A quick-reference glossary of high-yield Series 7 terms across products, accounts, trading, regulation, and suitability.
Use this glossary for quick recall, not as a substitute for the main lessons. The Series 7 often turns on whether you recognize a term precisely enough to separate it from a similar idea. Short definitions help with speed, but the chapter pages still matter for context, suitability logic, and application.
ADR (American Depositary Receipt): A negotiable certificate that represents shares of a foreign company and trades in U.S. markets.
Asset allocation: The process of dividing investments among asset classes such as equities, fixed income, and cash to match goals and risk tolerance.
Basis point: One one-hundredth of one percent, or 0.01%. Yield and rate changes are often described in basis points.
Breakpoint sale: An improper recommendation or sales practice involving mutual fund breakpoints, often by failing to apply an available sales-charge reduction.
Call premium: The amount above par that an issuer pays when redeeming a callable bond before maturity.
Call option: A contract giving the holder the right, but not the obligation, to buy the underlying security at the strike price before expiration or on expiration, depending on style.
Convertible bond: A bond that can be converted into a specified number of common shares under stated terms.
Current yield: Annual bond interest divided by the current market price of the bond.
Duration: A measure of a bond’s sensitivity to interest-rate changes. Higher duration generally means greater price volatility when rates move.
Ex-dividend date: The date on and after which a buyer of the stock is not entitled to the next declared dividend.
Front-end load: A sales charge paid when buying shares of a load mutual fund.
General obligation bond: A municipal bond backed by the issuer’s taxing power rather than a specific project’s revenues.
Hedge fund: A privately offered pooled vehicle that may use leverage, derivatives, concentrated positions, or liquidity restrictions.
Intrinsic value: For options, the amount by which an option is in the money. It does not include time value.
Margin call: A demand for more equity in a margin account when account equity falls below required levels.
Municipal revenue bond: A municipal bond backed primarily by revenues from a project, facility, or dedicated source rather than broad taxing power.
Mutual fund NAV: The per-share net asset value of a mutual fund, calculated from fund assets minus liabilities divided by shares outstanding.
ODD (Options Disclosure Document): The disclosure document that must be delivered in connection with options accounts and options recommendations under firm procedures.
Preferred stock: A class of stock with priority over common stock for dividends and liquidation, but typically with more limited voting rights.
Private placement: A securities offering sold under an exemption from public registration requirements, generally to a more limited investor base.
Reg BI (Regulation Best Interest): The SEC rule requiring broker-dealers to act in the retail customer’s best interest when making a recommendation.
Regulation T: The Federal Reserve rule governing credit extension by broker-dealers, including initial margin requirements in securities accounts.
Rights offering: An offering that gives existing shareholders the opportunity to buy additional shares, usually at a subscription price below the current market price.
Surrender charge: A fee charged when a variable annuity or similar insurance product is withdrawn from or terminated during the surrender period.
Suitability: The standard that a recommendation should fit the customer’s profile, objectives, risk tolerance, liquidity needs, and related facts.
Tender offer: A public offer to buy shares from existing shareholders, usually at a stated price and for a limited time.
UIT (Unit Investment Trust): An investment company with a fixed portfolio and redeemable units, commonly used for fixed-income or equity baskets.
Variable annuity: An insurance contract with investment subaccounts whose value varies with market performance and may include riders or payout options.
Yield to maturity: The total annualized return an investor would earn if a bond were held to maturity, assuming coupon payments are reinvested at that rate.