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SIE Essentials
| Question | Answer |
|---|---|
| What is the current settlement standard for U.S. equities, corporate bonds, municipal bonds, and ETFs? | T+1 (effective May 28, 2024) |
| Under T+1, what is the relationship between ex-dividend date and record date? | They are now the SAME DAY (previously ex-date was 1 business day before record date) |
| When do you need to buy a stock to receive its dividend? | BEFORE the ex-date; buying on or after the ex-date means no dividend |
| What is the current settlement for equity option exercise resulting stock transactions? | T+1 (was T+2) |
| What are the current Treasury Bill maturity options? | 4, 8, 13, 17, 26, and 52 weeks |
| What is the regular-way settlement for equities, corporate bonds, municipal bonds, and government securities? | T+1 |
| What is the settlement for cash settlement transactions? | T+0 (same day, special request) |
| What is Reg T initial margin requirement? | 50% |
| What is FINRA's minimum maintenance margin for long positions? | 25% |
| What is FINRA's minimum maintenance margin for short positions? | 30% |
| How many shares does one equity option contract represent? | 100 shares |
| What is the point value of an options premium? | $100 per point |
| What is the total SIPC coverage per separate customer? | $500,000 |
| What is the SIPC cash sublimit? | $250,000 |
| What is the maximum sales charge for a mutual fund under FINRA 2341? | 8.5% |
| What is the gift limit per person per year under FINRA/MSRB? | $300 |
| What is the threshold for filing a CTR (Currency Transaction Report)? | Cash transactions over $10,000 |
| What is the threshold for filing a SAR (Suspicious Activity Report)? | $5,000+ |
| What is the net worth threshold for an accredited individual (excluding primary residence)? | $1M |
| What is the income threshold for an accredited individual? | $200K single / $300K joint |
| What is the minimum asset level for a QIB (Qualified Institutional Buyer)? | $100M+ in securities |
| What is the SEC threshold for IA registration? | $110M+ AUM |
| What is the state threshold for IA registration? | Under $100M AUM |
| At what age do RMDs begin for a Traditional IRA? | 73 |
| At what age can you make catch-up IRA contributions? | 50+ |
| Are there RMDs for a Roth IRA during the owner's lifetime? | No |
| How long must you hold restricted stock issued by a reporting issuer (SEC filer) under Rule 144? | 6 months |
| How long must you hold restricted stock issued by a non-reporting issuer under Rule 144? | 12 months |
| What is the primary market? | New securities issued; issuer receives proceeds; governed by Securities Act of 1933 |
| What is the secondary market? | Existing securities traded between investors; issuer not involved; governed by Securities Exchange Act of 1934 |
| What is the third market? | Exchange-listed securities traded OTC (institutional) |
| What is the fourth market? | Direct institution-to-institution trading via ECNs and dark pools |
| What is an IPO? | First public sale of company stock |
| What is a follow-on offering (APO)? | New shares issued post-IPO; dilutive to existing shareholders |
| What is a secondary offering? | Existing shareholders sell their shares; non-dilutive to company |
| What is a split/combo offering? | Both company and existing shareholders sell |
| What is a private placement? | Sold to limited investors under exemption from registration |
| What is the role of the SEC? | Federal government agency; top of regulatory hierarchy; oversees all SROs |
| What is FINRA? | Largest SRO; regulates broker-dealers and registered reps |
| What does MSRB do? | Writes rules for municipal securities; does NOT enforce (SEC/FINRA enforce for B/Ds; bank regulators for bank dealers) |
| What is CBOE? | Options exchange SRO; largest U.S. options exchange |
| What is SIPC? | Customer protection (broker failure); NOT a regulator; NOT a government agency |
| What is the Federal Reserve's role? | Monetary policy; Reg T; sets credit rules for securities purchases |
| What is Blue Sky law? | State-level securities regulation; parallel authority alongside federal |
| What does Reg D Rule 504 allow? | Up to $10M; limited disclosure; Blue Sky still applies |
| What does Reg D Rule 506(b) allow? | Unlimited $; up to 35 non-accredited; no general solicitation |
| What does Reg D Rule 506(c) allow? | Unlimited $; accredited only; general solicitation permitted; must verify accredited status |
