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Wiley series 65 exam review 2016 test bank the uniform investment advisor law examination Wiley series 65 exam review 2016 test bank the uniform investment advisor law examination Wiley series 65 exam review 2016 test bank the uniform investment advisor law examination Wiley series 65 exam review 2016 test bank the uniform investment advisor law examination Wiley series 65 exam review 2016 test bank the uniform investment advisor law examination Wiley series 65 exam review 2016 test bank the uniform investment advisor law examination
WILEY SERIES 65 EXAM REVIEW 2016 WILEY FINRA SERIES This series includes the following titles: Wiley Series Exam Review 2016 + Test Bank: National Commodities Futures Examination Wiley Series Exam Review 2016 + Test Bank: The Registered Options Principal Examination Wiley Series Exam Review 2016 + Test Bank: The Investment Company and Variable Contracts Products Representative Examination Wiley Series Exam Review 2016 + Test Bank: The General Securities Representative Examination Wiley Series Exam Review 2016 + Test Bank: The General Securities Sales Supervisor Examination—Option Module Wiley Series 10 Exam Review 2016 + Test Bank: The General Securities Sales Supervisor Examination—General Module Wiley Series 24 Exam Review 2016 + Test Bank: The General Securities Principal Examination Wiley Series 26 Exam Review 2016 + Test Bank: The Investment Company and Variable Contracts Products Principal Examination Wiley Series 55 Exam Review 2016 + Test Bank: The Equity Trader Examination Wiley Series 62 Exam Review 2016 + Test Bank: The Corporate Securities Representative Examination Wiley Series 63 Exam Review 2016 + Test Bank: The Uniform Securities State Law Examination Wiley Series 65 Exam Review 2016 + Test Bank: The Uniform Investment Adviser Law Examination Wiley Series 66 Exam Review 2016 + Test Bank: The Uniform Combined State Law Examination Wiley Series 99 Exam Review 2016 + Test Bank: The Operations Professional Examination For more on this series, visit the website at www.wileysecuritieslicensing.com WILEY SERIES 65 EXAM REVIEW 2016 The Uniform Investment Adviser Law Examination The Securities Institute of America, Inc Cover Design: Wiley Cover Image: © iStockphoto.com / LuisB Copyright © 2016 by The Securities Institute of America, Inc All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Previous editions published by The Securities Institute of America, Inc Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley publishes in a variety of print and electronic formats and by print-on-demand Some material included with standard print versions of this book may not be included in e-books or in print-ondemand If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com For more information about Wiley products, visit www.wiley.com ISBN 9781119112396 (Paperback) ISBN 9781119138846 (ePDF) ISBN 9781119138822 (ePub) Printed in the United States of America 10 9 8 7 6 5 4 3 2 Contents ABOUT THE SERIES 65 EXAM xxi ABOUT THIS BOOK xxv ABOUT THE TEST BANK xxvii ABOUT THE SECURITIES INSTITUTE OF AMERICA xxix CHAPTER EQUITY SECURITIES1 What Is a Security? Equity = Stock Common Stock Corporate Time Line Values of Common Stock Book Value Par Value Rights of Common Stockholders Preemptive Rights Characteristics of a Rights Offering Determining the Value of a Right Cum Rights Determining the Value of a Right Ex Rights Voting8 vi Contents Limited Liability Freely Transferable The Transfer Agent 10 The Registrar 10 CUSIP Numbers 11 Inspection of Books and Records 11 Residual Claim to Assets 11 Why Do People Buy Common Stock? 11 Income11 What Are the Risks of Owning Common Stock? 12 How Does Someone Become a Stockholder? 13 Preferred Stock 14 Features of All Preferred Stock 14 Types of Preferred Stock 16 Callable Preferred 17 Types of Dividends 17 Dividend Distribution 18 Taxation of Dividends 20 Selling Dividends 20 Dividend Disbursement Process 21 Warrants21 How Do People Get Warrants? 21 American Depositary Receipts (ADRs)/American Depositary Shares (ADSs) 22 Currency Risks 23 Functions of the Custodian Bank Issuing ADRs 23 Real Estate Investment Trusts/REITs 23 Direct Participation Programs and Limited Partnerships 24 Limited Partnerships 24 Tax Reporting for Direct Participation Programs 28 Limited Partnership Analysis 28 Tax Deductions vs Tax Credits 28 Other Tax Considerations 29 Dissolving a Partnership 29 Pretest31 Contents vii CHAPTER CORPORATE AND MUNICIPAL DEBT SECURITIES 35 Corporate Bonds 35 Types of Bond Issuance 36 Bond Pricing 37 Par Value 38 Discount38 Premium38 Corporate Bond Pricing 38 Bond Yields 39 Yield to Maturity: Premium Bond 40 Yield to Maturity: Discount Bond 41 Calculating the Yield to Maturity 41 Calculating the Yield to Call 42 Realized Compound Yield Returns 42 Yield Spreads 43 The Real Interest Rate 43 Bond Maturities 43 Series Issue 44 Types of Corporate Bonds 44 Guaranteed Bonds 46 Convertible Bonds 46 Converting Bonds into Common Stock 47 Parity Price 47 Advantages of Issuing Convertible Bonds 48 Disadvantages of Issuing Convertible Bonds 48 Convertible Bonds and Stock Splits 48 The Trust Indenture Act of 1939 49 Bond Indenture 49 Ratings Considerations 49 Exchange Traded Notes (ETNs) 50 Euro and Yankee Bonds 50 Variable Rate Securities 51 Retiring Corporate Bonds 51 viii Contents Municipal Bonds 53 Types of Municipal Bonds 54 Taxation of Municipal Bonds 58 Tax-Equivalent Yield 58 Purchasing a Municipal Bond Issued in the State in Which the Investor Resides 59 Triple Tax Free 59 Original Issue Discount (OID) and Secondary Market Discounts 59 Amortization of a Municipal Bond’s Premium 60 Bond Swaps 60 Analyzing Municipal Bonds 60 Analyzing General Obligation Bonds 61 Duration61 Convexity62 