Trading & Markets
This market is where previously issued securities trade between investors.
What is the secondary market?
This account type belongs to one individual.
What is an individual account?
This IRA type allows anyone with earned income to contribute.
What is a traditional IRA?
This account type requires customers to pay the full purchase price.
What is a cash account?
This rule requires mutual funds to deliver a prospectus before or at confirmation.
What is the prospectus delivery requirement?
This type of firm maintains an inventory to buy and sell securities in the OTC market.
What is a market maker?
In this joint account, a deceased owner’s portion transfers to their estate.
What is Joint Tenants in Common (JTIC)?
This type of IRA allows tax-free withdrawals after age 59½ if rules are met.
What is a Roth IRA?
In this account type, investors borrow money from a broker-dealer.
What is a margin account?
This rule restricts selling just below a breakpoint to earn more commission.
What is a breakpoint sale violation?
This order is executed immediately at the best available price.
What is a market order?
This custodial account allows one minor and one custodian only.
What is a UGMA/UTMA account?
These required distributions begin at age 73 for traditional IRAs.
What are RMDs (Required Minimum Distributions)?
Regulation T requires this percentage down for a margin purchase.
What is 50%?
This regulation governs the initial issuance of securities to the public.
What is the Securities Act of 1933?
This order becomes a market order once a specified trigger price is reached.
What is a stop order?
This trust terminates when the grantor dies.
What is a revocable trust?
This employer plan allows employees to make pre-tax salary contributions.
What is a 401(k)?
This signed document is required before margin trading may occur.
What is the margin agreement?
This rule limits how much a mutual fund may charge in distribution (12b-1) fees.
What is the FINRA 12b-1 fee limit?
These systems allow institutions to trade large blocks without showing quotes publicly.
What are dark pools?
This account requires a corporate resolution to verify trading authority.
What is a corporate account?
Withdrawing retirement funds early usually results in this penalty.
What is a 10% early withdrawal penalty?
This is the minimum equity that must remain in a margin account.
What is the maintenance requirement?
This disclosure tells customers that margin accounts involve risk and may lose more than invested.
What is the margin risk disclosure statement?
This type of system electronically matches buy and sell orders anonymously.
What is an ECN (Electronic Communication Network)?
These accounts are used to hold employee retirement-plan assets.
What are qualified retirement plan accounts?
These IRA contributions are not tax-deductible, but qualified withdrawals are tax-free.
What are Roth IRA contributions?
This account type charges one bundled fee for advisory services and transactions.
What is a wrap account?
This federal entity insures bank deposits up to $250,000.
What is the FDIC?
This market center allows exchange-listed securities to trade OTC.
What is the third market?
These accounts require all investments to be suitable due to fiduciary responsibility.
What is a custodial account?
This type of plan guarantees a specific payout amount at retirement.
What is a defined-benefit plan?
This type of order is placed entirely by the customer without firm input.
What is an unsolicited order?
This rule allows the sale of restricted stock under specific holding-period and volume limits.
What is SEC Rule 144?
This describes a situation where a customer sells borrowed shares hoping to buy them back lower.
What is a short sale?
This account type is inappropriate for selling uncovered call options.
What is a fiduciary account?
This rollover must be completed within 60 days or it becomes taxable.
What is an indirect rollover?
These three items must be decided by the customer to avoid a discretionary order:
What are action, asset, and amount?
This act regulates mutual funds, UITs, and closed-end funds.
What is the Investment Company Act of 1940?
Short 2 XYZ Feb 80 Put
"Selling the right to sell 200 shares of XYZ stock at $80 strike price with an expiration date of February."
These three elements—action, asset, and amount—must be determined by the client.
What are the three elements required to avoid discretion?
This rule says an IRA can only be rolled over once every 12 months.
What is the one-per-year rollover rule?
This agreement allows a broker to lend a customer’s securities for short sales.
What is the loan consent agreement?
This rule ensures investors receive fair pricing when buying or selling municipal securities.
What is the MSRB fair pricing rule?
Long 8 ANC Aug 19 Call
"Buying the right to buy 800 shares of ANC stock at $19 strike price with an expiration date of August."
This trust is created after a person’s death and holds assets for distribution.
What is a testamentary trust?
This retirement plan combines employer and employee contributions, often for small businesses.
What is a SIMPLE IRA?
This notice is issued when equity falls below maintenance minimums.
What is a maintenance call?
This federal act established FINRA’s authority to regulate broker-dealers.
What is the Securities Exchange Act of 1934?