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Series 7
Studying for the series 7 these are some of the more important definitions
| Term | Definition |
|---|---|
| European Style | Can only be exercised at expiration |
| Depository Trust Clearing Company (DTCC) | one of the world's largest security depositories. It was created to reduce costs and provide clearing and settlement to the financial markets |
| National Securities Clearing Corporation (NSCC) | A subsidiary of the DTC that provides centralized, information, and settlement services to the financial industry including B/D's, banks, mutual funds, and insurance companies |
| Continuous Net Settlement (CNS) | operated by NSCC, is an automated settlement system that centralizes and matches the settlement of securities transactions and money balances of its member participants |
| Fixed income Clearing Corporation (FICC) | A subsidiary of DTCC that provides for centralized clearing information and settlement for government securities |
| Federal Deposit Insurance Companies (FDIC) | An independent agency of the federal government which insures deposits in banks and thrift institutions for at least $250,000 |
| Inflationary Risk or Purchasing Power Risk | Risk of loss of buying power, especially on fixed income securities with long-term maturities. If an investment value decreases and the income decreases then their ______ ______ would decrease |
| Liquidity Risk | The risk that an investor will not be able to sell or liquidate a security at a fair market value |
| Systematic Risk | A risk common to all securities of the same general class and therefore cannot be eliminated with diversification |
| Non-systematic Risk | Company specific risk, meaning the value of a single investment choice will decline. Can be minimized with diversification |
| credit risk | Risk that a company will declare bankruptcy or financial obligation won't be met |
| Economic and social risk | generally refers to how domestic and world affairs affect investments as well as fiscal and monetary policy |
| Risk/reward relationship | great risk the greater the reward. The lower the risk the less reward |
| reinvestment risk | risk that interest rates will decline and income received from existing investments will earn less when reinvested than the original investment |
| call risk | risk that a bondholder will have their bond called or redeemed before maturity |
| currency risk | risk that changes in the exchange rate will adversely affect your investment |
| Legislative or Regulatory Risk | risk that legislative changes may adversely affect your investment |
| Market Timing Risk | risk incurred trying to time the market, or a particular investment. Too late or too soon |
| business risk | associate the unique characteristics of a particular company as they might affect the price of that company's securities. |
| Capital Risk | The risk of loss of the principal value of an asset or security |
| Interest Rate Risk | loss of market value on fixed income securities because of the rise in competitive interest rates, especially on securities with long-term maturities |
| Indenture/bond Indenture/Trust Indenture | A bond's indenture describes the rights and duties of the municipality and the trustee |
| Form U5 | termination notice for securities industry registration. Filed with CRD or IARDSM. Notify FINRA within 30 days |
| Form U6 | Uniform disciplinary action reporting form. |
| SEC Rule 17F-2 | Requires every person in member firm to be fingerprinted. |
| Form U-4 | Uniform application for securities Industry. Reps must use this form to become registered in appropriate jurisdiction |
| Pump and dump | refers to the illegal and unethical practice of inflating the price of a stock by fictitious trading activity or by disseminating false stoires |
| Marking the close | unethical practice of placing a buy order for a security at the very end of the day |
| Marking the opening | unethical practice of placing a buy order for a security at the beginning of the day |
| backing away | is the failure of a MM to make good on a bid for the minimum quantity in a security |
| spoofing | Represent a trader entering one visible order, or several, which creates a new best bid or offer or adds significantally to the liquidity shown at best bid or offer |
| Office of the Ombudsman | provides a neutral and confidential forum for member firms and their employees or public investor to voice their concerns about operations, enforcements or other FINRA activities |
| Retail communiaction | includes any written or electronic communication to more than 25 retail investors within 30 day period. Is included in advertisement and sales literature |
| non-traditional ETFs | borrow capital with the goal of generating a greater percentage return. Uses futures and options. Percentage of gains or losses is magnified. 25% long of MV and 20% short of MV |
| underwriter/distributor/sponsor | buys and sells from the fund at NAV sells to public with sales chare or sells to retail dealers with discount. Receives an underwriting concession for selling fund shares. Concession is contained in the sales load. |
| custodian | is responsible for the safekeeping of the cash and securities in portfolio. Usually a bank. Main function is to provide recordkeeping and clerical services |
| transfer agent | issues fund shares, redeem fund shares, disburses dividends and capital gains. Send statement to shareholders and eeps record of purchases and redemptions. |
Created by:
catherinekempf
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