Bond Portfolio Management 62 Pretest65 CHAPTER GOVERNMENT AND GOVERNMENT AGENCY ISSUES69 Series EE Bonds Series HH Bonds Treasury Bills, Notes, and Bonds Purchasing Treasury Bills Treasury Notes Treasury Bonds Treasury Bond and Note Pricing Treasury STRIPs Treasury Receipts Treasury Inflation Protected Securities (TIPS) Agency Issues Government National Mortgage Association (GNMA) Federal National Mortgage Association (FNM) Federal Home Loan Mortgage Corporation (FHLMC) Federal Farm Credit System Collateralized Mortgage Obligation (CMO) 69 70 70 70 71 71 71 72 72 73 74 74 75 75 76 76 Index A AAA/Aaa rating, 50, 52, 76 Accelerated depreciation, 154 Access person, 315–316 Accredited investors, 316 Accumulation stage, 120, 121 Accumulation units, 121 Acid test/quick ratio, 155 Active portfolio management, 62–63 Active rebalancing, 211 Adjustable rate preferred stock, 14 Adjustment bonds, 46 Administrative orders, 372–373 Administrative records, 373–374 ADRs (American depository receipts), 22–23, 270 ADSs (American depository shares), 22–23 Advance decline line, 164 Advertising, 233–234, 237–240, 337–338, 378 Affiliated person, 88 Agency cross transaction, 340 Agency issues, 74–78 Agency securities, 74, 75 Agent(s): changes in employment of, 332 defined, 311 registration of, 327–333 specialist/DMM as, 258–259 AIR (assumed interest rate), 123–124 All-or-none orders, 256 Alpha, 205 Alternative funds, 96 Alternative minimum tax (AMT), 55, 221 American depository receipts (ADRs), 22–23, 270 American depository shares (ADSs), 22–23 American Stock Exchange (Amex), 263, 282 Amortization, of bond premium, 41, 60 AMT (alternative minimum tax), 55, 221 Analysis: fundamental, 149–159 of limited partnerships, 28 of municipal bonds, 60–61 technical, 159–166 yield-curve, 181–182 Annualized rate of return, 210 Annuities, 115–125 borrowing from, 124 mutual funds vs., 125 payment size of, 123 payout options with, 122–123 pretest, 145–147 purchase options with, 120–121 recommending, 119–120 types of, 115–119 Annuitizing the contract, 125 Annuity units, 120, 121, 123–124 Arbitrage, 274 Arithmetic mean, 165 “A” shares, 99 Assets, 150–151 See also Residual assets, shareholders’ claims to Asset allocation, 211 Asset allocation funds, 94 Asset rebalancing, 211 Assumed interest rate (AIR), 123–124 At-the-money options, 289–290 Auction Rate Securities, 51 Authorized stock, Automatic reinvestment, 105 Average cost, 216 B Backdating, 103 Back-end loads, 100 Backing away, 268 Balanced funds, 94 Balance of payments, 180 Balance of trade, 180 Balance sheet, 150–155 Balloon maturity, 44 BANs (bond anticipation notes), 57 Banking, retail, 330–331 Bank of the Cooperatives, 76 BBB/Baa rating, 50 Bearer bonds, 36 Bearish option investors, 281 Beneficiaries (annuity), 121 Best market, 259 Beta, 205–206 Blanket bonds, 88 Blanket recommendations, 191–192 Blind pools, 28 Blind recruiting advertisements, 237 Blocked Persons, 246 Blue sky laws, 245 Boards of directors, 87–88 468 Bonds, 35–67 in balanced funds, 94 convexity of, 62 corporate, 35–53 See also Corporate bonds municipal, 53–62 See also Municipal bonds and portfolio management, 62–63 pretest, 65–67 Bond anticipation notes (BANs), 57 Bond certificates, 37 Bond funds, 94 Bond immunization, 63 Bonding, of key employees, 88 Bond ratings, 49–50 Bond ratio, 155 Bond swaps, 60 Bonus annuities, 117–118 Book entry bonds, 37 Book value, Book value per share, 155 Borrowing from clients, 194 Bottom up analysis, 159 Breakpoints, 103–105 Breakpoint sales, 104 Breakpoint schedules, 103 Brochures, 338 Brokers, dealers vs., 271 Broker call loan rate, 175 Broker dealers: defined, 310–311 and firewalls, 243 registration of, 327–333 regulation of, 231 and Rule 200 updates, 264–265 “B” shares, 100 Bullish option investors, 281 Business decision exception (to ERISA rules), 139 Buy-and-hold managers, 63 Buy limit orders, 254, 261 Buy stop orders, 255 Bypass trusts, 218 C Calls, 279–281, 283–286, 289–290 Callable bonds, 62 Callable preferred stock, 17 Call-adjusted duration, 61 Call feature, 17, 52–53 Call protection, 17, 53 WILEY SERIES 65 Exam Review 2016 Call risk, 204–205 Canadian firms/agents, 332 Cancellation, of registration, 371 Capital asset pricing model (CAPM), 202–203 Capital gain, 59 Capital gains, 214–215, 219 Capitalization, 152 Capitalization weighted index, 166 Capital losses, 214–216 Capital preservation, 201 Capital risk, 203 CAPM (capital asset pricing model), 202–203 Capping, 190 Cap rate, 118 Cash accounts, 241 Cash assets ratio, 155 Cash dividends, 17–18 CBOE (Chicago Board Options Exchange), 282 C corporations, 199, 200 CDs (certificates of deposit), 319 CDSCs (contingent differed sales charges), 100 See also Back-end loads Cease-and-desist orders, 378 Central registration depository (CRD) system, 332 Certificates of deposit (CDs), 319 Certificate of limited partnership, 26 Charitable donations, 217–218 Chicago Board Options Exchange (CBOE), 282 Churning, 189–190 Civil penalties, 374–375 Classical economics, 173 Client information, disclosure of, 194 Client profile, developing, 194–195 Clients, advisory, 195–200 Closed-end companies, 83 Closed-end funds, 83 Closed-end indentures, 49 Closed-end mutual funds, 83–84, 98 Closing cross, 270 CMOs (collateralized mortgage obligations), 76–78 Coincident indicators, 172 Collateralized mortgage obligations (CMOs), 76–78 Collateral trust certificates, 45 College savings plans, 131–132 Combination annuities, 117 Combination (growth and income) funds, 93 Combination privileges, 105 Commissions, 271 Commission house broker, 263 Committee on Uniform Securities Identification Procedures (CUSIP), 11 Commodities contracts, 241, 301 Common stock, 2–14 authorized stock, book value of, converting bonds into, 47–48 corporate timeline for sale of, 