Pre test sie
A member of a stock exchange responsible for providing liquidity in a security by being willing to buy and sell at all times is known as: A) a broker. B) an underwriter. C) a market maker. D) a transfer agent.
C
A registered representative (RR) wants to participate in a private securities transaction. Which of the following actions must the RR take? A) Request a meeting with his supervisor to lay out the structure of the deal B) Call his supervisor and inform her of the deal and the RR's potential involvement C) Send written notice to his supervisor outlining the activity and compensation structure D) Initiate the paperwork required by the policies of the firm once the activity has begun
C
A registered representative (RR) who wants to place a mutual fund advertisement must obtain written approval from which of the following parties? A) FINRA B) Each state's securities administrator C) A registered principal of the RR's firm D) The investment management division of the appropriate regional SEC office
C
A stock power may be used to A. authorize discretionary trading. B. place an unsolicited trade. C. replace the owner's signature on the back of a certificate. D. pay for a trade.
C
At the time of issuance, which of the following securities normally has the longest period to expiration? A) Rights B) Options C) Warrants D) Repurchase agreements
C
BCO is currently quoted bid 42 ask 42.5 10 x 12. Your customer may be able to buy A. 1,000 shares at $42/share. B. 1,200 shares at $42/share. C. 1,200 shares at $42.5/share. D. 1,000 shares at $42.5/share.
C
Company ABC announces a 20% stock dividend for its common shareholders. If a customer holds 1,000 shares at $50.00, what is the new price and number of shares following the payment of the stock dividend? A) 800 shares at $62.50 B) 1,000 shares at $41.67 C) 1,200 shares at $41.67 D) 1,200 shares at $50.00
C
In a period of low inflation and economic recession, the Federal Reserve is expected to take which of the following actions? A) Decrease taxes B) Raise the federal funds rate C) Buy bonds in the open market D) Require banks to increase reserves
C
Seabird trading at $32 a share. The current yield for Seabird is Airlines, Inc., pays a $0.40 a share quarterly dividend, shares are currently A. 14%. B. 22%. C. 5%. D. 10%.
C
The current quote for DEF stock is 49.50 bid-ask 49.75. If an investor wanted to buy or sell DEF stock, we can conclude which of the following? l. The best price anyone in the secondary market is willing to sell at is 49.50. II. The best price anyone in the secondary market is willing to sell at is 49.75. III. The best price anyone in the secondary market is willing to buy at is 49.50. IV. The best price anyone in the secondary market is willing to buy at is 49.75. A. I and III B. Iand IV C. Il and III D. Il and IV
C
The customer must agree to three execution for the trade to be nondiscretionary, Which of the following is not requncer specific elements of a trade before the trades A. Action B. Asset C. Allowance D. Amount
C
The owner of which of the following products is most exposed to inflationary risk? A)Utility stocks B) Treasury bills C) Treasury bonds D) Blue chip industrials
C
The redemption value of an open-end investment company's shares is based on the: A) previous offering price. B) previous closing net asset value (NAV). C) NAV computed after the order is received. D) offering price computed after the order is received.
C
Three years ago your client, Lucy Jones, purchased 200 shares of Tremor Corporation. The shares have appreciated and she wants to take her profits. She would do this by entering A. an opening sale. В. a short sale. C. a closing sale. D. a covering purchase.
C
Under FINRA rules, which of the following activities by a registered representative requires written notification to her firm? A) Volunteering as a youth soccer league coach B) Gambling resulting in winnings in excess of $10,000 C) Driving part time for a transportation network company on weekends D) Selling nonproprietary investment company securities products through her firm
C
Under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors? A) Financial institutions B) Accredited investors C) Qualified institutional buyers (QIBS) D) Nonaccredited investors who have previously purchased restricted stock
C
Under a system of statutory voting, a common stockholder has as many votes for each vacancy on the board of directors as the number of: A) positions vacant on the board. B) directors present at the meeting. C) shares owned by the stockholder. D) proxies available for voting by the board.
C
Under industry regulations, an initial purchase of $3,000 of common stock in a margin account requires a cash deposit of: A) $750. B) $1,500. C) $2,000. D) $3,000.
