75 scored questions distributed as: Ch 1 · 12Ch 2 · 33Ch 3 · 23Ch 4 · 7. Ch 2 (products and their risks) is the heaviest, then Ch 3 (trading, accounts, prohibited activities), and both hold most of the arithmetic. Settlement is T+1 throughout: older materials that say T+2 are out of date. Tap a card title to open the full chapter walkthrough.
| SEC mission | Protect investors · fair, orderly, efficient markets · capital formation |
| SEC standard | Disclosure, never merit |
| Created by | Securities Exchange Act of 1934 (1933 Act = new issues) |
| SROs | FINRA, MSRB, CBOE · fine, suspend, expel · cannot imprison |
| MSRB | Rulemaking only · enforced by SEC/FINRA |
| Discipline vs arbitration | Code of Procedure (appealable) vs disputes and money (final) |
| NASAA / states | Uniform Securities Act · "blue sky" laws |
| SIPC | Failed brokerage · $500,000 per customer, $250,000 of it cash · never market losses |
| FDIC | Bank deposits · $250,000 per depositor, per bank |
| Federal Reserve | Monetary policy · Reg T (brokers) · Reg U (banks) · does not issue securities |
| Broker vs dealer | Agent, commission vs principal, markup/markdown |
| Bid / ask | Firm buys from you at the bid · sells to you at the ask |
| Quote 12 × 6 | Bid size 1,200 · ask size 600 (round lots of 100) |
| Information barriers | Between investment banking, research and trading · none to compliance |
| Accredited individual | $1M net worth excl. home, or $200K income ($300K joint) for two years |
| QIB | Entity only · $100M of unaffiliated securities |
| Registrar | Caps shares issued at the authorized number |
| Transfer agent | Issues/cancels certificates · keeps holder list · pays dividends |
| DTCC / NSCC / FICC / OCC | Depository · equity clearing · bond clearing · listed options |
| Fully disclosed vs omnibus | Clearing firm carries accounts vs introducing firm keeps records |
| Prime broker | One home for an institution's funds and securities |
| Third market | Listed stock traded OTC by dealers |
| Fourth market | Institution to institution directly |
| Non-listed quotes | OTC Pink |
| Fiscal policy | Congress and President · taxes and spending |
| Monetary policy | The Fed · money supply and rates |
| Easing | Buy securities · lower discount rate or reserve/margin requirement · rates fall |
| Discount rate | Fed to banks · set by the Fed |
| Fed funds rate | Bank to bank · market-set, Fed targets it |
| Business cycle | Expansion → Peak → Contraction → Trough |
| Leading / coincident / lagging | Permits, stocks / industrial production / prime rate, unemployment duration |
| GDP vs GNP | Inside the borders vs by U.S. producers anywhere |
| Strong dollar | Exports pricier · imports cheaper · helps importers |
| Primary vs follow-on | New shares, proceeds to issuer (follow-on is still primary) |
| Secondary offering | Existing holders sell · they get the proceeds |
| Firm commitment | Syndicate absorbs unsold shares |
| Best efforts | Unsold shares go back to the issuer |
| Selling group | Sales agent only · no liability · earns the concession |
| Shelf registration | Register now, sell within three years |
| Cooling-off | Red herring and indications of interest only · no sales, no money |
| Aftermarket prospectus | 90 / 40 / 25 days / none |
| Exempt securities | Government, municipal, non-profit, 270-day paper, banks · antifraud always applies |
| Reg D | Up to 35 non-accredited · unlimited accredited |
| Municipal offering | Official statement on EMMA · GO needs voter approval · revenue needs feasibility study |
| Outstanding shares | Issued − treasury · only these vote and get dividends |
| Liquidation order | Secured → administrative → general (debentures) → subordinated → preferred → common |
| Preferred | Fixed dividend, not guaranteed · no vote · less volatile than common |
| Cumulative preferred | Arrears + current dividend before common gets anything |
| Rights | Short life · below market · existing holders |
