Wiley Series 57 Securities Licensing Exam Review 2020 + Test Bank: The Securities Trader Examination

  The go-to guide to acing the Series 57 Exam! Passing The Securities Trader Examination (Series 57) qualifies an individual to engage in NASDAQ and OTC Equity trading and to act as a proprietary trader. The exam covers Market Overview and Products, Engaging in Professional Conduct and Adhering to Regulatory Requirements, Trading Activities, Maintaining Books and Records and Trade Reporting. There are no prerequisites to taking the series 57 exam other than being sponsored by a FINRA member firm. Created by the experts at The Securities Institute of America, Inc., Wiley Series 57 Exam Review 2020 arms you with everything you need to pass this challenging 125-question 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 57 Exam Review 2020 is your ticket to passing the Series 57 test on the first try—with flying colors! Visit www.efficientlearning.com/finra for more information. The Securities Institute of America, Inc. helps thousands of securities and insurance professionals build successful careers in the financial services industry every year. Our securities training options include: Onsite classes Private tutoring Classroom training Interactive online video training classes State-of-the-art exam preparation software Printed textbooks Real-time tracking and reporting for managers and training directors As a result, you can choose a securities training solution that matches your skill level, learning style, and schedule. Regardless of the format you choose, you can be sure that our securities training courses are relevant, tested, and designed to help you succeed. It is the experience of our instructors and the quality of our materials that make our courses requested by name at some of the largest financial services firms in the world. To contact The Securities Institute of America, visit us on the web at www.SecuritiesCE.com or call 877-218-1776.  

Table of Contents:
About the Series 57 Exam xix About this Book xxiii About the Test Bank xxv About the Securities Institute of America xxvii Chapter 1 Equity Securities 1 What is a Security? 1 Equity = Stock 2 Common Stock 2 Corporate Time Line 2 Values of Common Stock 4 Book Value 4 Par Value 5 Rights of Common Stockholders 5 Preemptive Rights 5 Characteristics of a Rights Offering 6 Determining the Value of a Right Cum Rights 7 Determining the Value of a Right Ex Rights 7 Voting 8 Limited Liability 9 Freely Transferable 9 The Transfer Agent 10 The Registrar 10 CUSIP Numbers 11 Inspection of Books and Records 11 Residual Claim to Assets 11 Why Do People Buy Common Stock? 11 Income 11 What are the Risks of Owning Common Stock? 12 How Does Someone Become a Stockholder? 13 Preferred Stock 14 Features of All Preferred Stock 14 Types of Preferred Stock 16 Types of Dividends 17 Dividend Distribution 18 Taxation of Dividends 20 Selling Dividends 20 Dividend Disbursement Process 21 Warrants 21 How Do People Get Warrants? 21 American Depositary Receipts (ADRs)/American Depositary Shares (ADSs) 22 Currency Risks 23 Functions of the Custodian Bank Issuing ADRs 23 Real Estate Investment Trusts/REITs 23 Non-Traded REITs 24 Direct Participation Programs and Limited Partnerships 24 Limited Partnerships 24 Tax Reporting for Direct Participation Programs 28 Limited Partnership Analysis 28 Tax Deductions vs. Tax Credits 29 Other Tax Considerations 29 Dissolving a Partnership 30 Pretest 31 Chapter 2 Debt Securities 35 Corporate Bonds 35 Types of Bond Issuance 36 Bond Certificate 37 Bond Pricing 37 Corporate Bond Pricing 38 Bond Yields 38 Yield Spreads 42 The Real Interest Rate 43 Bond Maturities 43 Types of Corporate Bonds 44 Converting Bonds into Common Stock 47 Advantages of Issuing Convertible Bonds 48 Disadvantages of Issuing Convertible Bonds 48 Convertible Bonds and Stock Splits 48 Reverse Convertible Securities 48 Forced Conversion 49 The Trust Indenture Act of 1939 49 Bond Indenture 49 Ratings Considerations 50 Retiring Corporate Bonds 50 Collateralized Mortgage Obligation (CMO) 52 CMOs and Interest Rates 53 Types of CMOs 53 Private-Label CMOs 55 Exchange-Traded Notes (ETNs) 55 Euro and Yankee Bonds 56 Pretest 57 Chapter 3 Government Securities 61 Series EE Bonds 61 Series HH Bonds 62 Treasury Bills, Notes, and Bonds 62 Treasury Bond and Note Pricing 63 Treasury Strips 64 Treasury Receipts 64 Treasury Inflation-Protected Securities (TIPS) 65 Agency Issues 65 Government National Mortgage Association (GNMA) 65 Federal National Mortgage Association (FNMA) 66 Federal Home Loan Mortgage Corporation (FHLMC) 66 Federal Farm Credit System (FFCS) 66 Sallie Mae 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 (GDP) 79 Recession 81 