Issuing Securities & Brokerage Support Services

An instrument that illustrates the transfer of title to any dividend, interest, or right that pertains to securities contracted for is called: A) a right. B) a warrant. C) a power of attorney. D) a due bill.

A due bill

Which of the following orders is reduced on the order book on the ex-dividend date for a cash dividend? A) Limit order to buy. B) Sell limit order. C) Buy stop order. D) Buy stop limit order.

A) Limit order to buy. Only orders placed below the market price are reduced for cash dividends on the order book. Buy limits and sell stops are entered below the market price.

All of the following would be excluded from raising capital under Regulation A+ EXCEPT A) a small manufacturing company B) a venture capital firm raising money for small and medium size companies C) a private equity fund D) a hedge fund specializing in small startup companies

A) a small manufacturing company Under Reg. A+ intended to facilitate small to medium size companies raise investment capital, venture capital firms, private equity funds and hedge funds are specifically excluded.

When operating a Keogh plan, a self-employed individual must make contributions for A) full-time employees who are at least 21 years old and have worked for the company for at least one year B) all employees C) all employees scheduled to work for 1,000 hours per year or more D) part-time employees who have worked for the company for 3 or more years

A) full-time employees who are at least 21 years old and have worked for the company for at least one year

An order to sell at 38.65 stop limit is entered before the opening. The subsequent trades are 38.85, 38.50, and 38.35. The order: A) has not yet been executed. B) was executed at 38.50. C) was executed at 38.65. D) was executed at 38.85.

A) has not yet been executed. A stop limit order is a stop order that becomes a limit order once the stop price has been triggered. When the limit price is the same as the stop price on a stop limit order, the order may be executed only at, or better than, the limit price. In this case, the order has not yet been executed because no transaction has occurred at, or above, 38.65 since the stop was triggered at 38.50.

Every transaction made by a registered representative for a customer's account A) must be reviewed by a principal of a FINRA member firm. B) is subject to cancellation by either party. C) must be based on a written order from the customer. D) is subject to FINRA approval.

A) must be reviewed by a principal of a FINRA member firm.

A registered representative makes several statements to a customer considering an investment under Regulation D. All of them are accurate statements EXCEPT A) under no circumstances can more than 20 nonaccredited investors participate in the purchase of shares B) a special inscription or legend on the stock certificate indicates that its transfer is restricted C) if the offering is advertised, all purchasers must be accredited D) investors agree to terms by signing an investment letter

A) under no circumstances can more than 20 nonaccredited investors participate in the purchase of shares A maximum of 35 nonaccredited investors may participate in the purchase of securities offered under a Regulation D exempt offering.

A confirmation sent to a customer must include: A) amount of any commission. B) all of these. C) markup or markdown if the member acted as a principal in a Nasdaq security. D) whether the member acted as agent or principal.

All dem choices!

A customer entered an order to sell short 100 shares of ABC. The stock closed on Friday at 48.00. The stock will trade ex-dividend $.50 on Monday. At what price can the order be executed at the opening? A) 47.49. B) 47.5. C) 47.51. D) Any price.

Any price The stock's price is adjusted for the dividend at its opening the next morning. The adjustment in the stock does not limit where the short sale can be executed.

A technical analyst has been charting XYZ stock and notes that it fluctuates between $36 and $41. If the analyst expects a breakout through resistance, which of the following orders should be placed? A) Buy XYZ 35 Stop GTC. B) Buy XYZ 42 Stop GTC. C) Buy XYZ 35 GTC. D) Buy XYZ 42 GTC.

B) Buy XYZ 42 Stop GTC. A buy stop order is placed above a resistance level. It is triggered if and when the stock trades at or above the stop price. This allows an investor to participate in a bullish breakout through resistance.

Which of the following statements about a Coverdell Education Savings Account (ESA) is NOT true? A) Contributions can be made to this type of plan and a Section 529 plan in the same year for the same beneficiary. B) Contributions are tax deductible, subject to a modified AGI phaseout. C) The funds grow income tax deferred and, if used for elementary, secondary, or college educational expenses, the earnings are tax free. D) Contributions of $2,000 per child per year are allowed.

