foreign it's my job to get you past the Sie exam now I'm going to do a review video like I did with the quick and dirty seven I've done it for the 66. this is high level watch it the day before two days before you can watch it it is assumed that you've already finished the book and you're ready to study and you're just looking for something to listen to on your drive just like high level facts I'm gonna go over stuff that is highly highly testable stuff like that real quick not super explanatory but making sure that this stuff is in your head and fresh when you're walking into the exam because what are you gonna do you're gonna walk into the example take it like a bad right you're going to be a Savage you're going to own these questions own them absolutely own them because remember because remember when you go in there you have to go in with the confidence right total total confidence know that I'm going to get because as I've said in my other videos if you go in there thinking oh I'm not ready I'm not I think I'm not sure every hard question is going to prove to you that you're not ready but if you go in there like I own this I'm gonna beat this thing and I'm gonna go go after it every hard question is yeah I'm gonna get this I'm going to be challenged it's a challenge but I'm gonna beat this thing and you're also going to know that you can let some go and not worry about it be confident in what you know and let this you don't know Fall by the side and you'll come out on the right side of a pass so make sure you eat right make sure you have a breakfast or lunch before you take the test some water don't have coffee because I think there's some that happens on the back end um just relax go in there you know fill out the stuff make sure you have a good valid ID you get in there you sit down maybe you write your dump sheet what are you going to put on a dumb sheet for Sie not I mean really shouldn't be to it the options box the teeter-totter or the bond triangle slobs over Bliss maybe dorm like stuff like that a couple things we cover here but nothing crazy don't waste a lot of time with it you want to get into the test then when you take a test read every word I am telling you read every freaking word don't skim don't assume don't say oh it looked like one of the questions I saw on STC you're achievable or Kaplan and think oh it's the same thing don't assume that treat every question as its own battle okay you need to treat it that way then answer the question read all four answers all four remember you gotta read all four I can't say that enough then answer it then move on now when you're done don't use your mark for view a lot don't use that Mark for review too much it that should be for stuff that you're like truly 50 50 on not like oh it might be like if you're pretty sure something's an answer and you think oh it might be this it's never though it might be it's the seven it's the one that you're pretty sure it is then when you get to the whole thing marked review is only for stuff that really is long that you think you can get like a long question which isn't really the Sie or something you're truly like wow I can't tell the difference between a and C I'm not sure when you're done before you go back before you hit submit just go back and check the first five questions that's all I want you to do because that's when you're not in the game okay that's when you're still thinking about the your guy your girl or the guy and rude you're not in the zone the first five questions is where your risk is of like making stupid dumb mistakes the highest risk now don't change unless you're 100 sure you're wrong but if you're pretty sure you got it right and you're like oh maybe don't change it just let it go and let it ride and you're going to come out on the right end of this so let's get into the info okay now remember this is a review this is not a replacement this is your watch the day before you watch it while you're driving there again I can't say this enough and again videos are never a replacement for reading the book you got to read the book do the questions with the book read every word okay so let's start with this one let's talk about The Regulators the SEC is actually the U.S federal government they can come after you for criminal for civil for anything they can track you down to wherever you are if you're dealing with Securities and committed violation so again the SEC is the actual government the federal government okay they can get back here for anything they can inspect you they don't do it as much and what they do is they lay a lot of the inspecting and regulating off on finra finra is what they call an SRO self-regulatory organization or it's a DEA designated examining Authority they regulate broker dealers and agents okay so if you're a registered rep you're registered with finra you are subject to the rules and all that but you're not registered with the SEC you're only registered with finra and then any state you do business in the SEC regulates everything to do with securities the SEC regulates everything to do with securities whether it's exchanges broker-dealers Securities everything anything to do with the security but what's not a security isn't so that's why if you watch the whole FTX thing they want to the FCC is trying to say that crypto is a security now and the cftc which is a Commodities group is saying it's a commodity they both want to go after what do you call it they both want to go after Sam bankman freed and FTX to get the glory but right now the SEC covers Securities only not not Commodities or fixed you know insurance and stuff like that or Banks finra covers broker-dealers and register reps remember the finra is not is not the government I can't say that enough now remember so I said if you if they regulate security so if you want to sell security in the public to the public you have to register with the SEC okay so if you want to sell security with to the public and raise money that way you have to register with the SEC that's your father registration statement 20-day cooling off period you can send out preliminary prospectuses during it get indications of Interest all that good stuff you know that's the Act of 1933 that regulates all that okay now if you want to pick if you're going to raise a lot of money maybe you're going to actually actually end up being on an exchange within your regulated by the SEC and the exchange that you're registered on smart and they're very liquid remember anything on an exchange is very very liquid anything that this the smaller the company the less liquid it is so not every every security is registered on an exchange they're all going to be SEC unless there's an exemptions but the smaller the company is they may not be on an exchange it may be over the counter bullet to board pink sheets stuff like that they're over the counter they're not very liquid so liquidity risk things not on exchangeable liquidity risk I'm trying to roll this into other things okay so again if we register with the SEC we file the registration statement called ns1 it starts a 20-day cooling off period and then after 20 days they declare the SEC declares as effective we're also going to register in the states at the same time but that's sorry for a different debt that's a story for a different test okay now if you don't want to register with the SEC or say you think there's an exemption where you shouldn't have to there are so if you're going to register in one state only that's called the rule 147 one state only you don't have to register with the SEC because you're only selling to security you're only selling your securities in one state only now anyone who buys that can only sell shares to other people in the state for the first six months so if you do a 147 offering in Vermont and I I'm a vermonter and I buy your shares I can only sell it to other vermonters until until six months is up and then I can sell what I want it's called the holding period dropping down reg D private placement unregistered restricted not with through the act of 33 it's an exemption you're only going to sell to accredited investors or even in some instances up to 35 non-accredited remember high level review I'm not going into little detail stuff reg a regulation A is for