| Warrants | Years long · above market · a sweetener (lower coupon on bonds) |
| Longest to shortest life | Warrants → options → rights |
| Restricted stock | Unregistered · 6 months from full payment (Rule 144) |
| Control stock | Officers, directors, more than 10% holders · no holding period |
| 144 volume | Greater of 1% outstanding or 4-week average weekly volume, per 90 days |
| ADRs | Foreign stock on U.S. markets · exchange-rate and political risk |
| Price / yield | Inverse · longer maturity and lower coupon = bigger price move |
| Discount bond | YTM > current yield > nominal |
| Premium bond | Nominal > current yield > YTM |
| Par bond | All three equal |
| Yield to worst | The lower of YTM and YTC |
| Accrued interest days | Corporate and muni 30/360 · Treasury actual/365 (as taught) |
| Quotes | Corporate/muni % of par in decimals · Treasury notes/bonds in 32nds · bills on discount yield |
| Investment grade | AAA/Aaa down to BBB/Baa |
| Call feature | Helps the issuer when rates fall · call protection helps holders |
| Called at 103.75 | $1,037.50 plus accrued |
| Convertible | Ratio = par ÷ conversion price · price follows the stock |
| T-bill | Discount · money-market instrument · most liquid |
| T-note / T-bond | 2 to 10 years / more than 10 years · semiannual coupons |
| Treasury interest tax | Federal only |
| GNMA, FNMA, FHLMC, corporates | Taxable at all three levels |
| Munis | Generally federal-exempt |
| GO | Taxes · voter approval · debt ceiling · usually competitive |
| Revenue | Project income · feasibility study · usually negotiated |
| Competitive bid | Awarded at the lowest net interest cost |
| Debenture | Unsecured corporate bond |
| Commercial paper | 270 days or less |
| Money market | One year or less · banker's acceptance finances foreign trade |
| ABS / MBS | Prepayment risk · trade on average life, not maturity |
| 1 contract | 100 shares |
| Call ITM / put ITM | Market above strike / market below strike |
| Premium | Intrinsic + time value · out-of-the-money = time value only |
| Long call | Loss = premium · gain unlimited · BE = strike + premium |
| Long put | Loss = premium · gain limited · BE = strike − premium |
| Short call (uncovered) | Gain = premium · loss unlimited |
| Short put | Gain = premium · loss limited (stock cannot go below zero) |
| Covered call BE | Cost − premium |
| Protective put BE | Cost + premium |
| Index options | Cash settled · usually European style · exercise settles T+1 for equity options |
| ODD | At or before options account approval · prepared by the OCC |
| Mutual fund pricing | Forward pricing · NAV at least daily (4:00 p.m. ET) · redemption within 7 days |
| Closed-end | Fixed shares · market price · marginable · can be sold short |
| UIT | Fixed portfolio · no adviser · redeemable |
| ETF | Trades intraday · marginable |
| Sales charge | Maximum 8.5% of POP |
| No-load | 12b-1 of 0.25% or less |
| Expense ratio | Excludes sales charges |
| Class A / B / C | Front load, breakpoints / CDSC, converts, no breakpoints / level load, short term |
| LOI / ROA | 13 months, 90-day backdate, non-binding / current value |
| Breakpoint sale | Prohibited · e.g. just under the discount level |
| Fixed annuity | Not a security |
| Variable annuity | Security · owner bears risk · tax-deferred · 10% penalty before 59½ |
| Death benefit | Greater of payments or value |
| 529 plan | After-tax in · qualified out tax-free · owner in control |
| LGIP | Money-market-like pool for local governments |
| ABLE account | Disability savings |
| DPP | Pass-through · passive losses offset passive income only · illiquid |
| REIT | 90% payout = one level of tax · no loss pass-through |
| Hedge fund / PE | Reg D · accredited · unregistered · illiquid · "two and twenty" |
| ETN | Unsecured issuer debt · credit risk · leveraged/inverse products reset daily |
| Systematic | Market, interest-rate, inflation, political/event · cannot be diversified away |
| Non-systematic | One issuer or sector · diversification reduces it |
