Reg D Rule 506 = Unlimited amount of money can be raised as long as the private placements are

offered to max 35 non-accredited investors

Book Value (Common Stock) = Hypothetical liquidation value if assets sold, liabilities paid, and
obligations settled

Right of Free Transfer = You can gift, sell, etc. negotiable securities with no restriction

Hedge Fund Advisor SEC Registration Requirements = Over $150M AUM = SEC Reg needed

Under $150M AUM = SEC Reg not required

Intrinsic Value = Amount an option is in-the-money

Time Value = Amount a buyer will pay over intrinsic value in hopes of further appreciation. Decreases as
expiration date nears

Adjustment Bond = Same as Income Bond. No guarantee of any payment

GNMA Denomination = Multiples of $25,000. Represents undivided interest

FNMA Denomination = Minimum $1,000. Represents undivided interest

Municipal Securities Underwriting = Disclosure docs sent to SEC, UW performs due diligence, final official
statment provided to MSRB one day after issuer sends it to UW via EMMA

Official Notice of Sale = Municipality wants to raise money, this document alerts investment bankers to
place bids to underwrite the offering

Tax Equivalent Yield = Municipal Rate / (100% - Tax Bracket)

Net Yield = Corporate Rate x (100% - Tax Bracket)

Legal Opinion = Makes a municipal bond tax-free

FNMA And FHLMC = Publicly traded companies

Investment Company Criteria = 1. In the business of managing a portfolio for investors OR has 40% of
assets held in securities

2. $100K in net assets

3. Clearly defined investment objectives

4. At least 100 shareholders

*Investors do not have beneficial interest

UIT = "Buy and Hold" that dissolves on a specified date. Shares of beneficial interest issued at $1,000 per
share and redeemable at NAV with the issuer

"75-5-10" Rule = Diversified fund requirements. Of 75% of assets, no more than 5% in one stock and no
more than 10% ownership in a company

Program Disclosure Documents = Used for sale of Municipal Funds (529, ABLE, and LGIP)
ETF Differences = Trade all day, can be UIT or open-end funds, can be bought on margin and sold short,
charge commission instead of sales charge

Interval Funds = Closed-end, do NOT trade on exchanges, can issue new shares, illiquid, higher fees,
invest in a wide range o assets

Open-End Fund Criteria = 1. Minimum $100K

2. Minimum 100 investors

3. One class of security issued

4. 1:3 Debt ratio

5. Clearly defined objectives

Majority of BOD must be ____ = Disinterested parties

12b-1 Fee = .75% Max towards marketing and distribution

.25% Max towards shareholder services

Reviewed quarterly, approved annually

Investment Advisory Contract = Initial contract is 2 years long, and a new contract is renewed annually
by majority shareholders or majority disinterested board members

Custodian Functions = Safeguard fund assets

Collect interest/dividends

Payable/receivable functions for securities transactions

Transfer Agent Functions = Perform record keeping functions

Name and address changes

Cancels/issues shares

Distribution of capital gains or dividends

Shareholder mailings

Fund Operating Expenses = Board of directors' stipends

Investment adviser management fees

Custodial services

Transfer agent fee

12b-1 fee

Administrative fee, legal, accounting, and day-to-day

Mutual Fund UWs must be ______ = FINRA members who form selling groups only with FINRA member
BDs

Equity Fund = Common and preferred stock

Large-Cap = $10B+ Market Cap

Mid-Cap = $2B to $10B

Small-Cap = $300M to $2B

Growth Fund = Capital appreciation

Blue-Chip Fund = Large-Cap stocks only

Aggressive Growth Fund = Small-Cap with high potential

Value Fund = Large-Cap believed to be undervalued

Blended Fund = Value and growth combined

Equity Income Fund = Preferred and common stock with long history of paying dividends

Special Situation Fund = Looks for companies undergoing profit inducing change

Option Income Fund = Writes covered calls on its portolio

Tax-Free Money Market Fund = Short-term municipal debt

Institutional Money Market Fund = $25M minimum investment and floating NAV

Retail Money Market Fund = "Fixed" NAV at $1

Balanced Fund = Fixed assets allocation that seeks more conservative approach. Moderate risk, fixed
income, and capital appreciation

