Series 7 Sponsorship - Exam Licenses that do not require a Sponsor

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It's a great way to keep up to speed on the brokerage industry, careers, licensing, sponsorship and more. The sign up form is on the side bar of this Series 7 Help Blog

Greetings to our Subscribers, Brokers and Traders.   IMPORTANT Career Info

With Summer ending soon, Brokerage Firms normally amp-up their hiring. Firms can be lazy in the summer :) 

As many of you know, The SERIES 7 needs a pre-hire and sponsorship from a brokerage firm. There are ways to make this easier through American Investment Training and the many firms we work with.

Unlike yrs ago, the Series 7 is not the only license you need, and in fact many financial advisers do not even have a 7 and are making a great living via fee based money management.

Either way, BD's we know WILL sponsor candidates if they can obtain more licenses that DO NOT REQUIRE SPONSORSHIP. We HIGHLY recommend (with our FREE help on registrations) to get these licenses as independents to add to your credentials. Firms need an incentive to sponsor you and minus an active book of clients, they want you to be pro active beforehand.  Firms will not sponsor you if you are not bringing something to the "table". So, let's show them MORE. Below is how:


These are a few of the "self sponsored exams" (no firm or employment needed beforehand) Licenses we recommend if you are looking to enter the brokerage field, expand your credentials for a better job if you are already working for a firm or position yourself to get SERIES 7 SPONSORSHIP:  

SERIES 65 - Investment Adviser  * This is almost a "must get" and it is a pretty simple exam.  The 65 is for money management (fees on assets), where the 7 is for transaction/commission business. Most brokers with clients have BOTH of these licenses. The 65 will immediately accredit you as a REGISTERED INVESTMENT ADVISER. Looks great on a business card, resume and cover letter.  Even if you are in another industry (mortgage, insurance etc.),  you can offer financial services on your own.  This also allows you to share commissions with a broker at any firm you may know. We can help make those connection to students who use us for training! 

SERIES 63 - Uniformed State Law  * All Advisers and Brokers who are doing out of state business or even soliciting must have the 63. Very easy exam that can be passed with our online course or using books/software combos. 
AIT will provide ALL assistance with registration forms, test center locations and all support needed. Once you start the study process, we'll coach you through the rest! Just let us know when you order and we'll keep you on our full and free help list until you are licensed and we assist in your Series 7.
Exam Prep Options:

Series 65 Online Course 
Monitored, Online Tutors and Pass Guarantee. Full refund if you do not pass on the first try
Series 65 Books and Software Combo
 Updated, accurate and offers book and computer/web based learning

Series 63 and all other license training can be found on our full catalog page at  aitraining.com/products.htm

Thank You and all the best $$$ to you
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American Investment Training

LOOKING FOR SPONSORSHIP FOR THE SERIES 7 AND SETTING UP AS AN INDEPENDENT BROKER? GET THE GUIDE THAT DOES IT ALL FOR YOU.



GET: "HOW TO BECOME A SUCCESSFUL BROKER AND ADVISER"

Municipal General Obligation Bonds - Understanding GO Bonds

The Series 7 and select Municipal Bond exams including the Series 51 - Municipal Securities Limited Principal  will have topics related to General Obligation Bonds.

Municipal Bonds and Notes that are backed by the taxing power of a municipality are General Obligation bonds. These debt obligations can be state or local issued. Each of these municipalities can use the taxes at their disposal and authorization to raise the money needed to pay off the bond interest and the principal.

While almost all Muni bonds are considered very safe as it relates to timely payments of Interest and return of principal at maturity, G.O Bonds are considered stronger/safer than revenue bonds - assuming all other factors being equal (maturity, issuer etc).  Revenue bonds are backed by a revenue generating facility like a bridge, tolls, usage rentals and other money producing projects. While these are generally safe as well, bonds backed by taxes will have more certainty in the money backing the bond issue.

Death and Taxes are the 2 sure things. If a bond is backed by the taxing power of the state, town or other municipal entity, it is assumed those taxes will be collected. If there is an anticipated lateness in tax collection, the municipality may issue short term notes for immediate financing. Those will most likely be Tax Anticipation Notes - or TAN's for short. 

General Obligation Bonds are backed by a variety of taxes

Local issues will primarily use Property Taxes to back bonds used for School needs, local roads or anything that is non revenue producing at the local level. 

The Series 7 Exam has more municipal issue questions than all of the other types of bonds. The MSRB - Municipal Securities Rule Making Board will make up a good amount of questions surrounding the new issue process and the regulations concerning the underwritings. This will be discussed in further posts. But as always, please feel free to ask a question on this blog on any FINRA Series Exam topic you need help in. 

Non local or State Issued General Obligation Bonds

If the state of Ohio is doing a bond issue, they will use non-property taxes as their primary resource for dollars. States will normally use other taxes such As: Income, Sales and other non local taxes.
Since a municipality relies on the taxes it can raise, the town must have a healthy tax base at their disposal - or at least healthy enough to support the bond and garner a good rating.
A rating company will examine the following before issuing a credit score on the bond:

• Debt per capita
• Income per capita
• Property values or assessed valuations
• Population Growth

All of these factors are important to see if the area that is supporting the bond issue has enough tax revenue potential to give the bond a healthy credit rating.