small issuers up to 20 million for tier one or up to 75 million for tier two again your exempt from the act of 33 you don't have to register if you buy them and go back a little bit if you buy a regulation D under 144 you have to hold the shares fully paid for six months you can't sell them to anyone for six months oh of course there's one exception to that 144a 144a is an exemption where quebs can actually buy what's a quib a quib is a qualified institutional buyer that's that's a firm an institution that manages 100 million or more they they their exempt from a lot of stuff they're since they're big and they can defend themselves finra and the SEC doesn't feel the need to regulate everything they do okay so that was sort of act to 33. so now the act of 34 Act of 1934 is all about the secondary Market um secondary Market is a trading primary Market is new issues stuff like that let's get into it a little bit okay so the act of 34 I've done videos on this I may pop it up here whatever it is but I've done videos on this so this is the acronym the mnemonic whatever you're going to call it for the actor 34. I'm not going to write them out because this is quick and dirty right so M manipulation so all Miss Palms remember Miss perms m-i-s-s-p-e-r-m-s for those of you who are not watching the video M is for manipulation they're regulated on manipulation I is for incentered it to find who insiders were the S is the SEC they created the SEC the other s is for short sales before you sell a share short shorting is when you sell something you don't own you have to get a borrow or a locate before you short it repeat proxy rules that's voting by mail so if you don't want to go to the actual shareholder meeting your shoulder you get to vote by proxy and let somebody else vote on your in your stead e for exchanges that means exchanges and broker dealers have to register with the SEC that's new as of 34 1934. um the other R is report so any kind of issuer who regulates with the SEC has to do a quarterly report called a 10-q they have to do an annual report called the 10K which is audited and then any kind of special announcements they use in AK or just slap it on a website which they're allowed to do the second m is margin the active 34 put all of margin under the guise of the Federal Reserve board so that's regulation t under M for margin and the last s is stabilization that allows Underwriters that allows Underwriters who are um let's have a suspended that allows Underwriters who are bringing a company public to actually support the stock and prevent it from dropping it's actually a manipulation but it's legally sanctioned okay that's the act of 34. okay so now another Act is this erisa which is all about retirement accounts we'll get into and then um then we have Civic sipc okay specific sipic is about if a brokered dealer goes bankrupt okay so for a broker dealer goes bankrupt where are you going to get your money from so if your money is held in what they call street name where if you go to buy shares for if you have an account at Robinhood and you go to buy shares in the market you're not actually buying them Robin Hood is but they have a ledger and say Ken owns the shares okay so they're actually held in street name but the risk is that what happens if that a um if the broker dealer goes bankrupt like Lehman or bear Stearns that you're going to lose your money so they have cipic which is a Securities investor protection Insurance okay let's forget the C stands for it doesn't matter um it says we'll cover your account up to 500 000. of security so 500 000 of which 250 can be cash so it's not you know 500 plus 250. it's 500 000 of which 250 can be canceled so if you have 500 Grand in Securities you're covered but if you have 400 Grand insecurities and and say 400 in cash they'll cover 400 in the Securities and then 100 in cash okay so and again if you like say you're married and you have an account and your husband or wife has an account and then you have a joint account each account is 500 each not 1.5 million total 500 each 500 for your account even if it's a cash and a margin they combine them the joint account gets 500 and and your husband or wife gets 500. so that's 1.5 million but not the total it's 500 500 500. that's sipping and that's only that's not for that's not for fraud and like that that is literally for the banker the company the broker dealer going bankrupt not the issue or the broker dealer now when we do try to raise money there's different ways there's common there's preferred there's bonds okay so start with common stock is like ownership in a company right you should know this I'm just again high level to bring it back to you common stock is ownership there's only three reasons by comments like either growth which is like Tech stock short stocks income dividends or inflation protection those are the three reasons what is the biggest risk you have Market risk called systematic and then you have or systemic whatever that you want to call it and then you have business risk which is non-systematic okay that you can diversify Away by buying multiple stocks or buying a mutual fund so common stock you buy it for capital appreciation for growth income or inflation protection and the biggest risks are systematic Market risk or non-systematic which is a business risk like your company sucks okay what rights do you have you have the right to vote you have statutory and cumulative statutory means you get one vote for every share you own and you have to use it the way you got it there's cumulative which is better for the smaller investor it gives them more voting power you get you get to take your shares you get the same amount of shares but you get to lump them on one person if you want you can like overload on one person it helps you can get this way you can maybe get someone in on the board that you like more than the other person you have the right to a dividend either cash or stock now remember derp d-e-r-p declaration this is the order declaration X day that's a day remember on the X day if you buy it before the next day you get the dividend if you buy it on the next day you don't get it remember X is like ex-girlfriend ex-boyfriend ex-dividend it means you don't get it okay um declaration X record record day is a day you have to be an owner of record you have to buy it two days before that the X date is one day before that so if you buy this stock two days before the record it you will settle on the record date and you get it if you buy it on the X date which is one day before the record date it will settle after and you won't get the dividend and on the X date the stock drops by that amount if you do a stock dividend you're actually getting more stock again that really isn't taxable in the year getting a dividend is taxable anytime you get cash it's taxable um with a stock dividend you're just going to get more stock it's like a mini stock split okay so you're getting more shares but worth less so if you have a hundred shares at 50 and you get a 10 stock dividend you're now going to have 110 shares and it's going to be with 45.45 so the shares goes up and the price goes down by the same amount remember derp okay preemptive rates that's the right that if the company issues more shares they're going to give you the ability to buy more shares to keep your percentage ownership now to increase it to keep your percentage ownership you gotta write their short term they're issued with intrinsic which means they're immediately exercisable if you want if you get that there's 30 to 45 days they let you buy more shares to keep your percentage ownership you're going to get one right for every show you own you may have to hand in four five six rights to get a new share math doesn't you don't have to worry about the math on this test just understand that's what it goes and what can you do with the right you can you can exercise it or subscribe you can let it expire dumb but you're allowed to do it you can trade it and give as a gift you can do all you can do all those things you you can't redeem it back to the company though okay if you get if you don't want it just sell the freaking thing because remember there's value there because it's going to let you buy the stock below the where it's