SIE Test 2
Which of the following investments allow a maximum contribution limit of 100% of earned income, not to exceed $6,000 (tax year 2022) and assuming the investor is less than 50 years of age? A. a Traditional IRA B. A keogh Plan C. A 401K plan D. An Education IRA
A. a Traditional IRA
Assume that interest rates have remained stable while stock prices have been declining. An investor is most concerned about the loss of principal when investing and asks his registered representative whether a balanced fund or a growth fund would provide better preservation of capital. The RR should tell the customer that the: A. balanced fund is better because the debt securities and preferred stocks in the portfolio will provide downside protection in this scenario B. growth fund is better because of the greater potential for gains C. balanced fund is better because of the inclusion of blue chip stocks in the portfolio D. growth fund is better because such funds typically hold a diverse portfolio of AAA bonds
A. balanced fund is better because the debt securities and preferred stocks in the portfolio will provide downside protection in this scenario
Which of the following statements about preferred stock is true? A. preferred stock is considered an equity security B. Preferred stocks have maturity dates that are fixed. C. Generally, preferred shares come with voting privileges. D. Most preferred stock has an equal claim to company assets as common stock in the event that a company becomes insolvent.
A. preferred stock is considered an equity security
A share of ABC 8% preferred stock with a par value of 25 will pay a quarterly dividend of: A. $.50 B. $2.00 C. $.80 D. $8.00
A. $.50
Which of the following is NOT a characteristic of Notes issued by the US Treasury? A. All US Treasury Notes have call features B. Maturities on these securities are typically intermediate C. Quotes on these securities are listed as a percentage of the note's par value D. Interest is paid on these securities semi-annually
A. All US Treasury Notes have call features
An RR is California has a client in Colorado. To make trades for the Colorado client, the RR must: A. Be registered in Colorado B. Obtain the branch manager's approval C. Keep a letter of authorization on file D. Transfer the account to firm's in Colorado branch office
A. Be registered in Colorado
Which of the following may NOT be purchased ob margin? A. IPOs B. U.S. T-bills C. Stocks listed on a national exchange D. Equity securities quoted on the National Market System
A. IPOs
A corporation increases the dividend payments to common stockholders. Assume that the price of the common remains unchanged. How does this affect the dividends yield of the stock? A. Increases B. Decreases C. Remains constant D. Cannot be determined
A. Increases
Preferred stock has which of the following traits? A. Preferred stockholders have a priority claim to the assets of a corporation over common shareholders in the event of dissolution of the company B. Dividends on preferred stock are typically paid on a monthly basis C. Preferred stock is issued in relation to the amount of corporate debt carried by the company D. Shareholders of preferred stock have the right to vote for the board of directors
A. Preferred stockholders have a priority claim to the assets of a corporation over common shareholders in the event of dissolution of the company
Which of the following types of bonds secures its income from fees charged to users? A. Revenue bond B. General obligation bond C. Collateral bond D. Convertible bond
A. Revenue bond
A member firm is associated with Mr. Smith, an independent contractor of the member firm. Mr. Smith sells mutual funds from his home office. All of the following are true regarding this association EXCEPT: A. Since Mr. Smith is an independent contractor, he will not be supervised by the firm. B. Mr. Smith's home office must be registered as a branch office if he uses his home address in ads. C. Mr. Smith must be registered. D. Mr. Smith's mutual fund trades must be reviewed and approved by a Registered Principal of the member firm.
