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An investor originally invested $2,000 into a mutual fund, and subsequently received $250 in dividends which were reinvested into the fund. The investor's cost basis would now be

$2,250

Reg T long positions minimum maintenance

25%

max political contribution

250

Coverdell contribution limit per year

2k

FDIC

Federal deposit insurance -insures up to 250k for each ownership category in each bank

how is accrued interest taxed and how does it effect cost basis

It is taxed as ordinary income and does not impact the cost basis of a bond.

Consider the following T bills: Maturity Bid Ask 8-2 6.36 6.20 8-16 6.42 6.26 The T bills maturing August 2nd (8-2) are being offered at par

less a discount to yield 6.20%

If a bond is trading above face value, its current yield will be ---- than its coupon yield

lower

federal reserve open market committee 's short term effect is to

make credit mor or less available

The greatest cost to an investor when investing in a fund is

management fees

what kind of risk is greatest in a variable life insurance policy

market risk

Systematic tisk

market tisk -non diversifyable

when an RR becomes subject to a statutory disqualification they

must optain regulatory approval before being permitted to work in the securities industry

he purpose of FINRA's rule 5130 on restrictions of the purchase and sale of Initial Equity Public Offerings (IPOs) is to ensure that

nderwriters make a bona fide public offering of all new issues

If a municipality appoints an underwriter to offer a new issue, the underwriting is

negotiated

The settlement date for the purchase or sale of an options contract is the

next business day

are employers required to make matching contributions to their 401(k)

no

is registration required for eurodollar bonds

no

is registration required for federal gov't securities

no

is registration required for municipal securities

no

treasury stoc

no voting rights or dividends stock that has been repurchased but he compay

ERISA Requirements

nondiscriminatory -at least 21 -one year of employment -vested

The RIA (Registered Investment Adviser) is most comparable to what other type of recognizable professional designation?

none

annual gift limit to an ugma or utma account

none

tax consequences during accumulation period of a variable annuity

none

529 contribution limit per year

none but gift tax is enacted on anything of 15K

conversion ratio

number of shares received upon conversion par/Conversion price

how are non qualified variable annuities taxed upon distribution

only on the growth of the invested dollars

third market

over-the-counter, negotiated-price trading of exchange-listed securities

For the purpose of FINRA rules regarding sharing in customer accounts, an immediate family member is a

parents, in laws, spouce, children or any relative to whose financial support the member or person associated with a member otherwise contributes directly or indirectly.

what is a vulnerable investor

person over 65 or a person over 18 that is physically or mentally impaired

If the YTM is higher than the YTC, the bond is trading at a

premium

term bond

principal is paid at maturity

The MSRB was created for what purposes?

propose and implement new rules for industry practitioners

A mutual fund's breakpoint schedule applies to .........

purchases within a single fund family.

how often must firms send account statements

quarterly

brokers call rate:

rate charged by banks on loans extended to broker-dealers

Federal funds rate:

rate that banks charge other banks for lending to them excess cash from their reserve balances on an overnight basis

DIscount rate

rate that the Federal Reserve charges banks for short term loans

CBOE purpose

regulate all matters related to trading standardized options and related options listed on that exchange

MSRB Purpose

regulates all matters related to the underwriting and trading of state and municipal securities. does not have enforcement powers.

An investor holds a callable bond that has been called by the issuer. This investor now faces

reinvestment risk

A UIT sells units to investors through...

representatives of broker dealers with which selling agreements have been established

a REIT is categorized as a(n)

trust it is not a type of investment company or direct participation program.

Under most circumstances a general securities firm is required to have a minimum of how many principals

two

a debenture is a(n)----

unsecured corporate bond

Current yield goes ----as bond prices decrease, and vice versa.

up

Roth IRA income contribution rules (limit)

up to 100% of compensation of active work that does not exceed MAGI income threshold

variable annuity return

varies with the performance of the investments

The process of a shareholder assigning voting rights to a third party is

voting by proxy

interpositioning

whe a second broker dealer is used in a way that denies the customer best execution

Secondary Offering

when a stockholder is selling a major portion of equity to the public

how often must regulatory elements ce

within 120 days of second anniversary of registration and every 3 years thereafter

Firms must report to FINRA any written customer complaints

within 15 days of the end of the quarter in which the complaint was submitted

Is registration required for ADR

yes

are capital gains for a municipal security taxable

yes

qualified institutional investor qualification

§ An institutional investor who invests at least 100MM on a discretionary basis

Depression definition

§ Six consecutive quarters of economic decline

Recession definition

§ Two consecutive quarters of economic decline

Finra (Code of Procedures (COP):

· Covers enforcement of FINRA rules and penalties for violation. COP decisions are appealable to the SEC.

FINRA (Uniform Practice Code (UPC)

· Covers technical aspects of trading and payment for securities transactions. Specifies delivery standards, dividend payment procedures, and interest payments

FINRA (conduct rules)

· Establish the relations between firms and their customers. This covers items such as fair dealing, compensation, communication, and sales practices.

Keynesian Theory

·-Active government involvement in the economy is vital -Demand for goods sets employment and price levels -Believed fiscal policy determined overall economic health

An "easy" monetary policy is one where the FRB

Buys securities to increase the money supply.

How can an investor participate in a Master Limited Partnership (MLP)?