| Liquidity risk | Cannot trade quickly at a fair price · unlisted stock, hedge funds, partnerships |
| Currency risk | Foreign investments only |
| Beta | Volatility against a benchmark |
| Inflation hedge | Common stock |
| Preserve capital | Short-term government bonds |
| Real return | Return − inflation |
| Market order | Execution guaranteed, not price · buy at ask, sell at bid |
| Limit order | Price (or better) guaranteed, not execution |
| Stop order | Triggers a MARKET order · sell stop below market protects a long |
| Stop-limit | Triggers a LIMIT order · may never fill |
| Duration | Day by default · GTC until filled or cancelled |
| FOK / IOC / AON | All now or cancel / any part now, cancel rest / all, not necessarily now |
| Agent vs principal | Commission, no risk / markup or markdown, inventory risk · one capacity per trade |
| Short sale | Margin account · locate (Reg SHO) · seller pays dividends · profits if price falls |
| Bullish | Long stock, long call, short put |
| Bearish | Short stock, long put, short call |
| Dividend dates | Declaration → ex-date = record date → payable |
| Ex-date price | Prior close − dividend ($40.00 − $0.50 = $39.50) |
| Current yield | Annual dividend or interest ÷ current price |
| Basis point | 0.01% · 100 bp = 1% |
| Total return | [(End − Begin) + income] ÷ Begin |
| Holding period | One year or less = short-term · more than one year = long-term |
| Inherited basis | Market value at date of death |
| Reinvested dividends | Add to cost basis |
| Indexes | S&P 500 = broad large-cap · DJIA = 30 blue chips |
| Regular way | T+1 for stocks, corporate and muni bonds, Treasuries |
| Cash | Same day as trade |
| Customer payment date | Set by Reg T (Federal Reserve), not the Uniform Practice Code |
| Missed payment | Sell-out + 90-day freeze |
| Good delivery, stock | 100-share units · stock power or signature · both joint owners sign |
| Split shares and price | Shares × a/b · price × b/a · value unchanged |
| Stock dividend 25% | 1,000 shares at $40 → 1,250 at $32 |
| Tender offer | Voluntary · oversubscribed = pro rata · minimum not met = bidder need not buy |
| Proxies (street name) | Firm forwards promptly · issuer reimburses · NOBO vs OBO |
| Reg T initial margin | 50% |
| New account minimum equity | $2,000 (long buy: lesser of $2,000 or full price · short sale: $2,000) |
| Equity, long | LMV − DR = EQ |
| Equity, short | CR − SMV = EQ |
| Margin agreement | Credit + hypothecation (required) · loan consent (optional) |
| Not marginable | Mutual funds, equity IPOs, OTC stocks · pay in full |
| Options account | ODD first · signed agreement within 15 days of approval |
| JTWROS vs TIC | Survivor takes all, outside probate / share goes to the estate |
| UGMA/UTMA | Irrevocable gift · one minor, one custodian · minor's SSN · no margin |
| Corporate account | Resolution + charter |
| Roth IRA | No RMDs · early withdrawal before 59½ = tax + 10% penalty (check current rules) |
| Stages | Placement → layering → integration |
| CTR | Cash over $10,000 in one business day, aggregated |
| SAR | $5,000 or more and suspicious · confidential |
| PATRIOT Act | 314 sharing · 326 CIP · 352 AML program |
| AML program | Written policies · AML officer · training · independent test |
| OFAC / SDN | Block and report · never trade or return the assets |
| Retention | Life of firm (corporate docs) · 6 years after closing (account records) · 3 years (tickets, confirms) · readily accessible first 2 years |
| Confirms / statements | At or before completion / at least quarterly |
| Excess margin securities | Value above 140% of the debit balance |
| Reg S-P | Privacy notice at opening, on change, annually · categories not names · opt-out blocks only unaffiliated third parties |
| Correspondence | 25 or fewer retail in 30 days |
| Retail communication | More than 25 · principal approval |
| Institutional | Institutions only |
| Telemarketing | 8 a.m.–9 p.m. called party's time · firm DNC list · 30 days to honor |
