Series 7 Stack
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each of the black spaces below before clicking
on it to display the answer.
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| Capital Market | Free flow of capital between corps, gvt bodies & investors
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| business raise money to build & expand by | selling stocks and bonds
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| what is stock | investors purchase equity ownership in issuer's business
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| how do bonds wprk? | investors lend money in exchange for debt = bond
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| what are securities? | stocks & bonds
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| who could be the issuers of bonds? | businesses/govts (fed/state/local)
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| what happens with capital raised in govt bonds? | govet raises money to provide service to public.
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| what are the types of capital markets? | primary & secondary
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| what is primary capital market? | sale of securities to investors directly.
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| example of primary capital market | IPO
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| what is an IPO | corporations' 1st attempt to attract capital from financial institutions & general public
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| is t-bill primary of secondar capital market? | primary
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| what is a t-bill? | Short-tm US govt debt w mty <1 year. High credit rating
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| what is secondary capital mkt? | Trading of fin instrumts btn investors
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| example of secondary capital mkt | NYSE
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| does sec capital mkt have direct effect on issuer? | no
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| how does secondary capital mkt affect issuer? | willingness of investors to invest increases likelihood of corps to raise cap in future
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| what might have caused the great depression? | unlmtd opportunities, investors invested, borrowed, stock mkt grew. Mkts were unltd
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| when did the bubble burst? | 1929
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| when did fed govt intervene? pres? | 1932, franklin roosevelt
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| what act resulted after great depression? | securities act of 1933
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| When was Securities Act? | 1933
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| What does Securities Act do? | Full & Fair Disclosure
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| Securities Act is in what market? | Primary
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| Securities Act Provides what to investors? | Info needed to make informed investmt decidions
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| Securities Act Provides what to issuer/IB? | rules to conduct on sales & mktg of securities
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| When was Securities Exchange Act? | 1934
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| What does Securities Exchange Act do? | Est. SEC & regulate domestic secs in prim & sec mkts + extnd credit in secs industry to Fed Res Board
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| What is SEC fn? | Regulate domestic secs dealings in both primary & sec mkts. + regulatory overst re:extnsn of credit in secs industry
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| SRO | self regulatory org. ex: NYSE
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| What is Maloney Act? | Enables creation of non-exchange SROs
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| What yr is Maloney Act? | 1938
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| Which Act enabled MSRB? | Maloney Act
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| MSRB | Municipal Securities Rulemaking Board
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| MSRB year | 1975
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| NASD | National Association of Securities Dealers
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| NASD year | 1939
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| NASD function | Self regulatory organization for OTC
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| What did Trust Indenture Act do? | Security for bond investors by requiring agmt between issuer and trustee if corporatn liquidates
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| Trust Indenture Act year | 1939
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| What is indenture? | Agreement between issuer and trustee of bonds
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| What is Trustee? | Acts for the owner of bonds
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| Investment Company Act year | 1940
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| What does Investment Company Act do? | Mandates mutual funds to register with SEC as Investment Investment Company
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| Why do mutual funds need to register with SEC? | Mutual Funds are companies formed to pool investors' money & invest that in securities
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| Investment Advisors Act year? | 1940
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| What does Investment Advisors Act do? | Mandates firm managing assets of mutual funds as Investment Advisor
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| Could lawyer, accountant, teacher, engineer, publishers be Investment Advisors? | No, unless they charge separate fee for investment advise
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| Examples of Investment Advisors | Portfolio Manager of mutual funds
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| Securities Investor Protection Act - SIPC year | 1970
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| What does SIPC do? | It is an insurance that covers customers of brokerage firms if they're insolvent
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| What is ERISA? | Employee Retirement Income Securities Act
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| ERISA year | 1974
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| What does ERISA do? | Establish standards for funding, vesting etc of private retirement accounts & fiduciary responsibilities of trustees
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| ERISA example | 401(k)
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| Securities Acts Amendments year | 1975
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| What does Securities Acts Amendments do? | Created MSRB
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| What is MSRB? | It is SRO for firms doing transactions in muni securities.
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| Does MSRB have an enforcement arm? | No
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| How is muni transaction rules enforced? | By other regulatory entities
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| What is Insider Trading Act? | Penalizes insider trading
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| Insider Trading Act year | 1988 in response to 1980 scandals
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| Did Acts of 33 & 34 prohibit insider trading? | Yes
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| Did Acts of 33 & 34 penalize insider trading? | No
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| What is the penalty of Insider Trading in '88 Act? | Penalties up to $1MM &/or 10 yrs prison
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| Federal Telephone Consumer Protection Act year | 1991
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| What does Federal Telephone Consumer Protection Act do? | Cold Callers must have do not call list
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| Penny Stock Rule year | 1991
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| What does Penny Stock Rule do? | Requires trading firm of penny stocks to sign disclosure with potential buyers as they're risky
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| What are Penny Stocks? | securities trading less than $5 per share - risky
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