Series 6, section 2
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What is the '33 act
- Paper act
- Primary offerings
What is Reg D?
- Private offerings
- 35 non accredited purchasers
- accredited - $1mil or more
What is the difference between a firm that acts as broker and one that acts as a dealer?
Broker side charges a commission and there is no risk. In an agency capacity
dealer - They act for their own account. Principal transaction. Lots of risk. They buy for their own inventory. No commission - they charge a mark-up. Stocks, not mutual funds
What is a security?
Any evidence of ownership, document or contract where performance depends upon third party management. Must be registered unless exempt
Investment Advisers act of 1940
They sell advice. Don't need a 65 if your advice is incidental to your profession. These are managers of mutual funds. (investment advisors) They charge a management fee.
What is a federal covered adviser?
An investment adviser who is regulated by the SEC. Manage large accounts like mutual funds.
State covered adviser manages smaller stuff
Investment company act of 1940
- Mutual fund law.
- 3 types of investment companies.
- -management company
- -unit investment trust
- -face amount certificate company
Insider trading act 1988
- Martha Stewart
- Michael Milken
What is FINRA
- Financial Industry Regulatory Autority
- Over the counter market (NASD)
- Exchange market (NYSE)
It has RULES, not laws. Like Realtors Asso.
What date determines the value of a separate account for a variable product?
The date the application is accepted by the insurer.
how long does the buyer have for a "free look" on a variable product
What is a maximum "sales charge" for asset based securities?
8.5% of the ask price. (public offering price)
What is a "no load" mutual fund
No sales charge
What is a front load sales charge?
The fee charged by the underwriter of a mutual fund. A $10 purchase becomes $9.15 after passing through the hands of the underwriter.
What is a 12b-1 fee?
it is an asset based sales charge. May not exceed 6.25%. Distribution fee
Who pays the 12b-1 fees
What is a qualified dividend and how is it taxed
Dividend from a mutual fund that is taxed at the same rate as capital gains. Currently 15%
How do you calculate total yield and total return?
- Yield is dividend/cost basis=yield
- Total return adds dividend+appreciation/cost basis=total return
What is the exclusion Ratio in regards to annuities
The exclusion ratio is the non taxable portion of an annuity payment. If you paid in $20,000 and when you annuatize your life expetancy is 20 years then $20,000/20=$1000 So you have $1000 tax deduction off of your annuity payout.
What is the cost basis for a TSA or 403b
Zero! it is payed with before tax dollars. It is in the tax later bucket
Is the contribution to a traditional IRA tax deductable?
- it MAY be. Don't assume it is.
- If you are covered by another tax deductable plan at work and you make too much money, then you can't deduct it.
How does a ROTH IRA differ from a traditional IRA
IF it is a qualified Roth, then the distributions are tax exempt IF held for more than 5 years. That is big! No tax on the gain. But 59 1/2 rule applies or 10% penalty.
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