Rule 144 Tutoring Replay - SIE Exam and Series 7 Exam Prep скачать в хорошем качестве

Rule 144 Tutoring Replay - SIE Exam and Series 7 Exam Prep

Dean advises that the most common issue with suitability questions is misreading the question rather than missing a specific answer. Securities Registration and Restricted Status Dean explains the differences between exempt and non-exempt securities, as well as restricted and control stock. He clarifies that exempt securities don't need to be registered under the Securities Act of 1933, while non-exempt securities sold through private placements are unregistered. Dean also discusses registration requirements for securities, broker-dealers, and agents with state administrators. He emphasizes that the main way to remove restricted status on securities is by holding them for 6 months. Regarding financial statements, Dean mentions that Reg A offerings may require audited financial statements and explains the importance of cash flow statements in detecting accounting irregularities. He confirms that all settlements are now T+1 and clarifies the distinction between qualified and non-qualified retirement plans in the context of private placements. Dilution and Earnings Per Share In the meeting, Brenda and Dean discussed the concept of dilution in the context of stock ownership. They clarified that dilution occurs when more stock is issued, reducing the proportionate ownership of existing shareholders. Dean explained that the existing owners have the first right of refusal on the issuance of new stock. They also discussed the concept of fully diluted earnings per share, which takes into account the potential increase in shares due to the issuance of new stock. Brenda requested an example to better understand the calculation of earnings per share. Dean agreed to provide this example and also promised to send Brenda a recording of the meeting. Rule 144: Insider Stock Sales Dean discussed the implications of Rule 144 on insider stock sales. He explained that insiders, also known as control persons, are subject to volume limitations under Rule 144. These individuals include officers, directors, and principal stockholders, as well as their immediate family members. Dean emphasized that these individuals cannot sell their stock after the transaction, and must file Form 144 at or prior to the sale. He also clarified that the form is valid for 90 days, and if no sales occur within this period, a new form must be filed. Dean further explained that the form allows the sale of up to 1% of the outstanding stock or the average of the last 4 weeks' trading volume, whichever is greater. He used a mnemonic device, "144," to remember the key points of the rule. Ford Motor Company Financing Options Brenda and Dean discussed the financing options for Ford Motor Company, with a focus on debt issuance over equity. Dean explained that the Ford family prefers debt financing to maintain their ownership percentage. He also mentioned the historical relationship between Ford and Goldman Sachs. They discussed the credit rating of Ford Motor Company and how it affects their bond issuance. Dean clarified the concept of coupon, nominal yield, and fixed stated rate of return in the context of bond financing. They also touched on the risk involved in bond investment, including interest rate risk and credit risk. Current Yield Calculation Explained Dean explained the concept of current yield, which is the annual interest or dividend divided by the market price of an investment. He used the example of a Ford Motor Company debenture bond trading at 110% of par, meaning it costs $1,100. He calculated the current yield as 7.3%, which is the annual interest of $80 divided by the cost of $1,100. Dean also mentioned that he would not test the calculation of yield to maturity or yield to call, but was willing to explain these concepts to Brenda. Yield to Maturity and Bond Investment Dean discussed the yield to maturity of a bond, explaining that it is lower than the current yield. He used the example of a Ford Motor Company bond, stating that if it was purchased at a premium and held to maturity, the yield would be lower than the current yield. Dean also mentioned the concept of adjusted interest, which takes into account the built-in loss over the remaining life of the bond. He concluded by suggesting that if the yield to maturity is attractive, the bond could be a good addition to a portfolio. Brenda raised a question about tax implications for those trying to avoid taxes by investing in municipal bonds. Tax Calculations and Bond Investments Dean discussed the complexities of tax calculations and bond investments, particularly in relation to private activity bonds. He explained how these bonds could be affected by alternative minimum tax and the potential for default if lease payments are not met. Brenda sought clarification on the yield to maturity and conversion rates, and Dean suggested considering the potential for bonds to be called in early, which could impact the yield.