trading so there's a discount okay good stuff now you also get to check the books and records of the company not that big a deal you just read the 10K 10q nobody cares you can freely transfer it that's a weird right but it's important like if you bought into my company feel free to send me checks you would take a lawyer and weeks and all that money to get in and if you want to get out it'll take weeks and lawyers to get out well stock you buy it an hour later you go I don't want it just sell the damn thing that's valuable we talked about the risks systematic versus non-systematic and common sock is the one that you see that's the most volatile is the one you see on the market on the tape that goes across under CNBC um and that's the mo that's the riskiest for the investor but the most conservative for the company because they don't actually owe you anything they just issued the stock and if they pay a dividend they pay if they don't they don't so let's go up one level preferred some what is preferred stock not common stock it's Equity but you get paid a fixed dividend if they pay it remember there's no guaranteed dividends interest would be guaranteed by the company but Dividends are never guaranteed it's up to the board of directors all Dividends are up to the board of directors all of them so what happens is you're going to buy a fixed dividend you're likely going to get paid you're going to buy a preferred it's going to have a fixed dividend so say it's a five percent preferred remember par on a preferred is a hundred pardon a common is a dollar carbon preferred is a hundred bucks so if you buy a five percent preferred you're getting five percent of a hundred bucks okay every year and what they do is they pay quarterly or monthly or every six months they'll tell you they will be absolutely clear I stick with quarterly because that's why I know them so if you get a five if you get a five percent preferred you're getting five bucks a year which is going to be a buck and a quarter every quarter okay that works it's not guaranteed but it is there why do you buy preferred you buy them for income and what are the risks well you have interest rate risk what's that the risk that rates go up the price your prefer goes down you lose money you may lose money you have inflation risk because you're getting the same amount of money but as we've seen in 2022 inflation kicks the out of you prices rise but you're still getting the same amount of money no good um call rest it's the risk that the company will call back the preferred they only do that when rates are lower so you're going to get your prefer your preferred money back and go oh I'll just buy new preferreds but then you realize there's really crappy rates available because that's why the company issued it that's a call risk okay reinvestment risk anytime you get paid something you're getting paid this you're getting paid this annual dividend or a quarterly dividend and you're going to reinvest it but if rates are lower when you get that money you're actually going to earn less money on your new money right so if you're getting five bucks a year say you get your five bucks you go to reinvest it but the only thing available is like a two or three percent preferred so earning less money the only way to kind of like um to offset that is to buy something a riskier with a lower credit rating so let's talk about oh we'll talk about credit ratings later now so pretty much if you think if you hear the word dividend think quarterly and not legally required it's always up to the board of directors there are three main types of preferreds we have the regular one you know callable not callable stuff like that but we have three other types we have cumulative which means all the cumulative means is is that if we miss a dividend like last year two years before we can pay the common we have to make those all those past dividends up it's called inner ears we have to make them all up in our ears okay that's cumulative the other one we have is participating participating means that if we have say we have a five percent preferred you're getting your five bucks every year and then the company is a great year you're not getting any more out of that so what happens is in participating they will give you a bigger dividend they will up your dividend by base it's in their perspectives but to say oh if we're earnings go to this you get this if the earnings go to that you get that only that one quarter or or a year or whatever it is but you can participate in the earnings growth of the company because it's written in that way that you'll get a little extra little bonus okay but a one-time thing then the third type is convertible I'll put the video up here but convertible means it turns into common stock so you're getting both the income and the growth of a common stock so the volatility so convertibles are very volatile right so if you buy a convertible Bond it turns into stock every time the stock moves the preferred the convertible prefer to a move also because it moves with it okay because anything that turns into common stock will move in accordance I said I'll put the video up here you'll get it hope I remember if not go look up convertibles it has a little Christmas thing on it I seem to do convertibles around Christmas all the time by the way Happy New Year's you guys okay it should be the first of January okay now there's a question you're gonna get current yield okay so everyone always gets this question about currently you always have to do one or two of them I'm not going to give you a question I'm just going to tell you how to do it okay so you're also going to get a question on current yield what is current yield current yield is always just coupon or annual income over market price so one of my students Greg he remember this is how he remembered it he said you know current is electricity and what is electricity amps okay amps so he remembers a m p so it's going to be annual income divided by market price that's all it is I'm not going to do the math you guys should have you should have this down but just remember annual over market price okay annual over market price that's that okay Okay the third thing that an issuer can issue is debt that's where the issuer is borrowing money from investors so if you buy a bond you're actually lending money to the issuer it's not a um it's not Equity you're not an owner you don't have dividends you don't have rights to vote or anything but you're a creditor which means in the order of payout you're first so let's make sure we talk about that so we'll get into the bigger thing but it's always going to be bonds then Equity bonds get paid first creditors get paid first in equity we'll go a little deeper at the end of this so now basically always think of like Kevin O'Leary right you always see Shark Tank and he's like well I won't buy it I'll give you a loan and then you pay me back that's what's going on you're lending the company money and that's a that's a risky Endeavor for the issuer because remember they're taking on debt right that means they have to pay like even with preferreds they're supposed to pay but if they don't pay I mean it's not the end of the world where with bonds if they don't pay you they get sued because whenever issue a corporate bonds have a trustee whose job it is to protect the investors so if you don't pay they're going to sue your ass and take you got to pay us or declare bankruptcy or something So when you buy a bond pars a thousand they don't have to be sold for a thousand it could be five grand ten Grand a hundred grand whatever but par is a thousand so if they say you buy a 10 Bond you're getting 10 a par which is ten percent of a thousand which is a hundred bucks you have a five percent Bond you're getting five percent of a thousand which is fifty bucks so the par value matters to tell you what you're earning okay it's just a counting tool if you want to say so let's remember so let's go back common stock par is a dollar preferred par is a hundred and bonds pars a thousand so in general it is this again I'm doing high level you lend the company money they pay you back in 30 years and they pay you semi-annually if you have a 10 Bond they pay you 100 bucks a year cut in half 50 bucks every