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Foreign. This is Ken at Capital Advantage Tutor. It's my job to get you passed 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 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, whatever, 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 going to do? You're going to walk into the exam and take it like a bad bitch, 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 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 going to beat this thing and I'm going to go go after it. Every hard question is, I'm going to get this, I'm going to be challenged. It's a challenge, but I'm going to 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 the shit 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 breakfast or lunch before you take the test. Some water. Don't have coffee because I think there's some that happened on the back end. 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 write your dumb sheet. What are you going to put on a dumb sheet for sie? I mean, really shouldn't be too hard. 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 fricking word. Don't skim, don't assume, don't say, oh, it looked like one of the questions I saw on STC or 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 got to 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 5050 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 se. It's the one that you're pretty sure it is. Then when you get through the whole thing, mark for view 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 cute guy or cute girl or the bay 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 it unless you're 100% sure you're wrong. 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 you 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. Read the fucking book. Read every fucking word. Okay, so let's start with this one. Let's talk about the regulators. The SEC is actually The US Federal government, they can come after you for criminal, for civil, for anything. They can track you down wherever you are if you're dealing in securities and commit a violation. So again, the SEC is the actual government, the federal government, okay? Federal can come back to you 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 SEC is trying to say that cryptos are security now. And the cftc, which is a commodities group, is saying it's a commodity. They, they both want to go after, what do you call it, they both want to go after Sam Bankman, Fried 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 registered 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 a security in the public, to the public, you have to register with the sec. Okay, so if you want to sell a security with, to the public and raise money that way, you have to register with the SEC. That's you file the registration statement, 20 day cooling off period, you can send out preliminary prospectuses during it, get indications of interest, all that good stuff. Now 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 where then you're regulated by the sec and the exchange that you're registered on smaller and they are very liquid. Remember anything on an exchange is very, very liquid. Anything that's 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 exemption. But the smaller the company is, they may not be on an exchange. It may be over the counter, bolt to board, pink sheets, stuff like that. They're over the counter. They're not very liquid. So liquidity risk. Things not on exchange have 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 MS.1, 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 day. 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'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 the act of 33. It's an exemption. You're only going to sell to accredited investors or, 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, you're exempt from the act of 33. You don't have to register if you buy. Let me 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, to anyone for six months. Oh, of course there's a one exception to that. 144A. 144A is an exemption where quibs 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, they're 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 of 33. So now the act of 34, act of 1934 is all about the secondary market. 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 in this. So this is the acronym, the mnemonic, whatever you want to call it, for the act of 34. I'm not going to write them out because this is quick and dirty. Right? So M manipulation. So all Ms. Perms, remember Ms. 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 insider 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. P Proxy rules. That's voting by mail. So if you don't want to go to the actual shareholder meeting your shareholder, 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. The other R is report. So any kind of issuer who regulates with the SEC has to do a quarterly report called a 10Q. They have to do an annual report called the 10K which is audited and any kind of special announcements, they use an AK or just slap it on a website, which they're allowed to do. The second M is margin. The act of 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, who are. What's the best way to explain it? That allows underwriters who are bringing a company public to actually support the stock and prevent it from dropping. It's actually manipulation, but it's legally sanctioned. Okay, that's the act of 34. Okay, so now another act is there's ERISA, which is all about retirement accounts. We'll get into. And then, then we have sipic. Sipc. Okay. So civic. SIPIC is about if a broker dealer goes bankrupt. Okay. So for 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, Robinhood 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, if the broker dealer goes bankrupt like Lehman or Bear Stearns, that you're going to lose your money. So they have sipic, which is a securities investor protection insurance. Okay, I forget the C stands for it doesn't matter. It says we'll cover your account up to 500,000 of securities. 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 Cash. So if you have 500 grand in securities, you, you're covered. But if you have 400 grand in securities 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 your husband or wife gets 500. So that's 1.5 million but not total, it's 500. 500. 500. That's sipping and that's only, that's not for, that's not for fraud and shit like that. That is literally for the banker, the company, the broker dealer going bankrupt. Not the issuer, 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 to buy common stock. Either growth, which is like tech stocks or 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 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 or 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 to take your shares. You get the same amount of shares but. 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, 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? Declaration X record. Record day is a day you have to be an owner of record. You have to buy two days before that. The X date is one day before that. So if you buy the stock two days before the record date, 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. Buy 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. 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 100 shares at 50 and you get a 10% stock dividend, you're now going to have 110 shares and it's going to be worth $45.45. So the shares goes up and the price goes down by the same amount. Remember derp, okay? Preemptive rights. 