Flashcards
A class B share is back-end loaded (contingent deferred sales charge). Class B shares have the highest 12b-1 fees, paying the lowest dividends. Class B shares will convert to class A shares after being held for a period of time as described in the prospectus.
A class C share may be front-loaded or back-end loaded. It has a middle 12b-1 fee. It never converts to an A share.
A beneficiary designation. Instead of specifically naming beneficiaries the owner designates a class or group of beneficiaries, for example “the children of Will and Jada.”
A class of options includes all options of the same type (puts or calls) that cover the same underlying security. For example, all AAPL calls or all GOOG puts.
A closed-end investment company is a management investment company that is operated in much the same manner as a conventional corporation. The closed-end fund will issue a fixed number of shares for sale (fixed capitalization). The shares may be of several classes. Shares are bought and sold in the secondary marketplace; the fund does not offer to redeem shares.
A closing purchase is done to close an options transaction that began with an opening sale.
A closing sale is done to close an options transaction that began with an opening purchase.
A CMO is a type of mortgage backed security.
FINRA’s code of arbitration provides a method of handling securities-related disputes or clearing controversies between members, public customers, clearing corporations, or clearing banks. Any claim, dispute, or controversy subject to arbitration is required to be submitted to arbitration. FINRA members and registered representatives must arbitrate. If the customer has signed a pre-dispute arbitration agreement as part of the account opening process, then the customer must also arbitrate. There is no appeal.
FINRA’s code of procedure has the penalties for violation of FINRA rules.
Coercion is an unfair trade practice that occurs when a producer applies physical or mental force or threat of force to persuade another to buy insurance.
A coin offering is a way for developers of a digital currency to raise money. Offerings come in different formats and might be offered publicly, privately, or both. Coin offerings are also referred to as token offerings.
A coincident indicator changes along with the current phase of the business cycle. Coincident indicators include personal income and industrial production.
A coincident indicator changes along with the current phase of the business cycle. Coincident indicators include personal income and industrial production.
The percentage of costs of a covered health care service the insured pays (20%, for example) after the deductible has been met.
Coinsurance/insurance to value exists in a property policy to ensure that the insured carries adequate limits. When the coinsurance clause is met, partial losses are paid in full, up to the limit.
Cold storage is a method of storing crypto in which private keys reside in an environment that isn’t connected to the internet. Examples include storing keys on disconnected hard drives, printing or writing them on a piece of paper, or storing them on USB drives. Also, see Hot Storage.
Collateral includes assets that are set aside by a company and pledged to a lender for the time period of the outstanding debt.
A temporary change of owner’s rights, typically done to secure a loan.
A collateral trust bond is a form of secured debt that is backed by stocks and/or bonds of another corporation. The collateral is held by a trustee for safekeeping.
CDOs are debt securities backed by various types of loans, such as credit card debt, auto loans, airplane leases, other equipment leases, and other fixed-income assets. CDOs are similar to CMOs, with different types of loans backing the debt. They are highly illiquid investments. These products are very complex and not suitable for average retail clients.
CMOs are debt securities backed by fixed-rate GNMA, FNMA, and other mortgages. A CMOs is a bond with a stated maturity date. Each CMO pool is divided into portions (called tranches) based on its expected maturity date. There may be short-term, intermediate, or long-term tranches. Each tranch has its own rate of interest and payment schedule. Each tranch passes through payments to investors monthly (principal and interest). Tranches are subject to pre-payment risk, which may reduce the return. They are highly illiquid investments. These products are very complex and not suitable for average retail clients.
A combination includes positions in more than one option at the same time, on the same underlying security but different strike prices, and/or expiration months.
The combination privilege allows an investor to combine purchases within a family of mutual funds towards breakpoints and/or the right of accumulation. The fund’s prospectus would describe this privilege if offered.
A combined annuity includes the features of both fixed and variable annuities.
Commercial general liability insurance insurers against financial loss due to act or omissions of the insured which cause financial or bodily harm to others. Five forms of liability are covered: premises, operations, products, completed operations and certain limited forms of contractual liability.
Commercial multiple peril is a package insurance policy that provides both liability and property coverage for businesses and other organizations.
Commercial paper is a corporate money market instrument that consists of signed promissory notes issued by the corporation to raise short-term funds. The notes are sold at a discount with full payment on demand at maturity. Commercial paper is not required to be registered with the SEC if maturing in nine months (270 days) or less.
Commercial property coverage applies to real property (buildings, factories, and warehouses) and business personal property (furniture, fixtures, and inventory). It commonly provides time element coverage such as loss of income.
Commingling occurs when a broker-dealer mixes firm securities with those owned by their clients. It is also considered commingling when the firm mixes a client’s fully-paid securities with their margin securities.
The broker-dealer when acting as a broker charges the client a commission. The commission is the cost charged to the client for the purchase and/or sale of securities.
The head of the state’s Department of Insurance. The Commissioner may also be referred to as the Director or Superintendent depending upon the state. The Commissioner’s job is to supervise the insurance business in a state and administer that state’s insurance laws.
Table of mortality based on intercompany experience over a period of time, which is legally recognized as the mortality basis for computing maximum reserves on life insurance policies. It is the 1980 CSO Table that is currently in use.
If the insured and the primary beneficiary die as the result of the same accident the common disaster clause states that the insured died last, even if that is not true. This common disaster clause protects the rights of the contingent beneficiary.
Common stock is the basic stock issued by a corporation representing shares of ownership. Its dividend rights are subordinate to preferred stock, and its dividend is variable. Common stockholders are a residual claim on assets if the corporation should go broke.
To be legally valid a contract must be entered into by competent parties. This means that the parties understand the contract that they are agreeing to.
A complex trust is a trust that can distribute income and/or corpus in any given year, but does not have to.
Concealment is failure to disclose a material fact.
The concession is the profit on the sale of a security to the public that is paid to the selling group member. The selling group member buys the securities from the syndicate member at the public offering price minus the concession.
Concurrent review evaluates medical necessity decisions during hospitalization.
A premium receipt given to an applicant that makes a life and health insurance policy effective only if or when a specified condition is met.
Conditions in a property insurance policy outline the obligations and responsibilities of both the insurer and the insured. These provisions set forth the rules and procedures that must be followed to maintain coverage and ensure the proper handling of claims.
The conduit theory is the theory behind IRC Subchapter M. For an investment company to be “regulated” under Subchapter M, it must distribute a minimum of 90% of its net investment income to its shareholders. If it follows this 90% rule, then distributions are deemed to only pass through the company, and the distribution is not taxable to the investment company.
The confirmation is sent to the client on or before the settlement date. The confirmation includes the trade date, settlement date, type of security purchased, and any monies owed.
Consideration is an exchange of value. Consideration for the insured is the premiums paid plus the answers to the questions on the application. Consideration for the insurer is the insurer’s promise to pay. Consideration does not have to be equal.
The consideration clause is the part of the insurance contract that sets forth the initial premium payment and renewal premiums as well as the frequency of the premiums due.
A federal law that may allow an individual to temporarily keep health coverage after their employment ends, they lose coverage as a dependent of the covered employee, or another qualifying event. When a person chooses COBRA coverage, they pay 100% of the premiums, including the share the employer used to pay, plus a small administrative fee.
Constant dollars are dollars that are adjusted to show the same purchasing power from one period to another. Constant dollars are indexed for inflation.
The consumer price index is used to measure the change in the cost of a basket of goods in various cities across the U.S. over time. The CPI measures inflation at the consumer level.
A period of up to two years during which a life insurance company may deny payment of a claim because of suicide or a material misrepresentation on an application.