six months remember it's paper for Equity now there's two types of bonds really they're secured which are like mortgage bonds by property equipment Bond backed by equipment and collateral bonds backed by us by a portfolio of Securities those are secured they get paid first so in the order of payout it's like secured then unsecured okay unsecured means it's just full faith and credit I just promise to pay you okay I have I do a maybe I have a good credit rating which we'll get into I have a good credit rating I'm just an issue an unsecured Bond remember which would you rather have a bond backed by property or something or one not backed my property you'd rather have the one backed by something so that'll have a lower coupon user to issue where the debenture a debenture means unsecured corporate Pond means that you will not have a um that if they issue if they default if the issue defaults you're just going to get you're going to be accredited and hope you get money at the end or something like that okay now on a bond the income is safe the income is more secure because they're legally obligated so it's more secure than preferred just preferred just we kind of have we were supposed to basically bonds have the same risks as preferred they have inflation risk interest rate risk call risk reinvestment risk and then they also have bonds also have default risk okay bonds have default risk also so we use credit ratings okay so to determine the risk or how risky a bond is we're going to use credit ratings and who the big two Moody's and s p so put it up here they're very similar but the top rating is AAA and then in Moody's it's a a and then down here I have a a it's literally the same thing just the areas are different okay then we have BBB we always say Moody's looks different because he's Moody ebb no those are the investment grade okay anything above that line is investment grade anything below that BB a that's anything below that's going to be speculative or high yield so those are the credit ratings that's how we determine how riskiest a bond is or debt is and the higher it is the less risky it is so it means there's a lower coupon because remember the more risk you have the more I have to pay you so if I if I get a higher credit rating I don't have to pay this much the lower credit rating I have to pay more and once it goes below this line This investment grade line to speculate or high yield it it's harder to sell there's a lot of Institutions that can't sell it even if they wanted to so again this is the credit ratings this is how we figure out how risky a bond is okay so those are the credit ratings but let's talk about the different types of again high level there's corporate bonds that's like IBM Tesla Apple the issue bonds it's based on the credit rating of the company they're either secured or unsecured which is a debenture then we have municipalities like city states governments city and state governments they that's the only way they can raise money they're called either go bonds General obligation which are backed by taxes those are for things that are free to use then we have revenue bonds which are backed like a project like a highway a bridge to anything that costs money even ferries and stuff like that anything that costs money to use the revenue from the project pays the interest so those are the main two Muni bonds municipal bonds the reason people buy Muni bonds is because the interest is federally tax-free almost always except for others some situations but not on this test the interest is federal tax tax free and then it might even be state tax rate if you buy it in your own state so there's an advantage there so rich people by munis poor people by corporates then the other one is if you want safety and income you buy ones issued by the US government treasuries there's five of them I'm going to repeat bills notes bonds tips strips again bills notes bonds tips strips Tebow short term no there's no uh they pay at the end a very short term like one two three six months in a year Tebow is very short term then we have t notes those pay income every six months those are two to ten years still safe then T bonds are up to 30 years they pay income every six months too um we also have strips which are long-term zero coupons a zero coupon there's a bond where you buy it at a discount and it grow and then what happens is at maturity you get the Thousand so if you buy it for 800 now and in 10 years they give you a thousand that 200 bucks is interest but that's not that's that's why it's called the zero coupon there is no coupon um they're pretty volatile because there's zero coupons um the other thing we have is tips tips are treasury inflation protection Securities those are bonds basically they're charging bonds and they pay like three percent or whatever it is depending on what's going on and if inflation goes up the par value actually reflects so you're you get you match inflation so if inflation goes up the amount of money you're getting every year will go up also to match inflation so Keynotes and T bonds for the most part they might ask this they're quoted in 30 seconds okay even tips or two but they're not going to ask that so they're gonna say how much did you pay for the bond or how much you sell it for so let's get through this so it's always out of 30 seconds but they don't say it so if you see a decimal or a dash this is a decimal or they say you see 98-25 it's the same thing it's going to be at it it's going to be out of 30 seconds so to find out what the bid and ask are you going to do 20 divided by 32 so what happens is I'm going to do 20 divided by 32 that gives me 0.625 and then I'm going to do plus 98 the full I'm going to do plus 98 on the calculator and that's going to give me this and then what happened is that would be kind of the quote but the really the price will be let's move the decimal over 986. 0.25 and they do the same thing over here 25 divided by 32 gives me 78 781 a lot of numbers add to 98 so it's going to be 98.78 but it's really going to be 987.8 because it's really out of a thousand so that is that if you bought the bond you pay the ask if you sold it you hit the bid oh and that's bid ass too remember that so if you if you buy you pay the ask if you sell yourself a bit you buy at the ask you sell it to bed okay again high level Bond just remember the biggest risk on bonds is mostly credit risk unless it's a treasury okay and a triple A rated is super safe I mean think about it there's only two companies in the world that are Tripoli rated John Chen and Johnson and Microsoft I guess those are the only two so that shows you how safe Triple A rated is so it's a big deal okay so if something's Triple A rated credit risk really isn't on the table but if it's not AAA rated credit risk is on the table it's one of the big ones now let's move on let's talk about bid and ask a little bit so I'm not going to put up on the screen but if by left side is Bid the right side is asked okay I have videos on this bid is where people are willing to buy ask a zero people are willing to sell if you want to buy it you have to buy it where someone's willing to sell it you buy it the ask and then you pay a commission or a markup after principal and then you sell it you sell it at the bid which means you you're going to hit the bid and then you pay a commission or you pay marked out and remember that if it's an agency transaction which means a broker dealer is not involved they're just kind of a middleman they're not using their inventory agent broker you can pay the commission if the company is actually using their own inventory or principal it's going to be acting as a dealer and they're going to charge a markup if you're buying and they're marked down if you're selling and what that means is that if you buy stock at 30 and they sell it to you principally you're actually going to pay like thirty dollars plus like a 20 cent markup it's going to be 30 20. kind of like if you go to a restaurant and you buy a bottle of wine you know you're paying 30 bucks for that wine cost them five bucks they're marking it up that's their profit okay now different types of orders right so if I call you up and say hey viewer just buy the shares okay just buy them I don't care about