Maximum/minimum exposure of 50-70% equity and 30-50% debt

Index Fund = Low portfolio turnover

NAV= = (Assets - Liabilities) / Shares Outstanding

NAV is NOT Affected by ______ = Sale or purchase of securities

Sales Charge = Always a percentage of POP. Maximum 8.5%

Class A Automatic Reinvestment = Typically are excluded from sales charge

Combination Privilege = Can combine fund values of all related funds to qualify for breakpoints

Qualified Fund Group Requirements = 10 members

Been in existence for at least 6 months

A purpose other than the purchase of mutual fund shares at a discount

Agreed to include fund sales publications in mailings to members

Does NOT include investment clubs

Voluntary Accumulation Plan = Often waives investment minimums

Dollar Cost Averging = Average cost per share is less than average price per share

Mutual Fund Market Timing = Purchasing/redeeming mutual funds to profit from differences between
the daily closing NAV and the next days' NAV due to events that occur in between calculations. Short
term redemption fees try to curb this prcatice

Reinstatement Provision = Can replace withdrawn money in to a mutual fund with no sales charge
within 30 days

Subchapter M = IRS says 90% of NII from RICs must be passed on to investors to avoid double taxation

Dividend Taxation = Taxed in year paid to investor

Qualified = preferential rate

Ordinary = ordinary income rate

Corporate Dividend Exclusion = Corporations that invest in the stocks of other domestic corporations
can exclude 50% of the dividend income derived from those holdings from their corporate income tax
liability

Mutual Fund Profile = Summary prospectus

Policy Loan = Policy loans from the cash value do not need to be repaid, but interested must be paid
each year the amount is missing

Maturity of Whole Life = Set to mature at 100. If still alive when the policy matures, you receive the face
value of the policy and the contract ceases

Increased Death Benefit (Universal Life) = Must medically qualify and mortality expense charge will
increase

Variable Policy Valuations = Separate account = 4PM EST

Cash value = monthly (at least)

Death benefit = annually

Free Look Provsion = Full refund of variable insurance sales within 45 days from date of application or 10
days of receipt, whichever is later

Conversion/Contract Exchange = Two year window to change variable to whole life without evidence of
insurability

Premium Deductions = Administrative fees

State premium taxes

Sales charges (maximum 9%)

Separate Account Deductions = Expense risk fee

Mortality risk fee

Investment management fee

Modified Endowment Contract = Fails 7 pay test. Any loan/surrender/withdrawals before 59 1/2 are
subject to ordinary income tax and a 10% penalty

Life Income Pure = Paid until death. Highest payment

Life Income Period Certain = Paid until death or until a period selected. If dead before the period ends, a
beneficiary will receive the remaining period's income

Life Income with Refund = Paid until death. If on death, payouts do not equal premiums paid in to the
account, the beneficiary will receive the lump sum remainder

Joint and Last Survivor = Income paid to two annuitants. Benefits continue to surviving annuitant until
their death

Waive of Surrender Charge = No fee is annuitant becomes disabled or confined to a nursing home

Non-Qualified Annuity Withdrawals = Last in first out (LIFO). Earnings taken first, subject to ordinary
income tax. Distributions taken before 59 1/2 will have a 10% penalty on the taxable portion

Exclusion Ratio = Determines how much of each payment is excluded from taxation.