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, not to increase it. To keep your percentage ownership, you got to write their short term. They're issued with intrinsic, which means they're immediately exercisable if you want. If you get that they're like 30 to 45 days, they let you buy more shares to keep your percentage ownership. You're going to get one right for every share you own. You may have to hand in 4, 5, 6 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. You get it 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 wanted to get out, it would take weeks and lawyers to get out. Oh, 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. In common stock is the one that you see. It's the most volatile is the one you see on the market on the tape that goes across under cnbc. 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 issue 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 stock. What is preferred? Preferred is a. It's 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 5% preferred. Remember, par on a preferred is a hundred part of common is a dollar part and preferred is a hundred bucks. So if you buy a 5% preferred, you're getting 5% of 100 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 what I know them. So if you get a five, if you get a 5% 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 of your preferred 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 shit out of you. Prices rise, but you're still getting the same amount of money. No good call risk. It's the risk that the company will call back the preferred. And they only do that when rates are lower. So you're going to get your preferred, your preferred money back and go, oh, I'll just buy new preferred. 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, 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 2 or 3% preferred, you're earning less money. The only way to kind of like to offset that is to buy something more riskier with a lower credit rating. So let's talk about, we'll talk about credit ratings later. Now. So pretty much, if you, 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 preferred. We have the regular one, you know, callable, not callable, stuff like that. But you 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 in arrears. We have to make them all up in arrears. Okay, that's cumulative. The other one we have is participating. Participating means that if we have, say we have a 5% preferred, you're getting your 5 bucks every year. And then the company has a great year. We're not getting anything 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 the prospectus. But I'll say, oh, if our 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, so if you buy a convertible bond, it turns into stock. Every time the stock moves the preferred, the convertible preferred will 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 as a little Christmas thing on it. I seem to do convertibles around Christmas all the time, by the way. Happy New Year's, guys. Okay. It should be the first of January. Okay. Now there's a question. You're going to get current yield. Okay? So everyone always gets this question about current yield. 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 remembered this is how he remembered it. He said, you know, current is electricity. And what is electricity? Amps. Okay? Amps. So he remembers a mp. 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, to the issuer. It's not a, 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, then 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 me, it's not the end of the world. Where with bonds, if they don't pay you, they get sued. Because whenever you issue a corporate bond to have a trustee whose job it is to protect the, the investors. So if you don't pay, they're going to sue your ass and say, 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. Could be 5 grand, 10 grand, 100 grand, whatever. But pars a thousand. So if they say you buy a 10% bond, you're getting 10% of par, which is 10% of a thousand, which is 100 bucks. You have a 5% bond, you're getting 5% of a thousand, which is 50 bucks. So the par value matters to tell you what you're earning. Okay. It's just accounting tool. If you want to Say so. Remember? So let's go back. Common stock par as a dollar, preferred pars 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 backed 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. I 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 by property? You'd rather have the one backed by something. So that'll have a lower coupon. Easier to issue where the debenture. A debenture means unsecured corporate bond means that you will not have a. That if they issue, if they default, if the issuer defaults, you're just going to get, you're going to be a creditor 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 because preferred just. We kind of have, we're 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, how risky a bond is, we're going to use credit ratings. And who the big two, Moody's and S and P. So I'm put it up here, they're very similar, but the top rating is aaa. And then in Moody's it's A. And then down here I have aa. Hey, hey. It's literally the same thing. Just A's look different. Okay, Then we have bbb. We always say Moody's looks different because he's moody. Bbb, B, A. No, those are the investment grade. Okay? Anything above that line is investment grade. Anything below That B BA 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 risky 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 you as much. The lower credit rating, I have to pay more. And once it goes below this line, this investment grade line to speculative high yield, 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 bonds. 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 GEO 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 by a project like a highway, a bridge to anything that costs money, even fairies 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 federally tax tax free and then it might even be state tax free if you buy it in your own state. So there's an advantage there. So rich people buy munis, poor people buy corporates. Then the other one is if you want safety and income, you buy bonds issued by the US government. Treasuries. There's five of them. I'm going to repeat. Bills, notes, bonds, tips, strips yet. Bills, notes, bonds, tips, strips, T bills. Short term? No, there's no. They pay at the end, very short term, like 1, 2, 3, 6 months in a year. T bills, very short term they may have T notes. Those pay income every six months. Those are two to 10 years, they still safe. Then T bonds are up to 30 years. They pay income every six months too. We also have strips which are long term, zero coupons. A zero coupon is a bond where you buy it at a discount and it, 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. They're pretty volatile because there's zero coupons. 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 3% or whatever it is, depending on what's going on. And if inflation goes up, the par value actually reflects. So your, 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 T notes and T bonds, for the most part, they might ask this. They're quoted in 30 seconds. Okay, even tips are too, but they're not going to ask that. So they're going to 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 out of, 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 point six to five. 