B) Contributions are tax deductible, subject to a modified AGI phaseout. Contributions to an ESA are not tax deductible.

Which of the following securities issue is nonexempt, requiring registration under the Securities Act of 1933? A) Municipal bonds B) Corporate bonds C) Debt instruments with maturities of 270 days or less D) Treasury bonds

B) Corporate bonds Nonexempt means that under the act the securities are required to be registered with the SEC

Which of the following statements CORRECTLY describe a Roth IRA?I. The maximum annual contribution is 100% of earned income or a maximum allowable dollar limit, whichever is greater. II. The maximum annual contribution is 100% of earned income or a maximum allowable dollar limit, whichever is less. III. Contributions are tax deductible. IV. Contributions are not tax deductible. A) II and III. B) I and III. C) I and IV. D) II and IV.

B) I and III.

Which two statements are true regarding Section 529 college savings plans? I. Contributions are considered gifts under federal law. II. Contributions are tax deductible under federal law. III. Earnings generated are taxable each year. IV. Earnings generated are tax deferred. A) II and IV. B) I and IV. C) II and III. D) I and III.

B) I and IV.

A registered representative (RR) is explaining the characteristics of a Coverdell ESA to a customer. Which of the following statements regarding this type of savings account is CORRECT? I. Contributions are tax deductible. II. Contributions are not tax deductible. III. When used for qualified educational expenses, withdrawals are taxable. IV. When used for qualified educational expenses, withdrawals are not taxable. A) I and III. B) II and IV. C) II and III. D) I and IV.

B) II and IV.

Which of the following acts requires corporate public issuers to send annual reports to their shareholders? A) Securities Act of 1933. B) Securities Exchange Act of 1934. C) Trust Indenture Act of 1939. D) Securities Investors Act of 1970.

B) Securities Exchange Act of 1934.

In an interdealer trade, if the seller delivers before the settlement date, which of the following statements is TRUE? A) The buyer must accept delivery. B) The buyer may accept the stock or may refuse it without prejudice. C) The seller has violated the Uniform Practice Code. D) The buyer must only accept delivery if the seller gave advance notice of his intention.

B) The buyer may accept the stock or may refuse it without prejudice.

When is the sales charge deducted from purchases of mutual fund shares made under a letter of intent? A) Annually. B) When each letter of intent is completed. C) When each purchase is made. D) Monthly.

B) When each letter of intent is completed.

Regular way settlement for all of the following transactions must settle on the second business day after the trade date EXCEPT A) for a customer buying closed-end fund shares through a broker/dealer B) for a broker/dealer buying a Treasury bond for its own account C) for a customer selling a municipal bond through a broker/dealer D) for a broker/dealer buying a corporate bond from another dealer

B) for a broker/dealer buying a Treasury bond for its own account Regular way settlement for U.S. government bonds occurs on the business day after the trade date (T + 1). Corporate bonds and closed-end funds settle regular way (T + 2). MSRB rules also require two-day settlement (T + 2) of municipal bond secondary transactions.

The Securities Exchange Act of 1934 regulates or mandates each of the following EXCEPT: A) extension of credit to customers. B) full and fair disclosure on new offerings. C) manipulation of the secondary market. D) creation of the SEC.

B) full and fair disclosure on new offerings.

Underwriters that reserve the right to stabilize the price of securities distributed to the public under an SEC registration statement may do so: A) under no circumstances. B) only if notice is given in the prospectus. C) without restriction. D) only if the securities being distributed will be immediately listed for trading on the NYSE or other exchange.

B) only if notice is given in the prospectus.

All of the following information must be on an order ticket EXCEPT: A) number of shares. B) price of a market order. C) stock symbol. D) time stamp.

B) price of a market order.

All of the following information must be on an order ticket EXCEPT: A) number of shares. B) price of a market order. C) stock symbol. D) time stamp.

