SEC-CISI Diploma flashcards
SEC-CISI Diploma · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- CISI
- The Chartered Institute for Securities & Investment, a UK-based professional body that awards qualifications covering securities, investment, and financial advice.
- SEC
- The US Securities and Exchange Commission, the federal regulator created by the Securities Exchange Act of 1934 to oversee securities markets and protect investors.
- Primary market
- The market in which an issuer sells newly created securities to investors and receives the proceeds, as in an initial public offering.
- Secondary market
- The market in which investors trade existing securities among themselves; proceeds go to the selling investor, not to the issuer.
- Common stock
- An equity security representing ownership, typically carrying voting rights and a residual claim on assets after all creditors and preferred holders are paid.
- Preferred stock
- An equity class with a stated dividend and priority over common stock in dividend payments and liquidation, usually without voting rights.
- Money-market instrument
- A short-term debt security with an original maturity of one year or less, such as a Treasury bill, commercial paper, or certificate of deposit.
- Exchange-traded fund
- A pooled investment vehicle whose shares trade intraday on an exchange and whose portfolio typically tracks an index.
- Derivative
- A financial contract whose value depends on an underlying asset, rate, or index; examples include options, futures, forwards, and swaps.
- Securities Act of 1933
- US federal law requiring registration and prospectus disclosure for public securities offerings, with Section 5 governing the offering process.
- Securities Exchange Act of 1934
- US federal law creating the SEC and governing secondary trading, periodic reporting, broker-dealer registration, and insider-trading prohibitions.
- Investment Company Act of 1940
- US federal law regulating pooled investment vehicles such as mutual funds, covering diversification, leverage limits, and disclosure obligations.
- Investment Advisers Act of 1940
- US federal law requiring investment adviser registration and imposing fiduciary duties; the SEC oversees larger advisers and states oversee smaller ones.
- Rule 10b-5
- The antifraud rule under the 1934 Act prohibiting deceptive practices in connection with securities transactions, including insider trading.
- Regulation D
- A set of private-placement safe harbors; Rule 506(b) bars general solicitation, while Rule 506(c) permits it with accredited-investor verification.
- Regulation FD
- A rule prohibiting selective disclosure of material nonpublic information to analysts or investors before public release.
- Sarbanes-Oxley Act
- 2002 US law imposing internal-control reporting, auditor-independence rules, and executive certification requirements on public companies.
- Know-your-customer
- The onboarding process of establishing a client's identity, beneficial ownership, source of funds, and risk profile before providing services.
- Suspicious activity report
- A confidential filing made to FinCEN by a financial institution when it detects potentially illegal client activity; it is not disclosed to the client.
- Chinese wall
- An information barrier separating departments such as research and investment banking to prevent misuse of material nonpublic information.
- Best execution
- The duty to seek the most favorable terms reasonably available for client orders, considering price, speed, execution likelihood, and cost.
- Suitability
- The requirement that a recommendation be consistent with the client's objectives, risk tolerance, time horizon, and financial circumstances.
- Holding-period return
- Total return over a period, computed as (ending value minus beginning value plus income) divided by beginning value.
- CAGR
- Compound annual growth rate, computed as (ending value divided by beginning value) raised to the power 1/n, minus one, where n is years.
- Present value
- The current worth of a future cash flow, computed as future value divided by (1 plus the discount rate) raised to the number of periods.
- Duration
- A measure of a bond's price sensitivity to yield changes, approximating the percentage price change for a one percent change in yield.
- Beta
- A measure of a security's sensitivity to market movements; above one indicates greater volatility than the market, below one indicates less.
- Sharpe ratio
- Excess return over the risk-free rate divided by the standard deviation of returns, measuring return per unit of total risk.
- Systematic risk
- Market-wide risk affecting all securities that cannot be eliminated through diversification, as distinct from firm-specific risk.
- T+1 settlement
- The US standard requiring equity trades to settle one business day after the trade date, shortened from T+2 in May 2024.
- Central counterparty
- A clearing house that becomes the buyer to every seller and seller to every buyer, managing default risk through margin and a default fund.
- Regulation SHO
- US rules governing short selling, including locate requirements before execution and close-out obligations for fails to deliver.