Flashcards
The settlement date is the date on which payment is made for the purchase of a security. FRB Regulation T requires settlement by the fourth business day following the trade date. FINRA regular-way delivery requires settlement by the second business day following the trade date (T + 2).
The several ways, other than immediate payment in cash, in which a policyholder or beneficiary may choose to have policy benefits paid. These options typically include the following:
Interest: Death benefit left on deposit at interest with the insurance company with earnings paid to the beneficiary annually.
Fixed Amount: Death benefit paid in a series of fixed amount installments until the proceeds and interest earned terminate.
Fixed Period: Death benefit left on deposit with the insurance company with the death benefit plus interest paid out in equal payments for the period of time selected.
Annuity (Life Income Payout): Death benefit plus interest paid through a life annuity. Income continues under a straight life income option for as long as the beneficiary lives or whether or not the beneficiary lives, under a life income with a period certain option.
Share identification is an accounting method whereby the shares selected for liquidation are identified in any order. Specific share identification is often the most beneficial for the investor.
With a shelf offering one registration statement is filed and the issuer is allowed to sell shares over a two-year period of time.
To short an option is to sell an option. To short a stock is to sell shares that the investor does not own, but has borrowed from the broker-dealer. Shorting a stock is only allowed in a margin account.
A short-term capital gain or loss occurs when the securities being sold have been held by the investor for 12 months or less. Short-term capital gains are taxed as ordinary income.
Savings Incentive Match Plan for Employers. A SIMPLE is a qualified retirement plan for a business with up to 100 employees.
A Savings Incentive Match Plan for Employees (SIMPLE) is a qualified retirement plan for small businesses. Employees vest immediately in employer contributions. Businesses with up to 100 employees can establish SIMPLEs. The employer can set the SIMPLE up to be an elective or non-elective contribution amount. Employees who earned $5,000 or more during the preceding year are eligible to fund a SIMPLE.
A simplified employee pension plan is a qualified plan for a self-employed person or small business.
A type of limited-payment policy that requires only one premium payment.
sinking fund is the money set aside to retire an outstanding bond issue.
SLM Corporation, commonly known as Sallie Mae (originally the Student Loan Marketing Association), is a publicly-traded U.S. corporation that provides consumer banking services. When it was first set up in 1973 it was a government entity that serviced federal education loans. It also originated federally guaranteed student loans and worked as a servicer and collector of federal student loans on behalf of the Department of Education. Then it became a private company and started offering private student loans. In 2014, Sallie Mae spun off its loan servicing operation and most of its loan portfolio into a separate, publicly-traded entity called Navient Corporation. Navient funds most of its operations by manufacturing student loan asset-backed securities; bundling loans and selling them to investors as financial instruments.
Social media includes online platforms that allow communications between financial services professionals, firms, and their clients. Social media platforms include Facebook, Instagram, TikTok, LinkedIn, and the firm’s website. Social media must comply with all applicable securities regulations.
Social Security provides financial protection, supporting Americans throughout all of life’s journeys. Social security includes various benefits including retirement, disability, survivor, and family benefits, as well as Medicare. Sometimes you will see Social Security referred to as OASDHI (old age, survivor, disability, and health insurance).
Socially responsible investing involves choosing investments that meet certain requirements or that can pass a screening test. Socially responsible investing focuses on ethical investing and encourages corporate practices that include sustainability, limited environmental footprint, human rights, and diversity.
Soft-dollar compensation is non-cash compensation received by an investment adviser in exchange for brokerage transactions. Soft-dollar compensation is allowed when disclosed to the client in the firm brochure.
A solicited order is one in which the security was recommended to the client by either an agent or an investment adviser representative. Solicited orders must be suitable for the client.
A one-participant 401(k) plan is sometimes called a Solo 401(k), Solo-k, Uni-k, or a One-participant k. The one-participant 401(k) plan isn’t a new type of 401(k) plan. It’s a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan. With a solo 401(k) the business owner wears two hats: employee and employer. Contributions can be made to the plan in both capacities.
Solvency describes the financial health of an individual or business, the ability to meet contractual obligations, and having money for growth.
SPAC stands for special purpose acquisition company. A SPAC is a shell company with no operations that offers securities for cash through an initial public offering (IPO), generally selling shares at $10 a share. SPACs then have a specified period of time, typically two years, to identify and merge with a private operating company. This business combination is used as an alternative means of taking the acquired company public, rather than through a traditional IPO. If they don’t find a suitable company to merge with during this time frame the SPAC will dissolve, and the remaining funds in the trust account are returned, with interest, to the current shareholders.
Special assessment bonds are issued for public projects that benefit specific property owners, such as street lighting, widening of streets, sidewalks, and sewer lines. With a special assessment bond, the homeowner is usually taxed per foot of the property.