A. Since Mr. Smith is an independent contractor, he will not be supervised by the firm.
Which of the following US Government securities are classified as money market instruments? A. Treasury bills B. Treasury notes C. Treasury bonds D. Treasury strips
A. Treasury bills
A customer buys 1 XYZ May 50 call for 2 and buys 1 XYZ May 35 put for 1 when XYZ is selling at $39 per share. XYZ decreases to $28 and the put is sold for the-in-the-money amount while the call expires unexercised. The customer's profit or loss is: A. $1,000 loss B. $400 profit C. $300 profit D. $300 loss
B. $400 profit
A customer buys 100 shares of ABC at 50.50 and sells 1 ABC 50 call @ 5. At what price will the customer breakeven. A. $45 B. $45.50 C. $55 D. $55.50
B. $45.50
One of your clients purchases a callable corporate bond. The bond is callable at 206.55. What will the customer receive if the corporation calls the bonds? A. $1,065.50 minus accrued interest B. 1,065.50 plus accrued interest C. 1,000 on bond 65.50 on interest 1,000 on bond 106.55 on interest
B. 1,065.50 plus accrued interest
A basis point equals: A. 1/1000 of 1% B. 1/100 of 1% C. 1/10 of 1% D. 1%
B. 1/100 of 1%
A broker-dealer has fired a registered representative (RR) for cause related to a violation of securities regulations. This RR will continue to be subject to FINRA jurisdiction for what period of time following the filing of the Form U-5? A. 1 year B. 2 year C. 3 years D. 4 Years
B. 2 year
One of your clients placed a trade in their cash account without the funds to pay for the securities. No additional funds were added to the account and no extension was obtained for additional time to deposit funds. The firm liquidates the purchased position. In order to comply with Reg T guidelines, the customer's account must be frozen for what amount of time? A. 180 days B. 90 days C. 30 days D. Not frozen
B. 90 days
The manager of introducing Broker-Dealer wants to thank the manger at another Broker-Dealer for their assistance with some increased trading volume as of late. Which of the following gifts is permissible under FINRA if given annually? A. Two front-row seats to an upcoming concert, valued at $175 B. A gift card to a local sporting goods store for $100 C. a nice, lined rain jacket valued at $145 D. a fishing rod valued at $450
B. A gift card to a local sporting goods store for $100
In general, which of the following is TRUE in terms of orders used to protect a profit or limit a loss? A. Buy limits are used to protect a long stock position, while sell limits are used to protect a short stock position. B. Buy stops are used to protect a short stock position, while sell stops are used to protect a long stock position C. Sell limits are used to protect a short stock position, while buy stop are used to protect a long stock position D. Sell stops are used to protect a long stock position, while buy limits are used to protect a short stock position
B. Buy stops are used to protect a short stock position, while sell stops are used to protect a long stock position
Which of the following is generally NOT TRUE in relation to Corporate Commercial Paper? A. Commercial paper is normally offered in book-entry form. B. Commercial paper is normally issued in callable form. C. Commercial paper is normally sold at a discount. D. Commercial paper is normally unsecured debt of a corporation.
B. Commercial paper is normally issued in callable form.
Eurodollars are BEST described with which of the following statements? A. Eurodollars are the currency of a group of European countries. B. Eurodollars represent currency of the US that is currently being held in foreign (non-US) banks. C. Eurodollars represent currency of a group of European countries that are held in domestic banks (banks in the US) D. Eurodollars represent currency that may only be traded in European markets.
B. Eurodollars represent currency of the US that is currently being held in foreign (non-US) banks.
Which of the following options positions would give the investor MAXIMUM protection when hedging using options? A. Long Calls and Short Calls B. Long Calls and Long Puts C. Short Calls and Short Puts D. Short Calls and Long Puts.
B. Long Calls and Long Puts
A customer buys US Government Bonds Friday, March 6. Regular Way settlement is? A. Friday, March 6 B. Monday, March 9 C. Friday, March 13 D. Monday, March 16
B. Monday, March 9
A client recently purchased a sizeable number of mutual fund shares and knows the the NAV will change daily. The customer asks the RR how the NAV number is computed. Which of the following best describes the computation to arrive NAV per share? A. NAV per share is calculated by finding the average value on a per share basis over the previous quarter B. NAV per share is calculated by subtracting the liabilities of the fund from the total assets of the fund, then dividing this number by the total number of shares currently outstanding C. NAV per share is calculated by talking the total value of the portfolio of the fund, adding sales charges received, and then dividing this figure by the total number of shares currently outstanding. D. NAV per share is calculated by finding the total appreciation of the portfolio and dividing the figure by the total number of shares outstanding
B. NAV per share is calculated by subtracting the liabilities of the fund from the total assets of the fund, then dividing this number by the total number of shares currently outstanding
A broker-deal firm has become insolvent. SPIC liquidation procedures have began. Jill and Jack are married and each of them have individual accounts along with a joint account. Jill has $275,00 full paid and Jack has $265,000 fully paid. The joint account has $475,000 fully paid. What would SPIC cover in relation to these accounts? A. SPIC coverage would total $500,000 for the three accounts. B. SPIC coverage would pay 275,000 for Jill, 265,000 for Jack, and $475,000 for the joint. C. SPIC coverage would pay $1,500,000 in this case because each account is insured for 500,000. D. SPIC would not cover any of the claims.