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 would be let's move the decimal over 986.25. And they do the same thing over here. 25 divided by 32 gives me 78, 71, a lot of numbers. Add the 98. So it's going to be 9878, but it's really going to be 987.8 because it's really out of a thousand. So that is it. If you bought the bond, you pay the ask. If you sold it, you hit the bid. Oh, and that's bid ask too. Remember that? So if you, if you buy, you pay the ask. If you Sell, you sell to bid. You buy at the ask, you sell it to bid. Okay, again, high level bond. Just remember the biggest risk on bonds is mostly credit risk, unless it's a Treasury. Okay. And of AAA rated is super safe. I mean think about it. There's only two companies in the world that are AAA rated. Johnson and Johnson and Microsoft. I guess those are the only two. So that shows you how safe AAA rated is. So it's a big deal. Okay. So if something's AAA 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 is where 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 at the ask and then you pay a commission or a markup if they're principal and then you sell it. You sell it at the bid, which means 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 deal 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 a markdown 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 $30 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, 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 100 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 than 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. Well, to sell it at 50, 51, 52, 58, but not lower than 50. Those are limit orders. And when you get down to the market, market order. When on the exchange, market orders take precedence over limit orders. So if they both show up at the same time market or goes first, then the limit order goes. Because you're rewarding aggressiveness in a way, because you're basically, you're just adding. You're helping out with the market. Okay. Since this is more of a listening thing or just the just letting it flow over you. Total 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. You made 10 bucks, you're going to do 10 divided by 50. That's your return. But what if they add money into that? What if they add some income into that? What if they say, oh, you bought stock at 50 and it went to 60 and you also got a $2 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 a proceeds. So that $10, okay? And then you add $2 of income on top of that. So that's $12. And then you divide it by the original. Remember that you divide by the original. So you do. I made 12. You divide by 50 and you got 24%. That's 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 up in the link, I'll put them in the description. But you gotta know how to do stocks. But 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 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 volatile 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. I'm not going to get into it. I have a video on that. But again, if it's $1,000 bond and the convertible converts at 20, you can do a thousand divided by 20. That's going to give you 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 common stock price, and that's going to give you parity and that's going to be what it will be worth if you, if you convert it to really the big, the mathy things, you have to know current yield, you have to know total return and you have to know the stock splits. That's the big ones. They're not going to ask you tax equivalent yield. Those things are more serious 7 stuff. If they do, it's probably a test question. Question. Okay, let's move over to another act, the Investment company Act of 1940 that covers like mutual funds. Remember FUM F U M face amount certificates, unit investment trust management companies, which are open and closed. So face amount certificates, UITs, you're probably not going to get 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 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 muso 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 of, 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 90% 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 trade on exchange again. Again, I have a shitload of videos on this. You buy them when you buy. Remember when you buy the municipal fund, you're buying it from the sponsor of the fund at NAV plus a sales charge. When you buy a close 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 end and closed, and they're 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 ma. It's not actively managed, but it is a trade. It's funny, it's like it acts like a close 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 it at 10 in the morning, you can sell it at 2 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 kind of out of kilter. So they will rebalance those securities, those portfolios every quarter that's passive to not trying to beat the market and all of those things Open, end, closing and ETFs. They even have inverse ETFs and, and leverage. Inverse means they go opposite of the market. 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, sensor 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'd have to worry about market risk, but not about one company doing bad. Just, you know, I'm going to throw it in there. An ETN is debt. It's a debt, it's very risky. It's unsecured debt. But it acts like an ETF because basically you're blending 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 an ETF, 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 gonna put it up here or in the playlist. I'm not gonna go crazy on that stuff because it's not heavy on the test and people freak 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, 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 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. Pay tax and everything. Because qualified means you put it in before tax. The money's never been taxed. Now we do this retirement. It's usually the last thing you ever recommend. That's more of a Series 7 thing. But we are, we are here. 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 no, what they call rmd, required minimum distribution. Required minimum distribution is when you hit 72, you take the money out. Just trying to spit. I have like bullet points, but I'm just trying to throw shit out. Okay, now remember the annuities. Annuities pay you until you die. Life insurance pays you when you die. So 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're going to 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, you're going to have some mark, you're going to have not have market risk, but you're going to have inflation risk or purchasing power risk. Oh, super quick. 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 cap of 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. 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 make that much money? Kidding you. You also 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 is 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 frickin 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, shit like that, you should know this already. It's a qualified withdrawal where on a regular IRA you pay no penalty and on a Roth you, you just don't pay any taxes at all. On the ERISA side, which is Employee Retirement 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 earliest you think it out is 59 and a half. You must start taking it out when you're 72. If you offer it 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 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 the them. But remember, any money that the employee puts in is immediately vested, 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. 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, I don't know how heavy they go that. The 403B is for like teachers and nonprofits. It can be qualified or not. For the most part they're going to be qualified, but that's for teachers and nonprofit. A457 is for also for government and nonprofits, but there can be a non qualified plan where they don't have to follow our risk of rules. The one whole point of ERISA was to protect employees from having the companies screw their pensions and retirement accounts over. Okay, now two things. Define 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 work 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 could be a million dollars, it could be 500,000, it could be $4 million. 