price that's a market order a market order just means buy them at whatever price or sell them at whatever price and in that case you would always pay the ask or sell the bid but let's say you do a limit order and I have video again I have a video on this buy a limit is like hey buy a hundred shares at 50. I'm not going to say take a limit order I'm just going to say buy 100 shares at 50. that means I'm willing to pay 50 or lower not higher that I'm setting a budget I will not pay more than 50. what if I say sell 100 shares at 50 that means I'm willing to sell it at 50 but no lower we'll have to sell it at 50 51 52.58 but not lower than 50. those are limit orders and then and when you get down to the market market order on The Exchange Market orders take precedence over limit orders so if they at the same time Market order goes first then the limit order does because you're rewarding aggressiveness in a way because you basically you just adding you're helping out with the market okay since this is more of a listening thing or just just letting it flow over you hold a return I'm not going to show the whole thing so Total return is your return so you're going to take your growth so say you buy stock at 50 and it goes to 60. he made 10 bucks you need to do 10 divided by 50. that's your return but what if they had money into that what if they added some income into that what if they say oh you bought socket 50 and it went to 60 and you also got a two dollar dividend then you take the 10 the capital gain the 10. remember will you buy that as your cost basis the 50 is a cost basis the 60 is the proceeds so that ten dollars okay and then you add two dollars of income on top of that so that's twelve dollars and then you divide it by the original remember that you divide by the original so you do I mean 12 you divide by 50 and you got 24 that you always remember Total return you might get a question or two is always going to be your growth plus any income divided by the original okay secondly you got to know how to do stock splits okay I have videos on that I'll try to if I can't put them on the link I'll put them in the description but you gotta know how to do stock switch to make it one you may get five I have an easy way to do it but if you don't like doing my video show if you have a way that works stick with it don't change now today before convertible bonds same thing you need to know that for the one thing you need to know one convertible bonds I'm going to say one thing and then list four because I'm an idiot one you need to know that they're more vital than than regular bonds because they're attached to stock two you're getting income and capital appreciation or that risk okay three when they ask you the ratio that's asking you how many shares you get if you convert and sometimes they give it to you but if they don't they're going to say oh it converts at a price you do par whether it's a convertible preferred or convertible Bond you do par divided by the convertible price so if it's a you know if you if you bought a um I'm not gonna get into it I have a video on that but again if it's a thousand dollar Bond and the convertible converts at 20 you're gonna do a thousand divided by 20 that's going to give it 50. okay that's the ratio how many shares you get if you convert if you then get that God forbid they go farther than that that's the ratio that's how many shares you get if they want to know what parity is or whatever you take that number that 50 or whatever we come up with and multiply it times the stock price the comments are priced and that's going to give you parity and that's going to be what it will be worth if you um if you converted to really the big the mathy things you have to know current yield you have to no total return and you have to know the stock splits that's the big ones but they're not going to ask you tax equivalent yield those things are more serious seven so if they do it's probably a test question okay let's move over to another act the Investment Company Act of 1940 that covers like mutual funds remember thumb f-u-m face amount certificates unit Investment Trust management companies which are open and closed so Facebook certificates uits you're probably not getting questions on but they are under the act of 40. they're regulated so think of an investment company as a diversified pool of funds it's basically a an investment company is like this filled with Securities of some sort and depending how it's handled is what it is again you should be you should know this stuff already right just reminding you okay so now a mutual fund also known as open end it trades once a day at the end of the it's priced once a day you buy it at nav plus sales charge okay and then when you sell it you sell it at nav you can go in and out of it inside or inside of a family of funds without paying a sales charge but remember everything about a mutual fund is taxable everything okay they have to distribute ninety percent of their income every year so this way they do that then you only pay taxes on what they distribute not they pay taxes and then you get it and you pay taxes it avoids double taxation don't have to go crazy on it closed end funds they you they issue shares one time and then those shares traded on Exchange again I have a shitload of videos on this you buy them when you buy it's remember when you buy the music fund you're buying it from the sponsor or the fund at nav plus a sales chart when you buy a closed end fund you're buying it from another investor on the market The Exchange whatever it is and you're paying the ask or if you sell it you're selling it at the bid plus a commission it's like a basically it trades like a stock okay you can buy it on margin you can sell short all that crap but both open and enclosed and are actively managed which means the actual portfolio manager is trying to beat the market they're actively trading to try to beat the market then we jump down to an ETF an ETF is not actively met it's not actively managed but it is it trades it's funny it's like it acts like a closed end fund it's technically an open end but it acts like a closing it trades on the market you can buy the margin you can sell it short all day long you buy at 10 in the morning you can sell it at two in the afternoon and maybe make money or not they're actually more liquid than mutual funds in a way but they're not actively managed they're passively managed and what does that mean passively managed means that they're not trying to beat the market they just go look here's our here's our Securities here's the percentages we have we're going to run with those but every quarter we're going to rebalance them because you know stocks don't move always at the same rate so the percentages may go cut out of kilter so they will rebalance those Securities those portfolios every quarter that's passive they're not trying to beat the market and all of those things open and close that in ETFs they even have inverse ETFs and leverage inverse means they go opposite of the market um leverage means that they go more up or down you don't have to go into it but they can go two times or three times okay all of these things open-end funds close-end funds and ETFs since they're pooled Investments they diversify you they do not get rid of systematic risk but they do get rid of non-systematic risk because that's business Risk by owning an ETF or any kind of fund you're Diversified hopefully and you're going to not have to worry about that you're gonna have to worry about Market risk but not about one company doing bad just you know I'm going to throw it in there and etn is debt it's a debt it's very risky it's unsecured debt but it acts like an ETF because it basically you're lending money to a company and then they're going to pay you in 20 30 15 years whatever they owe you plus whatever that index did just remember the big thing is etns are a debt they act like you need to have they track an index but they're definitely debt and they don't pay anything during the life of it I can go crazy on the options and stuff like that but I'm not gonna I have a playlist for that I'm just going to put it up here or in the playlist I'm not going to go crazy on that stuff because it's not heavy on the test and