Flashcards
The probability of an individual living to a certain age according to a particular mortality table. This is the beginning point in calculating the pure cost of life insurance and annuities and is reflected in the basic premium.
Insurance against loss due to the death of the named insured. If the insured dies during the policy period, the insurer agrees to pay a stated death benefit to the policy’s beneficiary.
A cap on the total lifetime benefits you may get from an insurance company. An insurance company may impose a total lifetime dollar limit on benefits (like a $1 million lifetime cap) or limits on specific benefits (like a $200,000 lifetime cap on organ transplants or one gastric bypass per lifetime) or a combination of the two. After a lifetime limit is reached, the insurance plan will no longer pay for covered services.
A limit order is an order to buy or sell at stock at a certain price or better. Limits are orders that are away from the current market price and as such, they are held on the books of the specialist (designated market maker). Open buy limits are below the current market price, and open sell limits are above the current market price. Limit orders can be good for the day or good ‘til canceled. Limit orders never become market orders.
An LLC is a business entity that is recognized at the state level but is not recognized by the IRS. An LLC has one or more members. An LLC is a pass-through entity that provides members with limited liability.
A limited partner, also called a subscriber, is an investor in a limited partnership. Limited partners have no say in how the partnership is managed. Limited partners have limited liability, they can lose whatever they have invested as well as any amount related to a recourse note. Limited partners receive form K-1 with their portion of profits or losses that flow through onto their individual tax returns.
A limited partnership is a form of business with one or more general partners and one or more limited partners. The general partners have unlimited liability. The limited partners have limited liability. It is a flow through tax entity that files Form 1065, as an information return only.
The limited partnership agreement spells out the responsibilities of the partners.
A limited pay whole life policy is a whole life policy that has a shortened premium pay-in period.
A limited power of attorney grants a third party limited trading authority. It allows a person other than the account owner to place trades in the account, but they cannot withdraw money or securities. Often referred to as a limited trading authorization.
Liquidation is the process of redeeming mutual fund shares. Also called redemption. Liquidation can also refer to the process of settling debts after a corporate bankruptcy.
In the event of a corporate liquidation who gets paid when is the liquidation priority. Secured creditors are paid first, then unsecured creditors (back wages, taxes, and debentures), preferred stock, common stock, and lastly foreign investors.
Liquidity refers to how easily can an asset be turned into cash.
Liquidity risk is the risk that the asset may not be easily sold. Liquidity risk is also referred to as marketability risk. Direct participation programs (DPPs) have the greatest liquidity risk since they do not trade in the secondary market.
Listed securities are those securities that meet the requirements to be listed on one of the national securities exchanges. There are many nationally registered securities exchanges in the United States. Listing requirements vary amongst the different exchanges. The three exchanges that conduct the largest volume of trades in the United States include the NASDAQ Stock Market, the NYSE, and the BATS Exchange.
A living trust is a trust that is created while the donor is alive. Living trusts are also called intro vivos trusts
Long is used to describe owning a security.
A long-term capital gain or loss occurs on securities that were held for longer than 12 months.
Coverage for individuals who require assistance with activities of daily living in homes or a nursing facility. Many states require additional training before an agent (producer) can sell long-term care products.
Services that include medical and non-medical care provided to people who are unable to perform basic activities of daily living such as dressing or bathing. Long-term care services can be provided at home, in the community, in assisted living, or nursing homes. Individuals may need long-term care services at any age. Medicare and most health insurance plans don’t pay for long-term care.
The long-term disability income policy provides benefits, often a portion of lost income, lasting for an extended time as defined in the insurance policy.
LEAPS are long-term options, good for two to three years.
The amount an insurance company pays on a claim.
A maintenance call will occur when the client’s equity falls below the minimum requirements. Clients can meet a maintenance call by depositing cash, fully paid securities, or selling securities out of the margin account. A maintenance call is also called a margin call.
In a margin account, FINRA sets ongoing equity requirements. For long accounts, the maintenance requirement is a minimum equity of 25% of the market value long. For a short margin account, the maintenance requirement is a minimum equity of 30% of the market value short.
Dealers make the market. Market making involves a firm buying a particular over-the-counter stock for its own account at its own risk (taking a position).
Managed care is a healthcare delivery system organized to manage cost, utilization, and quality. Managed care may be offered by prepaid health plans, often health maintenance organizations (HMOs). HMOs provide care through a network of providers within a fixed budget. Managed care may also be offered through preferred provider organizations (PPOs). Hallmarks of managed care include provider networks, provider oversight, prescription drug tiers, and utilization management.
Management companies actively buy, sell and trade the securities that are held in the company’s portfolio according to a prescribed investment objective. All mutual funds are management companies. Management companies may be open end funds, closed end funds, ETFs, diversified or non-diversified.
Manager tenure is the length of time that an investment manager has been at the helm of an investment fund.
This disclosure document is designed to remind the client of the risks involved in margin accounts. It must be given to the client as part of the account opening, and again annually.
The margin agreement contains three separate agreements: the credit agreement, the hypothecation agreement, and the loan consent agreement. The margin agreement must be obtained from the client promptly after the initial transaction in the account.
A margin sale involves the purchase of a security with the use of borrowed money. The Federal Reserve Board sets the percentage of the price that the buyer must provide under Regulation T as initial equity, currently, 50% or $2,000, whichever is greater. To buy securities on margin is risky.
Federal Reserve Board Regulation T identifies which securities may be purchased on margin, these securities are called marginable securities. In general, marginable securities include listed securities as well as listed warrants.
The market maker is the dealer side of broker-dealer. The dealer takes an inventory position in a security, making the market.
A market order is an order that will be executed immediately at the best available price.
Market risk is a type of systematic risk. The markets will go up and they will go down. Market risk is the uncertainty about the loss of capital due to changes in the market price of the security. Market risk cannot be reduced with diversification. Diversifying by asset class helps to reduce market risk.
The market value is the price an investor will pay for each share of common stock at any given time. Market value is determined by the laws of supply and demand. Market value is also known as market price.
Marketability refers to the ease with which a security can be bought or sold. Also known as liquidity risk.
Shorthand for the “Health Insurance Marketplace®,” a shopping and enrollment service for medical insurance created by the Affordable Care Act in 2010. In most states, the federal government runs the Marketplace (sometimes known as the “exchange”) for individuals and families. On the web, it’s found at HealthCare.gov. Some states run their Marketplaces on different websites.
The markup is the amount added to the lowest current offering price when the broker-dealer is acting as a dealer and trading with a client.
Matched orders are a form of market manipulation where simultaneous trading of a security is done to create the misleading appearance of active trading. Matched orders are prohibited.
A significant misstatement on an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.
The maturity date is the date on which a company is scheduled to repay the principal of a bond to the bondholder. Corporate bonds mature in up to 30 years.
It is this 1945 Act that exempts insurance from federal law to the extent that it is regulated by state law.
The mean is the average of the set of numbers.
The median is the middle number of the set of numbers.
Insurance program that provides free or low-cost health coverage to some low-income people, families and children, pregnant women, the elderly, and people with disabilities. Many states have expanded their Medicaid programs to cover all people below certain income levels.
An organization that collects medical data on life and health insurance applicants for member insurance companies.
A process used by insurance companies to try to figure out a person’s health status when they are applying for health insurance coverage to determine whether to offer you coverage, at what price, and with what exclusions or limits.
Health care services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.