By buying MLP shares on an exchange

The best bid currently available to buy ABC stock is $36.45 per share. If the spread is 2 cents per share, what is the best ask price, as shown on the limit order book?

$36.47

how to calcualte sales charge

(POP - NAV)/ POP

T- Bill (maturity and interest)

- 1 month -3month -6 month -9 month -1 year no semiannual interest, instead trade at a discount to par

Tax deferral plans

-401k -pension -traditional IRA

Rule 144A

-An exemption to rule 144 offered under the Securities Act of 1933. Only available to large, Qualified Institutional Buyers (QIB) -allows QIBs to purchase and resell restricted securities with no volume limit or holding period

Largest SROs (self regulated organizations)

-FINRA -CBOE (Chicago board options exchange) -MSRB (municipal securities rulemaking Board)

Trading Restrictions under Rule 144 for Insiders (time and amount)

-In a 90 day period, the security may not trade at a volume exceeding the greater of: - 1% of the total outstanding shares or -The average of the weekly trading volume of the prior 4 weeks on all exchanges.

DIrect Participation Program (DPP)

-Investment companies that raise funds to invest in real estate, oil and gas, equipment leasing, and related business ventures.

Factors that make a bond sensitive to interest rate risk

-Low coupon -long maturity

IPO Restricted Persons

-Member firms -Employees of member firms -Underwriters and their fiduciaries -Portfolio managers -any person owning 10% of more of a member firm -Immediate (nuclear) family members of member firm employees

Tenants in Common (TIC)

-Provides that a deceased tenants fractional interest in the account is retained by the tenant's estate and is not passed to the surviving tenant

post tax plans

-Roth IRA -529 -ABLE -Coverdell

restricted securities

-Securities acquired through some means other than a registered public offering (i.e. a private placement)

control securities

-Securities owned by directors, officers or persons who own more than 10% voting stock

Private Placement offer

-Sold directly to institutional investors and accredited investors -Exempt for Securities Act of 1933 regulation

MF share class A

-The sales charge is paid at the time the investor buy shares. The charge is subtracted from the amount invested.

MF share class C

-These funds have a standardized, annual fee schedule that never dissipates. -Fee structure is ideal for investors with a short investment horizon.

Best Efforts underwriting

-Underwriter acts as agent, not the principle -Underwriter is not obligated to purchase the shares.

QIB

-a qualified Institutional Investors who trade 100MM or more on a discretionary basis.

SIPC coverage (if BD fails)

-cash and margin accounts are covered no more than 500k -accounts for 1 customer are combined for coverage -only the equity in a margin account Is covered, not the market value -commodities and futures are not covered

securities exchange act of 1934

-created the SEC -governs trading markets for existing securities &registration requirements for BDs, their employees and exchanges

SROs under sec regulation must

-enforce federal securities law -supervise securities practice within an assigned jurisdiction

GO bond

-general obligation bond -non-revenue producing projects. Bond cash flow are produced by the taxation power of the jurisdiction.

securities act of 1933

-governs primary markets -requires issues to register their securities when selling to the public

An investor purchases a 6% bond for 115. Rank the yield computations for this bond from highest to lowest. I. Current yield II. Nominal yield III.Yield to call IV. Yield to maturity

-nominal yield (i.e. coupon) II -current yield, I -yield to maturity, IV -yield to call.III

UTMA/UGMA

-one minor -one custodian -custodian acts as fiduciary, and manager

shelf offering

-pre-emptively register securities without actually issuing them until a later date -Once filed, the registration is good for 2 years,

Pre registration period

-quiet period -underwriter prepares registration statement

trust account

-settler contributes -trustee holds legal title -multiple beneficiaries recieve

Penny stock

-unlisted security -trading less than 5$

FIrm Commitment underwriting

-·The underwriter contracts to buy the shares directly from the issuer at a set price. -Underwriter is acting as a principle

A corporate bond that is currently trading at 95 pays a semi-annual coupon of $25. What is the current yield?

0.0526 50/$950 = 5.26%.

Martin opens his first Roth IRA on March 31, 2014, at age 56. What is the first date on which he can take a qualified distribution that is tax-free?

1-Jan-19 2 criteria. 1) Five years after the first contribution (which is deemed to occur on Jan 1 of that year) and 2) after the account holder's 59½ birthday.

An individual may be subject to statutory disqualification if he or she has committed a felony within the past.... years

10

When a firm learns of a statutory disqualifying event, it must update a registered representative's U-4 within

10 days

standard denomination of a bankers acceptance is in what amount

100k

traditional ira tax free withdrall limits for first time homebuyer under the age of 59.5

10k

rule 144

144 regulates the sale of control and restricted securities

Unless eligible for an exception, municipal trades must be reported to the Real-time Transaction Reporting System (RTRS) within

15 minutes of execution.

ABLE contribution limit per year

15k

MFP rule G-37 has a penalty for political contributions of

2 year ban from negotiated underwrtitings

t-notes (maturity,interest and quote)

2-10 years pay semiannual 1/32nd quote

Under federal anti-money laundering regulations, a Suspicious Activity Report (SAR) must be filed within how many days of the discovery of suspicious activity?

