Beruflich Dokumente
Kultur Dokumente
Opening discretionary margin account new account form, margin agreement (hypothecation, loan
consent, credit agreement) and power attorney
Custodial accounts (UGMA/UTMA) always cash
Fiduciary who incurs losses w prudent man rule must restore those losses
JTWROS surviving member will inherit the total
JTIC (tenants in common) no survivorship rights
Regulation T
- Governed by Fed
- Loan amount of 50%
- Cash trades settle same day paid in full
Maintenance Rules:
- 50% long MV
- greater $2.5 or 100% of MV for short stock < $5
- greater $5 or 30% MV for short stock > $5
- greater 5% principal or 30% for short bond
- LEAPS (9months) 75% cash
- Options 100% cash
- Short equity and narrow index options 20% cash
- Short broad based index options 15% cash
- Short interest rate options 10% cash
Treasury 3% initial margin; IG/Convertible bonds 30% margin
Margin account cannot be used for IPO stock 30 days or stock under $5
SIPC provides protection if broker dealer fails of $500k per account
Bank qualified muni issue up to $10M, commercial banks deduct 80% of interest cost paid to depositors
of the funds
Regulation NMS prohibit trade through protected quote (inside market)
Rule enforcement SEC/FINRA for broker-dealers
Comptroller currency for federal banks
FRB for member banks
FDIC for member banks
Annuity withdrawal before 59.5 = 10% penalty
IRA withdrawal must begin at 70.5 or be subject to 50% penalty
o Roth IRA no required minimum withdrawal
Withdrawal from tax deferred account ALWAYS at ordinary income rate
o After tax contributions have return on capital
If a net loss is established, can only deduct $3k from ordinary income in 1 tax year
ETN subordinate debt linked to perf of currency, commodity, index & does not pay coupon
Accrued Interest
Corporate / munis use 30/360
Govt use actual/365
CMO
PAC (planned) tranche directs irregularities towards support tranches (most safe, receive principal first)
Tac (targeted) tranche sinking fund but also callable
Non PAC tranches (support)
Z tranche (accrual) pay no interest until lock out period ends, last tranche usually 20yr maturity
Volume
Restricted Share
Unregistered w/ SEC
- Private placement / Reg D
- Employee stock benefits
6months for SEC registered
12months for Non-SEC
N/A
Public
Information
Notice of Sale
Description:
Holding period:
Control Shares
Insiders (execs, board, 10%+
shareholders)
N/A
Greater of 1% outstanding & avg 4 week
trading volume
N/A
Must file 144 and then 90 day window,
Excempt if 5000 shares or less worth
less than $10k
Portal Market (rule 144a) = able to sell before a year to a qualified institutionalbuyer ($100mm+ in assets)
Sales charge is the difference in bid & offer, expressed as a % of the offer
Margin
Long margin account formula
Long market value (LMV) debit record (DR) = equity (EQ)
Short margin account formula
Short market value (SMV) + equity (EQ) = credit record (CR)
Bonds
U.S. Bonds are quoted in 32nds (95.8=95 and 8/32) can be shown as 95:08 or 95-08)
T-bills (6m or less) not quoted in 32nds
Bond trading at Premium: Nominal, Current, YTM, YTC
Libor = Average fed fund rate of foreign banks lending money to each other in U.S.dollars
REPO (repurchase agreement) = overnight loan (up to 90 days) that is secured by T-bills as collateral
(fed lends banks)
Reverse Repo (matched sale) = banks lend to fed and hold T- Bills as collateral
Interbank market= unregulated market for foreign currency transactions
Rules
Exemptions from listing with the SEC= U.S. securities+ muni + commercial paper +non-profit +banks
issues+ insurance and annuity policies + rule 147 offerings (onlywithin corporations own state) + reg A
offering ($5million or less within 12 months) + reg D (private placement/up to 35 unaccredited investors
and unlimitedaccredited)
Accredited investors= Financial institutions + insiders and family or owners of more than %10 + annual
income over 200,000/ (300,000 joint) + Net worth over a million + Corporation worth over 5 million
Green shoe clause= Underwriters can indicate interest for up to %15 more thansecurities available
Takedown = Profit for syndicate members
Reallowance = profit of non-syndicate sellers
Concession = Profit for selling group member
Managers fee= Fee received by managing under writer for a sale by anyone
Spread= Takedown+ Managers fee
Chapter 4
Unlisted Securities = only trade on the OTC
Muni +Govt bonds always trade on the OTC
Within the secondary markets:
1)First market= listed securities trading on an exchange
2)Second market= unlisted securities trading OTC
3)Third Market= Listed security trading OTC
4)Fourth market= Trading of securities between institutions without using a broker-dealer
Instinet = reporting system for the fourth market
Broker (agent) = does not use own inventory to execute trades
Dealer (principal/market maker) = uses own inventory
Stopping Stock= Specialist guaranteeing a certain price (only done with public orders)
Stops = immediately executed (becomes market order when triggered)
Limits= Specific price or better
Stop limit = when entered starts as a stop order and when triggered becomes a limit order (wont execute
until at a better price than order)
Buy limit and Sell stops (bliss) are reduced on dividend days (SLoBS remain the same)
Inside the market = highest bid and lowest ask (does not include stops)
Size of the market= number of shares available inside the market