Flashcards
The Uniform Practice Code is the FINRA code designed to make uniform the customs, practices, and trading techniques among members in the securities business, such as regular way settlement.
The Uniform Securities Act is a state’s securities law. State securities laws are also called blue-sky laws. States have the option of adopting the legislation in its entirety or adapting it as needed.
Commonly referred to as the common disaster clause this Act says that when the insured and the primary beneficiary die from the same accident it is assumed the insured died last.
Insurance contracts are an example of a unilateral contract. This means they are one-sided. So long as the life insurance premium is paid, the insurance company promises to pay the beneficiary the death benefit if a certain event occurs (the insured dies). With a unilateral contract only the insurer makes a legally enforceable promise to pay covered claims.
A unit is the basis of the valuation of an annuity, similar to a share of a mutual fund. During the pay-in, the annuity is valued in accumulation units. During pay-out, the annuity is valued in annuity units.
A unit investment trust is an investment company that invests in a fixed portfolio of securities. An investor will purchase units in the trust representing an undivided interest in the securities held. A UIT has no management fee or board of directors.
A unit refund life annuity is a life annuity that provides that a guaranteed number of units will be paid. If the annuitant dies before they are paid, the remaining units are paid to a beneficiary.
A type of life insurance that provides a guaranteed amount of life insurance (subject to adjustment by the insured), but with premiums and cash values that are based upon prevailing interest rates in the economy, also known as interest-sensitive whole life. Universal life insurance has a flexible premium.
An unsecured bond is not secured by the pledge of some specific asset or assets of the issuing corporation. Unsecured bonds are also known as debentures. Unsecured bonds represent a higher level of risk to the investor than a secured bond so their nominal yields will be correspondingly higher.
In an unsolicited order the client places the trade. Unsolicited orders are initiated by the client.
Unsystematic risk is stock-specific risk. Unsystematic risk is also called non-systematic risk. Unsystematic risk is reduced by diversification. Business risk, credit risk, legislative risk, political risk, and regulatory risk are some of the types of unsystematic risks.
Care for an illness, injury, or condition serious enough that a reasonable person would seek care right away, but not so severe it requires emergency room care.
The USA PATRIOT Act requires financial institutions to establish anti-money laundering programs, which at a minimum must include: the development of internal policies, procedures, and controls; designation of a compliance officer; an ongoing employee training program; and an independent audit function to test programs. It requires the filing of currency transaction reports and suspicious activity reports with FinCEN (the Financial Crimes Enforcement Network, a division of the Department of the Treasury).
The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.
The review process used by insurance companies to reduce healthcare costs by avoiding unnecessary care. Utilization management includes three basic categories: prospective review, concurrent review, and retrospective review.
To vacate means to cancel or annul a judgment or penalty.
A variable annuity is a type of annuity issued by life insurance companies. Like fixed annuities, variable annuities guarantee monthly payments for life once the contract is annuitized. The insurance company accepts the mortality risk for the client. However, unlike fixed annuities, the variable annuity contract does not guarantee the amount of the annuity payment or the performance of the account. The annuitant accepts the investment risk, not the company.
A type of annuity contract in which benefits and cash/surrender values vary in accordance with the investment experience of various types of securities (typically, shares in mutual funds) held by the insurer in the separate account. The rate of return in the separate account is variable. Variable annuities are considered to be securities. Agents (producers) marketing them must be registered with FINRA. Generally, producers will pass the Securities Industry Essentials Exam (SIE) and the Series 6 top-off to become registered with FINRA. Additionally, a life insurance license is needed. Variable annuities have tax-deferred earnings during the pay-in period. Most variable annuities are non-qualified, funded with after-tax dollars.
A form of life insurance, derived from whole life insurance, but without the guarantees, in which benefits and cash/surrender values vary in accordance with the investment experience of various types of securities held by the insurer in the separate account, on the same basis as variable annuities. Variable life is considered to be a securities product. Agents (producers) marketing them must have passed the SIE and either Series 6 or 7 and be registered with FINRA. In addition, a life insurance license is required. Variable life has a fixed (level) premium. The rate of return in the separate account is variable.
A type of life insurance combining the features of both variable life and universal life. A variable universal life policy is the only life insurance policy that allows the insured to self-direct funds in the separate account. Variable universal life has a flexible premium.
Viatical settlements involve the sale of an existing life insurance policy by a viator (person with a life-threatening or terminal illness) to a viatical settlement company in return for a cash payment that is a percentage of the policy´s death benefit.