people forget about it but they shouldn't okay another one is variable annuities variable annuities are a retirement account it's non-qualified what that means is that it means the money goes in after tax and then it grows tax deferred so non-qualified in this instance says it means the money goes in after tax which means you pay tax on the money you put in like a normal thing and then it grows tax deferred which means you do not pay tax on it until you take it out when you do withdraw it you can either get a lump sum get paid or annuitized which means you're paid for Life both of those the money you put in is not taxed the growth is taxed so if you put in 20 and it grows to 100 and then you take it out you're going to only pay tax on the 80 not the whole hundred because you already pay taxes on 20 of it that's where if it's a qualified plan and you put in 20 and it grows to 100 you'll be taxing everything because qualified means you put it in before taxed the money's never been taxed now we do this for retirement It's usually the last thing you ever recommend that that's more of a series seven thing but we are we are here um the whole point of it is to have a retirement plan that's not connected to your company or an IRA there's really no limit on how much money you can put in because they're taxing you when you put it in there's also know what they call rmd required minimum distribution required minimum distribution is when you hit 72 you always hit the money out just trying to spit but I have like bullet points but I'm just trying to throw out okay now remember the annuities annuities pay you until you die life insurance pays you when you next remember insurance pays you when you die annuities pay you until you die okay now a variable annuity you have if you see the word sub account or separate account that is a trigger to say you know that it's a variable and that means it's invested in the market and you're going to avoid inflation and you may you can avoid inflation risk a lot but you have Market risk if you see fixed annuity what they call general account if you get the same amount of money and it grows at a set rate so you're actually going to um you're gonna have some Mark you're gonna have not have Market risk but you're going to have inflation risk or purchasing high risk oh super quick on on retirement accounts okay so there's IRA and Roth IRA those are not those are not sponsored by Corporation the IRA is your own the Roth IRA and regular Ira you do it yourself you open a brokerage account you make it an IRA whatever it is now both of them have a cap as of this year it's more but they have a capital like say around six grand depending on the year six grand a year you can put in if it's a regular Ira it goes in pre-tax which means it's not been taxed if it's a Roth IRA it goes in after tax the regular IRA has no income limits every billionaire you can put money in but on a Roth if you if you make over a certain amount like if you're single and over 140 but how could you be single if you're making that much money um kidding um you you all sudden can't get put money in anymore but the good thing is if you start young and you put it in and then your income goes above that limit the money's there and here's the big difference the regular Ira you put the money in it's never been taxed when you take it out you pay tax on every prick and Penny okay on a Roth you put money in after tax so it's been taxed it grows tax deferred as long as it's been in there for five years or more when you take it out tax-free you do have to wait till you're 59 and a half just like all retirement accounts but if you do that or it's a qualified either for death or disability or education that you should know this already um it's a qualified withdrawal where on a regular Ira you pay no penalty and in a Roth you just don't pay any taxes at all on the orisa side which is employee requirement income Security Act these are qualified plans sponsored by corporations the big ones are like the 401K a simple which is up to 100 people we have a SEP IRA which is for small businesses they all get treated the same way it's money goes in pre-tax it grows tax deferred and then you pay tax on everything the early should think it out is 59 and a half you must start taking it out when you're 72. if you offer to one employee you have to offer to all full-time over 21 employees because you can't discriminate you have to have a vesting schedule which means any money we don't have to have it but you I guess you do if if any time the company matches so if the company puts in money for the employees that has to have a schedule where that becomes the employee's money like over one year to a year five years so if the employee leaves they got to walk away with some of that money that the company put in for them but remember any money that the employee puts in is immediately invested they can take it out now the IRS will penalize you but they can move and roll it to another firm okay to another retirement account if they want um a 401k again is pre-tax it grows tax deferred the company you put money in the company can match or not they don't have to match they can and again just like that it's 59 and a half and you have to take it out you have to start taking it out by the time you turn 72. again I'm spitting this out quick I don't know how heavy they go on that the 403b is for like teachers and non-profits it can be qualified or not um for the most part they're going to be qualified but that's for teachers and um nonprofit a 457 is for also for government and nonprofits but there's there can be a non-qualified plan where they don't have to follow our original rules the whole point of Arista was to protect employees from having the company's um screw their pensions and retirement accounts over okay now two things to find benefit means you know what you don't know what's going in for you but you know what you're going to get at the end like my buddy's an iron worker they told him if you put in if you worked for 20 years they're going to pay you a four grand a month for the rest of his life they're defining his benefit as opposed to like young people like you guys if you define contribution is like a 401k you put money in and it grows whatever it's going to be you have no idea because you're going to put in you know five six ten Grand a year and then that's going to be invested and it can be a million dollars it could be five hundred thousand it could be four million dollars you don't know what it is so Define contribution you know it's going in you don't know where it's going to end to find benefit you know you don't know what's going in but you know what you're getting at the end mostly defined benefits like pensions and people aren't like not corporations and stuff now let's go over to some compliance stuff that was so much fun okay so AML anti-money laundering that's basically taking money from Criminal Acts or illegal Enterprises I mean big words and cleaning it by running it through the system that's what you're doing so all the companies all the all the Regulators have a thing called red flags that's they have to have you have to have an AML compliance officer who does AML training every year you have a red flag thing which is like certain things that trigger it the best time to catch money laundering is when they put it in during the placement placement is when there's three stages of money laundering there's placement layering and integration we're going to talk about placement placement is you put the money in gets deposited yeah and then that's where fencing comes in because if somebody puts in like over 10 000 in cash you're gonna do a CTR and report it if somebody comes in there with a bunch of cash and they don't want to tell you where it is that's a red flag pretty much if they're wiring it from a from another U.S Bank we're not as worried because that's probably not going to be a problem we can track the money but if it comes from a bank from it outside the country or you they walk in and they seem kind of sketchy or Like You Ed they don't care about commissions or what if what if they put the money in and immediately start wiring it to unrelated accounts warranty your family is normal trust me I do it all the time