Other Definitions for the Series 7:

Overlapping Debt - When a local tax base overlaps the tax base of another, it is known as overlapping debt. An example of this could be two towns sharing the resources of a school, where both areas are paying taxes to support the same facility or services.

Ad Valorem Tax - The name of the property tax that residential and commercial residents are taxed at is called the Ad Valorem Tax.

Competitive underwriting - All General Obligation bonds must be underwritten on a competitive basis. This means that the issuer must offer a competitive bidding process open to broker dealers, where the best price (lowest interest cost) wins. Revenue bonds can be underwritten through negotiation of select Broker Dealers that the municipality may have relationships with. This difference should make common sense, since in a G.O Bond you are raising EVERYONE'S Taxes in the effected area to back the issue - it is very important that the absolute lowest interest rate possible is achieved - thus competitive underwriting ensures that.

Series 7 Study Tip Help: When asked about the difference between GO and Revenue Bonds, remember -   "Obligation" means through taxes. It is the obligation/responsibility of the Government entity to raise the needed tax dollars to back a G.O. Bond. A revenue bond cannot carry such as obligation since revenue from a place or project can never be exact.

Series 7 Virtual Class  - Take a full virtual Series 7 Class

Need Insurance CE Credits?  Discounted subjects available for fast and reliable approved credit. These courses are applicable for Insurance Licenses, CFP, CPA and more. INSURANCE CONTINUING EDUCATION   24/7 with full support. 

Hope this helps!
American Investment Training

Bond Yields for Discount Bonds - Yield to Maturity

Bonds are a big subject on the Series 7 Test and many students need help with them. Most Series 7 Exam students have little experience with Bonds and most will not trade them directly in their Broker Adviser Career.

Bonds that trade in the secondary market are mostly traded at a discount or a premium. The Coupon rate or Nominal Yield is a fixed rate of interest paid to par, so if a bond is purchased at a discount, your overall Yield or Yield to Maturity (your TRUE Yield) will be higher.

This is because the fixed interest rate is paid to par and you have paid below Par.

Example:

3%  10 yr Corporate Bond is priced at 99.00 

And you want to buy 10 bonds. Each Bond is $1,000. So, $10,000 would be par if the price was 100.00. But since it is 99.00, your total purchase would be $9,900 but you would still receive 3% interest payable to $10,000 PLUS, assuming you hold the bond to maturity, you will get back $10,000.

All Bonds mature at par

Your overall Yield to maturity would be higher than 3% and will always be higher than the nominal yield when bought at a discount and held to maturity. 

Next post will be on Premium Bonds and their yield relationship.

American Investment Training - Broker Licensing and Free Career Help

Buying Stock - Hedging with long puts - Series 7 Options Help

Buying stock and hedging with puts is a popular strategy for investors and is part of the Series 7 test when dealing with Stock and Option combo scenarios.

Main thing to remember with Long Stock and Long Put set ups is ALWAYS focus on the stock when it comes to maximum gain, maximum loss and break even. 

The Put Option is basically a "stop loss order" that is controlled by you - until the option expires. As opposed to a stop order that will automatically get triggered. Puts cost a premium, but they allow YOU the choice of whether to use it or not.

Stock and Put Example

BUY 100 Shares DFG at $78
BUY 1 DEC DFG 75 Put for $200

Key here is the investor wants the stock to go up. He has $7800 Invested in the stock alone. The $200 premium is added to his cost for protection. So, his cost is $8000 or $80. That is the break-even 80. Should the stock rise above 80 and stay there past the option expiration, it is pure profit for him and he will either allow the option to expire or perhaps trade it away for something back $ wise.

When you buy puts by themselves, you want the stock to go down but when they are placed 1 for 1 with long shares of stock, the person does not want the stock to go down. It is a Hedge.

Maximum Gain 

Maximum gain is unlimited because the stock can rise to an unlimited level. The premium will ultimately be deducted, but that is not able to calculated exactly, so unlimited is always the answer when you are long stock and long options. It will be a choice on the Series 7 exam.

Maximum Loss

This is why the Put was purchased - to limit the loss. Normally, the potential loss would be the whole stock value. In this case, $7800, but since the Put gives the holder the right to sell the stock or "put" it to someone at 75, the max stock part of the loss is $300. Then you add the premium cost of $200, which was paid up front when the option contract was purchased and that equals $500.

So, the maximum loss in this set up is $500

Always remember on the Series 7 or any exam where options are asked is to FOCUS ON THE STOCK when looking at gains losses and break-evens. The option is used for protection when LONG the option or it is used for income when selling or shorting a Call Option.

To learn about Covered Call Writing with Stock, Visit American Investment Training's Free Glossary and definitions Here:   Covered Call and Stock Strategies

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