Flashcards

An exchange traded fund (ETF) is a type of investment company that may track an index or may be actively managed. The ETF trades in the secondary market, at the market price, which may be more, less, or equal to the value of the underlying assets. ETFs may be shorted, purchased on margin, and may even have options that are written on them.

Health care services that a health insurance plan doesn’t pay for or cover.

An exclusion is an event (peril, accident, occupation, avocation) that an insurance policy will not cover.

The exclusion allowance is the amount of money that the employer may withhold for the employee for the purchase of a (TSA) 403b tax-sheltered annuity.

Exclusions in a property insurance policy delineate the specific risks or perils that are not covered by the insurer.

Executive bonus life insurance is a type of group life insurance product offered to individuals in C-suite positions, such as chief executives, operations executives, or chief financial officers. Executive bonus life insurance enables a business to provide life insurance to a given key employee or high-performance employees in a tax-advantaged way. The premium paid by the business for executive bonus life insurance is tax deductible so long as the bonus is considered reasonable compensation. The policy is owned by the executive. The key employee names the beneficiary and can access the policy’s cash value.

The executor is the person named in a will to settle the financial affairs and distribute the assets of a deceased person.

An exempt security is a security that may be sold without registration, it is exempt from the Securities Act of 1933 and/or the Uniform Securities Act. U.S. Government securities and municipal securities are both exempt securities. Exempt securities are not required to file sales and advertising materials.

: An exempt transaction is a transaction that does not require registration or the filing of a registration statement. Exempt transactions include private placements, fiduciary transactions, unsolicited transactions, and institutional transactions.

Exercise limits for options are the same as the stock’s position limits, so they will vary depending on the capitalization of the company and the volume of shares traded in the past six months. For the largest stocks, no more than 250,000 contracts of the same class may be exercised within 5 consecutive business days.

The exercise price is the price found in an option contract or a warrant. On a call, the owner can buy shares from the seller at the exercise price. On a put, the owner can sell shares to the seller at the exercise price. The exercise price is also known as the strike price.

An expansion is also called a recovery. During an expansion, there is growth in the economy. It is one of the four phases of the business cycle. Expansions are followed by a peak and preceded by a trough.

Expansionary monetary policies are designed to grow the economy (get the economy out of a contraction). Expansionary policies include lowering interest rates, lowering banks’ reserve requirements, and buying U.S. government bonds. Expansionary policies increase the money supply and are used to fight deflation.

Your policy’s share of the company’s operating costs; fees for medical examinations and inspection reports, underwriting, printing costs, commissions, advertising, agency expenses, premium taxes, salaries, rent, etc. Such costs are important in determining dividends and premium rates.

The expense guarantee is part of a variable annuity contract that guarantees that the amount of the net annuity payment will not be reduced by increased operating expenses of the company.

The expense ratio of a mutual fund takes the fund’s operating expenses divided by the net asset value of the fund. Actively managed funds have higher expense ratios than index funds due to the higher management fee paid to the investment adviser.

Monthly equity, index, and cash-settled currency options expire on the third Friday of the expiration month.

: In 2016 NASAA adopted The Model Act to Protect Vulnerable Adults from Financial Exploitation. The Act gives industry participants and state regulators new tools to help detect and prevent the financial exploitation of vulnerable adults.

In insurance, exposure is a measure of the potential risk faced by an insurance company as a result of their normal business operations – namely, selling insurance policies. When an insurer sells a policy, they must cover insured losses that fall within the terms and conditions of coverage.

Express authority in insurance refers to the explicit powers and permissions granted to an agent (producer) through a written agreement. It outlines the agent’s scope of authority and activities they are authorized to undertake on behalf of the insurer.

One of the three non-forfeiture options. Extended term may be chosen by the insured. It is the automatic option when a life insurance policy with cash value has lapsed and the insurer has not heard otherwise from the owner. The extended term policy will have the same face amount as the original whole life insurance policy. How long the term is will be a function of how much cash value was there, as well as the age, and gender of the insured.

The amount stated on the face of the policy that will be paid in case of death or at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.

Face-amount certificate companies are a type of investment company. The FACC issue certificates, usually purchased on an installment basis at a discount, that mature after a period of years for the face amount.