Annuity Contract Death Benefit = Not entirely tax free like a regular insurance contract

Office of Supervisory Jurisdiction (OSJ) = RR must send annuity application to OSJ for approval within 7
business days of receipt

Simplified Employee Pension (SEP) = Tax-deferred plan with a higher limit than a 401(k) and the option
for an employer to contribute

SIMPLE Plan = For 100 or fewer employees with no other plan. Employer match is required

Keogh HR-10 = Unincorporated self employed with 20% max contribution at the same rate for owner
and employer

ESOP = All or some of employer contribution goes towards purchasing company stock. Stock can be held
in a trust as well

Defined Contribution Plan Distribution options = Lump sum, keep account open, fund a annuity for
guaranteed income, IRA rollover

457 Plan = Non-qualified deferred compensation plans for governments and tax-exempt companies
(churches excluded). No penalty if separated from service

IRA Deductibility = No employer sponsored plan - deduct 100%

Employer plan - deductible subject to AGI limit. Past the AGI limit is post tax contributions distributed
tax free

IRA Prohibited Investments = Gold, foreign currency, life insurance, collectibles

IRA RMD Calculation = Based on life expectancy and account balance

IRA Transfer = IRA funds moved from one trustee directly to another trustee. No tax implications of
transfer limit

IRA Rollover = Moved from one IRA to another by physically taking control of assets. If not moved in 60
days, it is a taxable event subject to 59 1/2 penalty. 20% employer withholding applies to lump sum
employer plans

Associated Persons Account Opening = Prior written consent required by employing BD and subject to
duplicate account confirmations and statements upon request

Associated Persons Exempt Accounts = UIT, MFs, variable annuities, life insurance, municipal fund
securities, 529 plans

Unincorporated Associations = 501(c)(3) orgs

Margin Account Documents = Margin agreement, hypothecation agreement, margin risk disclosure
document

Prime Brokerage Account = $500,000 minimum in equity required. Consolidates multiple brokerage
accounts. For hedge funds and ultra high net worth clients

Penny Stock Compensation Disclosure = BD must disclose in writing any compensation received in
connection to penny stock at or prior to written confirmation of the sale

Automated Execution System = Handles best execution

Cancel and Rebill = Order ticket has to be adjusted or changed

Customer Account Transfers = Handled by ACATS after a TIF is submitted by the customer. Delivering
firm validates or takes exception to the instructions within three days. Receiving BD can accept or deny
the transfer

Interactive Communication = No pre-approval or FINRA file required

Static Communication = Principal pre-approval and possible FINRA file

Variable Product Advertising = Illustrations can't show more than 12% return, must show no growth
scenario, no guarantees can be made, make aware of all risks

Requirement for Investment Analysis Tools = FINRA does NOT endorse them. Must be made available to
to FINRA 10 days after first use

Requirements for Bond Fund Volatility Ratings = Can only be in a supplemental sales literature delivered
following a prospectus. 10 day FINRA pre-file

Investment Company Rankings in Retail Com = Must disclose:

Category title

# of companies in the category

# of the Ranking Entity

Time period covered and end date

Specific criteria ranking is based on

Payments for Market Price Influencing Ads = Allowed if (one of the following):

Com is clearly marked "paid ad"

Com describes amount of compensation

Com is a research report

Investment Company Sales Literature Limited to: = Current yield

Tax-equivalent yield

Avg annual total return for 1, 5, and 10 years or since fund inception if less than 5-10 years old

Generic Advertisting = No specific name of security, just general terms regarding the investment
company itself

Stable NAV Municipal Fund Advertising = Not covered by FDIC and that it is possible to lose money

Variable NAV Municipal Fund Advertising = Total annual operating expense ratio

Average annual total returns for 1, 5, and 10

Any yield quote must have a current yield quote as well

Simplified Arbitration = Claim is less than $50,000

Systematic Risks = Market, inflation, reinvestment, interest, currency

Modern Portfolio Theory = Maximize return for given risk, minimize risk for a given return

CAPM = Relationship between systematic risk and expected asset return

Fundamental Analysis = Study of company account statements to determine if stock will do well

Funded Debt = Long term liabilities (12+ months)

Income Statement = Determines profitability

Statement of Cash Flow = Indication if a company can pay its bills

Market/Technical Analysis = Trends based on historical performance to determine when to buy

Inherited Securities = CB is MV at death, become long term HP automatically

Gifted Secuirties = MV > CB - new CB is prior CB and holding period is day of purchase
MV < CB - new CB is MV and holding period is day of gift