Midterm

An investor's portfolio includes 10 bonds and 200 shares of common stock. If both positions increase by one point, what is the appreciation?

$300 (The gain would be $100 for the bonds (one point for one bond is $10 × 10 bonds) and $200 for the common stock (one point is $1 × 200 shares). The total portfolio gain is $300.)

A customer has the following accounts: Market value: long account $35,000; short account $40,000 Balance: long account (DR) $23,000; short account (CR) $60,000 SMA: long account $3,000 Regulation T: 50% What is the equity in the combined account? $35,000, $8,000, $32,000, or $75,000?

$32,000

In April, a customer buys 1 MCS Oct 50 call for 9 and sells 1 MCS Jul 50 call for 4. What will the customer's profit or loss be if he buys back the July call for $1 and sells the October call for $12?

$600 profit

An investor has an established margin account with a short market value of $8,000 and a credit balance of $13,000, with Regulation T at 50%. A maintenance call would be triggered if the short market value increased above

10,000

A customer is long 300 shares of COD and simultaneously short 200 shares of COD. To sell the 300 shares held long, the order ticket must be marked

100 shares long and 200 shares short (The customer is long 300 shares and short 200 shares of the same stock. Therefore, the customer's net long position is 100 shares. The order ticket must be marked 100 long, 200 short. In other words, the customer is long only to the extent of his net long position.)

A corporate bond valued at $1,012.50 is shown in the Standard & Poor's Bond Guide as

101-1/4

MNO is planning to raise capital through an offering of 30-year bonds. Which call price would be most beneficial to MNO? 1. 104 2. 106 3. 102 4. 110

102

Which of the following is NOT good delivery for 300 shares of stock? 1. 3 certificates for 60 shares each and 3 certificates for 40 shares each 2. 4 certificates for 75 shares each 3. 3 certificates for 100 shares each 4. 6 certificates for 50 shares each

4 certificates for 75 shares each

A customer places an order to sell short 100 DEF 52.25 STOP. After placing the order, DEF trades as follows: 53, 52.60, 52.20, 52.10, 52.25. Which trade will first trigger (elect) the order before it is executed?

52.2 (Sell stop orders are triggered as soon as the stock trades at or through the stop price. The trade at 52.20 represents the first such transaction after the order is placed. Once triggered at 52.20, the stop order becomes a market order and will be executed at the next price in the trade sequence, 52.10.)

An investor unaffiliated with the issuer is permitted to sell restricted stock without being subject to volume restrictions after having held the shares, fully paid, for a period of at least

6 months

If a customer places an order to buy 500 ABC at 62 stop limit, after the order is elected, at which of the following prices may the order be executed? I.61.50 II.62 III.62.50 IV.63

I and II

Initial and maintenance margin requirements for a short account are I. 50% initial II. 30% maintenance III. 25% maintenance IV. 50$ initial

I and II

The delivery of which of the following to a broker/dealer would be considered a fail to deliver? I.A mutilated certificate II.A municipal bond without the legal opinion attached III.A bond trading ex-legal without a legal opinion attached IV.Certificates delivered in par value denominations totaling the amount of the transaction

I and II

Which of the following are characteristics of a REIT? I.It is traded on an exchange or over the counter. II.It is professionally managed. III.It passes through both gains and losses to investors. IV.It is a type of limited partnership.

I and II

A customer has just opened a new account at your firm and given her lawyer limited power of attorney. Which of the following statements are TRUE? I.Confirmations of trades will be sent to the account owner. II.Confirmations will be sent to the party given the power of attorney only. III.The POA ceases upon the death of either party. IV.The POA must be renewed annually.

I and III

If a customer writes 2 ABC Feb 90 puts at 8 and buys 2 ABC Feb 80 puts at 2, which of the following statements are TRUE? I.The spread is bullish. II.The spread is bearish. III.The breakeven point is 84. IV.The breakeven point is 86.

I and III

If the market value in a long margin account increases, which of the following statements are TRUE? I.The SMA increases. II.The SMA decreases. III.The equity increases. IV.The equity decreases.

I and III

Which of the following statements regarding put and call features of bonds are TRUE? I.The put feature would likely be exercised if interest rates fall. II.The put feature would likely be exercised if interest rates rise. III.The issuer will likely call bonds if interest rates fall. IV.The issuer will likely call bonds if interest rates rise.

I and III

A customer wishes to open a cash account and give trading authorization to a sibling. The required documentation would include which of the following? I.New account form II.Joint account agreement III.Customer agreement IV.Limited power of attorney

I and IV

ZZTZ common stock is trading at $36 per share. Which of the following orders would normally be entered above the current market value of $36? I.Buy stop II.Sell stop III.Buy limit IV.Sell limit

I and IV

A member firm registered as a broker/dealer may charge a customer for I.forwarding proxy materials II.safekeeping of securities III.collection of dividends and interest IV.providing research reports

II and III

Ratio call writing exposes an options investor to I.limited loss II.unlimited loss III.limited gain IV.unlimited gain

II and III

Under the Securities Act of 1933, an accredited investor is defined as one having I.an annual income of at least $1 million for the last two years II.an annual income of at least $200,000 for the last two years and anticipating an income of $200,000 in the current year III.a net worth of $1 million not including net equity in a primary residence IV.a net worth of $200,000

II or III

Several investors open an account in joint tenancy. Which of the following statements regarding the account is TRUE? 1. Checks may be made payable to one tenant of the account. 2. Only one designated account holder need sign a margin agreement or other forms pertinent to the account. 3. Mail need only be sent to one of the parties to the account. 4. Checks need not be endorsed by all parties to the account in order to be deposited.

