Flashcards
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.
A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent, or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has more training in a specific area of health care.
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.
A specific policy provides coverage for a specific property, versus blanket coverage which provides single coverage for multiple properties or assets.
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.
Speculative risk involves chance of gain or loss. Speculative risk is not insurable. Gambling and investing involve speculative risk.
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).
A type of dental plan that’s not included as part of a health plan.
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.
In a stated or agreed value policy the policy limit is determined in advance. How much is paid in the case of a loss is known to the insured. There is no deduction for depreciation. Fine arts floaters, inland marine on jewelry, these are both examples of stated or agreed value policies.
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.
Straight preferred stock is preferred stock with no special features. Straight preferred stock is also called non-cumulative preferred.
When a security is held in street name it is held in the name of the broker-dealer and not the individual client. Securities are often held in street name to facilitate their trading.
Strict liability, also called absolute liability, there is no requirement to establish negligence, lack of care or recklessness. If a failure to act or specific actions lead to losses, injury or damages, the defendant can be held liable for a strict liability tort.
The strike price on an options contract is the exercise price. It is the price the owner of a call can buy shares at. It is the price that the owner of a put can sell shares at.
Subchapter M is a part of the Internal Revenue Code setting out the tax treatment of a regulated investment company. It is sometimes referred to as the conduit theory or the 90% rule.
A subordinated debenture is a debenture that is junior to regular debentures in a corporate liquidation.
Subrogation is a situation where an insurer, on behalf of the insured, has a legal right to bring a liability suit against a third party who caused losses to the insured.
The classification of a person applying for a life insurance policy who does not meet the requirements set for the standard risk. An additional premium is charged on substandard risks to provide for the probability that such a person will have a shorter life span than a standard risk.
A successor firm takes over for another firm. Successor firms must file their own registration, either Form BD or Form ADV, but do not pay a filing fee until their first renewal. They are allowed to use the unexpired portion of the previous firm’s filing fee.
Life insurance policy wording that specifies that the proceeds of the policy will not be paid if the insured takes his or her own life within a specified period of time after the policy´s date of issue.
FINRA rule 2111 is the suitability rule. The suitability rule requires that a firm or associated person have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. The customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation. A broker’s recommendation is the triggering event for the application of this rule. The three main suitability obligations are reasonable-basis, customer-specific, and quantitative suitability.
An easy-to-read summary that helps a person to make apples-to-apples comparisons of costs and coverage between health plans. Options can be compared based on price, benefits, and other features that may be important. The “Summary of Benefits and Coverage” (SBC) is made available when a person shops for coverage on their own or through their job, renews or changes coverage, or requests an SBC from the health insurance company.