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Wiley FINRA Series 62 Exam Review 2017: The Corporate Securities Representative Examination

Wiley FINRA Series 62 Exam Review 2017: The Corporate Securities Representative Examination

Wiley

ISBN: 978-1-119-37989-8

Mar 2017

492 pages

In Stock

$115.00

Description

The go-to guide to acing the Series 62 Exam!

Passing the Corporate Securities Limited Representative Exam (Series 62) qualifies an individual as a representative for the sale of public offerings and/or private placements of corporate securities, rights, warrants, closed-end funds, money market funds, REITs, asset-backed securities, mortgage-backed securities, and more. Topics covered on the exam include characteristics of securities and investments, the market for corporate securities, evaluation of securities and investments, and handling customer accounts and securities industry regulation.

Created by the experts at The Securities Institute of America, Inc., Wiley Series 62 Exam Review 2017 arms you with everything you need to pass this challenging 115-question multiple-choice test. Designed to help you build and fine-tune your knowledge of all areas covered in the exam and to guarantee that you're prepared mentally and strategically to take the test, it provides:

  • Dozens of examples
  • Assorted practice questions for each subject area covered in the exam
  • Priceless test-taking tips and strategies
  • Helpful hints on how to study for the test, manage stress, and stay focused

Wiley Series 62 Exam Review 2017 is your ticket to passing the Series 62 test on the first try—with flying colors!

