Formulas and dates series 66

alpha

(actual - RF) - (Beta x (Market - RF))

IA contract

- needs to be in writing and discloses services: fees, discretionary power or not

custody of IA

-be segregated and properly marked -itemized list of all securities not less than frequently every 3 months - verified annually by annual examination by independent CPA

There are two important numbers with REITs:

-pay out 90% of their taxable income must be distributed to investors as dividends -At least 75% of the value of a REIT's total assets must consist of real estate assets, cash, cash items and government securities

Regarding investment advisers, how many people does an ad have to be sent to before it is necessary to retain a copy

10

SEC can suspend trading in security

10 busienss days

oral discretion for IA

10 days after first trade

Annual delivery of adviser brochure to clients (if material changes)

120 days

time limit for an IA who expects to reach the required AUM to register with SEC

120 days

receipt of option account

15 days after account approval

firm form D Private placement

15 days after first sale

SEC IA and AUM below 90 million must register with states

180 days

records must be kept easily accessible

2 years

cooling off period

20 days

time period for most records kept by broker dealers

3 years

Snowbird Exemption

30 days

new issues eligible for margin once owned this long

30 days

Maximum maturity of any holding in money market mutual fund

397

filing form 8k

4 business days

federal registration o f BDs and IAs effective

45th days

penalty free cancellation of IA contract if brochure not delivered at least 48 hours in advance USA only

5 business days

time period for IA recordkeeping

5 years

Time limit to appeal an order under both state and federal law

60 days

time limit for open end to redeem shares

7 business days

payment of estate taxes is due

9 months after death

An investor purchases a 5% callable convertible subordinated debenture at par. Exactly one year later, the bond is called at 104. The investor's total return is: 4% 5% 7.5% 9%

9% 1040 is $40 gain then two semiannual payments of $25 is 50 a year . 50+40=90 then 1000/90=9%

After end of fiscal year, IA must file annual updating amendment

90 days

State IA with AUM at $110 million or above, must register with SEC

90 days

suspend all trading with letter to president

90 days

advertising that do not comply with IA act of 1940

: cannot invite to like a post or like a post both testimonials

investment advisor, IAR and federal covered unethical business practices : recommendation, sell or purchase, third party , fees, conflict of interest

: making recommendations to a client without reason :placing and order to sell or purchase can be given orally or in agreement :placing a order to sell by a third party without authorization from client :charging unreasonable fees :failing to disclose in writing any material conflict of interest

3rd party material and qualifications and fees

:not disclosing when 3rd party material is used unless IA gathers and uses research materials BEFORE making recommendation :misleading clients on qualifications and fees

continued: IA ONLY unethical business practices

:placing a order without prior written discretionary authority unless time or price, oral can be used 10 days (normal work week) after date of first transaction

swap

A derivative representing an exchange of cash flows.

alpha RF not given

Actual return - (beta x market return)

Which one of these represent a certain type of Bond Spread?a. liquidity spreadb. credit spread c. fundamental spreadd. systematic spread

Credit spread

Options Disclosure Document

Document that must be provided at or before the account approval

Which of the following would be least likely to be organized as a limited partnership?

Exchange traded Funds are never organized as limited partnerships

Which is the employer-sponsored retirement plan that allows withdrawals before reaching age 59 1/2 without the 10% penalty

IRC 457 B

You are following a company whose trailing P/E ratio used to be 10 to 1. It is now 20 to one

If the earnings have not changed, this means: The price of the stock has doubled.

difference between FSA and HSA

NO use or lose it money is rolled over and nontaxable if used for medical

dividend payout ratio

The dividends paid divided by the earnings made". It can be shown as total dividends and total net income, or as dividends per share and earnings per share.

What new benefit did the TCJA of 2017 bring to 529 plans effective 2018?

Use for tuition expenses for K-12 education. One of the choices might be about using the funds for foreign universities, but that's been around for a long time.

current yield

annual dividend or interest / cmv

safe harbor provision of Section 404c

does NOT include high yield junk bonds

Gift of Securities

does not "step-up" the cost basis. It remains the cost basis of the donor. It is only inheritance where the step-up applies.

record keeping for IAs

is 5 years from the end of the fiscal year in which the record was made. The exception to that is records of the business enterprise, such as partnership agreements, corporate charters, and minute books. Those are kept for 3 years after the termination of the business.

A 457 Plan is non-qualified (although there are tax benefits). As a non-qualified plan:

it is exempt from ERISA requirements. That means key employees may be covered - the plan can discriminate.

dark pool advantage

lack of transparency

When comparing non-traded REITs to listed REITs, the primary difference

liquidity

a bonds duration

lower coupon higher duration a bond with a 10 year 5% will have longer duration than 10 year with 10%

Remember, when it comes to computing capital gains or losses, if the investor is still holding the security

no gain or loss is realized until security is sold or redeemed

The shares of the LMN closed-end management investment company are selling at $45, while LMN's net asset value is $40. It would be most accurate to say that LMN's shares are trading at

selling at 5% premium so 5/40=.125

corporations net worth is the same as

stockholders equity or owners equity

You have two bonds with the same maturity date. One has a 3% coupon, the other a 6% coupon. When interest rates change (up or down), which bond has the greater price movement?

the one with greater duration and that is 3%

Borrowing funds from client or lending money to a client is prohibited

unless a broker dealer, affiliate of IA or institution engaged in loaning

inverse ETFs

use options and other derivatives to achieve their goal

when an IA acts in a principal capacity or agent in a transaction with client

written disclosure must be given and consent obtained.

money market funds

are NOT FDIC insured

Which of the following statements is most accurate when describing equity straddle options?

buyer is looking for market volatility seller is looking for stability

LLC

called members

universal life

client wishes to pay extra premiums but not invest in market