A vertical spread is either the purchase and sale of two calls or two puts with different strike prices (same class, same expiration month).
Vesting refers to ownership. An employee vests immediately in their contributions into a qualified plan. They will vest in the employer’s contribution over a period of time. Some qualified plans require immediate vesting of employer contributions (SIMPLE), but many have a vesting schedule to encourage employee retention.
Ownership of contributions made into a qualified plan. A participant vests in their contributions immediately. When they vest in the employer contributions depends upon the type of plan and ERISA requirements.
The visible supply is the list of new municipal offerings announced for sale within the next 30 days.
A health benefit that at least partially covers vision care, like eye exams and glasses. All plans in the Health Insurance Marketplace® include vision coverage for children. Only some plans include vision coverage for adults. A stand-alone vision plan can be purchased by an individual to reduce vision care expenses.
Volatility is the magnitude and frequency of price changes within the securities industry over a given period of time.
Volatility is the magnitude and frequency of price changes within the securities industry over a given period of time.
A voting trust certificate is a certificate that is issued by the trust to the beneficial owners of the voting trust. It is a type of security that is considered liquid.
The waiting period, or elimination period, is the amount of time that a person is unable to work before the coverage kicks in. The waiting period begins when the person meets the policy’s definition of totally disabled. The longer the waiting period, the lower the premium.
The time that must pass before coverage can become effective for an employee or dependent who is otherwise eligible for coverage under a job-based health plan.
A voluntary giving up of a legal, given right.
If the underwriter approves an incomplete application the insurer is waiving their rights to contest a claim related to whatever was left blank (doctrine of waiver and estoppel).
The waiver of premium rider on a life insurance policy waives the premium in the event the owner of the policy becomes totally disabled, keeping the life insurance policy in force. When the insured meets the policy’s definition of total disability, a six-month waiting period begins. This waiting period acts like a deductible. If the insured satisfies the waiting period the insurer will return the premiums paid to the insured, and then waive the premiums going forward for as long as the insured is totally disabled.
Relieves the insurer of liability, or reduces the liability, for loss caused by war.
A warrant is a stock purchase option similar to rights because it allows the holder to purchase stock at a predetermined price. Warrants are usually attached to bonds to make them easier to sell (sweeteners). Warrants are long-term options, expiring in up to 30 years.
A warranty is a guarantee of truth. Applicants cannot be asked to warranty their health.
A wash sale occurs when the investor sells a security at a loss but has purchased substantially identical securities within a certain time period. The IRS will disallow a loss if the investor repurchases substantially identical securities within 30 days before or after the sale of the security in which the loss was claimed, for a total of 61 days.
A type of life insurance that provides a guaranteed death benefit at a guaranteed flat premium and that accumulates cash value that may be borrowed against.
The Wilshire 5000 is the broadest U.S. index.
Some mutual funds will offer withdrawal plans to clients whose account balances meet a minimum requirement. With a withdrawal plan, the client requests the systematic withdrawal of his or her account periodically. Withdrawals may be based on a fixed dollar amount, a fixed number of shares, a fixed percentage, or a fixed period of time. A withdrawal plan is different from an annuity in the fact that the client may outlive the payments.
An insurance plan that employers are required to have to cover employees who get sick or injured on the job.
Working capital is a dollar amount that is found by subtracting a company’s current liabilities from its current assets. Working capital is not good for comparison purposes. It is a measurement of liquidity.
A wrap account is a client account that is charged one fee for both transactions and advice. When an investment adviser charges a wrap fee they must prepare Appendix 1 of Form ADV.
A wrap fee program is one in which one fee is charged for both the transaction costs and the investment advice given. When an investment adviser has a wrap fee program it must deliver Appendix 1 of Form ADV to customers of the program.
XMI is NYSE Arca’s major market index (20 blue-chip industrial stocks).
Yield is the rate of return on an investment, usually on an annual basis.
The yield curve is a plot of the yields of debt instruments of varying maturities, starting with short-term, then mid-term, and lastly long-term debt.
The yield spread is the difference in the yield that two distinct types of issuers must pay when selling debt of the same maturity. The yield spread is also referred to as the credit spread. Commonly the yield spread looks at the yields on corporate debt versus U.S. government debt, of the same maturity.
When an investor purchases a callable bond in the secondary market that is trading at a premium the most important yield to consider is yield to call (it is called yield to worst in this situation).