| What does Rule 144 cover? | Resale of restricted/control stock (6-mo / 12-mo holding) |
| What does Rule 144A cover? | Resales to QIBs ($100M+ institutions) |
| What do Rules 147/147A cover? | Intrastate offerings |
| What does Reg A / A+ cover? | Mini-registration ($20M Tier 1 / $75M Tier 2) |
| What does Reg S cover? | Offshore offerings to non-U.S. persons |
| What does Reg CF (Crowdfunding) cover? | Up to $5M annually via SEC-registered funding portals |
| What is a broker (agent) and what do they earn? | Executes orders for customers; earns Commission |
| What is a dealer (principal) and what do they earn? | Trades from own inventory; earns Markup / Markdown |
| What is a market maker and what do they earn? | Provides liquidity; quotes bid/ask; earns Spread |
| What is an underwriter and what do they earn? | Distributes new issues; earns Underwriting fee |
| What is a custodian and what do they earn? | Safeguards securities; earns Custody fees |
| What is a transfer agent and what do they earn? | Records ownership; processes transfers; earns Service fees |
| What is monetary policy? | Federal Reserve controls money supply and interest rates (open market operations, discount rate, reserve requirements) |
| What is fiscal policy? | Congress + President; spending and taxation |
| What is supply-side economics? | Reduce taxes and regulation to encourage production |
| What is Keynesian economics? | Government intervention to manage demand |
| What is monetarism? | Control money supply |
| What is the business cycle order? | Expansion → Peak → Contraction → Trough → Expansion |
| What are the three key rates? | Federal Funds (interbank overnight) |
| What is the dividend treatment for common stock? | Variable; discretionary |
| What is the dividend treatment for preferred stock? | Fixed; stated rate |
| Do common shareholders get voting rights? | Yes (1 share = 1 vote typical) |
| Do preferred shareholders get voting rights? | Usually no |
| What is the liquidation priority for common stock? | Last |
| What is the liquidation priority for preferred stock? | Before common |
| What is the growth potential for common stock? | Unlimited upside |
| What is the growth potential for preferred stock? | Limited |
| What is cumulative preferred stock? | Unpaid dividends accumulate as 'arrears'; must be paid before common dividends |
| What is non-cumulative (straight) preferred stock? | Missed dividends are forfeited forever |
| What is callable preferred stock? | Issuer can redeem at set price; benefits issuer when rates fall |
| What is convertible preferred stock? | Can be converted into common stock at set ratio; upside potential; lower dividend |
| What is participating preferred stock? | Fixed dividend PLUS share in extra profits (rare) |
| What is adjustable-rate preferred stock? | Dividend rate floats with benchmark |
| In what order are claimants paid in liquidation? | 1. Secured bondholders |
| Who is paid last in liquidation? | Common stockholders |
| What does "D" in the DERP mnemonic stand for? | Declaration (board announces dividend) |
| What does "E" in the DERP mnemonic stand for? | Ex-Dividend (first day stock trades WITHOUT the dividend) |
| What does "R" in the DERP mnemonic stand for? | Record (must be holder of record to receive - now SAME DAY as ex-date under T+1) |
| What does "P" in the DERP mnemonic stand for? | Payable (dividend is paid) |
| When are you eligible to receive a dividend? | Buy BEFORE the ex-date |
| How long do rights last? | Short (30–60 days) |
| How long do warrants last? | Long (up to 10+ years) |
| What is the exercise price for rights? | BELOW market |
| What is the exercise price for warrants? | ABOVE market (at issuance) |
| Who are rights issued to? | Existing shareholders (anti-dilution) |
| Who are warrants issued to? | Bond/preferred buyers (sweetener/incentive) |
| What is an ADR? | U.S.-traded security representing shares of a foreign company |
| In what currency are ADRs priced and do they pay dividends? | USD |
| Where are ADR shares held in custody? | U.S. bank |
| What is a sponsored ADR? | Company-involved, registered, often exchange-listed |
| What is an unsponsored ADR? | No company involvement, limited disclosure, OTC |
| What is the primary risk associated with ADRs? | Currency risk |
| What is restricted stock? | How you got it (private placement or compensation) |
| What is control stock? | Who owns it (officers, directors, 10%+ owners) |
| What is Rule 144? | Safe harbor for resale; 6-month hold (reporting issuer) or 12-month (non-reporting); volume limits; Form 144 filing for larger sales |
