DEAN SERIES 7 FINAL NOTES

Cash Dividend is Taxable, what is the current yield of a Quarterly dividend of 25 Cents and the stocks market price is 15?

.25 * 4 = 1$ 1$/15 = 6.6%

Corporate and Muni bonds

1/8

1 Bond points is how many dollars?

10 dollars

How much is one bond point?

10$ 1% of par

QIB

100,000,00$ or more unregistered foreign or domestic securities.

Institutional client must file what form in a private placement?

144a

Which of the following is used to eliminate or reduce short position?

A closing purchase

An investor owning an option contract liquidates the position, On the order ticket, the RR would enter?

A closing sale

A client is interested in generating additional income on a stock they own, What would you recommend?

A covered call.

Which of the following is used to establish or add a LONG position

An opening purchase

Which of the following is used to establish or add to a SHORT position

An opening sale

BULLS

BECAUSE U R LONG LOWER STRIKE

Bonds trading "add interest"

Bond with accrued interest NOT zero coupon bonds.

Buyer needs to SIGN suitability statement for a derivative security

Buyer needs to SIGN suitability statement for a derivative security

BALANCED FUND

Contains Stocks and Bonds

Short Margin account Market value maintenance

Credit

Customer is concerned about the interest charged in a margin account, what would you direct them to?

Credit Agreement!!! Loan consent form is optional

What does Standard and Poors rating for bonds measure?

Credit risk

Ex Date for mutual funds

DREP All dates in an open end mutual fund is set by the BOD.

DATO 15

Disclosure document Account approval Trade Options agreement in 15 days

DIE 90

Dividends on stock plus Interest on the bonds minus Expenses equals Net Investment income At least 90% pass through

REITS and mutual funds

Do not pass through losses, only income Must distribute 90% net income to shareholders.

CAL and PUSH

FOR SPREADS ONLY Call Add to the Lower Push Subtract from the higher ALWAYS between the strike prices

SILO

FOR STRADDLES Short Inside Long outside

Dollar Cost averaging

If prices are FLUCTUATING, the plan will produce a lower average per share cost.

If a customer buys 100 XYZ at 18$ in a NEW margin account, how much do they deposit?

If the amount is under 2000, they pay in full.

All Debt denominated securities trade?

In a negotiated, Quote driven market Bond desk is going to give you a bid and an offer

What are some bonds where the buy does not need to pay the seller?

Income or adjustment Zero coupon Bonds in default

Interest charged on debit in margin.

Interest ADDS to the debit.

What are the 2 biggest risks for bonds?

Interest rate risk Credit risk

Whichever syndicate provides bid with LOWEST net interest cost

Is the syndicate that has won

GO bonds can be issued on a negotiated basis

Issuer selects Underwriter

FINRA 5% rule

It is for the SECONDARY MARKET Securities sold through a prospectus are exempt from this rule because it is THE SECONDARY MARKET.

Treasury Note or Treasy spread

1/32

When, as, and if issued Reg T deposit

50%!!!

MUTUAL FUND MAX SALES CHARGE

8.5% of POP

Equity Linked Notes

A Debt instrument Holder has creditor relationship with the issuer Typically a financial institution.

An RR sells an investment non sponsored by his employer without permission, this is known as?

A prohibited practice known as selling away.

ALPHA excess return over BETA

ALPHA excess return over BETA

AAA for discretion

Action Asset Amount Making a decision on anything of these is discretion.

How does the OCC select who pays an option?

By random FIFO CANNOT be discriminatory

A customer said they would like to be able to trade during the day and if possible, to purchase below the NAV. You would recommend?

Closed end mutual fund.

Which bonds trade T + 2?

Corporates and Muni's

How often are customer statements sent?

Every Quarter Unless penny stock

ADR's

Foreign security that trades in the US. CURRENCY risk.

Bonds MOST sensitive to interest rate income.

LONG and LOW

Warrants

Long term Exercisable ABOVE SWEETENER for bonds.

What bonds are subject to AMT?

Private activity bond

Selling a spread`

Selling DIRECTION volatility. If a customer doesn't think something will go a certain direction.

Mutual funds send their financial statements how often?

Semi Annually

Index options

Settle cash Exercise and option are T+1

Speculative options strategies

Start with the stock but don't end up with the stock.

Zero coupon bonds

Straight line accretion that taxes will be owned UNLESS from a municipality NO REINVESTMENT RISK GOOD FOR SOMEONE WHO NEEDS MONEY ARE A FUTURE DATE

Non recourse

They can not come after the limited partners for the loan. Recourse loan BAD bank can come after the limited partners

Muni flow of funds statement is contained in?