C
Under normal circumstances, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? A) 3 months B) 6 months C) 13 months D) 24 months
C
Under the Securities Act of 1933, registration is required for which of the following securities? A) Eurodollar bonds B) Municipal securities C) American Depositary Receipts (ADRS) D) Securities issued by the federal government
C
Which of the following investments are generally traded according to their average life rather than their stated maturity dates? A) Corporate bonds B) Government bonds C) Asset-backed securities D) Fixed-rate capital securities
C
Which of the following security types provides investors with a stated maturity date, a floating interest rate, and an option to put the security back to a financial intermediary on a daily or weekly basis? A) Equity put option B) Perpetual preferred stock C) Variable rate demand note D) Tax-deferred variable annuity Incorrect
C
Which of the following statements is true about treasury stock? A) It has voting rights. B) It receives dividends. C) It is issued stock that has been subsequently reacquired corporation. D) It is authorized stock that has not been issued and is held in the corporation's treasury.
C
A broker-dealer is permitted to accept payment for a new issue from a new customer when the: A) registration is effective. B) red herring is delivered. C) preliminary prospectus is amended. D) transaction takes place during the cooling-off period.
A
A convertible bond has a conversion price of $50 and is currently selling in the market at $1,100. The conversion ratio is: A 20 B 22 C 55 D s0
A
A firm is a participant in a public offering. To sell a substantial amount of the securities to its customers, the firm agrees to repurchase the shares at no less than the original sales price. Such agreements are: A) prohibited as fraudulent and manipulative. B) permissible if the securities are deposited into escrow. C) prohibited unless the firm immediately sets aside funds for the repurchase. D) permissible if the customers retain the right to sell the securities into the open market.
A
A savings account at a bank is guaranteed by which of following entities? A) FDIC B) SIPC C) Federal Reserve D) Department of the Treasury
A
Broker-dealer ABC seeks to underwrite a municipal securities offering by a local town in which the mayor is currently seeking re-election. A municipal finance professional who resides in the town and works for ABC contributed $200 to the mayor's re-election campaign 13 months ago. If the employee wants to support the campaign further without impacting the municipal securities business of the firm, he is permitted to make an additional contribution of up to what amount? A) $50 B) $100 C) $150 D) $250
A
Call protection is most valuable to a bond owner when bond prices are generally: A) rising. B) falling. C) stable. D) fluctuating.
A
Entering a sale of stock short without locating the shares first is an uncovered short and is a violation of A. Regulation SHO. B. Regulation SHRT. C. the uptick rule. D. short against the box
A
In the over-the-counter market, the term "spread" refers to the difference between the: A) bid and asked prices. B) offered and asked prices. C) indicated and firm prices. D) opening and closing prices.
A
In which of the following situations is an employee of a public company permitted to trade upon information without violating insider trading laws? A) An independent securities analyst explains to the employee why the O earnings for the company next quarter could be markedly poorer than expected. B) The employee's neighbor works for the government and informs him that the government will award a major contract to the company next month. C) The employee's spouse works in the corporate headquarters and shares O with him a conversation overheard at work regarding possible acquisition targets. D) A coworker informs the employee of a conversation he had with the O administrative assistant to the company's general counsel regarding key developments in an ongoing class action lawsuit.
A
In which of the following situations is an employee of a public company permitted to trade upon information without violating insider trading laws? A) An independent securities analyst explains to the employee why the O earnings for the company next quarter could be markedly poorer than expected. B) The employee's neighbor works for the government and informs him that the government will award a major contract to the company next month. C) The employee's spouse works in the corporate headquarters and shares with him a conversation overheard at work regarding possible acquisition targets. D) A coworker informs the employee of a conversation he had with the administrative assistant to the company's general counsel regarding key developments in an ongoing class action lawsuit.
A
MGS stock is quoted at 15.20 bid-ask 15.22 5 x 12. The spread is A. $0.02. B. $0.25. C. $0.2. D. 2.
A
Member firms must maintain records of all gifts that exceed: A Any amount B $100 C $25 D $50
A
The computation of dollar prices and accrued interest on municipal bonds is normally on what calendar basis? A) 30/360 B) 30/365 C) Actual/360 D) Actual/365
A
The purchase of an equity option settles____ the exercise of an equity option settles______ A. T+1, T+2 B. T+2, T+1 C. same day, T+1 D. T+2, T+3
A
UTMA accounts are opened under the tax ID of the: A) minor B) donor. C) parent. D) custodian.
A
Upon expiration, all in-the-money S&P 100 Index call options are settled by the delivery of which of the following? A) Cash B) S&P 100 Index stocks C) S&P exchange-traded fund (ETF) D) The same number of S&P 100 Index put options
A
What is the cost basis of an inherited mutual fund? A) The net asset value (NAV) of the shares when the owner dies B) The NAV 30 days after the owner's death C) The same cost basis as the deceased D) The same cost basis as the deceased plus capital gains distribution
A
When a broker-dealer charges a commission on a securities transaction, it has acted as: A) an agent. B) a principal. C) an underwriter. D) a market maker.