| What is a forward split (2:1)? | More shares, lower price, same total value |
| What is a reverse split (1:10)? | Fewer shares, higher price; often a warning sign (avoiding delisting) |
| What is a buyback? | Company repurchases own shares; reduces shares outstanding, increases EPS |
| What is a tender offer? | Public offer to buy shares directly from shareholders, usually at premium |
| What is a spin-off? | Parent distributes shares of subsidiary |
| What is the typical par value for a bond? | $1,000 |
| How is bond price quoted? | As % of par (102.50 = $1,025) |
| Is the coupon rate fixed or variable? | FIXED at issuance; never changes |
| What is a premium bond? | Price > par (coupon > market rate) |
| What is a discount bond? | Price < par (coupon < market rate) |
| What is the inverse relationship between bond yields and prices? | Rates UP → prices DOWN |
| For a discount bond, what is the order of yields from highest to lowest? | YTM > Current Yield > Nominal (Coupon) |
| For a bond trading at par, how do the yields compare? | YTM = Current Yield = Nominal |
| For a premium bond, what is the order of yields from highest to lowest? | Nominal (Coupon) > Current Yield > YTM |
| For a callable premium bond, which yield represents the worst case for the investor? | YTC (yield to call) is the lowest and most conservative |
| What are the maturity options for T-Bills? | 4, 8, 13, 17, 26, 52 weeks |
| What type of interest does a T-Bill pay? | Discount (no coupon) |
| What is the credit risk for T-Bills? | Zero credit risk |
| What are the maturity options for T-Notes? | 2, 3, 5, 7, 10 years |
| What type of interest do T-Notes pay? | Semi-annual coupon |
| Why are T-Notes important? | Most actively traded |
| What are the maturity options for T-Bonds? | 20 or 30 years |
| What type of interest do T-Bonds pay? | Semi-annual coupon |
| What makes T-Bonds unique? | Most rate-sensitive |
| What are the maturity options for STRIPS? | Varies |
| What type of interest do STRIPS pay? | Zero-coupon |
| What is the feature of STRIPS? | Separated interest/principal |
| What are the maturity options for TIPS? | 5, 10, 30 years |
| What makes TIPS unique? | Inflation-protected; semi-annual coupon on adjusted principal; phantom income |
| At what level are Treasury securities taxable? | FEDERAL level only; exempt from state/local |
| What does 'risk-free' mean for Treasuries? | Refers to default risk only; interest rate risk remains |
| What is a secured corporate bond? | Backed by specific collateral (mortgage bonds, equipment trust certificates, collateral trust) |
| What is an unsecured corporate bond (debenture)? | Backed only by issuer creditworthiness |
| What is a subordinated debenture? | Paid AFTER other debt in bankruptcy |
| What is investment grade? | BBB/Baa and above |
| What is high-yield (junk) bond? | Below BBB/Baa |
| What is a GO bond? | Backed by 'full faith and credit' (taxing power); voter approval typical; safer |
| What is a revenue bond? | Backed by specific project revenue; no taxing power; riskier |
| What is the tax-equivalent yield formula? | Muni Yield ÷ (1 − Tax Rate) |
| At what level is municipal bond interest tax-exempt? | FEDERAL tax-exempt; often state-exempt if in-state |
| Why should you NEVER put munis in a tax-deferred account? | The tax benefit is wasted |
| What is the key feature of T-Bills? | Safest; discount |
| What is the key feature of commercial paper? | Corporations issue; unsecured; up to 270 days |
| What is the key feature of banker's acceptances? | Banks issue; trade finance |
| What is the key feature of negotiable CDs? | Banks issue; tradeable; $100K+ minimum |
| What is the key feature of repos? | Dealers; sell + repurchase agreement |
| What is the key feature of federal funds? | Banks; overnight interbank |
| What is interest rate risk? | All fixed-rate bonds; longer maturity = more risk; zero-coupon = MAX |
| What is credit (default) risk? | None for Treasuries; varies for corp/muni |
| What is call risk? | Issuer redeems early (when rates fall) |
| What is reinvestment risk? | Reinvesting coupons at lower rates; zero-coupon = NONE |
| What is inflation (purchasing power) risk? | Real return erosion |
| What is prepayment risk (MBS)? | Rates fall → faster principal return |
| What is extension risk (MBS)? | Rates rise → slower prepayments |
| What is a call option? | Right to BUY at strike; Bullish |
| What is a put option? | Right to SELL at strike; Bearish |