2–4 income from, 11–12 issued stock, outstanding stock, par value of, reasons for buying, 11–12 risks of ownership, 12 and stockholders’ rights, 5–9 transferability of, 9–10 treasury stock, 3–4 values of, 4–5 and voting rights, 8–9 and warrants, 21–22 Common stock ratio, 155 Communications, 233–234 Compensation, investment advisor, 339–340 Competitive tender, 70 Complaints, customer, 190–191 Consolidation, 160 Consumer Price Index (CPI), 73, 179 Contingent differed sales charges (CDSCs), 100 See also Back-end loads Continuous primary offering, 83, 91 Contracts, investment adviser, 343 Contraction, 170 Contractual plan (nonfixed UIT), 83 Contumacy, 318 Conversion price, 17 Conversion privileges, 105–106 Convertible bonds, 46–48 Convertible preferred stock, 17 Convertible securities, 154 Convexity, 62 Cooling-off period, 228 Coordination (simultaneous registration), 354–355 469 Index Coordination Act, see National Securities Market Improvement Act of 1996 Corporate bonds, 35–53 balance sheet and redemption of, 154 bearer bonds, 36 bond certificates, 37 in bond funds, 94 book entry/journal entry, 37 convertible, 46–48 convexity of, 62 discount, 38 fully registered, 36 indenture with, 49 maturities of, 43–44 municipal, 53–62 par value of, 38 and portfolio management, 62–63 premium, 38 pretest, 65–67 pricing of, 37–38 and principal-only registration, 36 ratings of, 49–50 registered, 36 retirement of, 51–53 secured, 44–45 and Trust Indenture Act of 1939, 224 types of, 36–37, 44–46 unsecured, 45–46 warrants attached to, 21 yields on, 39–43 Corporate bond funds, 94 Corporate dividends, 221 Corporate websites, 236–237 Corporations, as investment clients, 199–200 Correlation, 301 Correspondence, 236 Cost base, 214–217 Coterminous debt, 54 Coupon return, 62 Coverdell IRA, 131 Covered calls, 293–295 CPI (Consumer Price Index), 73, 179 CRD (central registration depository) system, 332 Credit risk, 50, 69, 204 Criminal penalties, 374–375 Crossing stock, 260–261 “C” shares, 100 Cum-rights formula, Cumulative preferred stock, 16 Cumulative voting method, 8–9 Currency markets, 301 Currency risk, 23, 50–51 Currency transactions, 245–247 Currency values, 180 Current assets, 150 Current liabilities, 151 Current ratio, 155 Current yield, 12, 39–40 CUSIP (Committee on Uniform Securities Identification Procedures), 11 CUSIP numbers, 11 Custodian banks, 23, 89 Customer complaints, 190–191 Customer losses, 241 Cyclical industries, 158 D Day orders, 253 DEA (designated examining authority), 230 Death: of IRA owner, 131 of minor, 198 Debentures, 75 Debt securities, see Bonds Debt service ratio, 157 Debt-to-equity ratio, 155 Declaration date, 19 Dedicated portfolio management, 63 Default risk, 69 Defeasance, 52 Defensive industries, 158 Deferred compensation plans, 135–136 Defined benefit plans, 136 Defined contribution plans, 137–138 Deflation, 179 Depreciation, 154 Depression, 171 Designated examining authority (DEA), 230 Designated market maker (DMM), 257–260 Directed transactions, 345 Direct investment, 117 Direct participation programs, 24, 28 See also Limited partnerships Direct participation programs (DPPs), 270 Disbursement of dividends, 21 Disclosure, 194, 232, 340–342 Discount bonds, 38, 41 Discount rate, 175, 176 Disintermediation, 178 Dissolving a partnership, 29 Distributions, 18–20, 89, 90, 105 Diversification, 63 Diversified mutual funds, 84–85 Dividends: and balance sheet, 154 on cumulative preferred stock, 16 disbursement process for, 21 distribution of, 18–20 on preferred stock, 15 on REITs, 23–24 and risks of common stock ownership, 12 selling, 20–21, 192 on straight preferred stock, 16 taxation of, 20 types of, 17–18 Dividend discount model, 159 Dividend growth model, 159 Dividend payout ratio, 157 Dividend reinvestment program (DRIP), 12 Dividend yield, 12 DMM (designated market maker), 257–260 DNR (do not reduce), 261 Dodd Frank Wall Street Reform Act of 2010, 334 Dollar cost averaging, 106–108 Donations, charitable, 217–218 Do not reduce (DNR), 261 Double-barreled bonds, 56 Double-entry bookkeeping, 152 Double ETFs, 99 Downward trend lines, 160, 162 DPPs (direct participation programs), 270 DRIP (dividend reinvestment program), 12 “D” shares, 100 Dual-auction markets, 257 Durable power of attorney, 319 Duration (bonds), 61 E Earnings available to common, 156 Earnings per share fully diluted, 157 Earnings per share primary, 157 470 ECNs (electronic communication networks), 267 Economics, 169–185 domestic policy, 174–180 GDP, 169–171 international monetary considerations, 180 pretest, 183–185 schools of economic thought, 173–174 Economic indicators, 171–173 Economic policy, 174–178 Educational IRA, 131 EE Bonds, 69 EFC (expected family contribution) rate, 132 Effective duration, 61 Efficient frontier, 211 Efficient market theory, 164 Electronic communication networks (ECNs), 267 Electronic trading, 263–264 Emergency withdrawal, 106 Employee Retirement Income Security Act of 1974 (ERISA), 139–141 Employees, bonding of, 88 Employee stock options, 138–139 Employers, 401K plans and, 137–138 Equipment, cash purchases of, 154 Equipment trust certificates, 45 Equities, 1–34 ADRs/ADSs, 22–23 in balanced funds, 94 book value of, common stock, 2–14 defined, direct participation programs, 24, 28 dividends on, 17–21 limited partnerships, 24–29 preferred stock, 14–17 pretest, 31–34 REITs, 23–24 Equity funds, 92 Equity income funds, 93 Equity-indexed annuities, 118–119 Equity-linked notes, 50 ERISA (Employee Retirement Income Security Act of 1974), 139–141 ERISA 404C Safe Harbor, 140–141 Estate taxes, 220–221 WILEY SERIES 65 Exam Review 2016 ETFs (exchange-traded funds), 98–99 ETNs (exchange-traded notes), 50 Eurobonds, 50–51 Eurodollar bonds, 51 Examinations, for investment advisers, 336–337 Exchange member broker