A
Which of the following actions is required of a broker-dealer's anti-money laundering (AML) program? A) Designating an AML compliance officer O B) Filing of the firm's AML program with FINRA c) Conducting background checks of all employees D) Identifying to regulators the employees responsible for Currency Transaction Reports (CTRS)
A
Which of the following actions is required when a firm receives cash in excess of $10,000 from one customer in one business day? A) File a Currency Transaction Report (CTR) B) File a Suspicious Activity Report (SAR) with the SEC C) Issue a cash transfer receipt to the customer D) Place a five-day hold on the customer's account for the funds received
A
Which of the following considerations should a registered representative explain to a customer when recommending a 529 college savings plan? A) The potential deductibility of contributions from state taxes B) The potential deductibility of contributions from federal taxes C) The income eligibility restrictions to contribute to the account D) The rights of the account beneficiary to the assets at the age of majority
A
Which of the following outcomes are possible for the writer of a covered call option? A) Profit limited and loss limited B) Profit limited and loss unlimited C) Profit unlimited and loss limited D) Profit unlimited and loss unlimited
A
Your customer had $120,000 in ordinary income in the prior tax year. This customer also sold two stock positions-the first for a gain of $47,000, and the second for a loss of $50,000. For that tax year, the customer will pay tax on A. $117,000 in ordinary income and zero net gains. B. $117,000 in ordinary income and $3,000 in gains. C. $120,000 in ordinary income and zero net gains. D. $120,000 in ordinary income and $3,000 in net gains. domestic
A
A customer has a cash balance in her account together with long positions in several securities. She has made no securities transactions in the account during the past 18 months. How often must the firm send her an account statement? A) Monthly B) Quarterly C) Semiannually D) Annually
B
A customer has a cash balance in her account together with long positions in several securities. She has made no securities transactions in the account during the past 18 months. How often must the firm send her an account statement? A) Monthly B) Quarterly C) Semiannually D) Annually
B
A customer is an officer of a company that is involved in some significant changes. All of the following items are examples of corporate affairs that could be considered inside information if the customer shares them with his registered representative except: A) pending transactions. B) declared stock dividend. C) top management changes. D) imminent financial liquidity problems.
B
A decline in the gross domestic product (GDP) must last for at least how many quarters to be considered a recession? A) 1 quarter B) 2 quarters C) 3 quarters D) 4 quarters
B
A married couple who earned income that exceeded $300,000 in each of the prior two years and reasonably expects the same for the current year is: A) a qualified investor. B) an accredited investor. C) an institutional investor. D) a qualified institutional buyer (QIB).
B
A transaction in which a writer covers a position by purchasing an option is called: A) a closing sale. B) a closing purchase. C) an opening sale. D) an opening purchase.
B
All of the following are components of ordinary income except A. A bonus from their employer B. Interest payments from a bond portfolio C. Profit made from the sale of a long-held security D. Consultation fees received from a client
B
All of the following risks apply to both foreign and domestic debt instruments except: A) political. B) exchange. C) repayment. D) interest rate.
B
An associated person who is not a registered representative is permitted to engage in which of the following activities? A) Accept an unsolicited customer order B) Provide account opening forms to a new customer C) Discuss the attributes of a particular investment product D) Prequalify prospective customers as to investment objectives
B
An investor owns 100 shares of XYZ common stock at the current market price of $50 per share. If XYZ conducts a 1-for- 2 reverse stock split, the investor's post-split stock position will be: A) 50 shares at $25 per share. B) 50 shares at $100 per share. C) 200 shares at $25 per share. D) 200 shares at $100 per share.
B
An investor who purchases stock in a closely held corporation with a smail number of outstanding shares should be MOST concerned about which of the following types of risks? A Interest-rate B Liquidity C Reinvestment D Regulatory
B
Direct participation programs (DPPS) provide: A) liquidity and transparency. B) exposure to non-correlated assets with steady returns. C) market-related correlations with higher average returns. D) investors with direct purchases of stock from public companies.
B
FinCEN accomplishes its mission to safeguard the financial system from the abuses of financial crime, including terrorist financing and money laundering, by enforcing: A) SEC regulations. B) the Bank Secrecy Act. C) the Securities Act of 1933. D) the Investment Company Act of 1940.
B
If a market maker posts a quote of 10.00 - 10.10 [25x10), which of the following actions is the market maker willing to take? A) Sell 1,000 shares at $10.00 and buy 2,500 shares at $10.10 B) Buy 2,500 shares at $10.00 and sell 1,000 shares at $10.10 C) Sell 100 shares at $10.00 and buy 250 shares $10.10 D) Buy 250 shares at $10.00
B
No-load mutual funds may have lower expense ratios load mutual funds for which of the following reasons? A) No-load funds do not charge 12b-1 fees. B) No-load funds are not permitted to charge a 12b-1 than 25 basis points. C) Sales charges for load mutual funds increase their ratios. D) Fund management fees for no-load funds are always load funds.
