Series 7

Defeasance

Defeasance occurs when an outstanding bond issue is paid off prior to maturity through a refunding. Once the creditors (the bondholders) have received their funds, any liens on assets or revenues are terminated

LEAPS --> Gains

Premiums (short) --> short term gain Profits (long) --> long term gain

Which of the following has unlimited risk if it is the only position in an account?

Short call

Investors wishing to protect the fixed-income portion of their portfolios from inflation risk would find which of the following choices most suitable?

TIPS Bonds

Market timing is normally associated with which of the following portfolio management styles?

Tactical asset allocation

Seventy-five basis points are equal to which of the following? 0.75% 7.5% $7.50 $75.00

There are 100 basis points in each point. One point represents 1% of a bond's value; therefore, one basis point represents 0.01%, and 75 basis points would represent 0.75%. Because each point is worth $10, 75 basis points represents $7.50

If an indenture has a closed-end provision, this means

These additional issues are also known as junior lien bonds. Under a closed-end indenture, additional bonds issued against the same stream of revenues have a junior (subordinate) claim to those already outstanding unless the funds are required to complete construction of the facility

acid-test ratio (also known as the quick assets ratio)

calculated by subtracting the inventory from the current assets and dividing that total by the current liabilities

When an outstanding bond issue is the subject of a refunding, the holders of those bonds have their claim on any pledged assets terminated. This is known as

defeasance

A registered representative with discretionary authority requires customer authorization before purchasing

municipal bonds where a control relationship exists.

Which of the following could an analyst use to establish the rate of return on a direct participation program (DPP)?

present return and internal rate of return

When a FINRA member firm has been designated as a "taping" firm, it is required to

retain copies of all mandated recordings for a period of three years from the date the tape was created

Defined benefit

retirement plan establishes, in advance, the payout to be received by the retiree. The formula is based on earnings and years of service.

Which term describes the following position? Write 1 DOH Jan 30 call Write 1 DOH Jan 40 put

short combination bc they have different strike prices

The call provisions of a municipal issue would be detailed most completely in

the bond resolution.

A front-end sales load is defined as

the difference between the public offering price and the net asset value per share of the fund

DK (don't know) notice

used when a broker-dealer receives a confirmation for a trade that it has no record of (the firm does not know of the trade).

due bill

when the incorrect party receives a distribution from the issuer