Q&A Test 7 (Part 2)
A broker-dealer is acting as a principal in which of the following scenarios? I.Selling bonds from inventory to an individual II.Selling bonds from inventory to another broker-dealer III.Buying bonds from another broker-dealer for inventory IV.Buying 500 bonds to fill an insurance company's order for 250 bonds
A broker-dealer is acting as a principal when buying for or selling from inventory. In choice (IV), the broker-dealer is buying 500 bonds to fill an order for 250 bonds. The remaining 250 bonds will be for inventory.
An individual owns 800 shares of stock at an original cost of $55 per share. If the company distributes a 15% stock dividend, what is the client's cost basis per share?
A stock dividend is not a taxable event when received. The investor must adjust her cost basis. The investor would now own 920 shares (800 shares x 1.15). The new cost basis would be $47.83 (original cost of $44,000 [800 shares x $55] divided by 920 shares).
An accumulation unit in a variable annuity contract is:
An accumulation unit in a variable annuity contract is an accounting measure used to determine the contract owner's interest in the separate account. The separate account is the portfolio in which the customer's contributions are invested. Some separate accounts consist of several subaccounts, with differing objectives and portfolios.
A securities market is considered efficient if which TWO of the following conditions are present? I.Large differences between the bid and offer prices II.Small differences between the bid and offer prices III.A large number of transactions IV.A small number of transactions
An efficient secondary market for securities will exist if a large number of buyers and sellers are willing to pay similar prices. This will help to keep the difference between the quoted prices (the spread) small and will attract a large number of buyers or sellers willing to execute transactions.
Promotional material made available to the public may compare collateralized mortgage obligations (CMOs) to:
Any type of promotional communication made available to customers may not compare CMOs to any other security. This is due to the uniqueness of this product.
Which TWO of the following are suitable for an aggressive investor who wants a non-traditional investment as well as access to his capital? I. A business development company II. A hedge fund III. A liquid alternative investment IV. A private equity fund
Both a business development company and a liquid alternative investment are non-traditional investments that are suitable for an aggressive investor. A business development company (BDC) raises capital by selling securities to investors, has a structure that is similar to a closed-end investment company, and provides an investor with access to his capital (liquidity). A BDC will use the money it raises to invest in private companies, small and developing businesses, as well as financially troubled companies that have difficulty raising capital in public markets. Since some of the funds are invested in the equity of non-public companies, purchasing shares of a BDC is similar to buying a publicly traded investment in a private equity firm. The term alternative investments refers to non-traditional strategies, such as short selling, using derivatives, long/short trading or neutral strategies, trading in distressed securities or currencies, and arbitrage. These strategies differ from simply buying, holding, and selling securities and are often referred to as a way to diversify a portfolio through the use of securities other than equities and bonds. These are the types of strategies are used by hedge funds and private equity funds. One of the disadvantages of both hedge funds and private equity funds is their lack of liquidly. A liquid alternative investment combines the structure of an SEC-registered mutual fund (which is liquid) with a non-traditional or alternative investment.
Under MSRB rules, which of the following documents do NOT need to be retained for a specific period?
Copies of official statements need not be retained since the MSRB does not have the authority to regulate issuers and, therefore, may not require the preparation of an official statement.
A corporation has issued a bond with a 5% coupon that is convertible into common stock at $40. The bond is selling currently trading at par and the stock is selling at $39.00. If the bond increased in value by 20 points, what is parity of the stock?
If the bond increased by 20 points over its par value of $1,000, it would be selling for $1,200. The parity price for the stock is found by dividing the market value of the bond ($1,200) by the conversion ratio of 25 ($1,000 or par value ÷ $40). This is equal to $48 ($1,200 ÷ 25 = $48). The current price of the stock is not relevant.
Repurchase agreements (repos) and reverse repos would MOST likely be used by:
In a repurchase agreement, a firm sells securities to another firm and agrees to repurchase them at a specific time and a specific price, which produces an agreed-upon rate of return. In effect, one firm is borrowing money from the other with securities as collateral.