venmo and sell now but you could wire it um but if it's unrelated accounts or even wiring it outside the country tell a Kyle of man that came in Switzerland all these countries some of the Stan countries Chad those would all be to red flags and wait a second you put the money in immediately wired it maybe you were doing what they call layering which is creating them some distance between the money we earned illegally and where we we want to clean the money okay by layering it making it hard to track okay that's the layering so we have placement which is when you put the money in and any kind of red flag or something like that it'll end up at fincen and that's always Finance on the financial Financial crimes enforcement Network that's what they're looking for stuff like that so if you see um if anyone puts in or takes out 10 grand in cash that's a CTR they have 15 days to do it hundreds of thousands have done or every day thousands at least they're done every day it's not a violation it says Hey somebody put in or took out more than 10 grand in cash but if you think it's a violation or something Shady you can do a SARS well you probably wouldn't but you would cook the red flag up and someone up higher in the chain would follow SARS that's like a suspicious activity report that you actually have 30 days to to send it because remember something here's why with this CTR big deal you reported with the SARS you're screwing that guy's life up okay because you're actually putting you're you're reporting them to the treasury Department FBI whatever it is SEC where they're going to be investigated so they give you 30 days to make sure it's good that you're doing the right thing but that's for anything over five grand that's suspicious the money comes in it has blood on it stuff like that or whatever they want that's crinkled they won't answer you why where they got the money from stuff like that and then the final stage of am of money laundering see AML is to preventing it money laundering is money laundering so we got placement we got layering and then we have integration that's where they're sitting in the Cayman Islands and they withdraw the money and they now have clean cash that's not tracked by this bad stuff they're doing that's all they're doing is they're trying to clean the money go watch Ozarks it's a really good show it'll explain it over four years okay so this is good stuff these are like little bullet points of stuff that that you got to know for this test the investment missed I have a video on it I'm not going to go through that whole thing so let's go through this this is what the register a lot of the rules on the register rep you work for finra you work for broker dealer that's Regis with finra you got to make sure you don't do this one no IPOs which means you cannot participate it's just an IPO but I'm going to make it cleaner you cannot participate in common stock IPOs you just can't it's a new issue rule you cannot do it questions exceptions right okay so one if it's a preferred or a bond or a secondary or an additional offering like the second or third time the company is your snares they don't care it's just common suck IPOs you can't the there's one big exception if your husband or wife works for the issuer so let's say my company's going public Capital Ben is tutoring hey um and I do an IPO if I worked for a broker dealer I couldn't buy it but oh wait I work for them that's an exception they would exclude me from that they say okay since you actually were for the issue we're not going to deny you that opportunity we're gonna let you buy it it doesn't happen that often where it's not manipulative another one is if you work if you're invested in a hedge fund or a mutual fund or some sort of club and as long as a register rep's involvement is 10 or less of the total than the the fund or the investment Club can buy on it because remember if you're if you're a registered you cannot buy in comments on copios nor can the clubs you're part of like if you're part of investment club or a hedge fund and you're more than 10 they can't do it either because that would be like a way around having having it done okay so a few more things one as a registered you cannot have outside jobs unless you have to at least tell your employer that you have a job you don't need permission now remember all these firms can have what they call house rules house rules are just hey we have rules that you have to get permission from us but finra does not require get permission you just have to let the company know your broker-dealer no the one you work for that you have an outside job you cannot have here's one thing you cannot have an outside brokerage account without prior written permission from your employer so you cannot have an outside brokerage account without prior written permission from the employer but let's say you start working for a company and you already have an account you have 30 days to let them know and they can say no you got to shut it down as a rep if you get to open an account at another firm another book a dealer you have to send duplicate statements and confirms confirmations to the employer okay no don't you cannot act as a register rep outside your firm meaning like if one of your it's called off the books and records of the firm it's like if your buddy says hey you want to help me raise money for this company and they'll pay you a dividend pay you commissions not through the firm that's called selling away and that's a violation unless you get permission from prior information from your firm which most of them won't so if you're doing it off the books and records of the firm without permissions it's selling away with permission it's called the private security transaction and that's fine you can't front run you can't jump buy shares in front of your customer no churning just look for the word excessive you can't churn the account one thing that doesn't matter when they're looking at turning Gander loss has nothing to do with it okay whether they make money or not excessive trading is excessive trading they look at the whole thing you can't make guarantees you cannot guarantee anything you can't guarantee a profit you can't protect against a loss all that you can't guarantee good to us no predictions you cannot make predictions for um the company for like that you can say oh I know it's going to be registered soon I know it's going to be an exchange I know it's going to go to 50. you can't do any of those things you can't give fake quotes you can only cold call cold call there are exceptions to it but you can only cold call between 8 AM and 9 pm of the person's time zone if they ask to not be on the on the if they say do not call me they have to be put on the Do Not Call List within 30 days and then you can't call them anymore unless they call you or respond stuff like that um you can't share in the profits and losses of an account unless you have a joint account and it's proportional to what you invest so if you put in 40 and they put in 60 you can get 40 they can get 60 percent um max gift to an employee of another firm of another firm is a hundred dollar gift okay customers whatever it is the most you can give as a gift is 100 bucks a year weddings and funerals are excluded they don't worry about that can't get a rolls for their you know can't be excessive but entertainment is no limit okay there's no limit on entertainment okay so if you want to take them out to dinner and you spend two grand it's fine take them to a game that's two grand where they get you sometimes where they get you sometimes is they go oh you bought two eighty dollar tickets for your to go to the game with your client and you get sick what do you do well you can't go so then they can't go unless you send another rep of the firm because if they go and they have those two tickets that's over a hundred dollars and that's a violation okay so enter so as long as you go with your client It's Entertainment if you give them me as a gift and you don't go like you buy them a meal there's a hundred dollar cap okay there's another thing we do called the for specified adults these are people over 18 and mentally incompetent or over 65 they have to be treated with care so you don't have to do this but it's suggested