Series 7
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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Computing Equity in Margin Accounts | Current Market Value - Debit Balance = Equity
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NYSE Minimum Maintenance Requirement | Current Market Value x .25 = NYSE Min Req
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(OP) Offering Price | (NAV) Net Asset Value / (100% - SL)
NAV and BID are SAME!!
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Sales Load % | (OP-NAV) / OP
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Calculating Parity Price | Step 1: Par Value / Conversion Px = Common Shares Produced
Step 2: Market Px of Bond or Preferred Stock / Common Shares Produced
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Credit Spreads | Max profit is n Net Credit in the premiums, if options expire
Max Loss is the difference between the two strike prices, less the net credit in the premiums
Credit Spreads must NARROW and/or expire to be profitable
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Call/Put Options | Buy Call = Buy Stock
Sell Call = Sell Stock
Buy Put = Sell Stock
Sell Put = Sell Stock
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Accrued Interest (Bonds) | Principal x Rate x Time / 360
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Convertible Bonds | Par Value / Conversion Px
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Dividend Payout Ratio | Dividends Per Share / Earnings Per Share
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In The Money | Call UP Put DOWN
Call in the money = Market Px above strike px
Put in the money = Market Px below strike Px
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Reasons a company repurchases its own stock (Treasury Stock) | Increase Earnings Per Share
Finance Future Acquisition (Takeovers)
Provide stock for employee stock option plans
Fight a Takeover
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Outstanding Stock | Issued Stock - Treasury Stock
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Hedging Option Positions | Long Puts Protect or hedge Long stock positions
Long Calls protect or hedge Short stock positions
Investors generally Do Not Sell options to hedge
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Current Yield (Bonds | Annual Interest / Market Price
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Current Yield (Common Stock) | Annual Dividend /Market Px
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Asset Distribution | Taxes
Secured Debt
Unsecured Debt
Preferred Stock
Common Stock
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Low Quality Bond | High Yield
Low Market Px
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High Quality Bond | Low Yield
High Market Px
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Calculating Equity | Market Value long
- Debit Balance
+ Credit Balance
- Short Market Value
= Equity
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Subscription Rights | Outstanding Shares / New Shares
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Conversion Px | Par Value / Common Shares Produced
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Debit Spread | Max Loss potential is the net debit in the premiums
Max Profit is the difference between the two strike prices less the net debit
Debit Spreads must WIDEN by more than the net debit to be profitable
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Debit Balance Chart | DB < Half Market Value = Excess Equity
DB > Half Market Value = Restricted
DB = Half Market Value = at Reg-T
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Margin Acc't Short Initial Requirements | $0-$5 = $2.50 per share OR $2000, whichever is GREATER
$5-$17 = $5.00 per share
$17 and Over = Reg-T 50%
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Short Margin Equity Formula | Proceeds of Short Sale
+ Reg T Deposit
= Credit Balance
- Current Market Value Short
= Equity
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Closed End Funds | Net Asset Value Per Share is Greater then the Offering Px
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Open End Funds | Net Asset Value Per Share is Less than the Offering Px
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Net Revenue Pledge (Revenue Bond) | Operation and Maintenance Fund
Bond Service Account
Debt Service Reserve
Surplus/General Fund
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Reasons for Refunding Bonds | To Lower Interest Rates
To Change the maturity or Amortization schedule
To liberalize the bonds indenture provisions
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Corporate Equivalent Yield | Muni Yield / (100% - Investors Tax Rate) = Taxable Equivalent Yield
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Allocation Procedures Among Underwriters | 1. Pre Sale Orders
2. Group Net Account/Syndicate Group Account
3. Designated Orders
4. Members Orders Takedown
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Holder of Unregistered Securities may make a public sale | Sales in an 90 day period are limited to either 1% of the outstanding stock or the average trading volume for the previous 4 weeks. Whichever is greater. Form 144 Notice of Offering is effective for 90 days.
BE SURE TO ONLY INCLUDE THE MOST RECENT 4WK
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Order of Brokerage Operations (WPMC) | Wire room order
Purchase and sale department
Margin department
Cashiers department
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Open Market Operations | FED........Banks.......Public
Buy........$ IN........IR Up
Sell.......$ Out.......IR Down
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Order of Claims Upon Partnership Dissolution | 1. Creditors- secured then general
2. Limited Ptnrs- profit claims then capital
3. General Ptnrs- profit then capital
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4 Types of Oil & Drilling Programs | 1. Exploratory- wildcatting. great risk/reward
2. Developmental- areas w/proven reserves
3. Balanced- Both exploraroty & Developmental
4. Oil & Gas Income Program- buy properties already producing oil
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