purchases 228
Purchasing Mutual Fund Shares 228
Sales Charges 231
45-Day Free Look 232
Withdrawal Plans 232
Recommending Mutual Funds 233
Structured Retail Products/SRPs 234
Pretest 235
CHAPTER 9 VARIABLE ANNUITIES 241
Annuities 241
Equity Indexed Annuity 244
Recommending Variable Annuities 245
Annuity Purchase Options 246
Accumulation Units 247
Annuity Units 247
Annuity Payout Options 247
Factors Affecting the Size of the Annuity Payment 249
The Assumed Interest Rate (AIR) 249
Taxation 250
Types of Withdrawals 250
Annuitizing the Contract 250
Expenses and Guarantees 251
Other Charges 251
Pretest 253
CHAPTER 10 ISSUING CORPORATE SECURITIES 257
The Securities Act of 1933 257
The Prospectus 258
The Final Prospectus 258
Free Writing Prospectus 259
Prospectus to Be Provided to Aftermarket Purchasers 260
SEC Disclaimer 260
Misrepresentations 260
Tombstone Ads 261
Free Riding and Withholding/FINRA Rule 5130 261
Underwriting Corporate Securities 262
Types of Underwriting Commitments 263
Types of Offerings 264
Awarding the Issue 265
The Underwiting Syndicate 265
Selling Group 265
Underwriter’s Compensation 265
Private Placements/Regulation D Offerings 267
Rule 144 268
Private Investment in a Public Equity (PIPE) 269
Regulation S Offerings 270
Regulation A Offerings 270
Rule 145 271
Rule 147 Intrastate Offering 271
Crowdfunding 272
Rule 415 Shelf Registration 273
Pretest 275
CHAPTER 11 TRADING SECURITIES 279
Types of Orders 279
The Exchanges 283
Priority of Exchange Orders 283
The Role of the Designated Market Maker (DMM) 284
The DMM Acting as a Principal 284
The DMM Acting as an Agent 285
Crossing Stock 286
Do Not Reduce (DNR) 287
Adjustments for Stock Splits 287
Stopping Stock 288
Commission House Broker 289
Two-Dollar Broker 289
Registered Traders 289
Super Display Book (SDBK) 289
Short Sales 290
Rule 200 Definitions and Order Marking 290
Rule 203 Security Borrowing and Delivery Requirements 292
Threshold Securities 292
Listing Requirements for the NYSE 294
Over the Counter/Nasdaq 294
Market Makers 294
Nasdaq Subscription Levels 295
Nasdaq Quotes 295
Nominal Nasdaq Quotes 296
Automated Confirmation System (ACT)/Trade Reporting Facility (TRF) 297
Nasdaq Execution Systems 297
The Nasdaq Market Center Execution System (NMCES) 297
The Nasdaq Opening Cross 297
Non-Nasdaq OTCBB 298
Regulation M, Rule 101 299
Penalty Bids 299
Regulation M, Rule 102 300
Regulation M, Rule 103 300
Passive Market Makers’ Daily Purchase Limit 301
Regulation M, Rule 104 301
Syndicate Short Positions 303
Regulation M, Rule 105 303
Pink OTC Market 303
Third Market 304
Fourth Market 304
Reading the Consolidated Tape 304
Exchange Qualifiers 306
Broker vs. Dealer 306
FINRA 5% Markup Policy 307
Markups/Markdowns When Acting as a Principal 307
Riskless Principal Transactions 308
Proceeds Transactions 309
The Order Audit Trail System (OATS) 309
Trade Reporting and Compliance Engine (TRACE) 309
Circuit Breakers 310
Limit Up Limit Down (LULD) 311
Arbitrage 311
Pretest 313
CHAPTER 12 CUSTOMER ACCOUNTS 317
Holding Securities 319
Mailing Instructions 320
Types of Accounts 321
Commingling Customers’ Pledged Securities 331
Wrap Accounts 332
Regulation S-P 332
Identity Theft 333
Day Trading Accounts 333
ABLE Accounts 334
FINRA Rules on Financial Exploitation of Seniors 335
Pretest 337
CHAPTER 13 MARGIN ACCOUNTS 341
Regulation of Credit 341
Regulation T 341
House Rules 344
Establishing a Long Position in a Margin Account 344
An Increase in the Long Market Value 345
Special Memorandum Account (SMA) Long Margin Account 347
A Decrease in the Long Market Value 349
Minimum Equity Requirement Long Margin Accounts 349
Establishing a Short Position in a Margin Account 350
A Decrease in the Short Market Value 351
Special Memorandum Account (SMA) Short Margin Account 352
An Increase in the Short Market Value 353
Minimum Equity Requirement Short Margin Accounts 354
Combined Margin Accounts 355
Portfolio Margin Accounts 355
Securities Backed Lines of Credit 356
Minimum Margin for Leveraged ETFs 356
Pretest 357
CHAPTER 14 RETIREMENT PLANS 361
Individual Plans 361
Individual Retirement Accounts (IRAs) 362
Traditional IRAs 362
Roth IRAs 363
Simplified Employee Pension IRA (SEP IRA) 364
Educational IRA/Coverdell IRA 366
Tax-Sheltered Annuities (TSAs)/Tax-Deferred Accounts (TDAs) 370
Corporate Plans 372
Rolling Over a Pension Plan 374
Health Savings Accounts 374
Employee Retirement Income Security Act of 1974 (ERISA) 375
ERISA 404C SAFE HARBOR 377
Department of Labor Fiduciary Rules 377
Pretest 379
CHAPTER 15 BROKERAGE OFFICE PROCEDURE 383
Executing an Order 383