The Act (Title VI of the Consumer Credit Protection Act) protects information collected by consumer reporting agencies such as credit bureaus, medical information companies, and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.

Misstating an insurance company’s financial position is an unfair trade practice.

False or deceptive advertising is an unfair trade practice.

A feasibility study considers the need for the municipal project.

A federal covered adviser is an investment adviser that is required to register at the federal level, with the SEC. Federal covered advisers are exempt from state registration.

A federal covered security must be registered federally but is exempt from state registration. Securities listed on an exchange and mutual fund shares are both federal covered securities.

The FDIC is a federal agency that provides deposit insurance for member banks. The FDIC protects the clients of insolvent banks.

Banks lend their excess reserves to other member banks, overnight, to meet reserve requirements, charging the federal funds rate. The federal funds rate is the most sensitive indicator of interest rate direction. The Federal Reserve sets a target for the federal funds rate.

Freddie Mac is a publicly-traded, government-sponsored enterprise. FHLMC was created in 1970 to expand the secondary market for mortgages in the United States. Freddie Mac issues corporate debt securities that are backed by loans for residential mortgages and are fully taxable at all levels of government.

Fannie Mae is an agency of the U.S. government that buys FHA and VA mortgages, then issues debt backed by the pools of mortgages. Interest paid by Fannie Mae is fully taxable at all levels of government. The bonds issued are book-entry and non-callable.

The Federal Reserve Board is a federal governmental body responsible for the country’s monetary policy. There are seven members on the FRB, each appointed by a President and confirmed by the Senate.

A fiduciary is a person in a place of financial trust.  The custodian of a minor’s account is a fiduciary. The trustee of a trust is a fiduciary. Section 404(c) of ERISA, Safe Harbor Provisions, defines a fiduciary as a person who can exercise discretion or control in administering and/or managing/controlling a plan’s assets.   Investment advisers must act in a fiduciary capacity in making recommendations to clients, fully disclosing all conflicts of interest.

A fill-or-kill order instructs the broker to fill the entire order right away, and if it can’t be filled in its entirety immediately, it must be canceled.

The final prospectus must be delivered to a client who is buying a new issue. It includes the price of the securities, the delivery date, and the underwriting spread.

Financial risk is a type of nonsystematic risk related to the financial health of the company that issued the security.  Financial risk is also known as credit risk or default risk.

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms and registered securities representatives doing business in the United States.  FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry.

FINRA Bylaws are the body of laws that describes how FINRA functions, defines its powers, and determines the qualifications and registration requirements for broker-dealers and registered representatives.

FINRA’s Department of Enforcement is a committee appointed from among the members of the FINRA that acts in accordance with the FINRA’s Bylaws, Rules of Conduct, and Code of Procedure to handle trade complaints.

A firm commitment is the most common type of underwriting agreement. In a firm commitment, the underwriter purchases the entire issue at a guaranteed specific price. The underwriter acts as a dealer and assumes the risk of resale.

A firm quote is an actual price at which a trading unit of the security may be bought or sold by dealers. The trading unit is 100 shares of stock or five bonds.

First in, first out is an accounting method in which the assets sold are assigned a cost basis from the first purchases, generally resulting in the largest gain, thus the largest tax bill due.

Fiscal policies are those policies set by the President and Congress designed to control the economy. Fiscal policies include tax laws and budgetary changes (government spending).

A fixed annuity promises to pay the annuitant a minimum guaranteed interest rate. Once annuitized a fixed annuity promises to pay a guaranteed income stream for life. Usually purchased to supplement retirement. Most annuities are non-qualified, funded with after-tax dollars.

A fixed annuity is a contract in which the insurance company makes fixed (guaranteed) dollar payments to the annuitant for the term of the contract (usually until he or she dies). The insurance company guarantees both the interest rate paid and the principal amount.

Fixed assets are those assets that have a physical quality. Fixed assets include land, building, and machinery. Generally, fixed assets are written down over time through depreciation, depletion, or amortization, depending upon the asset and applicable tax rules.

Fixed-dollar option is a mutual fund withdrawal plan pay-out option under which the client receives payment of a predetermined dollar amount monthly, for an undetermined time.

Fixed-percentage option is a mutual fund withdrawal plan option under which the client receives a payment equal to the liquidated value of a set percentage of the mutual fund account, monthly, for an undetermined time.