30 calendar days

A firm must report to FINRA a change in the person named as its Anti-Money Laundering Officer within

30 days of the change

t-bond (maturity, interest and quote)

30 year semiannual interest 1/32nd

Reg t short positions minimum maintenance

30%

Muni bond calander year (accrued interet)

360

corporate bond calander year (accrued interest)

360

Government bond calander year

365

afte passing sie how long does one have to take a top off exam

4 years

What is the name of a participant-directed ERISA plan sponsored by a state or local government entity?

457(b)

market sell order is executed at the quote at a time when the bid-ask is $48.35-$48.37. The transaction price is

48.35

Reg T Purchase deposit (and finra acc minimum)

50% and 2k in account

What is the penalty for failure to take a Required Minimum Distribution (RMD) from a Traditional IRA?

50% of the under-withdrawal amount

The maximum annual contribution of earned income to an IRA is

6K

When a redemption of mutual fund shares is requested, the fund must redeem shares within

7 calendar days

The maximum annual contribution of earned income to an IRA for a person over 50 is

7K

cold calling time limits

8am-9pm in customer time zone

All of the following information is required when submitting a Form U-4 for a registered representative EXCEPT A) Tax returns for the past 3 years B) Employment history for the past 10 years C) Social Security Number D) Residential history for the past 5 years

A

An insurance company's separate account is not directly managed by its investment managers. This separate account is A) Registered as a unit investment trust under the Investment Company Act of 1940 B) Is not registered under the Investment Company Act of 1940 C) Registered as a closed-end investment company under the Investment Company Act of 1940 D) Registered as an open-end investment company under the Investment Company Act of 1940

A

Which of the following are least likely to be found within an insurance company's general account? A) Common stock B) Corporate bonds C) Cash D) Treasury bonds

A

Which of the following statements is not accurate with respect to a warrant? A)There is no secondary market available for these securities. B)They usually have longer timeframes than a right, another type of equity security. C)They will have value if the share price appreciates above the exercise price. D)They are typically issued in connection with other securitie

A

in order for a firm to begin business as a broker-dealer, it must have satisfied all of the following requirements EXCEPT A) Received approval from the SEC B) Become a member of an SRO C) Filed Form BD D) Become a member of SIPC

A

Which of the following is a type of risk not commonly associated with ADRs? A) Call risk B) Political risk C) Currency risk D) Inflation risk

A ADRs do not carry call risk, as they are equity securities and as such the issuer does not have the right to redeem the shares from the investor.

Which type of open order is not adjusted for a cash dividend? A) Buy Stop B) Sell Stop-limit C) Buy Limit order D) Sell stop

A Orders above the market are not adjusted for corporate events. Only orders below the market, such as buy limit, sell stop and sell stop limits, are adjusted.

Who is the issuer of a banker's acceptance?

A borrower with a bank deposit account

STOP order

A market order activated once a security has passed a pre-specified limit.

Fourth Market

A market where large block trades of both listed and unlisted securities trade

The Bank Secrecy Act requires MSRB member firms to develop and implement a (an)

Anti-money laundering compliance program

An investor is concerned that he may receive his payment of invested principal at a time when interest rates are low. Which of the following is LEAST suitable for the investor?

A municipal bond with a call feature This investor is concerned with reinvestment risk, a risk associated with callable bonds. Issuers call bonds when interest rates have fallen.

According to Rule 144, which of the following persons is NOT a control person?

A non-affiliate who has obtained non-public information about the issuer of the stock

A mutual fund's investment manager is paid

A percentage of the assets held by the fund

An official statement is not yet available for a new issue of municipal securities. In this situation

A preliminary official statement can be used if available, but a final official statement must be furnished as soon as possible

In a tender offer, the price that the acquiring party is offering to pay to existing investors is

A premium to current market value

Which type of business is the most likely the target of a private equity firm?

A private company that is underperforming

An individual who has made an initial payment for a deferred variable annuity contract owns

Accumulation units

Primary offerings after the IPO are referred to as

Additional Public Offerings or Subsequent Public Offerings

Andrew is taking a new job with a company that offers a defined contribution plan. He is age 22. When can he expect to become eligible to participate in the plan, under ERISA's general eligibility standard?

After one year of work service

Execution at quote

An execution at the quote means a buy order is executed at the national best offer and a sell order is executed at the national best bid.

An investor in a mutual fund owns

An undivided interest in the shares of the securities held by the mutual fund

All of the following options are typically available to investors at the termination of a UIT EXCEPT A) Rollover into a new series of the same trust B) Receive a return of the principal that was invested C) Receive an in-kind distribution D) Receive proceeds in cash

B

Why are U.S. Treasury Securities used for conducting Open Market Operations?

Because the market for these securities is the broadest and most active in the U.S. financial markets

All of the following statements are true of a callable convertible preferred issue EXCEPT that A) the convertible is issued with a lower stated dividend rate than a nonconvertible preferred B) the stockholder must surrender the preferred when called or lose the right to par value C) dividend payments stop after the preferred is called D) the convertible preferred can increase in price because of the underlying security

B

An issuer will send proxy statements directly to the beneficial owner of the securities when they are held in all of the following forms EXCEPT A)DWAC B)Street name C)DRS D)Registered physical certificates

B

With regard to the price of closed-end fund shares held by investors which of the following statements is TRUE? A)Shares are sold at a discount when the securities in the fund have increased in value relative to their NAV B) Shares may be sold at a discount or premium to their NAV C) Shares are sold at the price calculated at the close of business on that day D) The price is set by formula each business day

B

In an underwriting of corporate securities, syndicate members participate in the distribution of the securities (what agreement, and with or without financial responsibility)

Based on the terms of the Agreement Among the Underwriters and With financial responsibility for unsold securities

Bid- ask (if i want to sell)

Bid what the market maker is willing to pay

A client owns a portfolio of blue chip stocks that is to fund his retirement in 10 years. Although confident that the market will continue to advance, he is concerned that a market correction of more than 10% could wipe out significant value. Which of the following strategies might benefit this investor?