Depression 81 Economic Indicators 81 Schools of Economic Thought 83 Economic Policy 84 Tools of The Federal Reserve Board 84 Fiscal Policy 87 Consumer Price Index (CPI) 88 Inflation/Deflation 88 Real GDP 88 International Monetary Considerations 89 Yield Curve Analysis 89 Pretest 91 Chapter 6 Customer Accounts 95 Holding Securities 97 Mailing Instructions 98 Types of Accounts 99 Commingling Customer’s Pledged Securities 109 Wrap Accounts 110 Regulation S-P 110 Day Trading Accounts 111 Pretest 113 Chapter 7 Margin Accounts 117 Regulation of Credit 117 Regulation T 117 House Rules 120 Establishing a Long Position in a Margin Account 120 An Increase in the Long Market Value 121 Special Memorandum Account (SMA) Long Margin Account 123 A Decrease in the Long Market Value 125 Minimum Equity Requirement Long Margin Accounts 125 Establishing a Short Position in a Margin Account 126 A Decrease in the Short Market Value 127 Special Memorandum Account (SMA) Short Margin Account 128 An Increase in the Short Market Value 129 Minimum Equity Requirement Short Margin Accounts 130 Combined Margin Accounts 131 Portfolio Margin Accounts 131 Securities Backed Lines of Credit 132 Minimum Margin for Leveraged ETFs 132 Pretest 133 Chapter 8 Issuing Corporate Securities 137 The Prospectus 138 The Final Prospectus 139 Providing the Prospectus to Aftermarket Purchasers 140 SEC Disclaimer 140 Misrepresentations 141 Tombstone Ads 141 Free Riding and Withholding/FINRA Rule 5130 142 Underwriting Corporate Securities 143 Types of Underwriting Commitments 144 Types of Offerings 146 Awarding the Issue 147 The Underwriting Syndicate 147 Selling Group 147 Underwriter’s Compensation 148 Underwriting Spread 149 Factors That Determine the Size of the Underwriting Spread 149 Review of Underwriting Agreements by FINRA 149 Underwriter’s Compensation 150 Unreasonable Compensation 150 Offering of Securities by FINRA Members 152 Exempt Securities 152 Exempt Transactions 153 Crowdfunding 159 Rule 137 Nonparticipants 161 Rule 138 Nonequivalent Securities 162 Rule 139 Issuing Research Reports 162 Rule 415 Shelf Registration 163 Securities Offering Reform Rules 163 SEC Rule 405 164 Additional Communication Rules 165 DPP Roll-UP Transactions 166 Pretest 167 Chapter 9 Brokerage Office Procedure 171 Executing an Order 171 Customer Confirmations 173 Clearly Erroneous Reports 174 Execution Errors 174 Corporate and Municipal Securities Settlement Options 174 RVP/DVP/COD 175 When-Issued Securities 175 Government Securities Settlement Options 176 Accrued Interest 176 Calculating Accrued interest 177 Accrued Interest for Government Notes and Bonds 178 Rules for Good Delivery 179 Delivery of Round Lots 180 Delivery of Bond Certificates 180 Rejection of Delivery 181 Don’t Know (DK) Procedures 181 Fail to Deliver/Fail to Receive 181 Due Bills 181 Customer Account Statements 182 Carrying of Customer Accounts 182 Proxies 183 Pretest 185 Chapter 10 Trading Securities 191 Types of Orders 191 The Exchanges 195 Priority of Exchange Orders 196 The Role of the Designated Market Maker 196 Crossing Stock 199 Do Not Reduce (DNR) 199 Adjustments for Stock Splits 200 Stopping Stock 201 Commission House Broker 202 Two-Dollar Broker 202 Registered Traders 202 Super Display Book (SDBK) 202 Short Sales 203 Affirmative Determination 203 Regulation SHO 204 Rule 200 Definitions and Order Marking 204 Rule 203 Security Borrowing and Delivery Requirements 205 Threshold Securities 206 Block Trades 207 Trading Along 208 Circuit Breakers 208 Limit Up Limit Down (LULD) 209 Listing Requirements for the NYSE 209 Reading the Consolidated Tape 210 Exchange Qualifiers 212 Over-the-Counter/Nasdaq 212 High Frequency and Algorithmic Trading 223 Market Centers 225 SEC Regulation NMS 226 SEC Regulation ATS 227 Direct Market Access 228 Nasdaq International 229 Non-Nasdaq OTCBB 229 Pink OTC Market 230 Third Market 230 Nasdaq Market Center for Listed Securities 231 Fourth Market 231 Nasdaq Listing Standards 231 Market Maker Regulations and Responsibilities 232 Times for Entering a Quote 232 Withdrawing Quotes 235 Handling and Displaying Customer Limit Orders 236 The Order Audit Trail System (OATS) 238 The Manning Rule 239 Automated Confirmation System (ACT)/Trade Reporting Facility (TRF) 240 ACT Trade Scan 240 Nasdaq Trade Reporting Facility (TRF) 241 Step Out Trades 244 Market Making During Syndication 245 Regulation M, Rule 101 245 Penalty Bids 246 Regulation M, Rule 102 246 Regulation M, Rule 103 247 Passive Market Makers’ Daily Purchase Limit 247 Regulation M, Rule 104 248 Syndicate Short Positions 249 Regulation M, Rule 105 249 Trade Reporting and Compliance Engine (TRACE) 250 Broker vs. Dealer 252 FINRA 5 Percent Markup Policy 252 Markups/Markdowns When Acting