SMA is created when a margin account’s equity is in excess of the Regulation T requirement. SMA is a line of credit. SMA once created does not go away unless it is used. SMA can be used to purchase additional securities. The buying power of SMA is two times the SMA balance. The client may withdraw the SMA in cash, which would increase the debit balance.
A specialized situation portfolio is a fund in which the investments are concentrated in little-known ventures involving high financial risk, with the hope of a high capital gain in a relatively short time. Special situation funds meet the investment objective of speculation.
Special tax bonds are a type of municipal bond that is payable only from the proceeds of a special tax, such as an excise tax, on a particular activity or asset. For example, a special tax may be levied on the sale of alcohol or tobacco to help fund a new cancer research facility.
The term specialist is a historical term for the person found on the floor of the NYSE who was in charge of maintaining a fair and orderly marketplace for a company’s stock. Phased out in 2009, the “Specialist” was replaced by the “Designated Market Maker” (DMM). DMMs are still required to maintain a fair and orderly marketplace on the floor of the NYSE, but now they also have market maker obligations and are required to provide capital (inject liquidity into the marketplace).
A specialized portfolio offers diversified investments that are concentrated in one industry, field, or geographic area. Sometimes called a sector fund or a geographic fund. These funds are higher than normal risk.
An investor who is engaged in speculation is taking on higher than normal risks in the hope of a higher than normal return. Speculation is an aggressive investment strategy.
A type of risk that involves a chance of gain or loss. Gambling involves speculative risk. Speculative risk is not insurable.
This provision states that the policy proceeds shall not be subject to the claims of creditors of the beneficiary or policyowner, to the extent permitted by law
A spousal IRA is an IRA that is available to a spouse that has low to no earned income. Contributions are made into the account by the working spouse and grow tax-deferred until withdrawal.
When there is a non-working spouse, they can fund a spousal IRA, it is a traditional account.
The spread is the difference between the bid price and the ask price. The narrower the spread the more active the issue. The spread is sometimes called the inside market.
With a spread, the investor buys and sells the same type of options, either creating a call spread or a put spread. With a spread, both of the options contracts are on the same underlying security. A spread will have either different strike prices or different expirations.
The spread refers to the difference between what the issuer receives and the price paid by the public for a new issue.
SPX is the ticker symbol for the Standard & Poor’s 500 stock index options traded on the Cboe.
Stablecoins are cryptocurrency that aim to manage price volatility. This can be done by tracking the values of more stable assets, including fiat currencies and commodities; holding well-known cryptocurrencies as collateral; or relying on smart contracts that use algorithms to adjust the supply of the stablecoins based on market demand to keep the value stable. Stablecoins are designed to serve as a source of stored value within the blockchain ecosystem, thereby reducing the need to convert digital assets into fiat currency (which typically involves both administrative burdens and significant fees).
Standard deviation is the mean of the means. It is a statistical measurement of the total risk of an investment. The greater the standard deviation, the greater the historical volatility of the investment’s market price.
The S&P 100 index is a market-capitalization-weighted index of 100 major, blue-chip stocks across diverse industry groups. This index measures large-company U.S. stock market performance. Options on the S&P 100 Index are listed on the Cboe.
The market as a whole is the S&P 500. The S&P 500 is comprised of 500 large-cap stocks. It is a market capitalization weighted index.
The classification of a person applying for a life insurance policy who fits the physical, occupational, and other standards on which the normal premium rates are based.
In a rights offering it is the standby underwriter that is waiting in the wings, ready to sell the shares not subscribed to by existing shareholders to the general public. The underwriter receives a fee for each share that is purchased.
With statutory voting, each share of stock entitles a stockholder to one vote per director.
Stock represents ownership in a corporation. Stock may be either common or preferred. Stock is equity and is purchased by investors looking for appreciation.
A stock certificate is a document stating the number of shares of stock owned by the holder of the certificate.
A stock dividend is a dividend paid to common shareholders in the form of additional stock in the corporation rather than in cash. Preferred stock cannot pay stock dividends, only common stock can pay a stock dividend.
An insurance company owned by its stockholders. Stock insurers issue nonparticipating policies. Dividends, when paid, are paid to the stockholders, not the policyholders.
A company will choose to split its stock to pull the market price down. After a stock split, an investor will have more shares, at a lower market price per share. A stock split or reverse split does not change the amount of money the investor has in the stock.
STOLI stands for stranger-owned life insurance, it is also sometimes referenced as stranger-originated life insurance or stranger-oriented life insurance. A STOLI is a life policy in which strangers have an interest. STOLIs are illegal in many states due to a lack of insurable interest. IOLI stands for investor-owned life insurance.
A stop order is an action that the Administrator can take that would prevent the sale of a security in that state. Stop orders require prior notice to the affected parties and a hearing with a finding in law.
A straddle consists of two options, either a long call and a long put or a short call and a short put. Straddles are traded as a unit but may be exercised separately.