| What is an option buyer (long)? | Pays premium; has rights |
| What is an option writer (short)? | Receives premium; has obligations |
| What is an option premium? | Intrinsic Value + Time Value; 1 contract = 100 shares; 1 point = $100 |
| What is the outlook for a long call? | Bullish |
| What is the maximum gain for a long call? | Unlimited |
| What is the maximum loss for a long call? | Premium |
| What is the breakeven for a long call? | Strike + Premium |
| What is the outlook for a short call? | Bearish |
| What is the maximum gain for a short call? | Premium |
| What is the maximum loss for a short call? | Unlimited |
| What is the breakeven for a short call? | Strike + Premium |
| What is the outlook for a long put? | Bearish |
| What is the maximum gain for a long put? | Strike − Premium |
| What is the maximum loss for a long put? | Premium |
| What is the breakeven for a long put? | Strike − Premium |
| What is the outlook for a short put? | Bullish |
| What is the maximum gain for a short put? | Premium |
| What is the maximum loss for a short put? | Strike − Premium |
| What is the breakeven for a short put? | Strike − Premium |
| When is a call option in the money (ITM)? | Market > Strike |
| When is a call option at the money (ATM)? | Market = Strike |
| When is a call option out of the money (OTM)? | Market < Strike |
| When is a put option in the money (ITM)? | Market < Strike |
| When is a put option at the money (ATM)? | Market = Strike |
| When is a put option out of the money (OTM)? | Market > Strike |
| What is a protective put? | Long stock + Long put = INSURANCE against downside |
| What is a covered call? | Long stock + Short call = INCOME (caps upside) |
| What is a collar? | Long stock + Long put + Short call = limited risk both directions |
| Where do futures trade? | Exchange |
| Where do forwards trade? | OTC |
| Are futures standardized? | Yes |
| Are forwards customized? | Yes |
| What is the counterparty risk for futures? | None (clearinghouse) |
| What is the counterparty risk for forwards? | Yes |
| How often are futures marked-to-market? | Daily |
| When are forwards marked-to-market? | At settlement |
| What is the liquidity of futures? | High |
| What is the liquidity of forwards? | Low |
| What is the key distinction between options and futures/forwards? | Options = RIGHTS; Futures/Forwards = OBLIGATIONS for BOTH parties |
| How do mutual fund shares outstanding work? | Continuous |
| How is a mutual fund priced? | NAV + sales charge = POP |
| How are mutual funds redeemed? | From the fund |
| What is the maximum sales charge for mutual funds? | 8.5% |
| How are closed-end fund shares outstanding determined? | Fixed |
| How is a closed-end fund priced? | Market price (supply/demand) |
| How are closed-end funds redeemed? | On secondary market |
| What sales charges apply to closed-end funds? | N/A (commission) |
| How do ETF shares outstanding work? | Variable (creation/redemption) |
| How is an ETF priced? | Market price (intraday) |
| How are ETFs redeemed? | On secondary market |
| What sales charges apply to ETFs? | N/A (commission) |
| What is a fixed annuity? | Guaranteed return; insurer assumes investment risk; insurance product (not a security) |
| What is a variable annuity? | Return based on subaccount performance; annuitant assumes risk; IS a security; prospectus required |
| What is the tax treatment for Traditional IRA contributions? | Pre-tax contributions; taxed at withdrawal |
| When do RMDs begin for a Traditional IRA? | Age 73 |
| What is the tax treatment for Roth IRA contributions? | After-tax contributions; tax-free withdrawals |
| Are there RMDs for a Roth IRA during the owner's lifetime? | No |
| Who should use a SEP IRA? | Self-employed |
| What is a key feature of a SEP IRA? | Employer contributions; higher limits |
| Who should use a SIMPLE IRA? | Small employer |
| What is a key feature of a SIMPLE IRA? | Employee + employer contributions; lower admin burden |
| What is the tax treatment for 401(k) / 403(b) plans? | Pre-tax (Roth option available) |
| What is unique about 403(b)? | For 501(c)(3) organizations |
| What type of organization uses 457 plans? | Governmental or nonqualified |
| What is the purpose of 457 plans? | Often deferred comp for govt employees |
| What is a 529 plan? | Education savings; tax-free growth and withdrawals for qualified expenses |
| What is an ABLE account? | Tax-advantaged savings for individuals with disabilities |
