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Securities Industry Essentials Exam.pdf, Exams of Nursing

University of Buckingham (UB)Nursing

Securities Industry Essentials Exam.pdf

Typology: Exams

2025/2026

Available from 03/19/2026

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Securities Industry Essentials Exam
Broker-Dealer that doesn't comply is subject to: -
-censure
-limits on activities
-suspension
-revocation of reg
-fine
FINRA -
regulates all matters related to investment banking, trading in the OTC market, trading in the NYSE
listed securities, and the conduct of FINRA member firms and associated persons
FINRA Purpose -
-promote investment banking and securities business
-provide medium for communication among its members
-adopt, admin, and enforce rules designed to prevent fraud
-promote self-discipline among members
MSRB (MUNICIPAL SECURITIES REGULATORY BOARD) -
-regulates all matters related to the underwriting and trading of state and municipal securities
-depends on other SROs for enforcement ability
Federal Reserve -
-12 regional Fed reserve banks and hundreds of national and state banks that belong to the system
-determines monetary policy and takes actions to implement policies including 1. acting as an agent of
treasury 2. regulating US money supply 3. setting reserve requirements 4. supervising the printing of
currency 5. clearing fund transfers
Securities Investor Protection Corporation (SIPC) -
-a nonprofit corporation, created by Congress and subject to SEC and congressional oversight, that
insures customer accounts against the financial failure of a brokerage firm
-basic coverage under is no more than 500k per separate customer
Federal Deposit Insurance Corporation (FDIC) -
-the government agency that insures customer deposits if a bank fails
-accounts covered up to 250k
Accredited Investor -
-has a net worth of 1 million or more, not including net equity
-has had an annual income of 200k or more in each of the two most recent years
Carrying Firm -
-carries customer accounts and accepts funds and securities from customers
-largest broker-dealers
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Securities Industry Essentials Exam

Broker-Dealer that doesn't comply is subject to: -

  • censure
  • limits on activities
  • suspension
  • revocation of reg
  • fine FINRA - regulates all matters related to investment banking, trading in the OTC market, trading in the NYSE listed securities, and the conduct of FINRA member firms and associated persons FINRA Purpose -
  • promote investment banking and securities business
  • provide medium for communication among its members
  • adopt, admin, and enforce rules designed to prevent fraud
  • promote self-discipline among members MSRB (MUNICIPAL SECURITIES REGULATORY BOARD) -
  • regulates all matters related to the underwriting and trading of state and municipal securities
  • depends on other SROs for enforcement ability Federal Reserve -
  • 12 regional Fed reserve banks and hundreds of national and state banks that belong to the system
  • determines monetary policy and takes actions to implement policies including 1. acting as an agent of treasury 2. regulating US money supply 3. setting reserve requirements 4. supervising the printing of currency 5. clearing fund transfers Securities Investor Protection Corporation (SIPC) -
  • a nonprofit corporation, created by Congress and subject to SEC and congressional oversight, that insures customer accounts against the financial failure of a brokerage firm
  • basic coverage under is no more than 500k per separate customer Federal Deposit Insurance Corporation (FDIC) -
  • the government agency that insures customer deposits if a bank fails
  • accounts covered up to 250k Accredited Investor -
  • has a net worth of 1 million or more, not including net equity
  • has had an annual income of 200k or more in each of the two most recent years Carrying Firm -
  • carries customer accounts and accepts funds and securities from customers
  • largest broker-dealers