B. SPIC coverage would pay 275,000 for Jill, 265,000 for Jack, and $475,000 for the joint.
The appreciation of the value of a variable annuity during the accumulation period is A. taxed as ordinary income each year B. Tax deferred until annutitization C. taxed as a capital gain each year D. adjusts the cost basis and is taxed each year
B. Tax deferred until annutitization
Which of the following statements is FALSE when discussing the Federal Funds Rate? A. Changes to the supply of money and demand for money causes fluctuations in the federal funds rate. B. The Federal Reserve directly sets the Federal Funds Rate. C. Historically, the discount rate has been lower than the Federal Funds Rate D. The calculation of the Federal Fund Rate takes place daily
B. The Federal Reserve directly sets the Federal Funds Rate.
Which of the following provides a long-term opportunity to purchase a certain number of common shares at a specific price? A. Standard equity options B. Warrants C. Rights D. ETFs
B. Warrants
One of your clients refers a friend. After talking with the referred friend, she opens an account with you, deposits $20,000, and states that she wants you choose some stocks that will have good growth potential whenever you feel it is the right time to buy. The next step you should take would be to: A. choose appropriate stocks, execute the order and report the transaction back to the new customer. B. get written discretionary authorization from her prior to executing any transaction. C. advise her that she needs to pick the stocks and enter the order herself. D. check with your original client to obtain his assessment of her risk tolerance prior to executing the order.
B. get written discretionary authorization from her prior to executing any transaction.
Which of the following are true about the purchase of variable annuities? A. monthly premium varies B. payout varies C. premium is voluntary D. payout is fixed
B. payout varies
In preparation for a Secondary distribution a member firm decides to make purchases on the floor which would cause the price of the stock to rise so that the secondary distribution could be made at a higher price. Such activity is A. allowed since anyone is allowed to enter buy order B. prohibited as market manipulation is not allowed C. allowed if complete disclosure is made to the public D. allowed if there are sufficient pre-sale orders received
B. prohibited as market manipulation is not allowed
All of the following are defensive except: A. automobile repair service B. tool and die manufacturer C. natural gas supplier D. Supermarket chain
B. tool and die manufacturer
Common stockholder have all of the following rights EXCEPT: A. attend the issuer's annual meeting B. vote for the senior management of the company C. assign the right to vote for directors to another person D. Receive a pro rata share of assets upon liquidation
B. vote for the senior management of the company
A customer calls their RR. Which of the following statements by the customer would allow the RR to take action in effecting a transaction for the customer? A. "Im in the market for some of the new IPO that we discussed, so if you ever see it under $50 per share, buy 150 shares for me." B. "I think a mutual fund of some kind would be a good addition to my portfolio. Go ahead and find one and buy it for me." C. "When you think that the price is right today, buy 200 shares of ABC for me." D. "I've got some shares of MNO that I'd like to get rid of some time later this month. So sell 50 shares of MNO later this month, but nothing less than $25."
C. "When you think that the price is right today, buy 200 shares of ABC for me."
Which of the following statements by an RR is true regarding dividends? A. "It is possible for a long-term equity anticipation security to pay dividends." B. "An investor can expect to receive dividends on the underlying security in the event that they own a call option." C. "an investor who owns an ADR can expect to receive dividends from their investment when declared and paid." D. "When an investor owns a warrant or right, they are entitled to receive dividends in accordance with these securities."