B
Regular way settlement on Treasury bonds is: A) same day. B) next business day. C) second business day (skip day). D) fifth business day.
B
The call provision of a bond stipulates which of the following factors? A) Maturity date B) Call date and call price C) Original issue discount D) Coupon rate and call date
B
The last transaction in XYZ 5.50s 2030 was at 102. This bond is selling at: A) par. B) a premium. C) a discount. D) asset value.
B
The primary purpose of a syndicate desk in the context of an equity offering is to: A) determine the list of selling shareholders. B) build an order book and allocate the stock. C) solicit interest from investors in the stock offering. D) chaperone company management during the road show.
B
To offer its shareholders a privilege to obtain its shares at a fixed price, which of the following products does a corporation issue? A)Puts B) Rights C)Futures D)Preferred stock
B
When is interest on Treasury notes paid? A) Quarterly B) Semiannually C) Annually D) At maturity
B
Which of the following investment risks is the greatest risk in variable life insurance policy? A) Credit risk B) Market risk C) Inflation risk D) Interest rate risk
B
Which of the following represents the effect of a stock split? A) The price per share of common stock increases. B) The price per share of common stock decreases. C) Each stockholder's proportionate owership decreases. D) Each stockholder's proportionate ownership increases.
B
Which of the following statements BEST describes a banker's acceptance (BA)? A It is issued by nondomestic banks and is secured by Eurodollar deposits B It helps to finance foreign trade between importers and exporters C It facilitates the trading of foreign stocks in the United States D It is used by a municipal issuer in raising funds to meet a seasonal need for cash
B
Which of the following statements is true about all U.S. government agency issues? A) They are exempt from federal taxes. B) They are exempt from registration under the Securities Act of 1933. C) They are issued in bearer form only. D) They are general obligations of the federal government.
B
Which of the following statements is true regarding customer account held as tenants in common? A) The owners must equally share the assets. B) The ownership of the decedent's assets is governed by their will or state law. C) Tenants in common is permitted for use only for two individuals. D) Tenants in common is permitted for use only for married couples or family members.
B
Which of the following statements is true regarding the concept of an annuity contract? A) Payouts of an investment in a nonqualified annuity are all income- tax-free. B) The kind of annuity selected partly determines the payment amounts to the annuitant. C) In the case of life annuity contracts, the age and sex of the annuitant do not affect the payment amounts. D) The amounts of the periodic payments to the annuitant are determined by the performance of the insurance company's investment returns.
B
Your client, Dan Brown, believes that the Seabird Coffee Company's shares are significantly overvalued and will soon drop sharply in value. In order to profit from this drop, he could A. buy calls on Seabird common stock B. sell Seabird shares short. C. sell Seabird shares long. D. sell puts on Seabird common stock.
B
Your customer, Cleveland Brown, would like you to be able to place trades in his account as and when you think best. In order to trade on a discretionary basis in Mr. Brown's account, you will need authorization from which of these? I.FINRA II. A principal III. The customer IV. State administrator A. I and II B. Il and II C. l and II D. I and IV
B
but not at $63. If the ABC stock is currently trading at $63. Julia Miller would like to purchase ABC stock, buy the stock. Which type of order should Miller place price of ABC stock were to fall to $58 or less, then Miller wants to considering her objective? A. Market order B. Buy limit C. Buy stop D. Buy stop limit
B
with Sorag coffee makers and likes the prospects of Seabird. This is an example of Company. He recently read an article online about the Your customer calls and requests that you purchase 300 shares of Seabird Coffee company's new collaboration A. a solicited trade. B. an unsolicited trade. C. a discretionary trade. D. a suggested trade.