fully disclosed firm -

  • a firm that introduces into customers to a clearing firm prime account -
  • type of account that allows a customer to select one member firm to provide custody and other services while other firms-called executing brokers-handle all trades placed
  • key advantage is that it usually provides a client with the ability to trade with multiple brokerage houses Municipal Advisor -
  • provides advice with respect to municipal products or the issuance of municipal securities, including advice with respect to structure, timing, terms, and other similar matters Transfer Agents -
  • ensures securities are issued in the correct owners name
  • cancels all old and issues new certificates
  • maintain records of ownership
  • handle problems related to lost, stolen or destroyed certificates primary market - market for selling financial assets that can only be redeemed by the original holder Third Market - off-exchange market for securities listed on an organized exchange Fourth Market -
  • market for institutional investors in which large blocks of stock, both listed and unlisted trade in transactions unassisted by broker-dealers Federal Reserve affects money supply through: -
  • open-market operations
  • changes in the discount rate
  • changes in reserve requirements Keynesian economics -
  • active government involvement is vital
  • government affects levels of spending and saving by taxes
  • demand for goods drives employment and prices monetarist theory -
  • believe the money supply is the major determinant of price levels
  • amount of money is the system is a major influence on economic performance supply side economics -
  • government should allow market forces to determine price of all goods GDP -
  • all goods and services produced within a nation

callable preferred stock -

  • stock that can be bought back from investors at a stated price after a speciifed date convertible preferred stock - stock that permits the preferred stockholders to convert their shares into common stock restricted securities - Those acquired through some means other than a registered public offering such as private placement established customer -
  • someone who's held an account witht eh broker-dealer for at least one year or
  • has made at least three penny stock purchases term bond - bond structured so that the principal of the whole issue matures at once. Since the entire principal is repaid at one time, issuers may establish a sinking fund account to accumulate money to retire the bonds at maturity serial bond issue - schedules portions of the principal to mature at intervals over a period of years until the entire balance has been repaid balloon bond issue - pays off major portion of bond at maturity but pays part of the principal throughout nominal yield - coupon or stated yield is set at time of issue current yield - a bond's annual coupon divided by its price yield to maturity - annualized return of a bond if held at maturity yield to call - the rate of return earned on a bond when it is called before its maturity date Farm Credit System - A federal agency of the Department of Agricultural that offers programs to help families purchase or operate family farms. Government National Mortgage Association (GNMA) - Commonly known as "Ginnie Mae," this agency of HUD operates in the secondary mortgage market. It is involved with special government financing programs. The only agency securities backed by the full faith and credit of the federal government. Federal Home Loan Mortgage Corporation - Freddie Mac: public corporation created to promote the development of a nationwide secondary market in mortgages by buying residential mortgages from financial institutions

federal national mortgage association(Fannie mae) - publicly held corporation that provides the mortgage capital. certificates of deposit - time deposits that state the amount of the deposit, maturity, and rate of interest being paid. Generally larger than 1 million. Banker's Acceptance - short-term time draft with a specified payment date drawn. Payment date is normally between 1 and 270 days. Repurchase Agreement -

  • agreement between a buyer and a seller to conduct a transaction and then to reverse that transaction in the future. Federal Reserve Bank -
  • mandates how much money its member banks must keep on reserve
  • any deposits in excess are known as federal funds Parity - a put option is at parity when the premium equals intrinsic value american style options - can be exercised at any time before expiration European-style option - can only be exercised on the expiration date covered option writing - options contract where the writer already owns the underlying security, ensuring the ability to perform should the owner exercise the contract uncovered option writing - options contract where the writer doesn't own the underlying security investment company - A corporation or trust that pools investors money and then invests that money in securities on their behalf. investment company - corporation or trust that pools investors money and then invests that money in securities on their behalf face amount certificates - contract between an investor and an issuer in which the issuer guarantees payment of a stated sum to the investor at some set date in the future unit investment trust -
  • asset based fee: fee determined annually as a flat dollar amount or as a percentage of NAV during the year Real Estate Programs -
    • capital growth(achieved through appreciation of property)
  • cash flow(collected from rents)
  • tax deductions(from mortgage interest expense and depreciation allowances for wearing gout the building and capital improvements
  • tax credits(fro government assisted housing and historic rehabilitation Limited Partnership -
    • most common type of DPP, investment opportunities that permit the economic consequences of a business to flow or pass through to investors, businesses themselves are not tax-paying entities Advantages of Limited Partnership -
    • investment managed by others
  • limited liability(can only lose the amount invested)
  • flow-through of income and certain expenses Real Estate Investment Trust - investments that
  • own commercial property
  • own mortgages on commercial property or
  • do both(hybrid REITS) Things to remember about REITS -
    • REIT owners hold an undivided interest in a pool of real estate investments
  • REITs may or may not be registered with the SEC
  • REITS may or may not be listed on exchanges
  • REITs are not investment companies
  • REITS offer dividends and gains to investors but do not pass through losses like limited partnerships and, therefore, are not considered to be direct participation programs Common Hedge Fund Strategies -
    • highly leveraged portfolios
  • the use of short positions
  • the utilization of derivative products such as options and futures
  • currency speculation
  • commodity speculation
  • investment in politically unstable international markets exchange traded funds - offshoots of mutual funds that allow investors to trade index portfolios ETF advantages -
    • pricing and ease of trading
  • margin
  • operating costs
  • tax efficiency