C. "an investor who owns an ADR can expect to receive dividends from their investment when declared and paid."
A new client opens up a margin account at the firm. The client wishes to perform a short sale as their transaction. They wish to sell short 1,000 shares of MNO, wish is trading at 2.25 per share. How much must this client deposit assuming no other deposits have been made at this time? A. $1,125 b. $2,250 C. $2,500 D. $4,500
C. $2,500
The following quote appears on a consolidated tape: XYZ P 25,13 +.25 B25 A25.25 How much should you expect to pay to buy 100 shares? A. $25 per sahre B $25.13 per share C. $25.25 per share D. $25.38 per share
C. $25.25 per share
The filing of SAR may be required for which of the following? 1. A $10,000 personal check deposited into an account annually 2. A quarterly direct deposit for $7,000 into an account 3. The deposit of a cashier's check once every other week for $9,000 4. Wire transfers into and out of an account at frequent intervals A. 1 and 2 B. 2 and 3 C. 3 and 4 D. 1 and 4
C. 3 and 4
Which of the following scenarios would NOT violate SEC rules related to trading on inside information? A. The husband of a manger of a company's accounting department buys the company stock in his own account based on info discussed with his wife over dinner about un released financial showings. B. The daughter-in-law of an executive at a major corporation sells the stock short prior to the release of news that significant cut-backs and lay-offs are coming. C. A RR of a broker-deal with an inside info related to the upcoming release of a research report executes an unsolicited buy order from a customer. D. a member of a company's outside counsel legal team tells his brother to sell the company's stock short due to negative outcomes on a pending legal matter.
C. A RR of a broker-deal with an inside info related to the upcoming release of a research report executes an unsolicited buy order from a customer.
The agreement that authorizes a broken-dealer to pledge a customer's margin securities as collateral for a loan from a bank to the broker-dealer is called. A. A credit agreement B. A loan consent agreement C. A hypothecation agreement D. A joint account agreement
C. A hypothecation agreement
Which of the following would be the MOST typical portfolio make up for a mutual fund that is categorized as "balanced"? A. A portfolio consisting of bonds that are all investment grade. B. A portfolio consisting of municipal bonds with diversified ratings and maturities. C. A portfolio consisting of equity securities such as common and preferred, along with bonds from various issuers including government, municipal, and corporate. D. A portfolio consisting of large-cap "blue chip" equity securities.
C. A portfolio consisting of equity securities such as common and preferred, along with bonds from various issuers including government, municipal, and corporate.
A client has held a long position in BCD Common for several years and has seen a sizable increase in price since initially buying the stock. The client fears that BCD is headed for a slight downturn in price and wishes to protect the profits that he holds from the previous increase. Which option strategy provides the MAXIMUM protection for this client? A. By buying calls on BCD B. By selling calls on BCD C. By buying puts on BCD D. By selling puts on BCD
C. By buying puts on BCD
A pharmaceutical company plans to release, one of your clients buys 1,000 shares. Two weeks prior to the release, the FDA publicly announces a delay in the approval of the drug. Your customer's shares drop approximately 20% in value. Which of the following types of risk is BEST represented by this scenario? A. Example of re-investment risk B. Example of market or systematic risk C. Example of legislative or regulatory risk D. Example of unsystematic or business risk
C. Example of legislative or regulatory risk
All of the following are true regarding IRA contributions EXCEPT: A. Although a tax return is filed prior to April 15th, the IRA contribution may be delayed until April 15th. B. Contributions may be made at any time between January 1st and April 15th of the following year. C. If an extension for a tax return is obtained, the IRA contribution may be delayed until the date the tax return is filed. D. Persons not participating in any other type of retirement plan may deduct their IRA contributions up to certain limits.
C. If an extension for a tax return is obtained, the IRA contribution may be delayed until the date the tax return is filed.
Which of the following gifts would EXCEED the gift and gratuity limitations established by FINRA? A. A registered representative, who services his mother-in-law's account, pays for an 3-day cruise for her and her husband at a cost of $2,500 B. A branch manager of a firm who is a long time friend of a principal at another firm pays for dinner and a concert for two couples, where dinner totals $400 and the concert totals $250 per ticket C. In celebration of a clearing firm reaching 20 years in business, an introducing firm who uses the clearing firm buys Rolex watches (valued at $2000) for 20 executives and principals at the clearing firm. D. To congratulate a customer on the birth of her first child, a registered representative buys the customer a $500 crib set
C. In celebration of a clearing firm reaching 20 years in business, an introducing firm who uses the clearing firm buys Rolex watches (valued at $2000) for 20 executives and principals at the clearing firm.
Which of the following statements about REPOs is FALSE? A. Typically REPOs denominations start at a minimum of $1,000,000 B. REPOs are considered money market instruments C. REPOs are often thought of as risk-free investments D. REPOs typically have maturities of less than three months.
