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Series 6 A
Terms
Question | Answer |
---|---|
Alternative Minimum Tax (AMT) | The requirement to add the income from tax preference items to income above an indexed level. A method to insure that wealthy persons and corporations pay at least some tax. |
Cost basis | The price paid for assets, including any commissions or fees, used to calculate capital gains or losses when the assets is sold |
Capital loss | The loss incurred when a capital asset is sold for a lower price than the purchase price. |
FIFO | An accounting method used to assess a company's inventory, in which it is assumed that the first goods acquired are the first to be sold. The same method is used by the IRS to determine cost basis for tax purposes. |
Earn income | Income derived from active participation in a trade or business, including wages, salary, tips, commissions and bonuses |
Gifted vs Inherited Securities | |
LIFO (Last in, last out) | An accounting method used to assess a company's inventory, in which it is assumed that the assumed that the last goods acquired are the first to be sold. The method used to determine cost basis for tax purposes; |
LIFO (Last in, last out) Continued | the IRS designates last in, first out as the order in which sales or withdrawals from an investment are made. |
Investment Income | |
Marginal Tax rate | |
Ordinary Income | Earnings other than capital gain. |
Post-tax | |
Preferential rates | |
Pre-tax | |
Rollover | The transfer of funds from one qualified retirement plan to another qualified retirement plan. If this is not done with in a specific time , the funds are taxed as ordinary income. |
Specified identification method | |
Tax-deductible | |
Tax-deferred | |
Tax-free | |
Trustee to Trustee transfer | |
Unrealized Gain | Amount by which a security appreciates in value before it is sold. Until it is sold, the investor does not actually possess the sale proceeds. |
Wash sales rule | Selling a security at a loss for tax purposes and, within 30 days before or after, purchasing the same or a substantially identical security. The IRS disallows the claimed loss. |
Short term gains | Taxed as Ordinary income |
Corporate bond taxation | Taxable as ordinary income in year received: federal, state, local. |
US Government Debt Taxation: | Federally taxable as ordinary income in the year received: Exempt from state and local taxes. |
Mutual Fund dividends | Taxed as ordinary income whether reinvested or not |
Short term capital gains distributions | Taxed as ordinary income whether reinvested or not. |
100% distributions from a qualified plan | Taxed as ordinary income. |
Only the earnings from a non-qualified plan | Taxed as ordinary income - cost basis returned tax-free |
Long term capital gain | Taxed at a Maximum rate of 15% |
Capital gains from the sale of inherited securities | Taxed at a Maximum rate of 15% |
Common stock cash dividends | Taxed at a Maximum rate of 15% |
Long term capital gains distributions whether reinvested or not | Taxed at a Maximum rate of 15% |
Stock dividends on stock: Not taxed upon, cost basis is adjusted and taxable upon sale. | Tax-free |
Municipal bond interest: Exempt from federal taxation may be subject to state and local taxation. | Tax-free |
Qualified distributions from a Roth IRAs | Tax-free |
Distribution from a Coverdell or 529 Plan used for qualified educational expenses | Tax-free |
Life insurance death benefit to beneficiary( subject to estate tax) | Tax-free |
8AM to 9PM (customer's time zone) | Time constraints imposed by the Telephone Consumer Protection Act 1940 |
Daily | Frequency of NAV calculation for mutual fund and variable contracts (business days only) |
T+1 | Settlement for options and treasury trades. |
T+3 | Settlement for municipal and corporate securities |
T+5 | Regulation T payment date |
7 calendar days | Maximum time period for redemption of mutual fund shares. |
within 10 days of first use | Time period for filing investment company ads and sales literature with FINRA |
20 days | SEC "cooling off period" for new issues |
Monthly | Variable contract cash values calculated on this basis |
30 days | Minimum waiting period for candidates who fail the Series 6 for the first or second time |
45 days | Free look provision on variable contracts |
60 days | Maximum time period to complete an IRA rollover |
61 days | Size of wash sale window |
90 days | Maximum allowable period to backdate a letter of intent |
90 days | Time period an account is "frozen" |
120 days | Maximum time and RR has to complete the regulatory element of CE after his or her two-year anniversary |
180 days | Minimum waiting period for Series 6 candidates who fail of 3rd or later attempts |
Semiannually | Minimum requirement for investment companies(ICs) to send reports to shareholders |
270 days | Maximum maturity for commercial paper and banker's acceptance |
1 year | Maximum maturity of a T-bill |
Annually | Minimum requirement for IC reporting to SEC |
Annually | Variable contract death benefit calculated on this basis |
13 months | Maximum time frame to complete a letter of intent (LOI) |
16 months | Maximum shelf life of a prospectus |
2 years | Maximum time to convert a variable life policy to a whole life policy |
2 years | Registered representatives (RRs) who leave the business longer than this period must retest. |
2 years | Maximum length of initial investment advisory contract |
5 years | Required holding period for a qualified (tax-free) distribution form a Roth IRA |
10 years | Maximum time period associated with statutory disqualification |
10 years | Maximum maturity of a T-Note |
20 years | Maximum jail term for insider trading violation |
30 years | Maximum maturity of a T-bond |
59.5 years | Minimum age to begin taking retirement plan distribution without penalty |
70.5 years | Age at which required minimum distributions from retirement plans must begin |
.01% | Value of a basis point |
.25% | Maximum 12b-1 fee that may be levied by a no load fund |
6% | Tax penalty on excess IRA contributions |
8.5% | Maximum sales charge allowed under FINRA rules on a single purchase of investment company securities |
9% | Maximum sales charged that may be levied over the life of a contractual plan |
10% | Penalty for early withdrawal (under 59.5) from retirement plan |
12% | Maximum interest rate that may be used in a illustration for variable life contracts |
15% | Maximum tax rate assessed against long-term capital gains |
15% | Preferential rates for cash dividends on stock |
16% | Maximum average annual sales charge that may be levied in a spread load plan (1970) over the first 4 years |
20% | Maximum annual sales charge that may be levied in a spread load plan |
50% | Failure to take required minimum distribution (RMD) tax penalty on traditional IRAs |
50% | Maximum sales charge that may be levied in year one of a front load plan (1940) |
70% | Minimum score needed to pass the Series 6 exam |
75% | Minimum percentage of the Board of Directors (BOD) that must be disinterested |
90% | Minimum distribution of net investment income fir a regulated investment company |
300% | Minimum asset to debt coverage ratio for an investment company engaged in bank borrowing |
1% | 100 basis point, 100BPs |
American Depository receipts (ADR) | also called American Depository Shares |
Annual return | also called Holding period return |
Ask | also called Offer |
Authorized stock | also called New Stock |
B shares | also called Back end load |
Back end sales charge | also called Contingent deferred sales charge (CDSD) |
Bondholder | also called Creditor |
Broker | also called Agent |