Mail need only be sent to one of the parties to the account.

Mr. Brown has several stock rights. Which of the following is NOT an alternative regarding these stock rights? 1. Selling in the open market at the prevailing market price 2. Exercising the stock rights before expiration to purchase shares of stock 3. Gifting the rights to his son to exercise 4. Redeeming them from the issuer for cash

Redeeming them from the issuer for cash

Which of the following statements about warrants is NOT true? 1. Warrants have longer lifetimes than rights. 2. Warrants have an exercise price above the current market price of the common stock when issued. 3. Warrants may not be traded in the secondary market. 4. Warrants may be attached to another of the issuer's securities.

Warrants may not be traded in the secondary market.

When an investment banker is successful on a competitive bid corporate underwriting in which they agree to purchase the shares from the issuer, the underwriters will be handling the offering as 1. an all or none 2. a firm commitment 3. a best efforts 4. a standby underwriter

a firm commitment

A company without business operations that raises money through an IPO in order to have its shares publicly traded for the sole purpose of seeking out a business or combination of businesses is known as 1. a growth company 2. a special situation company 3. a regulation D, Private Placement company 4. a special purpose acquisition company (SPAC)

a special purpose acquisition company (SPAC)

Instead of signing on the back of a security sold to meet the requirements of good delivery, the registered owner could sign on a separate paper called

a stock (or bond) power

If a registered representative opens a joint account for three people, the registered representative should obtain information on

all of the tenants

The market attitude of a customer who establishes a credit call spread is

bearish

LMN Securities is the managing underwriter for a new issue of one million MIC common shares. LMN has agreed to sell as much stock as possible in the market, and MIC has agreed to take back any unsold shares. If MIC has not specified a minimum amount of capital for LMN to raise, this is what type of offering?

best efforts

The flow of funds on a municipal revenue issue is outlined in the

bond indenture

A credit put spread is like the net sale of a put, and buying the lower strike price in any spread (put or call) is _________.

bullish

A registered representative who learns of a customer's death should 1. cancel all open (unexecuted) orders currently working in the market 2. notify FINRA and the IRS that the account holder is deceased 3. accept no orders to buy or sell securities unless coming from a third-party power of attorney 4. liquidate all positions in the account immediately upon notification

cancel all open (unexecuted) orders currently working in the market

A married couple in their late 50's opens an investment account with a BD. Having specified an income objective which of the following would be least suitable?

common stock

Each of the following securities are issued with a fixed rate of return EXCEPT 1. preferred stock 2. convertible preferred stock 3. bonds 4. common stock

common stock

A short sale of stock will be marked to market

daily

Under MSRB rules, a final official statement must be

delivered to customers on or before settlement date

Moody's bond ratings are based primarily on an issuer's

financial strength

A sale made at a profit from a customer's margin account would do all of the following EXCEPT 1. increase SMA 2. reduce market value 3. increase equity 4. decrease debit balance

increase equity

A holder of an ADR assumes all of the following risks EXCEPT 1. political risk 2. liquidity risk 3. foreign currency risk 4. market risk

liquidity risk

A corporate or municipal issuer might include a put option on a newly issued bond to A) raise additional capital by issuing more bonds in the future B) allow the issuer to redeem the bond before maturity C) make the offering more attractive to investors D) increase the yield on the bond by paying a higher rate of interest

make the offering more attractive to investors

A school district and a municipality have coterminous debt. In relation to one another, their debt is considered

overlapping

Which of the following is NOT a source of payment of principal and interest on a municipal revenue bond? 1. rental revenues 2. sewer and water fees 3. toll bridge fees 4. property taxes

property taxes

The Securities Act of 1933 exempts all of the following securities EXCEPT 1. us government debt issues 2. savings and loan issues 3. real estate investment trusts 4. municipal securities issues

reits

A customer long 100 shares of XYZ stock who wishes to reduce risk and generate income should 1. sell an XYZ call 2. buy an XYZ put 3. sell an XYZ put 4. buy an XYZ call

sell an XYZ call (If the customer sells a call, the risk of owning the stock is reduced by the call's premium. Receipt of the premium satisfies the customer's income objective.)

All of the following option strategies could be effectively used in a bear market EXCEPT a 1. debit put spread 2. credit call spread 3. short call 4. short straddle

short straddle

For U.S. investors holding American Depositary Receipts (ADRs), dividends received are 1. subject to a foreign withholding tax 2. tax-free in both the country of origin and in the U.S. 3. taxed as a capital gain in the U.S. 4. tax-free in the country of origin

subject to a foreign withholding tax

Capital gains on municipal bond transactions are 1. taxed at the state and local levels only 2. tax free 3. taxed at the federal level only 4. subject to tax as would be any other capital gain

subject to tax as would be any other capital gain (interest earned is exempt)