securities exam

For a new issue that qualifies for listing on an exchange, a prospectus must be provided to all purchasers for how many days after the effective date?

25 For new issues that qualify for listing on an exchange or Nasdaq, the prospectus delivery requirement period in the aftermarket (after the effective date) is 25 days. For nonlisted and non-Nasdaq securities the period is 40 days. If the new issue will be specifically quoted on the OTCBB or the electronic OTC Pink, the period is 90 days. Reference: 1.4.4 in the License Exam Manual

For a new issue that qualifies for Nasdaq listing, a prospectus must be provided to all purchasers within how many days after the effective date?

25 For new issues that qualify for listing on an exchange or Nasdaq, the prospectus delivery requirement period in the aftermarket is 25 days. For nonlisted and non-Nasdaq securities, the period is 40 days. If the new issue will be specifically quoted on the OTCBB or the electronic OTC Pink, the period is 90 days. Reference: 1.4.4 in the License Exam Manual

Which of the following must be a member of the Securities Investor Protection Corporation (SIPC)?

A firm that deals only in OTC and exchange listed stocks The Securities Investor Protection Act, which established SIPC, was passed in 1970 to protect persons with brokerage accounts from loss due to failure of their broker-dealer. Firms with such accounts are required to join, with the exception of dealers exclusively in government and municipal bonds, and those involved only with investment company securities. Reference: 1.1.3 in the License Exam Manual

Under the Uniform Securities Act, registrations must be renewed how frequently?

Annually State laws require that registrations must be renewed annually for broker-dealers with an office in the state, or those that direct calls into the state or receive calls from the state. Reference: 1.4.3 in the License Exam Manual

A prospectus displays which of the following?

Description of how the proceeds will be used A prospectus will not contain performance predictions, may not imply endorsement of the SEC, nor will it contain guarantees of gains or guarantees against loss. Reference: 1.4.4 in the License Exam Manual

Where can demand deposits, checking accounts, paper currency and coins be found in the money supply?

M1, M2 and M3 Demand deposits, checking accounts, paper currency, and coins are a part of M1 in the money supply. However, consider that M2 contains all of M1, and M3 contains all of M2 and M1; therefore, one should recognize that these components are found in each of them: M1, M2 and M3 Reference: 1.3.1 in the License Exam Manual

Currency held by the public, including checking accounts and time deposits less than $100,000, and money market mutual funds would best be described by economists as

M2 M2 is M1 (currency held by the public including checking accounts) plus time deposits less than $100,000 and money market mutual funds. Reference: 1.3.1 in the License Exam Manual

Large time deposits of more than $100,000 are considered to be found in what part of the money supply?

M3 M3 is where time deposits of more than $100,000 and repurchase agreements with terms longer than one day are found. Reference: 1.3.1 in the License Exam Manual

Which of the following regarding monetary or fiscal policy is TRUE?

Monetary policy is what the FRB engages in when it attempts to influence the money supply. Monetary policy is what the FRB engages in when it attempts to influence the money supply. Fiscal policy refers to governmental budget decisions enacted by the president and Congress to regulate federal spending and taxation, and those decisions impacting deficits and surpluses. Reference: 1.3.1 in the License Exam Manual

Which of the following are methods of registering securities within a state? Registration by coordination Registration by qualification Registration by notification Registration by application

Registration by coordination Registration by qualification States have two ways to register (or blue sky) securities: coordination and qualification. Notice filing is used solely for those securities that are referred to as federal covered, such as those listed on the NYSE, NASDAQ, or any national securities exchange and investment companies registered under the Investment Company Act of 1940. In this case, the states do not have jurisdiction over the registration requirements of these securities. However, the Uniform Securities Act does provide for states requiring a filing of a notice along with a filing fee to sell securities in that state. Reference: 1.4.3 in the License Exam Manual

Correspondent firms would be likely to have relationships with which of the following types of broker-dealers?

Self-clearing A self-clearing (or carrying) firm holds funds and securities of the fully disclosed or introducing firm's customers and performs related functions, such as sending confirmations and statements for them. Those firms for whom the carrying firm performs these services are known as their correspondents. Reference: 1.1.4 in the License Exam Manual

Which of the following entities is chiefly responsible to conduct U.S. monetary policy and maintain the stability of the financial system?

The Federal Reserve Board The Federal Reserve is the central bank of the United States, and a special committee within the Federal Reserve System known as the Federal Open Market Committee (FOMC) sets monetary policy. Reference: 1.3.2 in the License Exam Manual

A strong U.S. dollar leads to more

U.S. imports and a balance of payments deficit When the dollar is strong, it is more affordable for U.S. consumers to buy more foreign goods, so U.S. imports increase. As more imported goods flow in, more money flows out—deficit. Reference: 1.3.3 in the License Exam Manual

A company's board of directors has agreed that the company should be prepared to have shares of common stock ready to be issued that are intended to be distributed in the form of a one-time employee bonus. Not knowing exactly when the one-time bonus plan will be implemented and the shares will be needed, the type of registration or offering that would best suit the scenario is

a "shelf" registration The Securities Act of 1933 permits issuers to quickly raise money in the capital markets when needed via a shelf registration. This type of registration allows the company to, in essence, take the securities from the shelf without the delay of registering with the SEC, because the actual registration has already been done ahead of time. Reference: 1.4.3 in the License Exam Manual

To grow or expand the economy, U.S. fiscal policy should be to

cut taxes and increase government spending for programs and development Fiscal policies to grow or expand the economy would encompass cuts in taxes allowing consumers to have more money to spend, spurring the economy forward, and increasing government spending for programs and development that creates jobs, again spurring the economy forward. Reference: 1.3.1 in the License Exam Manual

During the cooling-off period, underwriters may NOT

distribute sales literature or advertising material During the cooling-off period, underwriters may not distribute sales or advertising literature regarding the securities to be offered. However, they may distribute a preliminary prospectus intended to gather indications of interest and place tombstone ads. Reference: 1.4.4 in the License Exam Manual

Laws increasing or decreasing taxation would be best associated with

fiscal policy enacted by the president and Congress Tax laws are fiscal (not monetary) policy and are enacted by the president and Congress. Reference: 1.3.1 in the License Exam Manual

Assets offered and traded in the securities markets can include all of the following EXCEPT

life insurance Equities (stocks), bonds, currencies, and derivative products like options can be offered and traded in the financial markets. Insurance is not an asset that can be traded in the financial markets. Reference: 1.4.5 in the License Exam Manual

All of the following are true of tombstone advertisements EXCEPT

they are mandatory and must be placed during the cooling-off period Tombstone advertisements are not mandatory. They can be placed by the issuer or the underwriters and contain only bare bones facts about the new issue that is limited in scope and detail. However, expected information to be found there would include the name of the issuer and underwriters, type of security, number of shares to be offered, and the offering price or expected price range. All must have a disclosure or advisory that the ad is not an offer to sell or solicit sales for the shares. Reference: 1.4.3 in the License Exam Manual

FINRA regulates all matters related to investment banking, including

trading in the OTC market FINRA regulates all matters related to investment banking (securities underwriting), trading in the OTC market, trading in NYSE-listed securities, and the conduct of FINRA member firms and associated persons. Reference: 1.1.2 in the License Exam Manual