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Series 7 Stack

Q Intro Securities IndustryAnswer
Capital Market Free flow of capital between corps, gvt bodies & investors
business raise money to build & expand by selling stocks and bonds
what is stock investors purchase equity ownership in issuer's business
how do bonds wprk? investors lend money in exchange for debt = bond
what are securities? stocks & bonds
who could be the issuers of bonds? businesses/govts (fed/state/local)
what happens with capital raised in govt bonds? govet raises money to provide service to public.
what are the types of capital markets? primary & secondary
what is primary capital market? sale of securities to investors directly.
example of primary capital market IPO
what is an IPO corporations' 1st attempt to attract capital from financial institutions & general public
is t-bill primary of secondar capital market? primary
what is a t-bill? Short-tm US govt debt w mty <1 year. High credit rating
what is secondary capital mkt? Trading of fin instrumts btn investors
example of secondary capital mkt NYSE
does sec capital mkt have direct effect on issuer? no
how does secondary capital mkt affect issuer? willingness of investors to invest increases likelihood of corps to raise cap in future
what might have caused the great depression? unlmtd opportunities, investors invested, borrowed, stock mkt grew. Mkts were unltd
when did the bubble burst? 1929
when did fed govt intervene? pres? 1932, franklin roosevelt
what act resulted after great depression? securities act of 1933
When was Securities Act? 1933
What does Securities Act do? Full & Fair Disclosure
Securities Act is in what market? Primary
Securities Act Provides what to investors? Info needed to make informed investmt decidions
Securities Act Provides what to issuer/IB? rules to conduct on sales & mktg of securities
When was Securities Exchange Act? 1934
What does Securities Exchange Act do? Est. SEC & regulate domestic secs in prim & sec mkts + extnd credit in secs industry to Fed Res Board
What is SEC fn? Regulate domestic secs dealings in both primary & sec mkts. + regulatory overst re:extnsn of credit in secs industry
SRO self regulatory org. ex: NYSE
What is Maloney Act? Enables creation of non-exchange SROs
What yr is Maloney Act? 1938
Which Act enabled MSRB? Maloney Act
MSRB Municipal Securities Rulemaking Board
MSRB year 1975
NASD National Association of Securities Dealers
NASD year 1939
NASD function Self regulatory organization for OTC
What did Trust Indenture Act do? Security for bond investors by requiring agmt between issuer and trustee if corporatn liquidates
Trust Indenture Act year 1939
What is indenture? Agreement between issuer and trustee of bonds
What is Trustee? Acts for the owner of bonds
Investment Company Act year 1940
What does Investment Company Act do? Mandates mutual funds to register with SEC as Investment Investment Company
Why do mutual funds need to register with SEC? Mutual Funds are companies formed to pool investors' money & invest that in securities
Investment Advisors Act year? 1940
What does Investment Advisors Act do? Mandates firm managing assets of mutual funds as Investment Advisor
Could lawyer, accountant, teacher, engineer, publishers be Investment Advisors? No, unless they charge separate fee for investment advise
Examples of Investment Advisors Portfolio Manager of mutual funds
Securities Investor Protection Act - SIPC year 1970
What does SIPC do? It is an insurance that covers customers of brokerage firms if they're insolvent
What is ERISA? Employee Retirement Income Securities Act
ERISA year 1974
What does ERISA do? Establish standards for funding, vesting etc of private retirement accounts & fiduciary responsibilities of trustees
ERISA example 401(k)
Securities Acts Amendments year 1975
What does Securities Acts Amendments do? Created MSRB
What is MSRB? It is SRO for firms doing transactions in muni securities.
Does MSRB have an enforcement arm? No
How is muni transaction rules enforced? By other regulatory entities
What is Insider Trading Act? Penalizes insider trading
Insider Trading Act year 1988 in response to 1980 scandals
Did Acts of 33 & 34 prohibit insider trading? Yes
Did Acts of 33 & 34 penalize insider trading? No
What is the penalty of Insider Trading in '88 Act? Penalties up to $1MM &/or 10 yrs prison
Federal Telephone Consumer Protection Act year 1991
What does Federal Telephone Consumer Protection Act do? Cold Callers must have do not call list
Penny Stock Rule year 1991
What does Penny Stock Rule do? Requires trading firm of penny stocks to sign disclosure with potential buyers as they're risky
What are Penny Stocks? securities trading less than $5 per share - risky
Created by: aymanm8
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