B) price of a market order. Price would not be included on a ticket for a market order, but it would be on the ticket for a limit, stop, or stop limit order.

All of the following statements regarding corporate insiders are true EXCEPT A) short selling of the company's stock is prohibited B) purchases may not be made through the exercise of options C) only public information may be used to make transactions D) reports of changes in holdings must be filed with the SEC

B) purchases may not be made through the exercise of options

All of the following statements regarding 529 plans are true EXCEPT: A) contributions to a 529 plan may be subject to gift taxation. B) the income level of the contributor can affect the annual contribution amount. C) the assets in the account are controlled by the account owner, not the child. D) states impose very high overall contribution limits.

B) the income level of the contributor can affect the annual contribution amount. Unlike Coverdell ESAs, the income level of the contributor will not affect annual contributions under a Section 529 plan.

Under one of the provisions allowing a company to qualify under Rule 147 for an intrastate exemption, what percentage of an issuer's gross business revenues must be derived from sales within the company's home state? A) 70% B) 100% C) 80% D) 90%

C) 80%

Within a firm commitment underwriting, which document details the responsibilities and liabilities of each firm? A) Registration statement. B) Letter of intent. C) Agreement among underwriters. D) Underwriting agreement.

C) Agreement among underwriters.

Which of the following statements regarding Coverdell Education Savings Accounts are TRUE? I. After-tax contributions of up to an indexed maximum per student per year are allowed. II. Contributions may not be made for students past their 18th birthday. III. If the account value is not used for educational purposes, it can be rolled over into a traditional IRA. IV. Distributions are always taxable. A) I and III. B) III and IV. C) I and II. D) II and IV.

C) I and II. If the accumulated value in the account is not used by age 30, the funds must be distributed and subject to income tax and a 10% penalty, or rolled over into a different Coverdell ESA for another family member.

Which of the following statements regarding joint accounts/tenants in common are TRUE? I. Each party specifies a percentage of interest in the account. II. Each party has an equal interest in the account. III. The interest of a deceased tenant passes to the estate of the decedent. IV. The interest of a deceased tenant passes to the co-tenant. A) II and IV. B) I and IV. C) I and III. D) II and III.

C) I and III.

One broker/dealer receives a don't know (DK) notice from another. Which of the following would be a reason for a DK to be sent? A) The broker/dealer who sent the DK is confirming that the trade specifications are good. B) The broker/dealer who sent the DK wants to know if the other broker's customer wants to trade more stock at the same price. C) The broker/dealer who sent the DK was expecting 200 shares of ABC common stock and received 200 shares of ABC preferred shares. D) The broker/dealer who sent the DK is alerting the other broker that one of their clients has opened a new account with them.

C) The broker/dealer who sent the DK was expecting 200 shares of ABC common stock and received 200 shares of ABC preferred shares. DKs are sent between brokers when delivery is made that is either not expected or where the specifications of the delivery do not match what was expected.

Which of the following interdealer trades does NOT settle in clearinghouse funds? A) OTC stocks. B) Corporate bonds. C) U.S. government bonds. D) GO bonds.

C) U.S. government bonds. Trades in securities backed by the federal government are settled in federal funds, not clearinghouse funds.

If your client has a certificate registered in his own name, to be a good delivery, the certificate must be accompanied by: A) the promise that it has not been called for redemption. B) a buyer's option. C) a properly-executed assignment to the brokerage firm on the reverse side of the certificate. D) the legal opinion, unless the client is selling municipal bonds.

C) a properly-executed assignment to the brokerage firm on the reverse side of the certificate. If the certificate is registered in your client's name, a stock power or a properly executed assignment to the brokerage firm must appear on the reverse side of the certificate.

In a proxy contest, a member firm holding securities in street name for clients who are beneficial owners must: A) send the proxy material to the beneficial owners at the member firm's expense. B) vote the proxies as it wishes. C) send the proxy material to the beneficial owners at the issuing company's expense. D) send a list of the beneficial owners' names and addresses to the issuing company so that it may send proxy materials to those owners.

C) send the proxy material to the beneficial owners at the issuing company's expense.