About the Series 62 Exam xv

About This Book xix

About the Test Bank xxi

About the Securities Institute of America xxiii

Chapter 1 Equity Securities 1

What Is a Security? 1

Equity = Stock 2

Common Stock 2

Corporate Timeline 2

Values of Common Stock 4

Rights of Common Stockholders 5

Why Do People Buy Common Stock? 11

What Are the Risks of Owning Common Stock? 12

How Does Someone Become a Stockholder? 12

Preferred Stock 14

Dividend Distribution 18

Warrants 20

American Depositary Receipts (ADRs)/American Depositary Shares (ADSs) 22

Real Estate Investment Trusts (REITs) 22

Structured Retail Products/SRPs 24

Limited Partnerships 25

Pretest 33

Chapter 2 Debt Securities 39

Corporate Bonds 39

Types of Bond Issuance 40

Bond Certificate 41

Bond Pricing 41

Bond Yields 43

Bond Maturities 46

Types of Corporate Bonds 47

Zero-Coupon Bonds 49

Guaranteed Bonds 49

Convertible Bonds 49

The Trust Indenture Act of 1939 52

Bond Indenture 52

Ratings Considerations 52

Retiring Corporate Bonds 53

Collateralized Mortgage Obligation (CMO) 55

Exchange-Traded Notes (ETNs) 57

Other Asset Backed Securities 58

Pretest 59

Chapter 3 Government Securities 63

Series EE Bonds 63

Series HH Bonds 64

Treasury Bills, Notes, and Bonds 64

Treasury Notes 65

Treasury Bonds 65

Treasury Bond and Note Pricing 65

Treasury Strips 66

Treasury Receipts 66

Treasury Inflation-Protected Securities (TIPS) 66

Agency Issues 67

Pretest 69

Chapter 4 The Money Market 71

Money Market Instruments 71

Corporate Money Market Instruments 71

Government Money Market Instruments 73

Municipal Money Market Instruments 74

International Money Market Instruments 74

Interest Rates 74

Pretest 77

Chapter 5 Economic Fundamentals 79

Gross Domestic Product 79

Economic Indicators 81

Economic Policy 83

Tools of the Federal Reserve Board 83

Fiscal Policy 86

International Monetary Considerations 88

London Interbank Offered Rate/Libor 88

Yield Curve Analysis 88

Pretest 91

Chapter 6 Issuing Corporate Securities 95

The Securities Act of 1933 95

The Prospectus 96

The Final Prospectus 96

SEC Disclaimer 97

Misrepresentations 97

Tombstone Ads 98

Free Riding and Withholding/FINRA Rule 5130 98

Underwriting Corporate Securities 99

Exempt Securities 104

Review of Underwriting Agreements by FINRA 104

Exempt Transactions 105

Crowdfunding 110

Rule 415 Shelf Registration 111

Securities Offering Reform Rules 111

SEC Rule 405 111

Offering of Securities by FINRA Members 112

Private Placements by Member Firms 113

Pretest 115

Chapter 7 Trading Securities 119

Types of Orders 119

The Exchanges 122

Priority of Exchange Orders 123

The Role of the Designated Market Maker 123

The Dmm Acting As a Principal 124

The Dmm Acting As an Agent 124

Crossing Stock 126

Do Not Reduce (DNR) 127

Adjustments for Stock Splits 127

Stopping Stock 128

Commission House Broker 129

Two-Dollar Broker 129

Registered Traders 129

Super Display Book/SDBK 129

Short Sales 130

Threshold Securities 133

Block Trades 134

Trading Along 134

Circuit Breakers 135

Listing Requirements for the NYSE 136

Reading the Consolidated Tape 137

Exchange Qualifiers 138

The Nasdaq Market 139

The Alternative Display Facility (ADF) 145

Trade Reporting and Comparison Service (TRACS) 146

Electronic Communication Networks (ECNS) 146

Unlisted Trading Privileges 147

Market Centers 147

SEC Regulation NMS 148

SEC Regulation ATS 148

Direct Market Access 149

Nasdaq International 150

Non-Nasdaq OTC BB 151

Pink OTC Market 152

Third Market 152

Fourth Market 153

Market Maker Regulations and Responsibilities 153

Times for Entering a Quote 153

The Opening Cross 154

Order Imbalances 154

The Nasdaq Official Opening Price (NOOP) 154

The Closing Cross 155

The Nasdaq Halt Cross 156

Withdrawing Quotes 156

Handling and Displaying Customer Limit Orders 157

The Manning Rule 159

The Order Audit Trail System (OATS) 160

Automated Confirmation System/ACT Market Center Trade Reporting Facility 161

ACT/TRF Trade Scan 161

Avoiding Double Reporting 163

Market Making During Syndication 167

Trade Reporting and Compliance Engine (TRACE) 172

Broker vs. Dealer 173

FINRA 5% Markup Policy 174

Markups/Markdowns When Acting As a Principal 174

Riskless Principal Transactions 175

Net Transactions with Customers/FINRA Rule 2124 176

Proceeds Transactions 176

Dominated and Controlled Markets 177

Net Transactions with Customers 177

Firm Quote Rule 178

The Firm Quote Compliance System (FQCS) 179

Trade Complaints Between Members 179

Rogue Trading Prevention 180

Arbitrage 180

Pretest 183

Chapter 8 Customer Accounts 187

Opening a Customer Account 187

Holding Securities 189

Mailing Instructions 190

Types of Accounts 190

Death of a Customer 192

Partnership Accounts 192

Corporate Accounts 192

Trading Authorization 193

Accounts for Employees of Other Broker Dealers 198

Numbered Accounts 198

Day Trading Accounts 198

Account Transfer 199

Option Accounts 200

Margin Accounts 201

Commingling Customer’s Pledged Securities 202

Wrap Accounts 202

Regulation S-P 202

Pretest 205

Chapter 9 Margin Accounts 211

Regulation of Credit 211

Establishing a Long Position in a Margin Account 214

Establishing a Short Position in a Margin Account 220

Combined Margin Accounts 225

Margin Requirements for Day Trading 226

Portfolio Margin Accounts 226

Securities Backed Lines of Credit 227

Minimum Margin for Leveraged ETFs 227

Pretest 229

Chapter 10 Retirement Plans 233

Individual Plans 233

Individual Retirement Accounts (IRAs) 234

Keogh Plans (HR-10) 239

Tax Sheltered Annuities (TSAs)/Tax Deferred Accounts (TDAs) 240

Employee Retirement Income Security Act of 1974 (ERISA) 245

The Department of Labor Fiduciary Standards 247

Health Savings Account 248

Pretest 249

Chapter 11 Brokerage Office Procedure 253

Executing an Order 253

Clearly Erroneous Reports 255

Execution Errors 255

Corporate and Municipal Securities Settlement Options 256

When-Issued Securities 257

Government Securities Settlement Options 258

Accrued Interest 258

Rules for Good Delivery 261

Delivery of Round Lots 262

Delivery of Bond Certificates 262

Rejection of Delivery 263

Don’t Know Procedures (DK) 263

Fail to Deliver/Fail to Receive 263

Due Bills 263

Customer Account Statements 263

Carrying of Customer Accounts 264

Proxies 265

Pretest 267

Chapter 12 Fundamental and Technical Analysis 271

Fundamental Analysis 271

Changes in the Balance Sheet 274

Technical Analysis 280

Efficient Market Theory 284

Capitalization Weighted Index 285

Price Weighted Index 285

Pretest 287

Chapter 13 Customer Recommendations, Professional Conduct, and Taxation 289

Professional Conduct in the Securities Industry 290

Fair Dealings with Customers 290

Recommendations to an Institutional Customer 294

Recommending Exchange Traded Funds (ETFs) 294

Information Obtained from an Issuer 295

Disclosure of Client Information 295

Borrowing and Lending Money 296

Gift Rule 296

Outside Employment 297

Private Securities Transactions 297

Customer Complaints 298

Investor Information 298

Know Your Customer 298

Investment Objectives 299

Risk vs. Reward 301

Suitability Standards 304

Recommendations Through Social Media 304

Tax Structure 306

Investment Taxation 306

Calculating Gains and Losses 307

Taxation of Interest Income 309

Inherited Securities 309

Donating Securities to Charity 310

Estate Taxes 310

Withholding Tax 311

Corporate Dividend Exclusion 311

Alternative Minimum Tax (AMT) 311

Taxes on Foreign Securities 312

Pretest 313

Chapter 14 Securities Industry Rules and Regulations 319

The Securities Exchange Act of 1934 319

The National Association of Securities Dealers (NASD) 321

Registration of Agents/Associated Persons 323

Securities Investor Protection Corporation Act of 1970 (SIPC) 339

The Securities Acts Amendments of 1975 340

The Insider Trading and Securities Fraud Enforcement Act of 1988 341

Telemarketing Rules 342

The Penny Stock Cold Call Rule 343

The Role of the Principal 344

Currency Transactions 347

The Patriot Act 348

Identity Theft 349

The Uniform Securities Act (USA) 350

Sarbanes-Oxley Act 350

SEC Regulation S-K 352

SEC Regulation M-A 353

FINRA Rule 5150 Fairness Opinion 354

SEC Regulation S-X 355

Regulation FD Fair Disclosure 355

Pretest 357

Answer Keys 363

Glossary of Exam Terms 375

Index 441