dealers, 89 Exchange (conversion) privileges, 105–106 Exchange-traded funds (ETFs), 98–99 Exchange-traded notes (ETNs), 50 Ex-dividend date (ex date), 19–20 Execution system, Nasdaq, 268 Exempt issuers, 358 Exempt securities, 353, 357–358 Exempt transactions, 358–363 Exercised option, 281 Exercise price, 282 Expansion, 170 Expected family contribution (EFC) rate, 132 Expected return, 06–207 Expired option, 282 Ex-rights date, 7–8 Extension risk, 78 F Face-amount certificates, 82 Face-amount companies, 82 Family limited partnerships, 199 Federal Farm Credit System, 76 Federal funds rate, 175 Federal Home Loan Mortgage Corporation (Freddie Mac), 75 Federal Housing Administration (FHA), 74 Federal Intermediate Credit Bank, 76 Federal Land Bank, 76 Federally covered exemptions, 318, 357–358 Federally covered investment advisers, 318 Federally covered securities, 318 Federal National Mortgage Association (Fannie Mae), 75 Federal Open Market Committee (FOMC), 176–177 Federal Reserve Board (FRB), 13, 174–179, 231 Fee-based management, 125 FHA (Federal Housing Administration), 74 Fidelity bond, 241 Fiduciaries, 361 Fiduciary accounts, 195–197 FIFO (first-in, first-out) method, 215 Fifth Amendment, 378 Fill or kill orders, 256 Final prospectus, 228–229 Financial Crimes Enforcement Network (FinCEN), 247 Financial Industry Regulatory Authority (FINRA), 231–232 corporate website regulations, 236–237 percent markup policy, 272–274 member communications with the public, 233–240 Rule 2210 communications with the public, 234–236 Financial institutions, transactions with, 360 Financial records, 11 FinCEN (Financial Crimes Enforcement Network), 247 FINRA, see Financial Industry Regulatory Authority FINRA Rule 2210, 234–236 Firewalls, 243 First-in, first-out (FIFO) method, 215 Fiscal policy, 178–180 501C3 organizations, 134–135 Five percent markup policy, 272–274 529 plans, 131–132 Fixed annuities, 116, 118–119 Fixed assets, 151 Fixed unit investment trusts, 82–83 Floor rate, 118 FOMC (Federal Open Market Committee), 176–177 Footnotes (balance sheet), 158 Foreign securities, taxes on, 221 Form ADV, 313–314 Form U5 termination notice, 332 Forwards, 301 Forward looking statements, 229 401k plans, 137–138 403B (public educational institutions), 134 Fourth market, 271 Fraud, 191 FRB, see Federal Reserve Board Free lunch seminars, 239 Free services, 239 471 Index Friedman, Milton, 174 Front-end loads, 99 Front running, 190 Fulcrum fees, 344 Full discretion, 196, 336 Full power of attorney, 196, 319 Fully registered bonds, 36 Fundamental analysis, 149–159 balance sheet, 150–155 capitalization, 152 dividend valuation models, 159 income statements, 156–158 pretest, 167–168 top down/bottom up analysis, 158–159 and type of industry, 158 Funded debt, 151 Futures, 301 Treasury receipts, 72–73 Treasury STRIPs, 72 Grantor retained annuity trust (GRAT), 219 Gross Domestic Product (GDP), 169–171 Growth, as investment objective, 201 Growth and income (combination) funds, 93 Growth funds, 92 Growth industries, 158 GSTT (Generational skipping transfer tax), 219 GTC (good ’til cancel), 253, 261–262 Guam, 59 Guarantees, 193, 318 Guaranteed bonds, 46 G H GDP (Gross Domestic Product), 169–171 General obligation bonds (GOs), 54–55, 61 General partners, 24–26 General securities principal, 238 Generational skipping transfer tax (GSTT), 219 Generational skipping trust, 218–219 Generic advertising, 237 Gifted securities, 217 Gifts (UGMA accounts), 198 Gift taxes, 220 Ginnie Mae, see Government National Mortgage Association (Ginnie Mae) Globalization, 180 Good ’til cancel (GTC), 253, 261–262 GOs (general obligation bonds), 54–55, 61 Government bond funds, 95 Government debt securities, 83 Government National Mortgage Association (Ginnie Mae), 74–75, 95 Government securities, 69–80 agency issues, 74–78 pretest, 79–80 TIPS, 73–74 Treasury bills, notes, and bonds, 70–72 Head-and-shoulders bottom, 163 Head-and-shoulders reversal, 162 Hedge, options as, 291 Hedge funds, 344 HH Bonds, 70 Highly leveraged company, 152 Holding period return, 210 I IARD (Investment Adviser Registration Database), 314–315 Immediate or cancel (IOC) orders, 256 Incentive stock option plans, 138–139 Income, 11–12, 200–201 Income bonds, 46 Income statements, 156–158 Indenture, 49 Index funds, 93, 99 Indexing, 63 Index-linked notes, 50 Indirect investment, 117 Individual retirement accounts (IRAs), 126–131 Individual retirement plans, 126–131 Industrial development bonds, 55 Industrial revenue bonds, 55 Inflation, 43, 73, 179 Inherited securities, 217 Initial public offerings (IPOs), 21, 83, 354–355 Inside information, 242–243 Inside market, 259, 268 Insider Trading and Securities Fraud Enforcement Act of 1988, 242–243 INSTINET, 271 Institutional communications, 235–236 Institutional investors, 316 Insurance companies, 63, 116 Intangible assets, 151 Interest income, taxation of, 217 Interest-only CMOs, 77–78 Interest rates, 174–175 and bond yields, 43 and CMOs, 76–77 and convexity, 62 and general obligation bonds, 61 and reserve requirement, 176 universal life insurance, 143 and zero-coupon bonds, 46 Interest rate risk, 204 Interest rate sensitivity, 15 Internal rate of return (IRR), 209 International indexes, 166 Interpretive opinions, 373 Inter vivos trusts, 218 In-the-money options, 289 Intrinsic value, of options, 290–291 Inverse relationships, 15 Investigations, 374 Investment advisers: additional compensation for, 339–340 capital requirements for, 336 contracts with, 343 custody of customer funds, 342 defined, 312 and 401K plans, 137–138 for investment companies, 88 persons controlling, 341 registration process for, 333–346 role of, 339 Investment Adviser Registration Database (IARD), 314–315 Investment adviser representatives, 315, 335 Investment Advisers Act of 