Buy index puts

An investor buys a December 45 call for 6 when the current market price of the stock is 46. Which of the following statements is true? A) The contract has no intrinsic value B) The contract has intrinsic value of $1 C) The contract has intrinsic value of $100 D) The contract has time value of $100

C

Hal buys a $50,000 certificate of deposit (CD) from his bank. Which one of the following features is the CD not likely to have? A) Fixed maturity B) FDIC insurance C) Can be resold D) Interest payable through maturity

C

Which of the following best characterizes the role of the SEC with respect to an offering of securities by an issuer? A) They endorse the offering for public sale. B) They advise the issuer on the best time to conduct a public sale. C) They clear the offering for public sale. D) They approve the offering for public sale.

C

Puts or calls of the same issuer share the same

Class

From a capital perspective, an ETF is structured most like what other investment (and why)

Closed end company Each of these investments has a fixed capitalization. After its initial IPO, there are not additional shares issued.

Which type of investment company product issues a single class of shares only and trades on the market at a discount or premium to its NAV?

Closed-end company

Manufacturing sales is what kind of economic indicator?

Coinciding Coincident indicators provide a snapshot of the economy's current level of health.

In which type of underwriting is a securities issuer most likely to get the best price with the least risk?

Competitive bid, firm commitment If issuers want the best price for shares with the least risk of unsold shares, they should elect a competitive bidding process with a firm commitment by the underwriter. Issuers may choose a negotiated process if underwriter-selection criteria other than price (comfort, relationship) are important. Firm commitment means the underwriter buys shares from the issuer, regardless whether these shares can be resold to the public.

What type of communications with the public is made available to 25 or fewer retail investors in any 30 calendar-day period?

Correspondence

Coverdell ESA's age rules

Coverdell ESA's can be opened for any student who is under the age of 18, and the assets must be used / withdrawn by the time the individual reaches the age of 30.

Securities Investor Protection Corporation (SIPC)

Created under the Securities Investor Protection Act of 1970, this agency oversees the liquidation of insolvent brokerage firms and provides insurance on investors' trading accounts. -all BDs must be SIPC members except for firms that deal exclusively in (munis, government securities, and redeemable investment company securities)

All of the following statements are true regarding private REITS EXCEPT A)They do not trade in the public markets B)They are exempt from many disclosure requirements under the Securities Act of 1933 C)they lack liquidity D)They are sold to public, accredited and institutional investors

D

All of the following statements regarding penalties for insider trading and securities fraud are true EXCEPT A) Both the tipper and tippee can be liable and subject to penalty under the Act B) A bounty is payable to persons who inform the SEC of insider trading activities C) Violators may be subject to civil penalties equal to three times the profits made or losses avoided D) Violators may be imprisoned for no more than 5 years if proven guilty

D

All of the following statements regarding the margin account disclosure statement are true EXCEPT A)The margin account disclosure must inform the customer that the firm can force the sale of assets without the customer's approval to meet a margin call B)Delivery of the margin account disclosure statement is required at or prior to the opening of the account C)Margin account disclosure delivery can take place physically in hard copy form or electronically D)A follow-up margin disclosure must be delivered to all margin customers at least once every 3 years in writing or electronically

D

Money market funds offer all of the following EXCEPT A)Higher interest than interest bearing bank accounts B)High degree of safety and liquidity C)Net asset value per share that historically has not fallen below $1.00. D) Insured by the FDIC

D

Under FINRA's Standards of Commercial Honor and Principles of Trade all of the following may be considered by a firm when charging a commission in an agency transaction, except: A)market conditions with respect to such security at the time of the transaction B)the expense of executing the order C)the value of any service rendered by reason of the firm's experience D)the fact that the firm is entitled to a profit

D

The notification and disclosure provisions that apply when an employee of a broker-dealer opens an account with another firm are waived for accounts limited to transactions in all of the following EXCEPT A)UITs B)Variable life policies C)Mutual funds D)ETFs

D Accounts that involve transactions in ETFs are subject to the FINRA disclosure and notification requirements when opened by employees of other firms.

MF no-load shares

Directly marketed shares with no sales fee

The function of the sponsor of the fund is

Distributing shares of the fund

Distributions from a CMO are made

Distributions from a CMO are made on monthly basis and are taxed at the federal, state, and local level. Their monthly distributions make them appropriate for investors who are seeking income on a monthly basis.

Transfer Agent

Entity responsible for ensuring that securities are issued in the owner's correct name. § Cancelling old, and issuing new securities § Maintaining records of ownership § Handling issues related to lost, stolen, or destroyed certificates.