Which of the following choices may write calls covered by XYZ stock? I.The president of XYZ Corporation II.The trustee of XYZ Corporation's pension fund III.XYZ Corporation IV.ABC Corporation
Individual stockholders may write calls on stock they own, regardless of their position as an insider. Trustees of pension funds are permitted by ERISA to write covered calls provided the strategy meets the objectives of the fund. Corporations may write calls covered by stock of other companies. However, a corporation may not write calls covered by its own stock.
A customer is NOT required to obtain approval to trade penny stocks in his account if the: I.Trade is solicited II.Trade is unsolicited III.Account is established IV.Account is new
It is necessary to read this question carefully since it is asking about when a customers is NOT required to obtain approval to trade penny stocks in his account. The approval to trade penny stocks in a customer's account is NOT required if the account has been in existence for more than one year or if all transactions in penny stocks are unsolicited (non-recommended). Penny stocks are defined as non-listed equity securities that are priced at less than $5.00 per share.
Which TWO of the following statements are TRUE concerning long-term (brokered) CDs? I.They are considered highly liquid II.Investors may be subject to interest-rate risk III.The total amount of the investment will be FDIC-insured IV.They may be callable
Long-term brokered CDs are not considered highly liquid since there is no active secondary market. Like most fixed-income securities they are subject to interest-rate risk. In addition, they may be callable and have other features such as floating rates. FDIC insurance may not apply to long-term CDs sold by broker-dealers if the face amount exceeds $250,000.
A 28-year-old single investor has funds saved at a bank. He contacts an RR and wants to begin allocating funds to a retirement account. Which of the following choices is the most appropriate asset allocation?
Long-term, risk-tolerant investors, such as those saving for retirement, are usually looking for growth of capital as an objective. They are also usually concerned about the effects of inflation. Over long periods, stocks usually keep pace or offer higher returns as measured against inflation. Inflationary risk is also referred to as purchasing-power risk. Since the investor is many years from retirement, a large percentage of his portfolio should be allocated to stocks.
The State of North Carolina is offering $50,000,000 of 5 1/2% sewer improvement bonds. Which TWO of the following choices apply to the bonds? I.They are subject to the margin requirements of Regulation T II.They are subject to the antifraud provisions of the Securities Act of 1933 III.They are subject to the Trust Indenture Act of 1939 IV.They are exempt from the registration requirements of the Securities Act of 1933
Municipal bonds are exempt from the registration provisions of the '33 Act, but are subject to the antifraud provisions. They are also exempt from Regulation T and the Trust Indenture Act of 1939.
When a municipal bond is to be advance-refunded (prerefunded), an escrow account is set up to insure that the money will be available. Securities are deposited in the escrow account. The securities that are deposited in the escrow account are:
Only Treasury obligations are acceptable securities as escrow when a bond is advance-refunded.
A woman with a low income has saved $5,000 to invest for her young son's college education. Which of the following investments would be the MOST appropriate?
Since the woman has a low income, municipal bonds and limited partnerships would not be of benefit. Since the son is young, a long-term investment would be most appropriate.
A woman will be retiring in 2030. She is interested in income and having her principal available at retirement. Which of the following municipal bonds would you recommend?
Since the woman wants her principal available at retirement, a bond maturing in 2030 (the year of her retirement) would be the best choice. Since the revenue bond is highly rated, there is a higher probability the issuer will be able to pay off the principal at maturity compared to the non-investment-grade revenue bond.
Which TWO of the following choices are types of securities that are issued by the Federal Home Loan Bank? I.Discount notes with maturities that range between two and 10 years II.Discount notes with maturities of one year or less III.Consolidated bonds with maturities of up to 30 years IV.Consolidated bonds with maturities that range from 20 to 40
The Federal Home Loan Bank issues two types of securities to raise capital—discount notes with maturities of one year or less and consolidated bonds with maturities of up to 30 years. These funds that are raised are used to provide funds to FHLB member banks that, in turn, lend these funds to their customers.
Which of the following statements is NOT TRUE concerning the Student Loan Marketing Association (Sallie Mae)?
The Student Loan Marketing Association (known as SLMA or Sallie Mae) provides liquidity to student loan makers by purchasing federally sponsored student loans. It also lends funds directly to educational institutions. Sallie Mae securities are not backed by the full faith and credit of the U.S. government, but the SLMA maintains a direct line of credit with the U.S. government. It does not issue securities that can be redeemed to pay for college education.