1940, 188, 232, 313, 375 Investment banks, firewalls for, 243 Investment companies, 81–113 See also Mutual funds components of, 87–89 for mutual funds, see Mutual funds philosophy of, 81–82 pretest, 111–113 472 Investment companies (continued) registration requirements for, 85–87 types of, 82–83 Investment Company Act of 1940, 142, 233 and asset allocation model, 84 board of directors requirements, 87–88 investment company regulation under, 82, 85 nonissuer transactions, 362–363 notice filing, 355 75-5-10 test, 84 variable annuity company registration, 117 Investment counsels, 313 Investment grade bonds, 50 Investment objectives: and client profile, 194–195 with mutual funds, 92–94 ways to achieve, 201–202 IOC (immediate or cancel) orders, 256 IPOs, see Initial public offerings IRAs (individual retirement accounts), 126–131 IRR (Internal rate of return), 209 Irrevocable trusts, 218 Isolated nonissuer transactions, 362–363 Issued stock, Issuer (defined), 311 J Joint annuity with last survivor, 122–123 Journal entry bonds, 37 Jumbo certificate of deposit, 319 Junk bonds, 50 Jurisdiction of state securities administrator, 375–378 K Keogh (HR-10) plans, 132–133 Key employees, bonding of, 88 Keynes, John Maynard, 173, 179 Keynesian economics, 173 L Lagging indicators, 172–173 Large capitalization, 166 WILEY SERIES 65 Exam Review 2016 Last in, first out (LIFO), 124 Leading indicators, 172 Lease rental bonds, 56 Legal list, 196 Legislative risk, 29, 204 Letters of intent, 103 Level-load funds, 100 Liabilities, 9, 150, 151 LIBOR (London Interbank Offered Rate), 180 Life insurance, 141–143 tax implications, 143 universal life, 142–143 universal variable life, 143 variable life, 142 variable universal life, 143 whole life, 141, 142 Life only (straight life) annuity, 122 Life with period certain annuity, 122 LIFO (last in, first out), 124 Limited discretion, 196 Limited liability, of common stockholders, Limited liability companies (LLCs), 199 Limited partnerships, 24–29 analysis of, 28 dissolution of, 29 as investment clients, 199–200 structuring/offering of, 25–26 tax considerations with, 28–29 types of, 27 Limited power of attorney, 196 Limit orders, 256, 268 Liquidity, 202 Liquidity risk, 29, 205 Listed securities, 257 LLCs (Limited liability companies), 199–200 Loans, 29, 124, 142, 194 London Interbank Offered Rate (LIBOR), 180 Long calls, 283–284 Long positions, 264–265 Long puts, 286–287 Long stock long puts/married puts, 291–293 Long stock short calls/covered calls, 293–295 Long straddles, 300 Long-term liabilities, 151 Low-income housing, 57 Lump sum withdrawal (annuity), 124 M M1/M2/M3 money supply, 177–178 Maloney Act of 1938, 231–232 Margin accounts, 241 Markdown, 272–273 Market arbitrage, 274 Market capitalization, 166 Market indexes, 166 Market indicators, 163–164 Market makers, 267, 268 Market on close orders, 256 Market on open orders, 256 Market orders, 254, 268 Market risk, 203 Market theories, 163–164 Markup, 272–273 Married puts, 291–293 Master limited partnerships (MLPs), 26 Material facts, omitting, 193 Material information, 242–243 Maturities, 43–44 Median, 165 Mergers and acquisitions, 332 Middle capitalization, 166 MIG ratings, 57 Misleading communications Misrepresentations, 192–193, 229 MLPs (master limited partnerships), 26 Mode, 165 Model Rule, NASAA, 339 Modern portfolio theory, 206, 211 Monetary economics, 173–174 Money laundering, 245–247 Money market funds, 95–96 Money supply, 173–174, 177–178 Moody’s, 49–50, 57 Moral obligation bonds, 56–57 Moral suasion, 178 Mortgage-backed bonds, 62, 74–75 Mortgage-backed securities, 62, 74–78, 361 Mortgage bonds, 44–45 MSRB (Municipal Securities Rule Making Board), 242 Municipal bonds, 53–62 analysis of, 60–61 in bond funds, 94, 95 convexity of, 62 473 Index and IRAs, 130 premium amortization with, 60 and Securities Acts Amendments of 1975, 242 taxation of, 58–59 types of, 54–57 Municipal bond funds, 94, 95 Municipal Securities Rule Making Board (MSRB), 242 Mutual funds, 83, 89–109, 193 alternative funds, 96 automatic reinvestment of distributions from, 105 breakpoint sales of, 104 combination privileges with, 105 conversion/exchange privileges with, 105–106 diversified vs nondiversified, 84–85 dollar cost averaging with, 106–108 and financial advisers’ recommendations, 193 investment companies for, 83 investment company philosophy for, 81–82 investment objectives with, 92–94 investor voting rights with, 108–109 open-end fund share characteristics of, 91–92 open-end vs closed-end, 83–84 portfolio turnover rates for, 109 pretest, 111–113 prospectus for, 90–91 recommending, 100–101, 193 rights of accumulation with, 104 sales charges on, 98–106 share distribution from, 89, 90 share valuation of, 96–97 30-day emergency withdrawal from, 106 variable annuity vs., 125 yields on, 109 N Naked calls, 284, 285 NASAA (North America Securities Administrators Association), 369–370 NASAA Model Rule, 339 NASD (National Association of Securities Dealers), 231–232 Nasdaq, 266–271 execution systems of, 269 fourth market, 271 market makers and, 267 nominal quotes and, 269 opening cross of, 270 and OTCBB, 270 and Pink Sheets, 270 subscription levels for, 267–268 third market, 270–271 Nasdaq closing cross, 270 Nasdaq Market Center Execution System (NMCES), 269 Nasdaq official opening price (NOOP), 270 Nasdaq opening cross, 270 Nasdaq TotalView, 268 National Association of Securities Dealers (NASD), 231–232 National Association of Securities Dealers Quotation System, see Nasdaq National Securities Market Improvement Act of 1996, 244, 334, 355, 357–358 Negative convexity, 62 Negotiable certificate of deposit, 319 Net asset value (NAV), 89, 95–98 Net capital, 240 Net income after taxes, 156 New housing authority (NHA) bonds, 57 Newspaper advertising, 378 New