| Suitability | Reasonable-basis, customer-specific, quantitative |
| Reg BI / Form CRS | Best interest for retail recommendations / 2 pages |
| Specified adult | 65+ or 18+ impaired · temporary hold · notice within 2 business days |
| Manipulation | Pump and dump · marking the close/open · churning · interpositioning |
| Insider trading | Trading on issuer MNPI · tipper and trader both liable |
| MNPI penalties | Civil up to 3× profit or loss avoided + disgorgement · criminal via DOJ · SRO expulsion |
| Front-running | Trading ahead of a customer's pending order |
| Trading ahead of research | Trading just before a report is released |
| Freeriding | Buy, sell, use the sale proceeds to pay for the buy |
| Backing away | Not honoring a firm quote for its size |
| New-issue restrictions | Firm, employees, supported or same-household family |
| Sharing in accounts | Proportional to contribution + prior consent of customer and firm |
| Signature of convenience | Forgery, even with consent |
| Associated person | Officers, directors, partners, branch managers, employees (not purely clerical) |
| SIE | Age 18+ · no firm needed · results valid 4 years · not registration by itself |
| Non-registered may | Invite to events · ask if prospect wants a rep or literature |
| Non-registered may not | Discuss products · pre-qualify · solicit · accept orders · earn referral fees |
| Registration | Registered persons take the exam for their role and are supervised |
| Statutory disqualification | Felony or investment misdemeanor in 10 years · SRO expulsion/suspension · regulator denial or revocation · false U4 |
| Fix | Eligibility proceeding + heightened supervision |
| Background check | Verify U4 by public records within 30 days · review latest U5 |
| Fingerprints | Officers, directors, partners, most employees · anyone touching funds, securities or original records |
| State registration | Agent and firm in each state · Series 63, 65 or 66 |
| Regulatory Element | Annual · by Dec 31 of the year after first registration · missed = inactive |
| Firm Element | Annual needs analysis + written training plan |
| Requalification | Out more than 24 months = exam · MQP gives 5 years |
| Form U4 | Application · amend within 30 days · arbitration clause |
| Form U5 | Termination · firm files within 30 days · copy to the person |
| Form U6 | Regulators' disciplinary actions (and final arbitration awards) |
| BrokerCheck | Current or last 10 years' registrants · no exam scores |
| Complaint file | 4 years · per office of supervisory jurisdiction · even if empty |
| Firm event reporting | 30 calendar days · complaint statistics quarterly by the 15th after quarter end |
| Red flags | Investigate · document in writing · pursue to conclusion |
| Outside business activity | Written notice BEFORE · even part-time jobs · charity and volunteering exempt |
| Private securities transaction | Written notice before · approval if paid · none = selling away |
| Gift limit | $100 per person per year (check current rules) · greater of cost or value |
| Entertainment | Not a gift if host attends · tickets handed over = gift |
| Non-cash compensation | Pay comes through the firm only |
| MSRB G-37 | Two-year ban on negotiated muni business after an over-limit contribution · $250 per election if entitled to vote (check current rules) · report to MSRB |
| Reportable on U4 | Felony charge/conviction · investment-related misdemeanors · bankruptcy · not an uncharged arrest |
| Outstanding shares · market cap | Issued − treasury · price × outstanding |
| Dividend yield | Annual dividend ÷ price · $0.50 quarterly at $40 = $2.00 ÷ $40 = 5% |
| Bond current yield | Annual interest ÷ price · 5% bond at 90 = $50 ÷ $900 ≈ 5.6% |
| Tax-equivalent yield | Muni yield ÷ (1 − tax bracket) · bracket = your current rate |
| Total return | [(End − Begin) + income] ÷ Begin |
| Real return | Actual return − inflation |
| Bond point value | 1 point = $10 · 1/8 = $1.25 · 92 5/8 = $926.25 |