Two options contracts would be in the same series when they have common

Expiration months and strike prices

who enforces MSRB rules within securities firms

FINRA

Broker dealer definition

Firms that stand ready to buy and sell securities in the hopes of making a profit

When large sums of money are transferred through sophisticated financial transaction to separate the funds from their illegal source, this is an example of

Layering

When a registered rep's association with a FINRA member firm is terminated, the firm must file (form and time frame)

Form U-5 with FINRA within 30 days

Money laundering (placement)

Funds or assets are moved into the laundering system

Ginnie mae vs Fannie Mae and Freddie mac

Ginnie mae is backed by US

to qualify as an "accredited investor" under the SEC's Regulation D, a single person would need to have income of

Has a net worth over 1MM at least $200,000 in each of the two most recent years

IPO selling group

Helps sell shares no financial commitment to deal

im is a single person covered by a retirement plan at work. He is told by his accountant that only part of his Traditional IRA contribution is deductible this year. Why is this true?

His income level falls in a particular range

All of the following are means of backing general obligation bonds EXCEPT Hotel occupancy taxes B) Ad valorem taxes C) Sales taxes D) Acts of state legislature

Hotel occupancy taxes

An exchange-traded note is a combination of which two of the following? I. a bond II. a pool of commodities III. a derivative IV. a pool of real estate

I and III

When designing its continuing education program, a firm must require that all covered persons complete I. Firm Element training annually II. Regulatory Element training annually III. Regulatory Element through a computer based module, and Firm Element through the method the broker-dealer has determined most appropriate

I and III

Which two of the following statements are TRUE regarding bond UITs? I. They issue a set number of units and their offerings are then closed II. They issue as many units as necessary to complete their IPO III. They are redeemable IV. They are exchange traded

I and III

A customer purchased a 5% U.S. government bond yielding 6%. A year before the bond matures, new U.S. government bonds are being issued at 4%, and the customer sells the 5% bond. The customer probably I. bought it at a discount II. bought it at a premium III. sold it at a discount IV. sold it at a premium

I and IV

A registered rep intends to begin working for a start-up company during off hours. Although not receiving compensation currently, she expects an equity position in the firm and eventual payment for her work. According to FINRA rules, this representativ e I. Must provide written notice to her employer II. Is not required to provide notice to her employer III.Must receive permission from her employer before accepting the position IV. Is not required to receive permission from her employer before accepting the position

I and IV

An increase in corporate inventories is I. A leading indicator II. A lagging indicator III.A sign of economic growth IV. A sign of economic decline

I and IV

Which TWO of the following are TRUE of a broker-dealer's obligation to provide notice to customers of its Customer Identification Program? I. Notice must be given when the account is opened. II. Notice must be given at account opening and annually thereafter. III. Individual copies of the notice must be delivered to the customer. IV. The notice must be provided by any means that ensures the customer will be able to view it.

I and IV

Under the Securities Exchange Act of 1934, the SEC does which of the following? I. Regulates securities exchanges. II. Requires the registration of brokers and dealers. III. Prohibits inequitable and unfair trade practices. IV. Regulates over-the-counter markets.

I, II, III and IV

Which of the following are acceptable options for delivery of Firm Element education? I. Computer-based training modules prepared by outside vendors II. Face-to-face training delivered by the firm's compliance department to all registered representatives III. Pre-recorded web conferences presented by high level product experts within the firm

I, II, and III

A dealer purchases municipal securities for its inventory from another dealer. This transaction is I. an agency trade II. a principal trade III. compensated with a mark up IV. compensated with a commission

II and III

The tax advantages a limited partnership offers I. Should be the primary reason an investor chooses a limited partnership as an investment choice II. Should be of use to the investor if the partnership investment is recommended III. Are most useful in sheltering other passive income IV. Are most useful in sheltering ordinary income

II and III

Which two of the following documents would be considered an advertisement under MSRB rules? I. a dealer offering sheet II. an abstract of an official statement III. a form letter IV. an interoffice memo

II and III

Which two of the following statements describe closed-end funds? I. They are a continuous primary offering II. There is a fixed number of shares III. Shares are liquidated through exchange trading IV. Shares are redeemed by the fund

II and III

An investor that holds units in a UIT needs to liquidate the units. These units will be I. Sold to another investor on an exchange II. Sold to the issuing trust III. Worth at least the price at which they were issued IV. Valued at the end of the business day of the transaction based on the assets held in the trust

II and IV

Under the terms of a selected dealer agreement, participant firms I. act as principal II. act as agent III. may distribute registered securities only IV. may distribute either registered or unregistered securities

II and IV

When a customer purchases a new municipal bond, the interest included in the accrued interest calculation I. begins on the trade date II. begins on the dated date III. includes the settlement date IV. does not include the settlement date

II and IV

Which of the following are "fiduciaries" covered under FINRA Rule 2060's restrictions on using information about the ownership of an issuer's securities to solicit transactions ? I. Broker-dealers II. Transfer agent III. Registered Representative IV. Trustee

II and IV

hich TWO of the following statements are TRUE of FINRA requirements for the designation of contact persons for a broker-dealer's business continuity plan? I. Firms must designate a single emergency contact person. II. Firms must designate a minimum of two emergency contacts. III. Updates of the emergency contacts must be made through WebCRD. IV. Updates of the emergency contacts must be made within 30 days.

II and IV

For purposes of calculating the Required Minimum Distribution (RMD) from a Traditional IRA, which life expectancy factors are used?

IRS tables

Money Laundering (Integration)

Illicit funds are integrated with legitimate funds

When must proxy materials be filed with the SEC?