York Stock Exchange, 96, 256, 257, 263 NMCES (Nasdaq Market Center Execution System), 269 No-load mutual funds, 90 Nominal interest rate, 43 Nominal quotes, 269 Nominal yield, 39 Noncompetitive tenders, 70 Noncumulative preferred stock, 16 Nondiversified mutual funds, 84–85 Nonestablished issuers, 355–357 Nonfixed unit investment trust, 83 Noninterested person, 88 Nonissuer, 312 Nonissuer transactions, 362–363 Non-Nasdaq OTCBB, 270 Nonprofit organizations/tax-exempt organizations (501C3), 134–135 Nonpublic material information, 242–243 Nonqualified retirement plans, 126, 127–128, 135–136 Nonqualified stock option plan, 138–139 Nonrecourse loan, 29 Nonsystematic risk, 204 Nonvoting stock, 15 NOOP (Nasdaq official opening price), 270 North America Securities Administrators Association (NASAA), 369–370 Not held orders, 256 Notice filing, 355 O OCC (Options Clearing Corporation), 282 Odd lot trading theory, 163 Offer (to sell/to buy), 317, 377 Office of Foreign Assets Control (OFAC), 246 OID (original issue discount), 59 Open-end indentures, 49 Open-end mutual funds, 83–84, 91–92 Opening cross, 270 Operating income, 156 Opportunity risk, 205 Options, 279–305 calls, 279–281, 283–286, 289–290 characteristics of, 282 classification of, 279–280 and correlation, 301 futures and forwards, 301 as hedge, 291 and managing a position, 282–283 possible outcomes for, 281–282 pretest, 303–305 puts, 53, 279–281, 286–293, 298–301 tombstone advertisement approval with, 238 Options Clearing Corporation (OCC), 282 Option premiums, 289–291 Option series, 280 474 Order shredding, 269 Original issue discount (OID), 59 OTC bulletin board (OTCBB), 270, 355 OTC market, see Over-the-counter market Out-of-the-money options, 290 Outside solicitors, 343 Outstanding stock, Overlapping debt, 54–55 Over-the-counter (OTC) market, 83, 231–232, 266–271 See also Nasdaq P PAC (planned amortization class) CMOs, 78 Painting the tape, 190 Parity price, 47–48 Participating preferred stock, 16 Partnership agreements, 25–26 Partnerships, see Limited partnerships Par value, 5, 15, 38 Passive portfolio management, 63 Patriot Act, 246–247 Payment date, 13, 19 Payout, annuity, 122–123 Payroll deduction plans, 135 Peak, 170 Pegging, 190 Penalties, civil/criminal, 374–375 Penny stocks, 270 Pension consultants, 312 Pension fund managers, 63 Pension plans, 139–141 Performance-based compensation, 344 Periodic payment deferred annuities, 120 Periodic payment plans, 193–194 Perpetual income accounts, 212–213 Person (defined), 309–310 PHA (public housing authority) bonds, 57 Pink OTC Market, 270 Pink Sheets, 270, 355 Plan administrators/trustees, 138 Planned amortization class (PAC) CMOs, 78 Pledges of securities, 362 POP (public offering price), 89–90, 101–102 WILEY SERIES 65 Exam Review 2016 Portfolio income, 212–213 Portfolio management, 62–63 Portfolio turnover rate, 109 Positive convexity, 62 Power of attorney, 196, 319 PPNs (principal protected notes), 50 Preemptive rights, 5–6 Preferred stock, 14–17 Preferred stock ratio, 155 Preliminary prospectus, 228 Premiums, 289–291 Premium bonds, 38, 40, 60 Premium enhancement, 117–118 Preopening orders, 264 Preorganization certificates, 362 Prepaid tuition plans, 131–132 Prerefunded bonds, 52 Preservation of capital, 201 Price earnings ratio, 157 Price return, 62 Price weighted index, 166 Pricing: of bonds, 37–38 of mutual fund shares, 96–97 of Treasury bonds/notes, 71–72 Primary dealers, 70 Prime rate, 175 Principal, specialist/DMM as, 258 Principal-only bond registration, 36 Principal-only CMOs, 77 Principal protected notes (PPNs), 50 Private investment companies, 317, 344 Private-label CMOs, 78 Private placements, 26, 358–359 Proceeds transactions, 274 Professional conduct, 188–193 pretest, 223–226 Profit-sharing plans, 137 Progressive taxes, 213 Property taxes, 54–55 Proprietary trading systems, 271 Prospectus, 90–91, 228 Prudent man rule, 196 Public educational institutions (403B), 134 Public housing authority (PHA) bonds, 57 Public offerings, 26 Public offering price (POP), 89–90, 101–102 Public Utilities Holding Company Act of 1935, 231 Puerto Rico, 59 Puts, 53, 279–281, 286–293, 298–301 Q Qualification, 355–357 Qualified purchasers, 317 Qualified retirement plans, 126, 136–138 Quantitative analysis, 165 Quick assets, 155 Quick ratio, 155 R Radio advertising, 378 Random walk theory, 164 Random withdrawal, 124 RANs (revenue anticipation notes), 57 Ratings, 49–50 Real estate investment trusts (REITs), 23–24 Real GDP, 179–180 Real interest rate, 43 Realized compound yield, 42 Rebalancing, 211 Recession, 171 Reciprocal immunity, 58 Recommendations, 187–213 and alpha, 205 and beta, 205–206 blanket, 191–192 and CAPM, 202–203 and client profile, 194–195 dividends as basis for, 192 and expected return, 06–207 and investment objectives, 201–202 misrepresentation in, 192–193 and modern portfolio theory, 211 of mutual funds, 100–101, 193 of periodic payment plans, 193–194 and portfolio income predictions, 212–213 pretest, 223–226 and report contents, 187–188 risk vs reward, 203–205 variable annuities, 119–120 and weighted returns, 209–210 Record date, 19 Recourse loan, 29 Redemption of corporate bonds, 52 Red herrings, 228 475 Index Reductions of sales charges, 102–105 Referrals, 343 Refunding of corporate bonds, 52 Registered bonds, 36 Registered traders, 263 Registrars, 10–11 Registration of firms/personnel, 327–337 agents, 327–333 broker dealers, 327–333 cancellation of, 371 investment advisers, 333–346 pretest, 347–351 withdrawal of registration, 371 Registration of securities, 353–368 exempt securities, 353, 357–358 exempt transactions, 358–363 federally covered exemptions, 357–358 pretest, 365–368 through coordination, 354–355 through notice filing, 355 through qualification, 355–357 Registration