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. Define benefit. You know, you don't know what's going in, but you know what you're getting at the end. But mostly defined benefit is like pensions and people who 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, 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 talk about placement. Placement is you put the money in, gets deposited and then that's where FinCEN comes in because if somebody puts in like over 10,000 in cash, you're going to do a CTR and report it. If somebody comes in 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 US 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 an outside the country or they walk in and they seem kind of sketchy or like you, and they don't care about commissions or what if, what if they put the money in and immediately start wiring it to unrelated accounts, wiring to your families. Normal. Trust me, I do it all the time. Venmo and Zell now. But you could wire it. But if it's unrelated accounts or even wiring it outside the country to like Isle of Man, the Cayman, Switzerland, all these countries, some of the Stan countries, Chad, those would all be red flags. And wait a second, you put the money and immediately wired it, maybe you would do 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 what, it's financial, the Financial Crimes Enforcement Network, that's what they're looking for, stuff like that. So if you see if anyone puts in or takes out 10 grand in cash, that's a ctrl have 15 days to do it. Hundreds of thousands have done. Or every day, thousands at least are done every day. It's not a violation. It's just, hey, somebody put in or took out more than ten 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 click the red flag up and someone up higher on 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 the ctr, big deal, you report it. 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. Or they won't. That's crinkled. They won't answer you why, where they got the money from, stuff like that. And then the final stage of, of money laundering, see aml is the preventing 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 were 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 risk. 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 up. A lot of the rules on the register rep, you work for finra. You work for broker dealer that's registered 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. Of course there's 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 issues snares, they don't care. It's just common stock IPOs. You can. There's one big exception if your husband or wife works for the issuer. So let's say my company's going public. Capital, Venice, tutoring. Hey, 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 work for the issue, we're not going to deny you that opportunity. We're going to let you buy it. It doesn't happen that often where it's not manipulative. Another one is if you work, if you are invested in a hedge fund or a mutual fund or some sort of club. And as long As a registered REPs involvement is 10% or less of the total. Then 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 common stock IPOs, nor can the clubs you're part of. Like if you're part of an 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 register up, you cannot have outside jobs. Unless you have to at least tell that 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 know the one you work for, that you have an outside job. You cannot. 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 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 broker dealer, you have to send duplicate statements and confirms confirmations to the employer. Okay, no, do. 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, 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 written permission 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 securities 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 turn the account. One thing that doesn't matter when they're looking at turning gain or 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 against a loss. No predictions. You cannot make predictions for 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 get fake quotes. You can only cold call. Cold call. There are exceptions to it, but you can only cold call between 8am and 9pm 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. 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. If you put in 40 and they put in 60, you can get 40%, they can get 60%. Max gift to an employee of another firm of another firm is $100 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, there's 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 like, oh, you bought 2,80 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 $100 and that's a violation. Okay? So, so as long as you go with your client, it's entertainment. If you give me as a gift and you don't go like you buy them a meal, there's $100 cap. Okay? There's another thing we do called 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 trusted 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 contract 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 can fill out 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, to put my middle school, I had to put salt broke middle school on there, my sixth grade, okay. I was really young when I started. Why is this hat so bad? Is that better? It 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 counts as work. And then look, and if you miss a fricking job. I get this question all the time. I forgot to mention a job. I had a summer, I was 16, I was catting. Nobody cares. Nobody gives a shit. They would just want to know where you are. 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 marital 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 going to have to put your College or your high school on there. So you think you're disclosing education when it's just the hell were 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 SEC. But you would know if you have any felony conviction, remember, not charged, not indicted, not arraigned. Conviction in the last 10 years, you're out. You can't work. Statutory disqualified estate, 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 dui, well, not 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, any 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 don't. 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. You get in a bar fight, you get arrested, you're supposed to tell your firm. But it's. That's not disclosable because a bar fight is 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. Then we have U5. That's when you leave. Doesn't matter whether it's voluntary or not. U5 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, 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 going to 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 FINRA 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 going to be next year. You're continuing it because you've done it. But remember, it's annual now starting today it's annual. C But the test are 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. 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 ride there. Watch this 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 with monetary. So fiscal policy is changing the taxes and the government and taxing and spending. That's the whole Keynesian thing. Monetary is a Federal Reserve moving the money supply up and down. So why will we do that? Because 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 going to. At the end of peak, they're going to start loosening. Maybe they'll start lowering tax brackets, they'll spend 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 V. Once we're going down, we want to be 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, do R M. I'll try to put 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 SIE exam. Quick and dirty. I'll have this out as quick as I can. And let's go do this. We got it.