In advance of the shareholder solicitation

rule 147

Instate business qualifications (only must meet one of the following) o 80% of revenue in a state o 80% of assets in a state o 80% of net proceeds used in a state o Majority of employees are based in a state - Can raise unlimited capital - As often as they want - Can sell to in state residents o Those residents can sell across state lines after holding shares for 6 months

Repurchase agreement

Institutions raise cash (funding) by temporarily selling certain securities with the promise to buy them back

When a UIT reaches the termination date specified at its creation, the trust

Is dissolved and no longer active

Cleo wants to make sure she gets a good price when she sells her 400 shares of Time Warner stock. If she enters a stop order to sell the shares at $11, what is the worst price she can get? and why

It isn't known The stop order will convert into a market order when any shares of Time Warner sell at $11. However, there is no guarantee of the next-sale price.

Which of the following is TRUE of the yield of a bond that is trading at a price that is $80 more than its face value?

Its coupon yield will be higher than its current yield

Joe is a registered rep currently employed by Windy City Broker-Dealer, a Chicago based firm. Joe recently graduated from college and is working to pay down his student loan debt. In order to get his finances in order in a timely fashion, his parents, who also happen to be clients of the broker-dealer, agree to lend him $50,000. Which of the following is true regarding this action?

Joe can borrow money from his parents provided that the firm has written supervisory procedures addressing the scenario.

client and his business partner open an account together that allows them to share profits and losses in the account based on a 30/70 split, and will pass to their heirs at death. This account is a

Joint Tenants in Common (JTIC)

------ allows an investor to receive a sales charge discount on a current purchase by combining it with future purchases within the next 13 months

Letter of intent

What types of contributions may employers make to a 401(k)?

Matching or profit-sharing

A customer makes a stock purchase and two months later the company goes bankrupt and the stock becomes worthless. The registered rep (reimbursement forms)

May not offer to reimburse this customer, as no guarantees may be made against financial loss.

Roth IRA contribution age cap

NONE

The role of the specialist (Designated Market Maker) is most closely associated with what market

NYSE

When must a confirmation of purchase of equity securities be sent to the customer?

No later than the date of settlement

Which date relating to dividends generally occurs last?

Payable

Which of the following would have the smallest impact on the share price of an OTC listed REIT? A) Lack of liquidity B) Market conditions C) Occupancy rates D) Pending mortgage applications

Pending mortgage applications

A registered representative would like to open a brokerage account at a different firm, where his friend recently accepted a position. This is

Permitted, with prior written consent from the employer

seriel bond

Portion of Principle paid off at intervals over a period of time

balloon bond

Portion of principle paid off prior to maturity, but the majority is paid off at maturity.

Equity includes (balance sheet)

Preferred Stock, Common Stock, Additional paid-in Capital, Treasury Stock, Retained earnings.

If an investor is holding callable preferred stock, she should be

Prepared to sell her shares back to the company

Conversion price

Price paid per share upon conversion

Which of the following receive the least amount of their revenue from property taxes?

State governments

The correct order of these interest rates, from high to low is: Discount rate, Broker's call rate, Prime rate, Federal funds rate

Prime rate, Broker's call rate, Discount rate, Federal funds rate

Pursuant to Regulation S-P, a broker-dealer must provide a privacy notice to a customer

Prior to engaging in any securities business with that customer.

A broker-dealer is excluded from registration as an investment adviser if both of two tests are met. One test is receipt of no special compensation for advisory services. What is the other test?

Providing advisory services that are solely incidental to the main business

To establish a short position in one XYZ two-year 90 LEAP puts at $13, an investor will (pay/recieve how much)

Receive $1,300

Fed selling securities effect on money supply and rates

Reduces money supply and raises rates

Retiring an outstanding bond issue at maturity by using money from the sale of a new offering is known as

Refunding

-------is/are most likely backed by fees, tolls or concessions?

Revenue bonds

key difference between a Traditional IRA and a Roth IRA?

Roth IRAs are not available to everyone with earned income, but Traditional IRAs are.

act that created SIPC

Securities Investor Protection Act of 1970

The option strategy presenting the greatest potential risk to an investor is a

Short call

Under the intrastate offering rule, when may a resident purchaser of the securities resell them to a nonresiden

Six months after the last sale made by the issuer

--- receives the least amount of their revenue from property taxes?

State governments

In interest-bearing corporate bonds, accrued interest that is due the seller must be included in settlement. According to industry rules, the accrued interest must be calculated up to what date?

T + 1 For interest-bearing fixed income securities, interest is accrues up to (but not including) the settlement date, which is the second business day following the trade date (T+2). Put differently, accrued interest includes the trade date and T+1, but not on T+2 (settlement). On T+2, the interest accrues to the buyer of the bond.

Treasury debt settlement time

T+1

Unlike most other packaged investment products, hedge funds are exempt from

The Investment Company Act of 1940

best source of financial information about an issuer for potential investors?

The Official Statement

The regulation that requires the appointment of an independent fiduciary to act on behalf of bondholders and periodic filing of financial information by corporate issuers is

The Trust Indenture Act of 1939

working capital

The amount of available capital a company has to work with · Increased by higher profits, sale of securities, and sale of non-current assets. · Decreased by declared dividends, paying off long-term debt, and net losses

In order to receive a cash dividend payment based on regular way settlement process, an investor must purchase stock no later than

The business day before the ex-dividend date

In which of the following situations would it be appropriate for a registered representative to lend money to a client without receiving permission from the firm?