statements, 227–228, 354 Regressive taxes, 214 Regulation D, 358–359 Regulation Filing Application (RFA), 266 Regulation SHO, 264 Regulation T, 13, 14 Reinvestment of distributions, 105 Reinvestment return, 62 Reinvestment risk, 204 REITs (real estate investment trusts), 23–24 Renewals, registration, 332 Rescission, 378–379 Research, 345 Research reports, 238 Reserve requirement, 176 Residual assets, shareholders’ claims to, 11, 12, 15 Resistance, 160 Retail banking, 330–331 Retail communications, 234–235 Retail trading departments, 243 Retirement of corporate bonds, 51–53 Retirement plans, 126–141 corporate plans, 135–139 individual plans, 126–131 IRAs, 126–131 Keogh plans, 132–133 pretest, 145–147 TSAs/TDAs, 133–135 Revenue anticipation notes (RANs), 57 Revenue bonds, 55 Reversals, 160, 162–163 Reverse churning, 189–190 Revocable trusts, 218 Rewards, risk vs., 203–205 RFA (Regulation Filing Application), 266 Right cum rights, Right ex rights, 7–8 Rights of accumulation, 104 Rights of common stockholders, 5–9, 11 Rights of rescission, 378–379 Rights offerings, 5–7 Risk, 12, 29, 203–205 See also specific types, e.g.: Currency risk Risk arbitrage, 274 Risk aversion, 211 Riskless principal transactions, 272–274 Risk premium, 202, 206 Rollover, 130, 138 Roth IRAs, 127–128 Round lot, 282 Rule 144, 359–360 Rule 147, 360 Rule 200, 264–265 Rule 203, 265–266 Rule 2210, 234–236 Rules and regulations, 227–251 See also specific rules and regulations FINRA, 231–232 Insider Trading and Securities Fraud Enforcement Act of 1988, 242–243 Investment Advisers Act of 1940, 232 Investment Company Act of 1940, 233 National Securities Market Improvement Act of 1996, 244 Patriot Act, 246–247 pretest, 249–251 SEC, 230–231 Securities Act of 1933, 227–229 Securities Acts Amendments of 1975, 242 Securities Exchange Act of 1934, 230–231 SIPC, 240–242 Telephone Consumer Protection Act of 1991, 243–244 Trust Indenture Act of 1939, 232 USA, 245 Rule changes, by state securities administrators, 372 Rule of 72, 213 Rush orders, 337 S “Safe Harbor” (ERISA 404C), 140–141 Sale (defined), 317 Sales charges, 89, 98–106, 125 SAR (Suspicious Activity Report), 246 S corporations, 28, 199, 200 SDBK (super display book system), 263–264 SEC, see Securities and Exchange Commission SEC disclaimer, 229 Secondary markets, 22, 59, 74, 230 Sector funds, 93 Secured bonds, 44–45 Securities: defined, 1–2, 307–309 registration of, see Registration of securities trading of, see Trading securities types of, 1–2 Securities Act of 1933, 82, 85, 227–229, 353 Securities Acts Amendments of 1975, 242 Securities and Exchange Commission (SEC), 230–231 broker dealer registration with, 330 creation of, 230 FOK/IOC order rules, 256 investment adviser registration with, 334 investment company registration with, 85–87 IPO registration with, 354 and registration statements, 227–228, 354 Regulation SHO, 264 and soft dollars, 344–346 transaction regulations, 227–229 Securities Exchange Act of 1934, 13, 230–231, 244, 330, 363 476 Securities Investor Protection Corporation Act of 1970 (SIPC), 240–242 Securities transactions, 375–378 Self-directed 401K plans, 137–138 Self-incrimination, 378 Self-regulatory organizations (SROs), 230 Sell (defined), 317 Selling: calls, 284–286 dividends, 20–21, 192 puts, 287–288 Selling group members, 89–90 Sell limit orders, 254 Sell stop orders, 255, 261 Seminars, free lunch, 239 Semi-strong-form efficiency, 164 SEP (simplified employee pension) IRA, 128–129 Serial bonds, 44 Serial maturity, 44 Series EE Bonds, 69 Series HH Bonds, 70 Series issue, 44 Services, free, 239 Settlement dates, 13 Settlor function, 139 75-5-10 test, 84–85 Share identification, 215 Sharpe ratio, 205–206 Short calls, 284–286 Short interest theory, 163 Short puts, 287–288 Short sales, 264–266 Short stock long calls, 295–298 Short stock short puts, 298–301 Short straddles, 300–301 Short-term municipal financing, 57 Shredding, 269 Simplified employee pension (SEP) IRA, 128–129 Single payment deferred annuity, 120 Single payment immediate annuity, 120 “Sin” taxes, 56 SIPC (Securities Investor Protection Corporation Act of 1970), 240–242 SLP (supplemental liquidity provider), 263 Small capitalization, 166 WILEY SERIES 65 Exam Review 2016 Soft dollars, 344–346 Sold option, 282 Solicitors, 315, 343 S&P (Standard & Poor’s), 49–50 S&P 500, 93, 118, 344 Special assessment bonds, 56 Specialists/DMMs, 257–260 Specialist bills, 259 Specially Designated Nationals, 246 Special tax bonds, 56 Specified program, 28 Speculation as investment objective, 202 Speculative rate bonds, 50 Spread (defined), 267 SROs (self-regulatory organizations), 230 Standard & Poor’s, see S&P Standard power of attorney, 319 State regulation: broker dealer registration, 321–325 and coordination, 354–355 and exempt securities, 357–358 stop orders, 373 State securities administrators, 369–386 actions by, 370–375 broker dealer registration with, 329–330 and civil/criminal penalties, 374–375 jurisdiction of, 375–378 notice filing with, 355 pretest, 381–386 and right of rescission, 378–379 and statute of limitations, 379 Uniform Securities Act and, 245 Statistical analysis, 165 Statute of limitations, 379 Statutory debt limit, 54 Statutory voting method, 8–9 Stocks, see Common stock; Equities; Preferred stock; Securities Stock dividends, 18 Stock exchanges, 257 Stockholders’ equity, 152 Stockholders’ rights, 5–9 Stock splits, 48, 155, 261–262 Stop limit orders, 256 Stop loss orders, 255–256 Stop orders, 255–256, 373 Stopping stock, 262–263 Stop price, 255 Straddles, 300–301 Straight life annuity, 122 Straight line depreciation, 154 Straight preferred stock, 16 Strategic asset allocation, 211 Street name, 21 Strike price, 282 STRIPs, 72 Strong-form efficiency, 164 Subchapter S corporations, 28, 199, 200 