| Treasury 32nds | 95.16 = 95 16/32 = 95.50 = $955 |
| Accrued interest | Annual interest × days ÷ (360 corporate/muni, 365 Treasury) |
| Conversion ratio | Par ÷ conversion price · $1,000 ÷ $25 = 40 shares · preferred $100 ÷ $20 = 5 |
| Cumulative preferred arrears | 6% of $100 par, two years missed + current = $18 |
| Call breakeven · put breakeven | Strike + premium · strike − premium |
| Covered call · protective put breakeven | Cost − premium · cost + premium |
| Options max gain / loss | Buyer's loss = premium · 10 calls sold at $3 = $3,000 max gain |
| Index option payoff | $100 per point · strike 4,000, close 4,009 = $900 · less $400 premium = $500 |
| Stock split a-for-b | Shares × a/b · price × b/a · 5-for-2: 100 at $50 → 250 at $20 · 1-for-20 reverse: 1,000 at $2.00 → 50 at $40 |
| Stock dividend | Shares × (1 + %) · price = old value ÷ new shares |
| Markup % | Markup ÷ PREVAILING MARKET price · $2.50 ÷ $50.00 = 5% (a guideline) |
| NAV · POP · charge % | (Assets − liabilities) ÷ shares · NAV ÷ (1 − charge %) · (POP − NAV) ÷ POP |
| Expense ratio | Expenses ÷ average net assets |
| Equity-indexed annuity credit | Index return × participation rate |
| Reg T deposit | $4,800 of stock → $2,400 · 100 at $30 → $2,000 minimum · 100 at $18 → $1,800 · short 1,000 at $90 → $45,000 |
| Quote sizes | $20.10 – $20.20, 10 × 5 → buy 1,000 at bid · sell 500 at offer · spread $0.10 |
| Rule 144 volume | Greater of 1% outstanding or 4-week average weekly volume |
| Declaration date | Board announces the dividend |
| Trade date (T) | Regular-way trade made |
| Settlement (T+1) | Next business day for stocks, corporate and muni bonds, Treasuries and listed options |
| Ex-date = record date | Buy BEFORE it to receive the dividend · buy ON it and the seller keeps it |
| Payable date | Dividend is paid to holders of record |
| Example, record date Thursday | Buy Wednesday → settles Thursday → buyer gets it · buy Thursday → settles Friday → seller keeps it |
| Example, record date Monday | Buy Friday → settles Monday → buyer gets it · buy Monday → settles Tuesday → seller keeps it |
| Holiday example | Thursday trade, Friday federal holiday → settles Monday |
| Cash / seller's option / when-issued | Same day / later by agreement / when the security is issued |
| Customer payment | Reg T sets the deadline; miss it = sell-out + 90-day freeze · check current day count |
| Equity option exercise | Settles like the stock: T+1 |
| Failed delivery / failed payment | Buy-in against the seller / sell-out against the buyer |
| SIPC vs FDIC | Failed brokerage $500,000/$250,000 cash · bank deposits $250,000 |
| Registrar vs transfer agent | Caps issued at authorized · issues certificates, holder list, pays dividends |
| Discount rate vs fed funds | Fed to banks, set by the Fed · bank to bank, market-set |
| Firm commitment vs best efforts | Syndicate keeps unsold · unsold returns to issuer |
| Rights vs warrants vs options | Short, existing holders · long, sweetener · OCC-issued, 100 shares |
| Restricted vs control stock | Holding period (6 months) applies · volume limit applies, no holding period |
| Reg D vs Rule 144A | Private placement to accredited investors · resale to QIBs |
| GO vs revenue bond | Taxes, voters · project income, feasibility study |
| Open-end vs closed-end vs UIT | NAV, forward pricing · market price, marginable · fixed portfolio, no adviser |
| ETF vs ETN | Basket of securities · unsecured issuer debt with credit risk |
| DPP vs REIT | Passes losses through · does not, 90% payout |
| Fixed vs variable annuity | Not a security · security, owner bears risk |
| Stop vs stop-limit | Becomes a market order · becomes a limit order |
| Market vs limit order | Fills, price not guaranteed · price guaranteed, may not fill |
| Agent vs principal | Commission · markup/markdown |
| JTWROS vs TIC | Survivor takes all · share goes to the estate |
| Coverdell ESA vs 529 | Self-directed · state menu · both after-tax, tax-free for education |