The client is a financial institution engaged in the business of lending money.

An institutional account may be able to qualify for an exemption from

The customer-specific aspect of the suitability rule

FINRA (Code of Arbitration (COA)

The dispute resolution arm of FINRA. Handles non-monetary disputes. COA decisions are final and binding

An associated person has a mutual fund account with another broker-dealer. According to industry rules, which of the following statements is true?

The mutual fund is not required to notify the employing firm or offer duplicate confirmations in this situation.

Money laundering (layering )

The origins of the cash are concealed

MF share class B

The sales fee is paid when the investor sells the shares. -sales fee drops over time incintivizig investor to hold shares

A municipal finance professional at JoeBrokerDealer made a contribution of $250 to a candidate in a local election. A month later the MFP joined a new municipal securities firm, JaneBrokerDealer. With regard to the campaign of this candidate, if the MFP makes another $250 contribution to the same election

The underwriting ban will be triggered for JaneBrokerDealer

A customer has a Roth IRA, and he wants to delay taking money out as long as possible. If he lives to be 100, at what age must he begin taking minimum distributions?

There is no such requirement

Which of the following statements is true of Treasury Notes? A) They cannot be traded in the secondary market B) They have a minimum purchase amount of $100 C) They are the shortest maturity of U.S. government securities D) They are issued at a discount and mature to face value

They have a minimum purchase amount of $100

over-the-counter trading of exchange-listed securities takes place in which market

Third

An investor would like to achieve monthly income from a mutual fund investment that has the highest level of principal protection available. A suitable recommendation is a

U.S. Government Bond fund

In which of the following investments is the investor most likely to hold an interest in the same securities for the life of the investment?

UIT

post effective period

Underwriter sells shares

A customer that invests in a unit investment trust owns

Units in a fixed portfolio of securities

What term specifies an ERISA plan participant's right to receive benefits from the plan, without a risk of forfeiture, such as the participant's dismissal from work?

Vesting

FINRA has revoked the registration of a registered representative due to a violation of SEC regulations. In this case the representative may

When FINRA has canceled the registration of a representative, the firm may not allow the representative to act in any capacity and may not pay compensation earned after the revocation.

An order ticket, or memorandum, must be completed

When a customer's order is received

In which case will an open buy limit order not be adjusted by the amount of a cash dividend paid to shareholders of record?

When the order is marked Do Not Reduce "DNR" Also, orders are not adjusted for dividends of less than one cent.

When securities are purchased by investors in a Regulation D private placement, what determines the required holding period, before they can be sold?

Whether or not the issuer reports financial information to the SEC

he registrar is best characterized as the entity

Who maintains records of ownership of securities

A bond issued by a well-known and highly rated municipal issue (compared to 10 year t bond)

Will trade at a relatively low spread relative to the U.S. Treasury 10 year bond

A registered rep has violated an SEC rule, resulting in termination of employment. This individual is now the subject of a statutory disqualification and

is ineligible for registration

Claire is a stay-at-home mother who is married to Ken. They file a joint tax return. She has no income of her own. Can she have a Traditional IRA?

Yes, if her husband works and has compensation

Bond is trading flat

a bond that trades with no accrued interest (zero coupon bonds)

exchange offer

a company exchanges new securities for old ones. the old and new securities MUST have the same issuer

Joint Tenants with Rights of Survivorship (JTWROS)

a deceased tenant's interest in the account passes to the surviving tenant

reverse repurchase agreement

a lender borrows a security and agrees to return it for a higher price.

who grants approval for advertising by a RR

a registered principal of the RRs firm

Broker definition

act as intermediary (Broker)

how to calculate NAV

adding the total value of the fund's investments, subtracting the fund's fees and expenses, and dividing this figure by the number of shares of the fund that investors currently own.

For the purpose of FINRA rules involving borrowing and lending money to customers, an immediate family member is a(n) I. grandparent II. Aunt or uncle III. Cousin

all

1035 exchanges

allows annuity investor to make a tax free transfer of one annuity contract for another

current yeild calculation

annual interest/current price

how often must firm elements training be completed

annually

who is able to set up a 529 plan and contribute to it

any adult

how are qualified variable annuities taxed upon distribution

as ordinary income

bid- ask (if i want to buy)

ask what market maker is willing to accept

In a firm commitment offering, the underwriter

assumes the risk of selling the entire allotment of securities.

to qualify as an "accredited investor" under the SEC's Regulation D, a married couple would need to have income of

at least $300,000 in each of the two most recent years

Restricted Securities (time to hold until sale)

at least 6 months

when must an options disclosure document be provided to a customer

at or prior tot he time the account is approved for options trading

in a best-efforts offering, an underwriter

attempts to sell the newly issued securities to the public, but makes no guarantees, and takes on no financial risk.

