Flashcards
A nonqualified stock option is a stock option that an employer may grant to its employees. With an NSO the difference between the current market price at the time of exercise and the strike price is reported as wages on the employee’s and the employer’s tax return.
Nonrenewal occurs at policy expiration, the policy is no longer in force, it is not renewed. There is no refund owed at a non-renewal.
Nonsystematic risks are risks related to the actual investment itself. Also called unsystematic risk, it can be reduced through diversification. Business risk, credit risk, legislative risk, and regulatory risk are all types of nonsystematic risk.
A normal yield curve is an upward sloping curve. Normally, short-term debt pays the lowest yield, mid-term a bit higher and long-term pays the highest yield. Normal yield curves are also called positive yield curves.
NASAA was founded in 1919 in Kansas. It is the oldest investor protection organization. Its members include securities Administrators from over 65 states, territories, and districts in the United States. The Series 63, 65, and 66 exams are written by NASAA and administered by FINRA.
A note is a short-term debt instrument, maturing in five years or less.
Notice filing is required at the state level when an issuer that has previously sold securities will be selling more securities across state lines. Registration by notice filing is also called registration by filing. Federally covered advisers are also required to do notice filings in each state in which they do business, paying fees at the state level in addition to their federal fees.
A notice of claim is an initial formal communication from the policyholder to the insurance company, alerting them of a potential loss or damage that may be covered under the policy, setting the claims process in motion.
A requirement that describes the policyowner’s obligation to provide notification of loss to the insurer within a reasonable period of time.
The NYSE is the New York Stock Exchange. The NYSE has a physical trading floor. Historically trading was conducted by the specialists at auction. Today the NYSE is a hybrid marketplace, with trading occurring both electronically and on the floor. The NYSE is the largest stock exchange in the United States.
An accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured.
An odd lot involves the trading of fewer than 100 shares or five bonds. Odd lot traders are small investors.
OEX is shorthand for the S&P 100 stock index. OEX index options trade on the Cboe.
Under the Uniform Securities Act an offer includes any attempt to solicit a purchase or sale of a security for value.
For an insurance policy to be a legal contract it must include four elements. C – O – A – L. O stands for offer. In general, the applicant makes the offer when they fill out the application and submit the first premium payment.
The offering price of an open-end mutual fund share is net asset value per share plus the sales charge. The offering price is also known as the ask price. When it is a no-load fund the nav per share is equal to the offering price.
Every broker-dealer must have at minimum one OSJ. The OSJ is where the principal works. The OSJ is responsible for the supervision of the activities of the associated persons at the branch offices of the member firm.
The official notice of sale is published by a municipality inviting investment firms to submit competitive bids for an upcoming bond issue.
An official statement is the equivalent of a prospectus for a municipal issue.
The acronym for social security, sometimes seen as OASHI.
An omnibus account is an account opened for an investment adviser or a broker-dealer for the benefit of their customers. The carrying firm does not know the individual customers’ names or holdings.
An open-end investment company is a mutual fund company that is managed according to a specific investment objective and continuously offers new redeemable shares in the primary market.
A period of time when people can enroll in certain types of health insurance. The open enrollment period for a Marketplace plan is November 1 – January 15. For Medicare open enrollment is October 15th to December 7th each year. Job-based plans may have different Open Enrollment Periods. Enrollment in Medicaid or the Children’s Health Insurance Program (CHIP) is available at any time of year.
The total number of options currently outstanding in a series. This includes only options that have not been exercised, closed out, or allowed to expire.
The Federal Reserve engages in open market operations, the buying and selling of U.S. government securities, to control the money supply. When buying securities, they are injecting cash into the economy, to fight a recession. When selling securities, they are pulling cash out of the economy, in an attempt to control inflation.
An opening purchase consists of the purchase of a call or a put. To close an opening purchase the investor would engage in a closing sale.
An opening sale consists of the sale of a call or a put. To close an opening sale the investor would engage in a closing purchase.
There are many ongoing expenses related to the day-to-day running of a business, these expenses are referred to as operating expenses.
The option agreement is a form that the customer must sign and return to the broker-dealer within 15 days of being approved for options trading. If the form is not returned, the client will not be able to open any additional positions until it is returned. The options agreement requires the client to abide by options rules, including market position limits and exercise limits.
The holder of an option has the right to buy or sell a security at a predetermined price for a period of time, usually nine months.
The Options Clearing Corporation is the guarantor of all listed options. They issue standardized options contracts.
The Options Disclosure Document is a document that must be given to all options trading clients, at the opening of the account. It is written by the OCC. It includes an explanation of the risks and rewards of investing in options.
The order ticket contains the customer’s instructions regarding a securities transaction. Information that is included on an order ticket includes the customer’s name and account number, description of the security, type of order (buy, sell, short), and any price qualifications (such as stops or limits). The order ticket is also sometimes referred to as the order memorandum.
Ordinary income includes earnings other than capital gains.
The age of the insured when they originally purchased the life insurance policy.
Original Medicare is a fee-for-service health plan that has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance). After a person pays the deductible, Medicare pays its share of the Medicare-approved amount, and the enrollee pays their share (coinsurance and deductibles)
An OTC margin security is a security that does not trade on an exchange but that the Federal Reserve Board has approved for margin trading. The Fed publishes a list of marginable securities.
The OTC market is a negotiated market. Both listed and unlisted securities trade in the OTC market. Municipal and U.S. government securities also trade in the OTC market.
Other insurance provisions are crucial in property insurance policies as they delineate how claims are managed when multiple policies are in effect. These provisions help avoid over-insurance and ensure equitable distribution of coverage responsibility among insurers.
A term rider, covering a family member other than the insured, attached to a whole life policy covering the insured.
The most an insured has to pay for covered services in a plan year. After this amount is spent on deductibles, copayments, and coinsurance for in-network care and services, the health plan pays 100% of the costs of covered benefits.
An options contract is out-of-the-money when it does not have intrinsic value. When an option is out-of-the-money the owner of the option cannot exercise the option. A call is out-of-the-money when the market price is below the strike price. A put is out-of-the-money when the market price is above the strike price.
Once the stock is sold and in the hands of the public, the stock is outstanding. The total of a company’s outstanding stock is equal to issued stock minus any treasury stock that is held by the company. A company’s market capitalization is determined by taking the outstanding stock and multiplying it by the current market price.
Overlapping debt occurs when the same taxpayers cover municipal debt that is issued by more than one taxing authority or district.
The owner of a life policy has the right to pay the premium, the right to select and/or change the beneficiary, the right to take a loan, and the right to choose a non-forfeiture option (such as cash surrender). The owner may or may not be the insured. The owner does not have the authority to change a policy provision.
This event occurs when a life insurance policy will not require any further premiums to keep the coverage in force.
Additional amounts of life insurance purchased using dividends; these insurance amounts require no further premium payments.
Painting the tape is a form of market manipulation and is prohibited. Painting the tape occurs when a group of investors works together to create the misleading appearance of active trading.
Par value on common stock is an arbitrary dollar value assigned to each share of stock at the time of issuance. Par value also references the face value (principal) amount of a bond, usually $1,000. The par value of preferred stock is $100.
Parity is the intrinsic value of a convertible security in terms of the common stock into which it can be converted. Parity means equal.