C. REPOs are often thought of as risk-free investments
Regular way settlement for corporate securities such as common stocks, preferred stocks, and bonds is: A. same day as trade date B. T+1 C. T+2 D. T+3
C. T+2
Which of the statements below on open-end funds is FALSE? A. at least once annually shareholders should receive distribution of any capital gains of the fund. B. 8.5% is the largest allowable sales charge C. The secondary market is where such funds are traded D. Some customers may qualify for breakpoints
C. The secondary market is where such funds are traded
A market maker is quoting ABCD common stock, a NASDAQ security. The spread in this security is best described as the difference between: A. the dealer's cost and the sale price with the mark-up B. the dealer's cost and the quoted bid price C. the dealer's quoted bid and ask price D. the highest bid and the highest ask of all market makers
C. the dealer's quoted bid and ask price
One of your clients hold a preferred stock on ABC and ABC has not paid dividends for the past two quarters. ABC requires that unpaid dividends on preferred stock be paid prior to paying any dividends to common stockholders. What kind of preferred stock does your client hold? A. Cumulative features B. Conversion feature C. Participating feature D. Call feature
Cumulative features
Mrs. Jones has a conservative investing approach. She has a large portfolio of blue chip common stocks and wants to use options to receive additional income from the portfolio. Which of the following would be the MOST suitable recommendation for Mrs. Jones? A) Buy Puts options on the portfolio of securities B) Write Put options on the portfolio of securities C) Buy Call options on the portfolio of securities D) Write Call options on the portfolio of securities
D) Write Call options on the portfolio of securities
Which following would NOT be considered to be a Money Market Instrument? A. Jumbo Certificates of Deposit B.Bankers Acceptances C. Treasury Bills D. ADRs
D. ADRs
Which of the following accurately describes a secondary offering or secondary distribution? A. An offering of securities that remained after an initial public offering that was not fully sold. B. A rights offering of primary shares that would take place after the completion of an initial public offering. C. Transactions that take place within an underwriting syndicate before shares are actually made available to the public. D. An offering in the secondary market of securities owned by one of more major owners wishing to sell large volumes of their shares.
D. An offering in the secondary market of securities owned by one of more major owners wishing to sell large volumes of their shares.
An investor who regularly trades in and out of five or six different stocks daily and does not maintain any positions overnight is a: A. program trader B. Designated market Maker C. Qualified Client D. Pattern Day Trader
D. Pattern Day Trader
When an investor buys either a corporate or municipal bond, how frequently is interest paid? A. Every week B. Every month C. Quarterly D. Semi Annual
D. Semi Annual
What happens when an RR fails to complete the regulatory element of continuing education? A. The RR will only be cut off from receiving commissions B. The RR only must stop prospecting soliciting new clients C. The RR will automatically be terminated from their position D. The RR must immediately stop performing all activities which require the RR to be registered.
D. The RR must immediately stop performing all activities which require the RR to be registered.
Which of the following is TRUE when a corporation declares a split in its common stock? A. The corporation's working capital would be affected B. The corporation's retained earnings would be affected C. The market price of the common stock will remain unchanged D. The common stock's par value would be affected
D. The common stock's par value would be affected
A. Roth IRA plans are not permitted to invest in individual stocks. B. Maximum contributions for a single year for an individual with a Roth IRA plan would be $5,000 C. The original owner of the plan must receive minimum distributions by the age of 70 1/2. D. The qualified distribution of a Roth IRA plan are not taxable.Which of the following statement about Roth IRA plans is true?
D. The qualified distribution of a Roth IRA plan are not taxable.Which of the following statement about Roth IRA plans is true?