Prime rate:

is the interest rate that commercial banks charge their most credit-worthy customers

An investor interested in a general obligation bond versus a revenue bond

is willing to accept a lower yield in return for taking less risk

Eurodollar bond

bond traded or issued outside of the US but is denominated in USD

margin account loans are typically assessed based on what

broker call rate

the primary purpose of a syndicate desk is to

build an order book and allocate the stock

penalty free withdrawals from a traditional IRA pre 59.5 for college tuition

bust be used for qualified expences

When must traditional ira distributions begin

by age 72

how are official statements used

by syndicates in the marketing of the issue

why is comingling prohibited

it places the customers securities at risk if the BD defaults on a loan

What will an investor own after exercising a warrant at its strike price?

common stock

a municipal issuer invites bids from potential underwriters and gives the deal to the firm offering the lowest interest cost to the issuer this is a

competitive bid

529 plan (tax and non relatives)

contributions are tax deductible non relatives may establish plans for a beneficiary

A statutory disqualification may be imposed if, within the past ten years, an individual has been

convicted of a securities misdemeanor

20 days after registration of a security

cooling off period

A bond indenture requires an issuer to maintain adequate financial ratios and reserve funds to pay bond interest. Such provisions, designed to protect bond holders, are called

covenants.

the US patriot act

covers anti-money laundering policies and procedures that must be followed by financial firms

securities investor protection act of 1970

covers the protection threshold for customers in the event of BD bankruptcy

Insider Trading and Securities Fraud Enforcement Act of 1988

defines penalties for the misuse of materials NPI by both firms and individuals

who signs the Customer New Account form

designated principal

Selling away

engaging in private securities transactions without written prior consent of the employing BD

Account Custodians and Trustees definition

entity responsible for making all investment, management, and distribution decisions in an account. All decisions are made on a fiduciary basis.

-American Depository Receipt (ADR)

equity security designed to simplify foreign investing for Americans

a secondary offering is---

existing investors are selling some or all of their shares in to the open marketplace.

Every year a mutual fund will examine its operating expenses as a function of the average dollar value of its assets under management. This item is published as the mutual funds'

expense ratio

dealer definition

facilitate trade form own balance sheet

what is the most volitile interest rate

federal funds rate rates banks charge other banks for overnight loans

Interest received from a Treasury Bond is taxed at the

federal level but not the state or local level.

Revenue Bonds

finance any municipal facility that generates sufficient income to self-fund the issuance

IPO syndicate

firms committed to underwrite shares will buy own unseld shares

The function of the transfer agent of the fund is

for customer redemptions and other services

Ad valorem taxes are most likely used to support issues of

general obligation bonds issued by a city.

investment advisor act of 1940

governs the regulation of firms that earn fees from providing investment advise

investment company act of 1940

governs the regulation of packaged products such as MF, closed-end funds, and unit investment trusts

If a bond is trading below face value, current yield will be the ------of the two.

greater

fixed annuity returns are...

guaranteed at a fixed rate

A bond is trading at a premium. Therefore, the nominal yield will be _______ than the YTM

higher

at issuance, warrants are issued at what price relative to the underlying security

higher than the current market value

What determines whether Pablo can make a Roth IRA contribution this year?

his income oth IRA contributions are available only to taxpayers who work, earn compensation, and have income below a certain dollar amount.

A client has just started her traditional IRA. when will she will be vested

immediately

when is a standby offer used

in a rights offering

Pre-refunding or advance refunding occur if the issuers sells the new bonds...

in advance of the first available call date, typically to lock in a lower interest rate.

fed Buying securities effect on money supply and rates

increases money supply and lowers rates

fixed annuity premiums are invested into

insurance company general account

variable annuity premiums are invested into

insurance company seperate account

The practice of returning illegal funds to their original source through the legitimate banking system i

integration

private activity bond taxation

interest is fully taxable

A dealer buying debt securities from a customer with an agreement to sell the same securities back to the same customer at a later date is taking part in

reverse repurchase agreement

a non-deductable ira referes to a

roth ira

The function of the Custodian of the fund is

safekeeping

cooling off period

sec reviews registration statement underwriter markets the new securities but cannot sell

The agreement that specifies rules for the group of financial institutions who assist an underwriter in the sale of a new securities issue but do not have responsibility for any unsold securities is a(n)

selected dealer agreement

selling of Open end company (MF)

shares are redeemed to the fund by the holder and are priced at NAV

Tax Anticipation Notes (TANs)

short term municipal instruments that are issued in anticipation of an upcoming tax collection. example- Schools are supported by property taxes, so TANs can be used to provide interim financing until the tax revenue is available.

nonsystematic risk

specific business risk -diversifyable

Coupon yield ----over the life of a bond while current yield

stays consistent changes

rising interest rates effect on usd

strengthens

Listed options have standardized ........strike prices and expiration dates

strike prices and expiration dates

Cash dividends paid on common shares held for fewer than 60 days are

taxable as ordinary income

Who actively manages the business of a limited partnership?

the General Partner

what is the cost basis of an inherited mutual fund

the NAV of the shares when the owner dies

under reg S-P what is something the firm must include in the customer privacy and optout notices

the polices to protect the security of non public information

rising rates effect on mortgage prepayments

they will decine When interest rates rise, fewer homeowners will be inclined to prepay their mortgages, thus causing refinancing activity to slow down.

Who wants strong exchange rate (stong USD)

those with revenues in USD

selling of Closed end company

traded on secondary market

A bond is selling at a price of 81 with all coupons since July of 2011 attached. This bond is said to be

trading flat with unpaid coupons attached

The function of the investment advisor of the fund is

trading of the fund's portfolio

a deductible ira refers to a

traditional ira


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