exchange traded notes - Debt instruments in which the issuer promises to pay a return based on the performance of a specific debt index. systematic risk - risk that cannot be eliminated through diversification market risk - risk that affects all companies in the stock market (type of systematic risk) interest rate risk - the risk of capital losses to which investors are exposed because of changing interest rates (type of systematic risk) Reinvestment Risk - the risk that a fixed-income investor will not be able to reinvest interest payments or the par value at attractive interest rates. Happens when rates are falling (type of systematic risk) inflation risk - The danger that money won't be worth as much in the future as it is today nonsystematic risk - risk that can be eliminated by diversification call risk - risk that a bond might be called before maturity and an investor will be unable to reinvest the principal at a comparable rate of return fill or kill order - applicable to limit orders, this is an instruction to fill the order immediately or kill the order completely naked short selling - Involves selling short without actually borrowing the shares needed to sell short. This is illegal. discretionary account - account set up with the preapproved authority for a registered representative to make transactions without having to ask for a specific approval is a discretionary account solicited transaction - transaction initiated by an agent or representative ordinary income - the income earned from interest, wages, rents, royalties, and similar income streams dividends - distributions of a company's profits to its shareholders

general ledger - contains account records of the firms assets, liabilities and net work accounts stock record - displays all securities held by the firm, the ownership of those securities and where the securities are held customer ledgers - customer statements that must be posted no later than settlement date three year records - most common, include advertising, trial balances, form U4, U5 and fingerprint cards account statements - show: - all activity in the account since the previous statement

  • securities positions, long or short
  • account balances (debit or credit trade confirmation - printed document that confirms a trade, its settlement date and the amount of money due from or owed to the customer Central Registration Depository (CRD) - A computerized information system that is maintained by FINRA to provide registration information regarding broker-dealers and registered representatives. conduct rules - Industry rules relating to a broker-dealer's transactions with the public. Every exchange and securities association has a similar set of rules Uniform Practice Code (UPC) - standardizes the dates and times for each type of settlement Code of Procedure (COP) - The formal procedure for handling trade practice complaints involving violations of the Conduct Rules. The Department of Enforcement (DOE) is the first body to hear and judge complaints. The National Adjudicatory Council handles appeals and review of DOE decisions. Code of Arbitration Procedure - The formal method of handling securities-related disputes or clearing controversies between members, public customers, clearing corporations, or clearing banks. Any claim, dispute or controversy between member firms or associated persons must be submitted to arbitration. Selling Away - The failure to provide a member firm with written notice of involvement in a private securities transaction by a person associated with the member. Municipal Securities Rulemaking Board (MSRB) -

A self-regulatory organization that regulates the issuance and trading of municipal securities. The Board functions under the Securities and Exchange Commission's supervision; it has no enforcement powers. Related item(s): Securities Acts Amendments of 1975. National Adjudicatory Council (NAC) - council responsible for determining membership eligibility standards for FINRA members