LOMA 311 CHAPTERS 1-9 EXPLORE 362 ESSENTIAL QUESTIONS AND ANSWERS

LOMA 311 CHAPTERS 1-9 EXPLORE 362 ESSENTIAL QUESTIONS AND ANSWERS Rehabilitation - Answer-the insurer continues to exist as a corporation, and the insurance department assesses more precisely the insurer's financial situation. If it seems possible that an insurer can be rehabilitated, state insurance departments may try to find an investor to invest capital in the insurer (rare) Federal Insurance Office (FIO) - Answer-Created by Dodd-Frank, an administrative office within the Treasure Department Prudential regulation - Answer-solvency regulation - typically is the primary focus of insurance laws and regulatory requirements throughout the world Depository institution - Answer-financial institution that specializes in accepting deposits and making loans Commercial bank - Answer-depository institution that accepts deposits from people, businesses, and government agencies, and uses these deposits to make loans to people, businesses, and government agencies Thrift Institution - Answer-(S&L association or savings bank) depository institution that receives the majority of its deposits from consumers and makes the majority of its loans as residential mortgage loans Credit union - Answer-a nonprofit, cooperative financial institution owned and run by its members. May not begin operations until it receives either a federal charter or a state charter - regulated by the National Credit Union Administration Federal Reserve System (The Fed) - Answer-a system consisting of 12 regional banks and the state and national banks that are members Office of the Comptroller of the Currency (OCC) - Answer-Agency within the Treasury Department that is directly responsible for adopting and enforcing regulations to ensure that banks operate in a safe and sound manner. Federal Deposit Insurance Corporation (FDIC) - Answer-federal agency that guarantees, within stated limits, the funds deposited in member banks Group of Twenty Finance Ministers and Central Bank Governors (G20) - Answer-forum for cooperation and consultation among representatives of key countries, the UE, and a few nongoverning institutions on matters pertaining to the international financial system. Basel Committee on Banking Supervision - Answer-cooperative organization with members from all regions of the world. Exchange information on supervision issues and have developed guidelines and supervisory standards that member countries are encouraged to follow Security - Answer-a certificate or electronic record that represents either an ownership interest in a business or an obligation of indebtedness owed by a business Option - Answer-a contract that gives the owner the right to either buy or sell a specified asset during a limited time period for a stated price Debenture - Answer-an unsecured corporate bond for which the corporate borrower does not pledge any assets or income as security Mutual Fund Share - Answer-a share in a fund operated by an investment company that raises and pools money from shareholders and invests it in stocks, bonds, and other securities. Variable Annuity Contract - Answer-an annuity contract under which the amount of the accumulated value and the periodic annuity benefit payments fluctuate in accordance with the performance of a specified pool of investments Variable Life Insurance Contract - Answer-a life insurance contract under which the death benefit and the cash value of the policy fluctuate according to the investment performance of a specified pool of investments Stock Exchange - Answer-an organized marketplace where specific types of securities, such as stocks and bonds, are bought and sold by members of the exchange Over-the-counter sales - Answer-sales of stocks that are not traded on a stock exchange Investment company - Answer-a company that issues securities and engages primarily in investing and trading securities Open end investment company - Answer-establishes a portfolio of securities and issues shares in the portfolio to investors. The public may purchase shares from the investment company at their net asset value, and the investment company will redeem shares upon the owner's request at their current net asset value. They normally issue more shares as people want them Closed end Investment company - Answer-issues a fixed number of shares to the public and does not redeem shares that are outstanding. Unit investment trust - Answer-organized as a trust that buys and holds a portfolio of securities for a predetermined time. The trust sells units in the portfolio to the public for a limited period, and the number of units remains unchanged. At the end of the predetermined time, the trust sells its portfolio of securities and distributes the money to unitholders on a pro rata basis Securities broker - Answer-individual, corporation, or other legal entity engaged in the business of buying and selling securities for the accounts of others Securities dealer - Answer-an individual, corporation, or other legal entity that is engaged in the business of buying and selling securities for its own account Broker-dealer - Answer-individuals and firms that transact securities businesses. Registered representative - Answer-a person who is associated with a FINRA member, engages in the securities business on behalf of the member by soliciting the sale of securities or training securities salespeople, and has passed a special examination by FINRA Principal - Answer-an officer or manager who is involved in the day to day operation and supervision of the securities business, has qualified as a registered representative, and has passed additional examinations administered by FINRA Prospectus - Answer-a communication, usually written, that offers a security for sale and that must contain detailed information about the issuer of the security and the security itself NAIC Insurance Information and Privacy Protection Model Act - Answer-establishes standards for the collection, use, and disclosure of information gathered in connection with insurance transactions Insurance transaction - Answer-Involves insurance for personal, family, or household needs and in which an insurer either determines an individual's eligibility for insurance coverage or benefits or services a policy. Nonpublic Personal Information - Answer-personally identifiable information about a consumer that is not public available Conflict of Law Rules - Answer-determine which jurisdiction's laws govern a contract Center of gravity rule - Answer-states that the law of the jurisdiction that has the greatest interest in the contract governs the contract Formal contract - Answer-enforceable because the parties met certain formalities concerning the form of the agreement. In writing, and contain a seal Informal contract - Answer-enforceable because the parties met requirements concerning the substance of the agreement rather than requirements concerning the form of the agreement Bilateral contract - Answer-both parties make legally enforceable promises Unilateral contract - Answer-only one of the contracting parties makes a legally enforceable promise Commutative contract - Answer-agreement under which the parties specify in advance the values that they will exchange; moreover, the parties generally exchange items or services that they think are of relatively equal value. Constitutions - Answer-a relatively permanent document or group of documents which set out the fundamental principles that determine the powers and duties of a jurisdictions government and the rights of the people of the jurisdiction Statutes - Answer-laws enacted by the legislative branch. declare, command, or prohibit something Administrative Regulations - Answer-rules or orders adopted by agencies within the executive branch Treaties and International Agreements - Answer-formal agreements between two or more countries Case Law - Answer-law created by a jurisdiction's courts and found I the courts' written decisions Parliamentary Democracies - Answer-the legislative ranch, usually known as the parliament, has ultimate authority for making all laws. US Legislature - Answer-House of Representatives and Senate Congress - Answer-Legislative branch of the federal government State Legislature - Answer-legislative branch of the state government US/State Code - Answer-all of the laws enacted by each legislative body. Further subdivided into discrete sections that each regulate a specific area. For example, the federal tax laws are found in a portion referred to as the Internal Revenue Code State Insurance Code - Answer-a portion of each state code that is devoted to regulating the insurance industry in that state Administrative Agencies - Answer-responsible for administering specific aspects of the law Department of Treasury - Answer-primary responsibility for administering federal banking and tax laws Department of Justice - Answer-responsible for enforcing federal criminal laws, representing the US in federal cases, and providing legal advice to other federal officials and departments Securities and Exchange Commission - Answer-administers federal laws governing securities and the investment industry Office of the Secretary of State - Answer-responsible for licensing corporations and businesses Office of the Attorney General - Answer-authorized to enforce the state's criminal laws, represent the state in all legal matters, and provide legal advice to the governor and other state administrative officials