as a Principal 253 Riskless Principal Transactions 254 Proceeds Transactions 255 Dominated and Controlled Markets 255 Net Transactions With Customers 256 Firm Quote Rule 256 The Firm Quote Compliance System (FQCS) 257 Trade Complaints Between Members 257 Rogue Trading Prevention 258 Arbitrage 258 Pretest 261 Chapter 11 Options 267 Option Classification 267 Option Classes 268 Option Series 268 Bullish vs. Bearish 268 Possible Outcomes for an Option 269 Characteristics of All Options 270 Managing an Option Position 270 Buying Calls 271 Selling Calls 272 Buying Puts 274 Selling Puts 275 Option Premiums 277 At the Money Options 277 Out of the Money Options 278 Intrinsic Value and Time Value 278 Using Options as a Hedge 279 Long Stock Long Puts/Married Puts 279 Long Stock Short Calls/Covered Calls 281 Maximum Gain Long Stock Short Calls 282 Maximum Loss Long Stock Short Calls 283 Short Stock Long Calls 283 Maximum Gain Short Stock Long Calls 284 Maximum Loss Short Stock Long Call 285 Short Stock Short Puts 285 Maximum Gain Short Stock Short Puts 286 Maximum Loss Short Stock Short Puts 287 Multiple Option Positions and Strategies 288 Long Straddles 288 Short Straddles 290 Spreads 292 Combinations 303 Using a T Chart to Evaluate Option Positions 304 Index Options 308 Interest Rate Options 310 Price-Based Options 310 Rate-Based Options 312 Foreign Currency Options 312 The Option Clearing Corporation 314 The Options Markets 315 The Chicago Board Options Exchange 315 Opening and Closing Option Prices 317 Order Execution 317 Expiration and Exercise 318 American vs. European Exercise 318 Market Volatility Options/VIX 319 Flex Options 319 Weekly Options 320 Mini Options 320 Position and Exercise Limits 321 Stock Splits and Stock dividends 321 Taxation of Options 322 Closing an Option Position 322 Exercising a Call 322 Exercising a Put 323 Protective Puts 323 Covered Calls 323 Option Compliance 323 Option Agreement 323 Pretest 325 Chapter 12 Securities Industry Rules and Regulations 333 The Securities Exchange Act of 1934 333 The Securities and Exchange Commission (SEC) 334 Extension of Credit 335 The National Association of Securities Dealers (NASD) 335 Becoming a Member of FINRA 337 Hiring New Employees 338 Disciplinary Actions Against a Registered Representative 339 Resignation of a Registered Representative 340 Continuing Education 340 Termination for Cause 342 Retiring Representatives/Continuing Commissions 342 State Registration 342 Registration Exemptions 343 Persons Ineligible to Register 343 Communications with the Public 343 FINRA Rule 2210 Communications with the Public 344 Broker Dealer Websites 347 Blind Recruiting Ads 348 Generic Advertising 348 Tombstone Ads 348 Testimonials 349 Free Services 349 Misleading Communication with the Public 350 Securities Investor Protection Corporation Act of 1970 350 Net Capital Requirement 350 Customer Coverage 351 Fidelity Bond 351 The Securities Acts Amendments of 1975 351 The Insider Trading & Securities Fraud Enforcement Act of 1988 352 Firewall 352 Telemarketing Rules 353 Do Not Call List Exemptions 354 The Penny Stock Cold Call Rule 354 The Role of the Principal 355 Violations and Complaints 355 Resolution of Allegations 355 Minor Rule Violation 356 Code of Arbitration 356 The Arbitration Process 357 Mediation 358 Currency Transactions 359 The Patriot Act 359 U.S. Accounts 361 Foreign Accounts 361 Annual Compliance Review 361 Business Continuity Plan 361 Sarbanes-Oxley Act 362 The Uniform Securities Act 363 Tender Offers 364 Stockholders Owning 5% of An Issuer’s Equity Securities 365 Pretest 367 Answer Keys 373 Appendix 385 Glossary of Exam Terms 419 Index 485

About the Author :
The Securities Institute of America, Inc. has an 18 year track record for excellence in securities exam training. Jeffrey Van Blarcom author from The Securities Institute of America, Inc. helps thousands of securities and insurance professionals build successful careers in the financial services industry every year Learn more at : https://securitiesce.com Wiley empowers learners, researchers, universities, and corporations to achieve their goals in an ever-changing world. For over 200 years, Wiley has been helping people and organizations develop the skills and knowledge they need to succeed. Wiley develops digital education, learning, assessment, and certification solutions to help universities, businesses, and individuals move between education and employment and achieve their ambitions. By partnering with learned societies, we support researchers to communicate discoveries that make a difference. Our online scientific, technical, medical, and scholarly journals, books, and other digital content build on a 200-year heritage of quality publishing.