Government agency securities settle A) the next business day following the trade date B) the seventh calendar day following the trade date C) the second business day following the trade date D) in 3 business days following the trade date

C) the second business day following the trade date

If a customer purchases a new issue of stock from a syndicate member, the customer will pay the public offering price: A) plus a commission. B) plus a mark-up. C) with no mark-up or commission. D) plus the spread.

C) with no mark-up or commission. New issues are sold at the public offering price without a commission or mark-up. In the secondary market, securities are traded on an agency basis (commission) or on a principal basis (mark-up or mark-down).

Regulation T requires payment from a customer in a margin account A) within 10 business days B) before purchase C) within 4 business days D) within 3 business days

C) within 4 business days

Which of the following regarding a Roth IRA are TRUE? I.The contributions are nondeductible. II.Contributions must cease at age 70½. III.Withdrawals must begin at age 70½. IV.Withdrawals after age 59½ can be tax free. A) I and III. B) II and III. C) II and IV. D) I and IV.

D) I and IV.

According to the multi-tiered market making system of NYSE Euronext, a Supplemental Liquidity Provider may: I.never compete with the specialist. II.make markets in NYSE listed securities from an off-floor location. III.never receive rebates of transaction fees from the exchange. IV.make a one-sided market.

D) II and IV.

Which of the following statements regarding a shelf offering are TRUE?I. It can be used to distribute an initial public offering only. II. It can be used to distribute an additional offering only. III. Its maximum duration is 90 days. IV. Its maximum duration is 3 years. A) I and III. B) I and IV. C) II and III. D) II and IV.

D) II and IV.

Your customer wishes to purchase shares of an IPO. During the cooling- off period, the customer can: A) pay in advance for shares to be purchased when the cooling-off period ends. B) purchase shares in limited amounts. C) enter an order to sell the new issue short upon the effective date. D) indicate an interest in the offering.

D) indicate an interest in the offering. During the cooling-off period, neither purchases or sales can be made, and orders for either cannot be accepted by the broker/dealer, However, indications of interest can be made by customers and accepted by broker/dealers. Indications of interest are non-binding for both parties.

A member firm receives a signed proxy from a customer who failed to indicate how his shares held in street name are to be voted at the annual shareholder's meeting. Under NYSE rules, the member firm: A) may vote the shares as it sees fit. B) cannot vote the shares. C) may vote the shares as it sees fit only if a principal attends the meeting. D) must vote the shares as recommended by management of the issuer.

D) must vote the shares as recommended by management of the issuer. If the beneficial owner of street name stock returns a signed proxy statement but fails to indicate how the shares are to be voted, the member must vote the shares as recommended by management of the issuer.

Broker to broker confirmations must be sent no later than A) end of day on the date of the trade B) regular way settlement date C) trade date plus two business days D) next business day

D) next business day Confirmations between brokers (broker to broker confirms) must be sent no later than the next business day following the transaction (T + 1).

All of the following statements regarding customer confirmations are true EXCEPT A) the confirmation must disclose commissions if the firm acted as agent B) the confirmation must disclose whether the broker/dealer is a market maker in the security sold C) the confirmation must disclose if a control relationship exists D) the customer must receive the confirmation no later than the business day after the trade

D) the customer must receive the confirmation no later than the business day after the trade The customer must be sent or receive a confirmation from the broker/dealer no later than completion of the transaction (on or before settlement date).

All of the following are nonexempt securities EXCEPT a: A) variable annuity unit. B) municipal unit investment trust share. C) U.S. government bond mutual fund share. D) fixed annuity.

Fixed annuity

Qualified distributions from Roth IRAs are: A) 100% taxable. B) taxable only to the extent of earnings. C) tax deferred. D) tax free.

Tax free

Regular way settlement for U.S. government bonds is: A) three business days. B) next business day. C) two business days. D) same day.

The next business day

Regulation T requires payment from a customer in a margin account A) within 10 business days B) before purchase C) within 4 business days D) within 3 business days

within 4 business days