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Section 1
Classify retail, correspondence, and institutional communications
Preview
Preview: Function 1: Seeks Business for the Broker-Dealer from Customers and Potential Customers
Preview includes- 4 of 5 lesson topics
- 1 overview segment
- 3 core concepts
- 2 exam tips
Lesson Topics
- Communication Classification
- Retail vs. Correspondence vs. Institutional
- Recipient Thresholds
- Fair and Balanced Communications
Overview
This objective focuses on correctly classifying communications based on the number of recipients and their investor type. Accurate classification is critical for regulatory compliance and preventing misleading disclosures
Core Concepts
- Communication types are defined by recipient count and investor type (Retail, Correspondence, or Institutional)
- Retail communication is distributed or made available to more than 25 retail investors within any 30-calendar-day period
- Correspondence is written or electronic communication distributed to 25 or fewer retail investors within any 30-calendar-day period
Exam Tips
- Carefully analyze the recipient count and the timeframe
- Remember the definition of ‘retail investor’
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Section 2
Apply fair-and-balanced standards to public communications
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Section 3
Apply product-specific communication and disclosure requirements
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Section 4
Distinguish registered-offering communications by offering period
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Section 5
Select an appropriate exempt-offering path
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Section 6
Apply IPO allocation restrictions
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Section 7
Explain municipal primary offering and underwriting roles
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Section 8
Choose an appropriate account registration
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Section 9
Distinguish cash, margin, fee-based, and day-trading accounts
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Section 10
Collect and maintain customer account information
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Section 11
Apply customer identification and suspicious-activity procedures
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Section 12
Establish and limit discretionary authority
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Section 13
Validate powers of attorney and entity authority
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Section 14
Apply Regulation Best Interest to a recommendation
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Section 15
Translate objectives, time horizon, liquidity, and risk into constraints
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Section 16
Obtain supervisory approval or restrict an account
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Section 17
Use diversification to address concentration risk
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Section 18
Apply asset allocation and rebalancing
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Section 19
Distinguish systematic and nonsystematic risk
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Section 20
Interpret alpha, beta, and CAPM inputs
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Section 21
Read a balance sheet
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Section 22
Read an income statement
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Section 23
Calculate working capital and liquidity ratios
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Section 24
Interpret EPS, P/E, current yield, and payout ratio
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Section 25
Evaluate inventory and depreciation effects
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Section 26
Process dividends, splits, tenders, and other corporate actions
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Section 27
Reconcile authorized, issued, outstanding, and treasury shares
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Section 28
Apply common shareholder rights and voting methods
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Section 29
Compare preferred stock features
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Section 30
Distinguish stock rights and warrants
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Section 31
Evaluate ADR and foreign-security risks
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Section 32
Determine equity cost basis after purchases and conversions
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Section 33
Apply capital-gain holding periods and wash-sale rules
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Section 34
Select an equity trading venue or liquidity mechanism
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Section 35
Apply penny-stock disclosure and suitability controls
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Section 36
Compare open-end and closed-end investment companies
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Section 37
Calculate mutual-fund NAV, POP, and forward price
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Section 38
Choose among mutual-fund load and share-class structures
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Section 39
Apply breakpoints, rights of accumulation, and letters of intent
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Section 40
Match a mutual-fund objective to a customer constraint
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Section 41
Compare an ETF with an open-end mutual fund
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Section 42
Apply unit investment trust characteristics
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Section 43
Apply dollar-cost averaging, redemption, and fund taxation
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Section 44
Explain the variable-annuity separate account
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Section 45
Distinguish accumulation units from annuity units
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Section 46
Relate the assumed interest rate to variable payouts
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Section 47
Apply variable-annuity taxation and surrender charges
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Section 48
Evaluate a variable-annuity recommendation or exchange
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Section 49
Compare equity, mortgage, and hybrid REITs
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Section 50
Compare traded and non-traded REIT liquidity
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Section 51
Distinguish general and limited partner roles
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Section 52
Apply DPP pass-through tax treatment
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Section 53
Evaluate DPP economics and customer fit
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Section 54
Distinguish call and put rights from writer obligations
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Section 55
Analyze a long call
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Section 56
Analyze an uncovered short call
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Section 57
Analyze a long put
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Section 58
Analyze an uncovered short put
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Section 59
Use a covered call
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Section 60
Use a protective put
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Section 61
Compare debit and credit option spreads
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Section 62
Analyze long and short straddles
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Section 63
Calculate option intrinsic value, time value, and breakeven
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Section 64
Relate bond price to market yield
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Section 65
Rank coupon, current yield, YTM, and YTC
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Section 66
Evaluate call and reinvestment risk
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Section 67
Compare secured corporate bonds and debentures
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Section 68
Calculate convertible bond parity
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Section 69
Apply bond OID, premium, and secondary-market discount tax treatment
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Section 70
Use credit ratings and coverage measures
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Section 71
Select a money-market instrument
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Section 72
Evaluate a structured note or exchange-traded note
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Section 73
Compare GO and revenue municipal bonds
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Section 74
Match municipal notes to short-term financing needs
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Section 75
Evaluate municipal credit, call, and marketability factors
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Section 76
Calculate municipal taxable-equivalent yield and price conventions
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Section 77
Select among Treasury bills, notes, bonds, TIPS, and STRIPS
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Section 78
Distinguish Treasury from agency and mortgage-backed obligations
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Section 79
Analyze CMO tranche prepayment and extension risk
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Section 80
Disclose investment risks and return sources
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Section 81
Compare commissions, markups, loads, and ongoing fees
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Section 82
Determine basis for gifted and inherited securities
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Section 83
Interpret support, resistance, trend, volume, and momentum
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Section 84
Handle material disclosures and suspected elder exploitation
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Section 85
Read and explain a customer confirmation
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Section 86
Reconcile statements, positions, and realized versus unrealized results
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Section 87
Process an ACATS account transfer
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Section 88
Update account records and required notices
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Section 89
Close an account while preserving obligations and records
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Section 90
Process withdrawals, tenders, and third-party instructions
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Section 91
Distinguish firm and qualified quotations
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Section 92
Apply AON, FOK, IOC, MOC, and not-held qualifiers
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Section 93
Choose between market and limit orders
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Section 94
Choose between stop and stop-limit orders
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Section 95
Process a short sale under Regulation SHO
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Section 96
Apply best execution to routing decisions
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Section 97
Complete an order ticket and distinguish agency from principal capacity
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Section 98
Route transaction and disclosure data to TRACE, EMMA, or another facility
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Section 99
Meet good-delivery and T+1 settlement obligations
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Section 100
Escalate trade errors, discrepancies, and customer complaints
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Section 101
Calculate and restore margin-account equity
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