| What is an LGIP? | Local government investment pool; short-term, low-risk pooled investments for municipalities |
| What is the role of limited partners in a DPP? | Passive, limited liability, no management role |
| What is the role of general partners in a DPP? | Unlimited liability, manage operations, fiduciary duty |
| What is the liquidity of DPPs? | Illiquid; long holding periods (5–10+ years) |
| What percentage of taxable income must REITs distribute? | 90%+ to avoid corporate tax |
| What is an equity REIT? | Rent income |
| What is a mortgage REIT? | Interest income |
| What is a hybrid REIT? | Both equity and mortgage |
| What types of REIT listings exist? | Listed (liquid) |
| What is market risk? | Whole market declines; Systematic (non-diversifiable) |
| What is interest rate risk? | Rates change; affects bonds & rate-sensitive equities; Systematic (non-diversifiable) |
| What is inflation (purchasing power) risk? | Real return erosion; Systematic (non-diversifiable) |
| What is reinvestment risk? | Reinvest coupons/principal at lower rates; Systematic (non-diversifiable) |
| What is business risk? | Company-specific problems; Non-Systematic (diversifiable) |
| What is credit (financial) risk? | Issuer default; Non-Systematic (diversifiable) |
| What is liquidity risk? | Cannot sell quickly at fair price; Non-Systematic (diversifiable) |
| What is call risk? | Bond called early; Non-Systematic (diversifiable) |
| What is currency risk? | Foreign exchange movement (ADRs, foreign bonds); Non-Systematic (diversifiable) |
| What is legislative/political risk? | Law or government change; Non-Systematic (diversifiable) |
| What is prepayment risk? | MBS; rates fall, faster principal return; Non-Systematic (diversifiable) |
| What is a market order? | Guarantees execution; bad price |
| What is a limit order? | Price (or better); may not execute |
| What is a stop (stop-loss) order? | Triggers at stop; becomes MARKET; bad price after trigger |
| What is a stop-limit order? | Triggers at stop; becomes LIMIT; may not execute if price gaps |
| What does a stop order become when triggered? | MARKET order (no price guarantee after trigger) |
| What is a day order? | Expires at end of trading day (default) |
| What is a GTC order? | Good-Til-Canceled; remains open until filled or canceled |
| What is an IOC order? | Immediate-Or-Cancel; fill any available portion immediately; cancel rest |
| What is a FOK order? | Fill-Or-Kill; fill entire order immediately or cancel all |
| What is an AON order? | All-Or-None; fill entire quantity or none (can wait) |
| When do stocks (equities) settle? | T+1 |
| When do corporate bonds settle? | T+1 |
| When do municipal bonds settle? | T+1 |
| When do government securities settle? | T+1 |
| When do options (premium) settle? | T+1 |
| When is cash settlement available? | T+0 (same day, special request) |
| How does short selling work? | Sell first → buy back later; profit when price falls |
| What account is required for short selling? | MUST be in margin account (not cash account) |
| What must you do before short selling under Reg SHO? | Must LOCATE shares before shorting |
| What is the loss potential for short selling? | UNLIMITED (price can rise infinitely) |
| What do short sellers owe to the lender? | Any dividends |
| What is a cash account? | Full payment required upfront |
| What is a margin account? | Borrow up to 50% (Reg T initial); 25% maintenance |
| What is an options account? | Requires options agreement and approval |
| What is a discretionary account? | Rep places trades with written authorization |
| What is a non-discretionary account? | Client decides each trade |
| What is a fee-based account? | Flat or AUM fee for advice + transactions |
| What is a commission account? | Per-transaction charges |
| What is an individual account? | Single owner |
| What is JTWROS? | Decedent's share passes to surviving owners |
| What is TIC (Tenants in Common)? | Decedent's share passes to their estate |
| What is UGMA / UTMA? | Custodian manages for benefit of minor |
| What documents are needed for corporate/partnership/trust accounts? | Organizational documents |
| What does FINRA 2090 require? | Know Your Customer (KYC): understand the essential facts about every customer |
| What does FINRA 2111 require? | Suitability: reasonable basis, customer-specific, and quantitative suitability obligations |
| What does Reg BI require? | Broker-dealers must act in retail customer's best interest; cannot place own interests ahead |
