1) MISSED

An offering in which one or more stockholders in the corporation are selling all or a portion of their own shares to the investing public for the first time is known as A) a secondary offering B) a primary offering C) an initial public offering D) a subsequent offering

A) a secondary offering

A broker-dealer that accepts the risk of holding a particular security in its account to facilitate trading and provide liquidity in that security is BEST described as a(n) A) market maker B) clearing corporation C) holding company D) direct participation program

A) market maker

All of the following are benefits of using a prime broker EXCEPT A) research B) cost savings C) consolidation of records D) multiple executing brokers

A) research

Several months of slow economic growth and rising unemployment have characterized the economy. Market analysts would describe this as a period of A) stagnation B) stagflation C) inflation D) deflation

A) stagnation stagnation = slow economic growth and rising unemployment stagflation = inflation and rising unemployment

Securities not covered by SIPC

- commodities - commodities futures - futures contracts - currency losses - government securities

Prime Broker

- provide custody and other services besides handling trades - serves as centralized master account to work with other brokerages

Self-Regulatory Organization (SRO)

- under SEC oversight - all SROs require their members to be registered with them

An investor opens an account with BNZ Government Securities, a broker-dealer limiting its transactions exclusively to securities issued by the U.S. government. The account holds $250,000 of Treasury bonds, $250,000 of Treasury notes, and $50,000 in cash. If BNZ's broker-dealer business should fail, the investor would receive SIPC protection in the amount of A) all of the securities and all of the cash, because U.S. government securities do not go bankrupt B) $0.00 C) $50,000 of the cash and $450,000 of the securities D) $500,000 of the securities, none of the cash

B) $0.00 those who deal exclusively in U.S. government securities are exempt from SIPC coverage

A deficit in the U.S. balance of payments can occur if I) interest rates in foreign countries are higher than U.S. domestic rates II) interest rates in foreign countries are lower than U.S. domestic rates III) U.S. consumers are purchasing (importing) foreign goods IV) foreign consumers are purchasing (importing) U.S. goods A) I & IV B) I & III C) II & III D) II & IV

B) I & III higher foreign interest rates = lower domestic interest rates = increased imports

A firm that functions for the purpose of receiving and delivering payments and securities on behalf of both buyer and seller in a securities transaction is A) a broker-dealer B) a clearing agent C) a depository D) a transfer agent

B) a clearing agent

Just as markets can be influenced by many factors, so can the market price of a single company's stock. While all of the following could impact a company's stock price to some extent, which would be the least likely to have a direct and immediate impact? A) changes in the business cycle B) political elections C) federal reserve board (FRB) policies D) the company's earnings

B) political elections

Which of the following organizations looks to promote self-discipline among members and investigate and resolve grievances between the public and members and between members? A) SEC B) MSRB C) FINRA D) SIPC

C) FINRA

All of the following are self-regulatory organizations (SROs) EXCEPT A) MSRB B) FINRA C) SEC D) NYSE

C) SEC

Broker-dealers and registered representatives may be subject to each of the following administrative and regulatory bodies EXCEPT A) NYSE B) state securities administrator C) SIPC D) FINRA

C) SIPC SIPC is not a regulatory body

Some institutions can function as a depository and intermediary for settling transactions between buyers and sellers of securities. All of the following are acceptable for this purpose EXCEPT A) carrying firms B) the Depository Trust Company C) national banks D) the National Securities Clearing Corporation

C) national banks

The flow of money between the United States and other countries is known as A) the balance of trade B) the surplus C) the balance of payments D) the payment reserves

C) the balance of payments

Which of the following would NOT be expected to be found in a tombstone advertisement for a new issue? A) the name of the issuer or those of the underwriters B) the number of shares to be offered C) the intended purpose for which to use the sales proceeds D) the type of security to be offered (equity or debt)

C) the intended purpose for which to use the sales proceeds

An underwriter is placing a tombstone advertisement for a company's new issue. A prospective investor might expect to see all of the following information on the advertisement EXCEPT A) the names of the underwriting members B) the type of security to be sold (stock or bond) C) the names of the company's officers D) the number of shares to be sold

C) the names of the company's officers

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? A) 60 B) 90 C) 40 D) 25

D) 25 nonlisted = 40 OTCBB or OTC pink = 90

Which of the following is an SRO? A) FRB B) SEC C) FDIC D) FINRA

D) FINRA

A surplus in the U.S. balance of payments can occur if I) interest rates in foreign countries are higher than U.S. domestic rates II) interest rates in foreign countries are lower than U.S. domestic rates III) U.S. consumers are purchasing (importing) foreign goods IV) foreign consumers are purchasing (importing) U.S. goods A) II & III B) I & III C) I & IV D) II & IV

D) II & IV lower foreign interest rates = higher domestic interest rates = increased exports

A tombstone advertisement would be expected to include all of the following information EXCEPT A) the price or price range at which the securities are expected to be offered B) the name of the issuer and underwriters if they are being used to assist in the offering C) an advisory that the advertisement is neither an offer to sell nor a solicitation of an offer for any of these securities D) any inherent risks associated with the offering or the issuer offering the securities

D) any inherent risks associated with the offering or the issuer offering the securities

When the Federal Open Market Committee (FOMC) directs that Treasury securities be purchased in the open market, this A) is intended to hinder contraction of the money supply B) stabilizes the money supply C) decreases the money supply D) increases the supply of money

D) increases the supply of money treasury securities are going out, money is going in

When the money supply in the economy increases, A) interest rates go up, hence borrowing and spending for consumers is easier B) interest rates go up, hence borrowing and spending for consumers is more difficult C) interest rates go down, hence borrowing and spending for consumers is more difficult D) interest rates go down, hence borrowing and spending for consumers is easier

D) interest rates go down, hence borrowing and spending for consumers is easier

Correspondent firms would be likely to have relationships with which of the following types of broker-dealers? A) market maker B) introducing C) fully disclosed D) self-clearing

D) self-clearing self-clearing (carrying) firms hold funds and securities of fully disclosed or introducing firm's customers. correspondent firms are the firms that use self-clearing firms' services

Carrying Firms

larger BDs that carry account and accept funds from customers (back office for introducing firm)

US Balance of Payments

positive = exports > imports negative = imports > exports

Market Makers

publish quotes to buy and sell securities

Depositories and Clearing Corporations

receives and delivers payments for trades - National Securities Clearing Corp (NSCC) - Depository Trust & Clearing Corp (DTCC) - Options Clearing Corporation (OCC)