Series 6, section 2

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  1. What is the '33 act
    • Paper act
    • Primary offerings
  2. What is Reg D?
    • Private offerings
    • 35 non accredited purchasers
    • accredited - $1mil or more
  3. 1934 act
    People act
  4. 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
  5. What is a security?
    Any evidence of ownership, document or contract where performance depends upon third party management. Must be registered unless exempt
  6. 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.
  7. 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
  8. Investment company act of 1940
    • Mutual fund law.
    • 3 types of investment companies.
    • -management company
    • -unit investment trust
    • -face amount certificate company
  9. Insider trading act 1988
    • Martha Stewart
    • Michael Milken
  10. What is FINRA
    • Financial Industry Regulatory Autority
    • Over the counter market (NASD)
    • Exchange market (NYSE)

    It has RULES, not laws. Like Realtors Asso.
  11. What date determines the value of a separate account for a variable product?
    The date the application is accepted by the insurer.
  12. how long does the buyer have for a "free look" on a variable product
    Seven days
  13. What is a maximum "sales charge" for asset based securities?
    8.5% of the ask price. (public offering price)
  14. What is a "no load" mutual fund
    No sales charge
  15. 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.
  16. What is a 12b-1 fee?
    it is an asset based sales charge. May not exceed 6.25%. Distribution fee
  17. Who pays the 12b-1 fees
  18. 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%
  19. How do you calculate total yield and total return?
    • Yield is dividend/cost basis=yield
    • Total return adds dividend+appreciation/cost basis=total return
  20. 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.
  21. 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
  22. 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.
  23. 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.
Card Set:
Series 6, section 2
2013-05-18 17:58:23
Series securities licenses federal

Section 2 of the Testeachers Series 6 securities license series
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