An investor wants to exchange shares of one fund with shares of another fund that is within the same family of funds. Which of the following is NOT an important consideration when making such an exchange? A. The fund's investment objective B. The investment risk C. Tax consequence D. The sales load of the new fund
D. The sales load of the new fund
An investor, whose investment objective is speculation, would MOSTLY be concerned with which of the following? A. Their exposure to reinvestment risk B. Their exposure to currency risk C. Their exposure to interest rate risk D. Their exposure to capital risk
D. Their exposure to capital risk
Good-till cancelled order have all of the following characteristics EXCEPT: A. They will be confirmed or renewed periodically B. They are permitted for round lots and odd lots C. They are also called open orders D. They are permitted for common stock only
D. They are permitted for common stock only
A RR thoroughly reads a preliminary prospectus and then writes a brief review of the prospectus which he wants to send to clients he believes are suitable. A. This may only be done with the Branch Office manager's approval B. This may be done without restriction C. This may only be done with the approval of a supervisory analyst. D. This may not be done under any circumstances
D. This may not be done under any circumstances
Which of the following statements is TRUE in relation to Coverdell Education Savings Accounts? A. Contributions are not tax deductible for a donor, but all withdraws are. B. The 2,000 max is measured per donor per year in terms of contributions to an account beneficiary C. Multiple accounts can be established for a beneficiary if contributions will exceed $2,000 per year in an account. D. Total contributions may not exceed $2,000 per beneficiary in any year, regardless of the number of donors.
D. Total contributions may not exceed $2,000 per beneficiary in any year, regardless of the number of donors.
A common stockholder has all of the following rights except: A. voting D. demand dissolution of the company's assets C. residual claim on the company's assets D. to examine certain books and records
D. demand dissolution of the company's assets
SEC rules 415 allow "self registration." This permits one registration statement to cover all securities to be issued during the next: A. six months B. one year C. two years D. three years
D. three years
When a client opens an options account at a firm, regulations dictate that the firm must receive an account agreement signed by the customer in what time frame? [A] Following approval of the account, the firm must receive the signed account agreement within 15 days. [B] The firm must receive the signed account agreement prior to approval of the account. [C] Following approval of the account, the firm must receive the signed account agreement within one month. [D] The firm must receive the signed account agreement no fewer than 10 business days before approval of the account.
[A] Following approval of the account, the firm must receive the signed account agreement within 15 days.
In order to free up time for the registered representatives, a member firm has several non-registered persons telemarket prospective clients with a script. The script states the following: "Good morning, my name is _____ and I'm calling you from Make Money Securities. Our firm expects market increases in ABC Fund, which is offered for sale by our registered representatives. May I connect you with one of our representatives or send you further information?" Which of the following is CORRECT about this situation? [A] Under no circumstances may an unregistered person perform such activities. [B] All actions are permissible except projecting the future return of the ABC Fund. [C] The non-registered persons can perform such actions provided they obtain the appropriate registration within 30 calendar days. [D] As long as registered persons are standing by to take phone calls and the non-registered persons are closely supervised, the situation is acceptable.
[A] Under no circumstances may an unregistered person perform such activities.
When could one expect changes in the net asset value of a mutual fund? [A] When there are changes in the value of securities within the fund's portfolio [B] When customers redeem fund shares [C] When customers exchange fund shares for another fund's shares within the same family [D] When shares of the fund are split
[A] When there are changes in the value of securities within the fund's portfolio
The term "spread" in the OTC market refers to the difference between the [A] bid and ask prices of a security. [B] Treasury bill yield and the yield on corporate bonds. [C] market maker's inventory in the security from the opening to the close of the trading day. [D] market price of the security and the price at which a firm would offer the security.
[A] bid and ask prices of a security.
529 Education Savings Plan accounts have all of the following features EXCEPT: [A] Beneficiaries of the 529 education savings accounts can be changed by the owner. [B] Annual contributions to the account can total no more than $2,000. [C] The owner of the account maintains control over the account. [D] As long as withdrawals are qualified, federal income tax does not apply.
[B] Annual contributions to the account can total no more than $2,000.
Mr. Smith, your client, has maintained about 80% of his portfolio in fixed income securities. Interest rates are expected to decline over the next 12 month period. Mr. Smith calls you because he is concerned about this prediction and his portfolio. Which of the following recommendations would be appropriate for you to give to Mr. Smith? [A] Move 50% of his portfolio into equity securities [B] Leave his portfolio the way it is now [C] Move 60% of his portfolio into Money Market funds [D] Move 25% of his portfolio into Limited Partnerships
[B] Leave his portfolio the way it is now
Mr. Smith advises his registered representative to sell 300 shares of his ABC common stock whenever the price is right. Later that day ABC starts to move up and the RR enters a market order to sell the stock. Which of the following statements is true? [A] The RR was in violation because he did not have written discretionary authority for this customer. [B] The RR handled the order appropriately since the only decisions required were related to time and price. [C] The RR should have sought the approval of a supervisory person prior to entering the order. [D] The RR should have refused to take the order and asked the customer to call him back later in the day to see where the stock was trading.