| What is the fiduciary standard for investment advisers? | Duties of care and loyalty (HIGHER than Reg BI) |
| Which standard applies to broker-dealers vs. investment advisers? | Reg BI applies to BROKER-DEALERS; Fiduciary duty applies to INVESTMENT ADVISERS |
| What is retail communication? | >25 retail investors in 30 days; Principal approval; often pre-file |
| What is correspondence? | ≤25 retail investors in 30 days; Reviewed but lower bar |
| What is institutional communication? | Institutions only; no retail; supervisory procedures |
| What is placement in AML? | Introducing illegal funds into the financial system |
| What is layering in AML? | Concealing the source through complex transactions |
| What is integration in AML? | Using laundered money for legitimate purposes |
| What is the AML mnemonic? | PLI (Placement → Layering → Integration) |
| What triggers a CTR (Currency Transaction Report)? | Cash transactions over $10,000 |
| What triggers a SAR (Suspicious Activity Report)? | Suspicious activity ≥ $5,000 |
| What is FinCEN? | Treasury bureau; receives CTRs/SARs |
| What is OFAC? | Administers economic sanctions; SDN list checks |
| What is CIP under the PATRIOT Act §326? | Customer Identification Program at account opening |
| What is the PATRIOT Act §314? | Information sharing among institutions / law enforcement |
| What is churning? | Excessive trading to generate commissions |
| What is front running? | Trading ahead of a known customer order |
| What is pump and dump? | Artificially inflate price, then sell |
| What is freeriding? | Buying and selling without sufficient funds (Reg T violation) |
| What is selling away? | Private securities transactions outside firm supervision without approval |
| What is a breakpoint sale? | Failing to inform clients of mutual fund discount thresholds |
| What is guaranteeing returns? | Promising profits or protection against loss |
| What are the rules on sharing in customer accounts? | Generally prohibited; immediate family with firm approval may be exception |
| What are the rules on borrowing/lending with customers? | Generally prohibited; limited exceptions |
| What happens in a 10% stock dividend? | 100 sh @ $55 → 110 sh @ $50 (total $5,500 preserved) |
| What happens in a 2:1 even split? | 100 sh @ $30 → 200 sh @ $15 |
| What happens in a 3:2 uneven split? | 100 sh @ $30 → 150 sh @ $20 |
| What happens in a 1:2 reverse split? | 10M sh @ $9 → 5M sh @ $18 |
| What is the Securities Act of 1933? | Primary market; registration & prospectus (truth in securities) |
| What is the Securities Exchange Act of 1934? | Secondary market; created SEC; broker-dealer registration; antifraud (10b-5) |
| What is the Investment Company Act of 1940? | Regulates mutual funds, ETFs, CEFs, UITs |
| What is the Investment Advisers Act of 1940? | Regulates IAs; fiduciary standard; Form ADV |
| What is the Securities Investor Protection Act of 1970? | Created SIPC ($500K / $250K cash) |
| What is the Insider Trading & Securities Fraud Enforcement Act of 1988? | Insider trading penalties up to 3x gain/loss avoided |
| What is the Telephone Consumer Protection Act of 1991? | Do-Not-Call list; calling time restrictions |
| What does the Bank Secrecy Act cover? | CTRs; AML recordkeeping |
| What does the USA PATRIOT Act of 2001 cover? | CIP (§326), information sharing (§314) |
| What is the Uniform Securities Act? | Framework for state-level regulation |
| What is the total SIPC coverage per separate customer? | $500,000 |
| What is the SIPC cash sublimit? | $250,000 |
| What does SIPC protect against? | Broker-dealer failure (NOT market losses) |
| What does SIPC NOT cover? | Commodities, futures, fixed annuities, market declines |
| How does SIPC differ from FDIC? | SIPC protects brokerage assets from firm failure; FDIC insures bank deposits |
| Is SIPC a government agency? | No; SIPC is NOT a government agency and NOT a regulator |
| What is FINRA Rule 2010? | Standards of Commercial Honor |
| What is FINRA Rule 2020? | Manipulative / Deceptive Practices |
| What is FINRA Rule 2040? | Payments to Unregistered Persons |
| What is FINRA Rule 2090? | Know Your Customer (KYC) |
| What is FINRA Rule 2111? | Suitability |
| What is FINRA Rule 2165? | Financial Exploitation of Specified Adults |
| What is FINRA Rule 2210? | Communications with the Public |
| What is FINRA Rule 2266? | SIPC Disclosure |
| What is FINRA Rule 2341? | Mutual Fund Sales Charges (8.5% max) |
| What is FINRA Rule 3210? | Accounts at Other Broker-Dealers |