Subordinated debentures, 45 Subscription price, 6, 21 Suitability obligation, 121 Summary order, 372 Super display book system (SDBK), 263–264 Supplemental liquidity provider (SLP), 263 Supply side economics, 173 Support (technical analysis), 160 Suspicious Activity Report (SAR), 246 Systematic rebalancing, 211 Systematic risk, 203 T T+3 (settlement date), 13 T+5 (payment date), 13 Targeted amortization class (TAC) CMOs, 78 Tax and revenue anticipation notes (TRANs), 57 Tax anticipation notes (TANs), 57 Taxation, 214–221 AMT, 221 and annuities, 124 and charitable donations, 217–218 corporate dividend exclusion, 221 and cost base of multiple purchases, 215–216 and direct participation programs, 28 of dividends, 20 estate taxes, 220–221 as fiscal policy, 178–179 and foreign securities, 221 gains and losses, 214–216 and inherited/gifted securities, 217 of interest income, 217 and Keogh plans, 132–133 and life insurance, 143 and municipal bonds, 58–59 of partnerships, 25 477 Index pretest, 223–226 and SEP IRAs, 129 of trusts, 219 of TSA/TDA distributions, 135 of UGMA accounts, 198 and wash sales, 216 withholding tax, 221 Tax benefits, as investment objective, 201 Tax credits, 28 Tax deductions, 28 Tax-deferred accounts (TDAs), 133–135 Tax-equivalent yields, 58 Tax-exempt organizations (501C3), 134–135 Tax-sheltered annuities (TSAs), 133–135 Technical analysis, 159–166 and efficient market theory, 164 market theories/indicators, 163–164 pretest, 167–168 and statistical analysis, 165 Telemarketing, 243–244 Telephone Consumer Protection Act of 1991, 243–244 Television advertising, 378 Tender offers, 53 Term bonds, 43–44 Term definitions under USA, 307–325 Testamentary trusts, 218 Testimonials, 238–239 Third market, 270–271 Third-person accounts, 195–197 30-day emergency withdrawal, 106 3C7 funds, 344 Thrift plans, 137–138 Time value: of money, 207–209 of options, 290–291 Timing risk, 204 TIPS (Treasury inflation protected securities), 73–74 Tombstone advertisements, 238 Top down analysis, 158–159 Total return, 210 Trade date, 13 Trading ahead, 190 Trading securities, 253–277 arbitrage, 274 brokers vs dealers, 271 crossing stock, 260–261 DNR, 261 FINRA percent markup policy, 272–274 over the counter/Nasdaq, 266–271 pretest, 275–277 regulation of, 264–266 by specialists/DMMs, 257–260 state securities administrator’s jurisdiction over, 375–378 stock exchanges, 257 stock splits, 261–262 stopping stock, 262–263 types of orders, 253–256 Traditional IRAs, 127 Tranches, 76 TRANs (tax and revenue anticipation notes), 57 Transactions, see Trading securities Transfer agents, 10, 89 Treasury, U.S Department of, 246 Treasury bills, 70–72 Treasury bonds, 71–72 Treasury inflation protected securities (TIPS), 73–74 Treasury notes, 71–72 Treasury receipts, 72–73 Treasury stock, 3–4 Treasury STRIPs, 72 Trend lines, 160 Trigger prices, 255 Troughs, 170–171 Trusts, 218–219 Trust accounts, 196 Trust indentures, 232 Trust Indenture Act of 1939, 49, 55, 231–232 TSAs (tax-sheltered annuities), 133–135 Two-dollar brokers, 263 Two-sided markets, 267 U UGMA (Uniform Gifts to Minors Act), 197–198 UITs (unit investment trusts), 82–83 Ultra ETFs, 99 Unauthorized transactions, 191 Uncovered calls, 284, 285 Underwriters, transactions with, 361 Uniform Gifts to Minors Act (UGMA), 197–198 Uniform Prudent Investors act of 1994 (UPIA), 188–189 Uniform Securities Act (USA), 245 agent registration under, 328–329 civil/criminal penalties under, 374–375 and exempt financial institution transactions, 360 and exempt securities, 353 penalties under, 374–375 state administrator’s powers under, 375–376 State Securities Administrator pretest, 381–386 State Securities Administrator role/ responsibilities, 369–386 term definitions, 307–325 term definitions pretest, 321–325 Units (common shares with warrants), 21 Unit investment trusts (UITs), 82–83 Universal life insurance, 142–143 Universal variable life insurance, 143 Unsecured bonds, 45–46 Unsolicited orders, 361 UPIA (Uniform Prudent Investors act of 1994), 188–189 Upward trend lines, 160, 161 USA, see Uniform Securities Act USA PATRIOT Act, 246–247 Utility stocks, 93, 205 V Valuation ratios, 155 Variable annuities, 116, 118–120, 125 Variable life insurance, 142 Variable Rate Demand Obligations (VRDOs), 51 Variable rate securities, 51 Variable universal life insurance, 143 Veterans Affairs, U.S Department of (VA), 74 Voting rights, 8–9, 108–109 VRDOs (Variable Rate Demand Obligations), 51 W Warrants, 21–22 Wash sales, 60, 216 Weak-form efficiency, 164 478 Websites, FINRA regulations for, 236–237 Weighted returns, 209–210 Whole life insurance, 141, 142 Withholding tax, 221 Working capital, 155 Wrap accounts, 344 WILEY SERIES 65 Exam Review 2016 Y Yankee bonds, 51 Yields, 39–43, 109 Yield-curve analysis, 181–182 Yield spreads, 43 Yield to call, 42 Yield to maturity, 40–42 Z Zero-coupon bonds, 46, 61, 72 Z tranches, 76 Your purchase of Wiley Series 65 Exam Review includes access to the accompanying test bank If you have purchased an electronic version of this book, please visit www.wileysecuritieslicensing.com to request an access code WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA ... Examination Wiley Series 65 Exam Review 2016 + Test Bank: The Uniform Investment Adviser Law Examination Wiley Series 66 Exam Review 2016 + Test Bank: The Uniform Combined State Law Examination Wiley Series. .. Trader Examination Wiley Series 62 Exam Review 2016 + Test Bank: The Corporate Securities Representative Examination Wiley Series 63 Exam Review 2016 + Test Bank: The Uniform Securities State Law Examination. .. WILEY SERIES 65 EXAM REVIEW 2016 WILEY FINRA SERIES This series includes the following titles: Wiley Series Exam Review 2016 + Test Bank: National Commodities Futures Examination Wiley Series