| CTR vs SAR | Cash over $10,000 in a business day · suspicious activity of $5,000 or more |
| Front-running vs insider trading | Customer's pending order · issuer MNPI |
| Correspondence vs retail communication | 25 or fewer retail in 30 days · more than 25, principal approval |
| Regulatory vs Firm Element | Annual, by Dec 31 · firm's needs analysis and training plan |
| U4 vs U5 vs U6 | Registration · termination · regulators' disciplinary actions |
| Outside activity vs private securities transaction | Any outside job, written notice · securities sales outside the firm, notice + approval |
| 1 | T+1 everywhere: ex-date = record date. Ignore any T+2 wording from older books. |
| 2 | Treasury quotes: digits after the decimal are 32nds. |
| 3 | Coupon interest is on par, never the price you paid. |
| 4 | Sales charge % is on the POP, not NAV. |
| 5 | Option breakeven ignores the number of contracts. |
| 6 | Only buying options hedges: long put protects a long, long call protects a short. |
| 7 | Fixed annuities are not securities; variable annuities are. |
| 8 | REITs keep losses; DPPs pass them through. ETNs carry credit risk. |
| 9 | Systematic risk cannot be diversified away. |
| 10 | Markup % is on the prevailing market price, not the customer's price. |
| 11 | Stop orders become market orders; stop-limits become limit orders. |
| 12 | Discretion needs written authority; time and price latitude alone is not discretion. |
| 13 | Opt-out under Reg S-P blocks unaffiliated third parties only. |
| 14 | SIE alone does not register anyone; non-registered staff cannot discuss products or take orders. |
| 15 | A signature of convenience is forgery, even with the customer's consent. |
| 16 | The SEC never approves a security: the no-approval clause, disclosure not merit. |
| 17 | SIPC never covers market losses or commodity futures. |
| SIPC | $500,000 per customer, $250,000 of it cash |
| FDIC | $250,000 per depositor, per bank |
| CTR / SAR | Over $10,000 in cash in a day / $5,000 or more suspicious |
| Margin | Reg T 50% · $2,000 minimum equity · excess margin securities above 140% of debit |
| Accredited individual | $1M net worth excluding residence, or $200K/$300K income |
| Rule 144 | 6 months restricted · control > 10% holders · 1% or 4-week average volume · Form 144 good for 90 days |
| Commercial paper / money market | 270 days or less / one year or less |
| Shelf registration | 3 years |
| Prospectus after IPO | 90 / 40 / 25 days / none |
| Reg D non-accredited | Up to 35 |
| Mutual fund | Max sales charge 8.5% · 12b-1 of 0.25% or less for no-load · LOI 13 months · redemption in 7 days |
| Options | 1 contract = 100 shares · signed agreement within 15 days |
| Non-payment | Sell-out and 90-day freeze |
| Retention | Life of firm · 6 years after closing · 3 years tickets · first 2 years accessible |
| Complaint file | 4 years |
| SIE / requalification / MQP | Valid 4 years · 24 months out · 5 years |
| U4 / U5 / events | 30 days each · quarterly complaint stats by the 15th |
| Statutory disqualification look-back | 10 years |
| Communications | 25 or fewer retail in 30 days · telemarketing 8 a.m.–9 p.m. |
| Specified adult | 65+ · notice within 2 business days |
| Gift limit (check current rules) | $100 per person per year |
| Format | 75 scored questions (plus 10 unscored) · 1 hour 45 minutes · no penalty for guessing |
| Chapter weights | Ch 2: 33 · Ch 3: 23 · Ch 1: 12 · Ch 4: 7 |
| Heavy chapters | Ch 2 + Ch 3 = 56 of 75 questions (about three quarters) |
| Calculation sweep | Current yield · TEY · options breakeven · splits · markup · POP · margin · total return |
| "NOT" / "EXCEPT" questions | Read carefully · pick the odd one out |
FINRA and SIE are trademarks of FINRA. FinStudyHub is independent and is not affiliated with or endorsed by FINRA. This sheet is an original summary for revision, not the exam. Time-sensitive figures (dollar limits, rates, thresholds and tax brackets) change: check current rules before relying on them.