| What is FINRA Rule 3270? | Outside Business Activities |
| What is FINRA Rule 3280? | Private Securities Transactions |
| What is FINRA Rule 3310? | AML Compliance Program |
| What is FINRA Rule 4513? | Written Customer Complaints |
| What is SEC Rule 15l-1? | Regulation Best Interest (Reg BI) |
| What is MSRB Rule G-3? | Professional Qualifications |
| What are MSRB Rules G-8 / G-9? | Books, Records & Retention |
| What is MSRB Rule G-11? | Primary Offering Practices |
| What is MSRB Rule G-17? | Fair Dealing |
| What is MSRB Rule G-18? | Best Execution |
| What is MSRB Rule G-20? | Gifts ($300 limit) |
| What is MSRB Rule G-30? | Pricing & Commissions |
| What is MSRB Rule G-32? | Official Statement Delivery |
| What is MSRB Rule G-37? | Political Contributions / Pay-to-Play |
| What is MSRB Rule G-41? | AML for Municipal Dealers |
| What is Form U4? | Registration application for associated persons; must update for changes |
| What is Form U5? | Termination filing; filed within 30 days of separation |
| What is Form ADV? | Investment Adviser disclosure (Part 1 + Part 2 brochure) |
| What is Form 144? | Filed for larger Rule 144 resales |
| What is the Regulatory Element CE? | Annual training on industry rules and regulations |
| What is Firm Element CE? | Annual firm-specific training on products and procedures |
| What is one reason for statutory disqualification? | Felony conviction within past 10 years |
| What is another reason for statutory disqualification? | Securities-related misdemeanor within past 10 years |
| What other events cause statutory disqualification? | Bar or suspension by regulator or SRO, or court injunction related to securities activities |
| How long must articles of incorporation, partnership agreements, and original ledgers be kept? | Lifetime |
| How long must blotters, general ledgers, customer account records, customer statements, and stock records be kept? | 6 years |
| How long must customer complaints and quarterly filings be kept? | 4 years |
| How long must advertising, trade confirmations, trial balances, order tickets, Forms U4/U5, and compliance manuals be kept? | 3 years |
| What does DERP stand for for dividend dates? | Declaration → Ex-Dividend → Record → Payable |
| What does GO stand for? | General + Obligation (backed by taxing power) |
| How do you remember revenue bonds? | RevenueRevenue (backed by project revenue, NOT taxes) |
| What mnemonic helps remember discount bond yields? | Discount Goes UP: YTM > CY > Nominal |
| What mnemonic helps remember premium bond yields? | Premium Goes DOWN: Nominal > CY > YTM |
| What is the mnemonic for Treasury maturities? | Bills < Notes < Bonds (Weeks → 2–10 yrs → 20/30 yrs) |
| What is the mnemonic to remember calls vs puts? | Call it AWAY, Put it TO (Call = right to BUY, Put = right to SELL) |
| What is the mnemonic for option buyer vs writer? | Long pays, Short receives (Buyer has rights; writer has obligations) |
| What is the maximum loss for a long call? | Premium only (limited risk, unlimited reward) |
| What is the maximum loss for a short call? | Unlimited (if naked / uncovered) |
| What is the mnemonic for liquidation order? | Secured → Unsec → Sub → Preferred → Common (Common always LAST) |
| What is the AML mnemonic? | PLI (Placement → Layering → Integration) |
| True or False: The MSRB enforces its rules. | FALSE. MSRB writes rules but does NOT enforce them. SEC/FINRA enforce for broker-dealers; bank regulators for bank dealers. |
| True or False: Equity option exercise settles T+2. | FALSE. Since May 2024, the resulting equity transaction settles T+1. |
| True or False: Common stock dividends must be paid. | FALSE. Common dividends are ALWAYS discretionary; declared by the board. |
| True or False: Naked short calls have limited risk. | FALSE. Naked short calls = UNLIMITED loss. |
| True or False: A stop order at $45 sells at $45. | FALSE. Stop becomes a MARKET order at trigger; execution price may differ. |
| True or False: Buying a stock on the ex-dividend date gets you the dividend. | FALSE. Buy BEFORE the ex-date. On or after = no dividend. |
| True or False: SIPC is a government agency. | FALSE. SIPC is a non-profit, member-funded organization. Not a regulator. |
| True or False: Treasury interest is fully taxable. | FALSE. Treasury interest is FEDERAL-taxable only; exempt from state and local. |
| True or False: Putting munis in an IRA is smart for the tax break. | FALSE. The tax exemption is WASTED in a tax-deferred account. |
Created by:
ria868