[B] The RR handled the order appropriately since the only decisions required were related to time and price.
Who receives an annuity contract's surrender value? [A] The beneficiary designated by the contract owner receives the surrender value. [B] The owner of the contract receives the surrender value. [C] The surrender value is forfeited back to the issuer. [D] The surrender value will be auctioned to the highest bidder.
[B] The owner of the contract receives the surrender value.
When a bond is trading at a discount, the current yield on the bond is: [A] unrelated to its yield to maturity [B] less than its yield to maturity [C] equal to its yield to maturity [D] more than its yield to maturity
[B] less than its yield to maturity
A day trader of blue chip common stocks would be most concerned with which of the following risks? [A] purchasing power risk [B] timing risk [C] default risk [D] interest rate risk
[B] timing risk
An RR must explain sales charges to prospective mutual fund clients so that they [A] can negotiate the all sales charges and fees [B] understand breakpoint discounts and maximum charges related to buying mutual fund shares [C] aware of the SEC fees that are included in each mutual fund transaction [D] understand how the RR's commission is generated
[B] understand breakpoint discounts and maximum charges related to buying mutual fund shares
An investor, Mrs. Smith, is seeking a mutual fund offering a high yield. Which of the following is the best choice for Mrs. Smith? [A] Aggressive Growth Fund [B] Hedge Fund [C] Income Fund [D] Emerging Growth Fund
[C] Income Fund
Form letters, telemarketing scripts, and seminar texts are examples of: [A] Correspondence [B] Advertisements [C] Sales literature [D] Educational material
[C] Sales literature
When a company calls an issue of bonds, all of the following would typically be FALSE EXCEPT: [A] The ratio of debt to net worth will increase. [B] The company's credit rating will be reduced. [C] The holders of called bonds will receive the face value of the bond plus a call premium. [D] The holders of called bonds will be able to reinvest and receive a higher coupon.
[C] The holders of called bonds will receive the face value of the bond plus a call premium.
Customers of member firms are required to receive statements of their accounts at a MINIMUM of [A] weekly. [B] monthly. [C] quarterly. [D] semi-annually.
[C] quarterly.
Blake currently owns 200 shares of ABC common stock. ABC announces a 3 for 1 stock split. After the split, how many shares of ABC will Blake own? [A] 200 shares [B] 300 shares [C] 400 shares [D] 600 shares
[D] 600 shares
Jane left the securities industry 6 years ago to raise her two children. The children are now in school full time and Jane has decided to go back to work at the same broker-dealer where she previously worked. Which of the following is true regarding Jane's registration status with the firm? [A] If Jane's firm paid the annual registration fees, Jane's license would still be valid and she could come back to work without having to take the qualification exams again, provided she kept up with the continuing education requirements of her license. [B] If Jane's firm paid the annual registration fees, Jane's license would still be valid and she could come back to work without having to take the qualification exams again but she would be required to complete the continuing education requirements to reactive her license. [C] Jane's licenses would have remained valid since she always intended to come back to work after her children went to school full time and had an agreement in place to come back to work at the firm. [D] Jane's licenses have lapsed and she will be required to take the qualification exams again.
[D] Jane's licenses have lapsed and she will be required to take the qualification exams again.
When a customer opens a margin account at a broker/dealer, they are required to sign certain documents. Which of the following best describes the agreement between the customer and the broker/dealer related to the terms and conditions of financing involved in purchasing on margin? [A] This is covered in the customer's new account form. [B] This is covered in a consent by the client to the loan from the broker/dealer. [C] This is covered in the customer's hypothecation agreement. [D] This is covered in the Credit Agreement for a line of credit with the customer.
[D] This is covered in the Credit Agreement for a line of credit with the customer.
SEC Rule 144A permits the resale of non registered securities to all of the following EXCEPT: [A] insurance companies [B] banks [C] mutual funds [D] individuals
[D] individuals