you get a trusted contact person but this tries to contact person can't make decisions I mean they can't buy or sell they can't do orders unless they have power of attorney they can't do any of that okay they can only sit there and help you try to figure out what's going on if somebody comes in and so if somebody comes in and they're clearly out of it and they try to give you an order and you have a trusted contact person you should always try to find that and say listen the person seems out of it or we think they're being exploited and that also if you think they're being exploited you can put a hold on their account you can put a hold on disbursements but you cannot put a hold on trading and you cannot stop them from paying their bills so again The Trusted contact person in this holding holding period where you stop them from doing stuff is all to protect people who are incompetent or over 65 and might get exploited okay and again The Trusted Contour I did but contact person is a guideline not a rule so what happens when you start working for a broker dealer you're going to fill out a u4 what's on that really it's more about what's not on it right you're going to have you're going to do you're gonna put your information your address all that you don't need to put marital status you do need to know your last 10 years working now if you're young like like when I started I was 20 right so I actually had to put my middle school I had to put soul pro Middle School on there my sixth grade okay I was really young when I started why is this hat so bad is that better feels crooked but it looks better I don't know so on the u4 you have to give your last 10 years of employment or working school counselors work and then and look and if you miss a freaking job I get this question all the time I forgot to mention a job I had this summer I was 16 I was chatting nobody cares nobody gives a they just want to know where you are um then the other one is the last five years okay the last five years of residence you don't have to go 10 years of residence so it's 10 years of employment or work and five years of residence okay you don't have to put your matter status you don't have to put your education on there the reason everyone thinks it's education is because if you start under the age of like 30 you're gonna have to put your college or your high school on there so you think you're disclosing education when it just what the hell are you doing 10 years ago that's all they're asking now remember statutory disqualification I can't say that statutory disqualification occurs if you have criminal activity within a certain time period so any criminal activity you have to disclose from whenever but it only matters if it's in the last 10 years or if you were banned by the FCC but you would know um if you have any felony conviction remember not charged not indicted not arranged conviction in the last 10 years you're out you can't work statutory disqualified as state if you have any now this is the confusing one if it's a misdemeanor and it's not Securities ethics or taking of money like bribery and stuff like that then if it's not one of those then you're okay so like a bar fight or a DUI Walnut okay will not disqualify you so if you have a misdemeanor conviction in the last 10 years both are 10 years so any felony conviction in the last 10 years and any either Securities ethics taking of money that kind of thing that conviction would disqualify you remember not charged not arraigned not indicted none of that has to be convicted now if during your while you're working you are charged with any one of those things then you have to tell your firm you're not going to be disqualified until you're convicted hopefully you're innocent until proven guilty but you do have to let them know if you get in a bar fight you get arrested you're supposed to tell your firm but it's that's not disclosable because of our fight as a bar fight right okay now that's the u4 and anytime there's a change you have to update within 30 days you have to tell your firm they have to update it within 30 days they'll be a view five that's when you leave doesn't matter whether it's voluntary or not you five means you've been terminated whether you quit or just left that has to happen within 30 days of that has to happen within 30 days of you doing it so if I quit or you fire me today you have 30 days to finish it okay U6 is if there's a screw-up and look at the numbers I think it's a fine of over 2500 whatever is anytime you screw up the Securities wise the finra SEC you have to disclose it on your U6 now here's the thing it's now January 2nd continuing ed is now going forward annual for every license you have you have to take continuing at every year one caveat to that what it used to be was on your second anniversary and then every three years after that so you're gonna see one of those two on the exam they might even have the old one on there but it won't give you the annual also because that would be cool because it is every year and for every license you have so I have like six licenses I have maybe more but only six that are fin related I would have to take six continuing it now if you get the seven it's one year so if you pass a seven this year you should have to do it I would assume that it's gonna be next year you're continuing it because you've done it but remember it's annual now starting today it's annual CE but they're on the tests they're not going to give you both they're going to give you one or the other so it's either going to be second anniversary and then every three years after that or annual they will never make you choose between the two um I think that works now let's jump on to the the economic stuff again this is all quick and dirty high level stuff not going super deep so the Federal Reserve there's two okay so let's get into economics remember high level quick and dirty this is not like going deep into it but this reminds you of stuff you can watch it on the right there watches over and over again really important to watch it the day before the morning of but whatever so there's two things we can do for the economy we either have fiscal or monetary so fiscal policy is changing the taxes and the government and taxing and spending that's the whole Keynesian thing monetaries of Federal Reserve moving this money supply up and down so why would we do that because what what's happening is is that with the governments or the Federal Reserve because it's not the government is trying to lessen the impact of swings so back to that now in the economy of four Cycles we have expansion expansion is when the GDP is rising everything's going good we're worried about overheating economy so if it's fiscal they might raise taxes and spend less if it's monetary they will sell treasuries and raise rates to make it harder to borrow during Peak it's starting to go up but it's slowing down now during the during expansion we're worried about inflation and that's why we do this during Peak we have what they call disinflation where it's still going up but not as much right so they're gonna at the end of peak they're gonna start loosening maybe they'll start lowering tax brackets they'll spend it's tax rates maybe they'll start spending a little more on the government that's fiscal and then the Federal Reserve will start lowering the discount rate that's the rate they do and start buying treasuries so we'll go from expansion Peak contraction okay contraction means it's dropping we're going to start loosening and then we get to the trough which is the bottom okay that then what happens is what we want we don't want a a v but once we're going down we want the V up but we don't want sharped up and down the FED wants it smooth okay so during during the good economy they're going to tighten and during the bad economy they're going to loosen that's monetary policy now the four tools the FED has is remember dorm d-o-r-m I'll try to print it here discount rate open market Ops reserve requirement and then margin those are the four things they do they really only do the do the dno the discount rate and the open market Ops okay that's awesome thanks that's the SAE exam quick and dirty I'll have this out as quick as I can and um let's go do this we got it