Customer Confirmations 385
Clearly Erroneous Reports 386
Execution Errors 386
Corporate and Municipal Securities Settlement Options 386
RVP/DVP/COD 387
When-Issued Securities 387
Government Securities Settlement Options 388
Accrued Interest 388
Calculating Accrued interest 389
Accrued Interest for Government Notes and Bonds 390
Rules for Good Delivery 391
Delivery of Round Lots 392
Delivery of Bond Certificates 392
Rejection of Delivery 393
Don’t Know (DK) Procedures 393
Fail to Deliver/Fail to Receive 393
Due Bills 393
Customer Account Statements 394
Carrying of Customer Accounts 394
Proxies 395
Pretest 397
CHAPTER 16 FUNDAMENTAL AND TECHNICAL ANALYSIS 403
Fundamental Analysis 403
The Balance Sheet 404
Industry Fundamentals 411
Top Down and Bottom up Analysis 412
Technical Analysis 412
Market Theories and Indicators 416
Efficient Market Theory 417
Pretest 419
CHAPTER 17 DIRECT PARTICIPATION PROGRAMS 421
Limited Partnerships 421
Structuring and Offering Limited Partnerships 423
Types of Limited Partnerships 424
Oil and Gas Sharing Arrangements 426
Equipment Leasing Programs 426
Tax Reporting for Direct Participation Programs 427
Limited Partnership Analysis 427
Tax Deductions vs. Tax Credits 428
Other Tax Considerations 428
Dissolving a Partnership 428
Pretest 431
CHAPTER 18 CUSTOMER RECOMMENDATIONS, PROFESSIONAL CONDUCT, AND TAXATION 435
Professional Conduct in the Securities Industry 436
Fair Dealings with Customers 436
Periodic Payment Plans 441
Mutual Fund Current Yield 441
Information Obtained from an Issuer 441
Disclosure of Client Information 442
Borrowing and Lending Money 442
Gift Rule 442
Outside Employment 443
Private Securities Transactions 443
Customer Complaints 443
Investor Information 444
NYSE/FINRA Know Your Customer 444
Investment Objectives 445
Risk vs. Reward 447
Alpha 449
Beta 449
Capital Asset Pricing Model (CAPM) 449
Products Made Available through Member Firms 450
Recommendations through Social Media 451
Tax Structure 452
Investment Taxation 452
Calculating Gains and Losses 453
Cost Base of Multiple Purchases 453
Deducting Capital Losses 454
Wash Sales 454
Taxation of Interest income 455
Inherited Securities 456
Donating Securities to Charity 456
Gift Taxes 456
Estate Taxes 457
Withholding Tax 457
Corporate Dividend Exclusion 457
Alternative Minimum Tax (AMT) 457
Taxes on Foreign Securities 458
Pretest 459
CHAPTER 19 SECURITIES INDUSTRY RULES AND REGULATIONS 465
The Securities Exchange Act of 1934 465
The Securities and Exchange Commission (SEC) 466
Extension of Credit 467
The National Association of Securities Dealers (NASD) 467
Becoming a Member of FINRA 469
Hiring New Employees 470
Disciplinary Actions against a Registered Representative 471
Resignation of a Registered Representative 472
Continuing Education 472
Termination for Cause 474
Retiring Representatives/Continuing Commissions 474
State Registration 474
Registration Exemptions 475
Persons Ineligible to Register 475
Communications with the Public 475
FINRA Rule 2210 Communications with the Public 476
Broker Dealer Websites 479
Blind Recruiting Ads 480
Generic Advertising 480
Tombstone Ads 480
Testimonials 481
Free Services 481
Misleading Communication with the Public 482
Securities Investor Protection Corporation Act of 1970 482
Net Capital Requirement 482
Customer Coverage 483
Fidelity Bond 483
The Securities Acts Amendments of 1975 483
The Insider Trading & Securities Fraud Enforcement Act of 1988 484
Firewall 484
Telemarketing Rules 485
Do Not Call List Exemptions 486
The Penny Stock Cold Call Rule 486
The Role of the Principal 487
Violations and Complaints 487
Resolution of Allegations 487
Minor Rule Violation 488
Code of Arbitration 488
The Arbitration Process 489
Mediation 490
Currency Transactions 491
The Patriot Act 491
U.S. Accounts 493
Foreign Accounts 493
Annual Compliance Review 493
Business Continuity Plan 493
Sarbanes-Oxley Act 494
The Uniform Securities Act 495
Tender Offers 496
Stockholders Owning 5% of an Issuer’s Equity Securities 497
Pretest 499
ANSWER KEYS 505
GLOSSARY OF EXAM TERMS 523
INDEX 589
| Erscheinungsdatum | 17.01.2019 |
|---|---|
| Verlagsort | New York |
| Sprache | englisch |
| Maße | 218 x 274 mm |
| Gewicht | 1438 g |
| Themenwelt | Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung |
| Betriebswirtschaft / Management ► Spezielle Betriebswirtschaftslehre ► Bankbetriebslehre | |
| ISBN-10 | 1-119-55275-3 / 1119552753 |
| ISBN-13 | 978-1-119-55275-8 / 9781119552758 |
| Zustand | Neuware |
| Haben Sie eine Frage zum Produkt? |
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