Trust indenture/bond contract

EPIC

US Exporters buy puts on the foreign currency US Importers buy calls on the foreign currency

Issuer needs a Cash advance

Underwriter says here's some cash give us a BAN When we raise that money we want a little extra

Selling Dividends

Violation of the Code of Conduct.

When will a variable annuity be a suitable Retirment plan?

When the person has maxed out other qualified retirement plans availible to them.

When are options taxed?

When they Expire!!!

When does a book entry security clear and transfer?

With journal entry.

If a bond is at a premium what is the yield?

Yield to Call

UTMA

Kids Tax ID No Margin/Short sales One minor - One Custodian per account

Random withdrawals from Variable Annuities are?

LIFO

An investor needs significant passive income, what would the RR recommend?

Low income housing (Tax Credit) Exploratory Oil and Gas Historic Real estate (Tax Credits)

Underwriters payments

Managers fee - Smallest Selling concession - largest Spread = Amount paid to issuer - Underwriter payment

Are stock dividends taxable?

NO The cost basis is adjusted.

Are stock dividends and stock splits taxable?

NOOO HOWEVER Adjust the cost basis More share at a lower price.

Are Advanced options strategies conservative?

NOOOO

Do investment clubs get breakpoints?

NOOOO

If a customer leaves town and their stock is dropping, what can the RR do?

NOTHING they need to talk to the customer.

Inside Market

Nasdaq Level 1 Highest bid Lowest Ask

Numbered Accounts

Need signed letter for account ownership Only RR and principal need to know Works just like any other account.

150,000 Long 70,000 Debit 80,000 Equity Investor Sells XYZ for 18,000 and buys ABC for 20,000. How much is required to deposit?

Net the 2 together 18,000 and 20,000 = 2000 Find SMA 150,000/2 = 75,000 80,000-75,000 = 5000 5000 excess equity 10,000 Buying power Needs to deposit 0$

Clearing firm

Order Department Purchase and Sales Department Margin Department Cashiering Department

Which CMO tranch has the least risk?

PAC

Retail "Sales literature"

PRE approved by principal. Correspondence PRE or POST

Equity REITS

Pay a high dividend Moderately risky

What are term bonds quoted on?

Percentage of par

If a customer is subject to AMT do NOT recommend?

Private Purpose non essential Bond Private Activity Bond

Benefits of REITS

Professional Management Diversification Ease of ownership Traded on an exchange LIQUID 75% for real estate 90% net investment income go to shareholders

If Competitive Muni

Publish a notice of sale in the bond buyer

When does a B/D send account statements?

Quarterly UNLESS penny stock or active trading.

MUNI NOTES ARE MUNI MONEY MARKET SECURITIES

RANS TANS BANS TRANS PAYDAY LOAN ISSUER gets it from underwriter

6 month holding period required for?

Restricted stock NOT control stock(officers)

Corporate bonds

SECURED BONDS Morgage bonds - secured by mortgages Collateral trust bonds - secured by securities placed in escrow Equipment Trust certificates - Major movable equipment UNSECRED BONDS Debentures Subordinated Debentures Income or adjustment - ONLY pay interest when earned(Trade Flat) Guaranteed bonds - PARENT company guarantees the debt.

Closed End investment companies

Shares are issued in a one time offering, THEN trade on an exchange or over the counter.

Rights

Short term Exercisable BELOW

Money Market Funds

Sold without a sales charge Typical maturities are 30 days or less

Zero Coup Bonds

Straight line Accretion Accreted interest is taxable unless from Muni bond Great for target date investment No reinvestment risk

What is the attorney for a muni bond?

The bond counsel They cover Tax Status The legality of the muni debt

What is the Ex date?

The first date on which the stock no longer trades with the dividend attached.

What does a Head a shoulders pattern indicate?

The reversal of a trend.

Which bonds trade T + 1?

Treasuries

Hedge funds

Very volatile Organized as private partnerships Distributed under Reg D Only institutional and accredited investors

Taxing authority is required for a GO bond

Voter approval is required for a GO bond

Corporate Resolution

What officer is going to trade the account Corporate BY LAWS is specific to margin.

If a bond is at a Discount what is the yield?

Yield to Maturity

What are serial bonds quoted on?

Yield to maturity.

Long term capital gains

You have to be AT risk. So if a person buys some shares and 3 months later buys at put option, he is no longer at risk and is subject to short term capital gains.