B
A company announces a tender offer to its shareholders with the intent to buy a maximum of 1 million shares of its outstanding stock at $10 per share and sets no minimum number of shares to be purchased. An investor wants to participate in this offer and tenders his 1,000 share position. At the close of the offer period, only 900,000 shares have been tendered. How many, if any, of the investor's shares will the company purchase? A) 0 B) 100 C) 900 D) 1,000
D
A company based in Europe with offices located in New Jersey would like to have its stock traded on the NYSE. This would most likely be accomplished through the issuance of: A .Bankers' Acceptances B .Yankee bonds C .Eurodollar bonds D .American Depositary Receipts
D
A customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling at what price per share at expiration? A) $3 B) $32 C) $35 D) $38
D
A registered representative is reviewing the following portfolio: • 30% ABC Energy Company • 30% XYZ Health Care Company 30% Exchange-traded fund (tracks the S&P 500) • 10% Money market funds Which of the following risks is inherent in this portfolio? A) Credit B) Liquidity C) Political D) Nonsystematic
D
At issue, which of the following debt securities mature in one year or less? A) FNMA bonds B) GNMA bonds C) Treasury notes D) Money market instruments
D
Blue-sky laws are regulated by which of the following entities? A) SEC B) MSRB O C) FINRA D) State securities regulators
D
In the event of a stock split, which of the following parties is required to maintain a record of the shareholders eligible to receive the additional shares? A) DTC B) Issuer C) Custodian D) Transfer agent
D
Ms. Chiang executes a trade to purchase her cash account on Thursday, for the trade by the close of business on June 30. Cash must be in her 100 shares of ABC Corporation common in account sufficient to pay A. July 1 1. B. July 2 2. C. July 4 4. D. July 5
D
Stability in the value of a debt portfolio is greatest when: A) interest rates are rising.- B) interest rates are falling. C) maturities of the debt securities are long. D) maturities of the debt securities are short.
D
The 5% markup policy applies to a: A Purchase of mutual fund shares B Municipal bond trade C New issue of common stock D Proceeds transaction
D
The Windmill Growth Fund declares a 15-cent dividend for shareholders of record date as Wednesday, November 12. The most likely ex-dividend date is A. Monday, November 10. B. Tuesday, November 11. C. Wednesday, November 12. D. Thursday, November 13.
D
Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? A) The same stock on the same day in a margin account B) The same stock in different accounts on the same day C) The same stock in different accounts in the same household D) The same stock in a cash account without paying for the stock in full
D
Under SEC Regulation S-P (Consumer Privacy), which of the following information must a firm include in its customer privacy and opt-out notices? A) The address of the firm's website B) The fee to opt out from the privacy program C) The deadline by which to opt out from the privacy program D) The policies to protect the security of nonpublic information
D
When an investor is long a stock A. the investor is bearish. B. buying the stock in the secondary market will close the position. C. there is limited gain potential. D. the investor is bullish.
D
Which of the following Form U4 reportable events results in a statutory disqualification? A) A personal bankruptcy filing B) A written customer complaint alleging misappropriation of assets C) A felony theft charge D)A felony conviction for a driving under the influence (DUI) charge
D
Which of the following actions violates FINRA rules regarding selling away? A) Recommending to a customer the services of another broker- dealer (BD) B) Sharing commissions with another registered representative in the same BD C) Advising customers to buy mutual funds at amounts just belowa discount level D) Engaging in private securities transactions without written prior consent of the employing BD
D
Which of the following communications with the public is considered misleading? A) Historical illustrations based on factual performance B) Product comparisons that illustrate material differences C) A research report that includes a buy recommendation for a specific security D) Literature providing 10-year performance information to support predictions of future performance
D
Which of the following comparisons best describes the essential difference between a primary distribution and a secondary distribution? A) A primary distribution can only be made for equity issues while a secondary distribution can be made for both equity and debt issues. B) A primary distribution can only be made for issues that exceed a specified dollar amount while a secondary distribution can be made for issues of all sizes. C)A primary distribution must be made at a fixed public offering price (POP) while a secondary distribution must be made at the current market price. D) A primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares.
D
Which of the following products is adversely impacted if the issuer's credit rating is downgraded? A) Mutual funds B) Unit investment trusts (UITS) C) Exchange-traded funds (ETFS) D) Exchange-traded notes (ETNS)
D
Which of the following responses describes an advantage of index funds? A) The protection of principal during bearish markets B) High turnover to take advantage of market opportunities C) Higher management fees due to active management of the fund D) Lower management fees due to passive management of the fund
D
Your client, Mrs. Watt, sold her $22 a share. She purchased the stock on July 10 of the previous year for $18 a share. investment in Ohm Electric Company on June 10 She has realized A. a long-term capital loss. B. a long-term capital gain. C. a short-term capital loss. D. a short-term capital gain.
D
Your customer places a trade to buy 1,000 shares of Seabird Airlines at a limit of 32 FOK. When the order reaches the floor of the exchange, there are 500 shares available to buy at 32. What is the likely outcome of the trade? A. 500 shares filled, 500 share order remains until filled of canceled at the end of the day. B. 500 shares filled, the rest of the order is canceled. C. 500 shares filled at 32, 500 at the market. D. Order canceled, nothing done.
D