Which of the following indexes is the broadest equity market indicator?
The Wilshire 5000 Equity Index consists of more than 7,000 stocks that trade on the New York Stock Exchange and Nasdaq. The Index is referred to as the Wilshire 5,000 because, when created, it contained approximately 5,000 stocks. The Wilshire Index is considered the broadest of all indexes and averages.
The current yield on a municipal bond with a coupon rate of 4.50%, purchased at par and currently trading at $1,055, is:
The current yield is found by dividing the yearly interest payment of $45 by the market price of $1, 055. This equals 4.26%. The fact that the bond was purchased at par is not relevant.
One of your clients, Kona Okemo, has a long-term objective of capital appreciation. Which of the following investment strategies will MOST closely achieve this goal?
The investor is seeking long-term capital appreciation (also referred to as capital growth). The best answer is based on the asset allocation mix. An investor seeking capital appreciation would want a large percentage of his assets invested in equities. Choice (c) has a mix of 80% equities and 20% fixed-income. The largest percentage of the other choices is choice (d) with 60% equities and 40% in fixed-income.
When must a customer sign an agreement to abide by the rules of the exchanges and the rules of the Options Clearing Corporation with regard to position limits?
The investor must sign an agreement to abide by the position limit rules of the exchanges and of the Options Clearing Corporation no later than 15 days following the approval of the account.
Which of the following statements is TRUE regarding the purchaser of a call option?
The maximum loss that a purchaser of an option (call or put) can sustain is the amount of the premium paid. The purchaser of a call option will profit if the underlying stock increases in value, and exercises the call only if the stock is above the strike price. The investor can profit by either exercising or liquidating the call. A purchaser of a call option has the right to buy stock, not an obligation to sell stock.
The minimum denomination for negotiable certificates of deposit is:
The minimum denomination for negotiable CDs is $100,000. Typical denominations are often $1,000,000 or more.
An investor purchases the following bonds: State of Florida 8% bond due 2020, State of California 8 1/2% bond due 2020, State of New York Housing Finance Agency 9% Revenue bond due 2030, and Wayne County, Michigan 8 1/2% Water and Sewer Revenue bond due 2030. This portfolio offers:
The portfolio offers the investor geographical diversification because the issues are from different municipalities throughout the country.
In a margin account, an investor purchased 100 shares of XYZ stock at $60 per share and also sold an XYZ May 65 call at 3. What is the amount of cash that the investor must deposit?
The stock purchase is subject to the Regulation T requirement of 50%; however, since the option was sold and is covered by the long stock, there is no deposit required. The requirement on the stock purchase is $3,000, but the $300 premium received reduces the required deposit amount to $2,700.
An investor wishes to establish a tax loss but still wants to own the same security. The customer sells the security and repurchases it two weeks later. The tax loss is:
The tax loss is disallowed. The customer must wait more than 30 days before repurchasing the same security or any security convertible into the security (a right, option, warrant, or convertible bond). The customer repurchased the same security two weeks later. This is considered a wash sale for tax purposes by the IRS and the loss is disallowed.
The turnover that a dollar experiences over a given period is known as the:
The velocity of money represents the number of times that a dollar is spent over a given period. It is a measure of business activity in the marketplace. The multiplier effect, created by the reserve requirements placed on members of the Federal Reserve System, refers to the fact that small changes in bank deposits result in large changes in the money supply.
Which of the following stocks would most likely be considered a defensive stock?
Utility, food, beer, candy, pharmaceutical, tobacco, and soft drink stocks would be considered defensive stocks. They offer the investor a greater amount of safety because in periods of recession and adverse economic conditions these companies are the last to be affected.
A floor broker goes to a trading post to execute an order. When told of the floor broker's order, the designated market maker replies, "you're stopped at 21." This means:
When a designated market maker stops stock, the price is guaranteed. Stopping stock may be done only for a public order.
A municipality may issue a Direct Pay Build America Bond to finance all of the following activities, EXCEPT to:
A Direct Pay Build America Bond may be used to raise capital for the same purposes as regular tax-exempt municipal debt, except for refundings, working capital, and private activity bonds.
Which of the following persons may contribute to a 457 plan?
A Section 457 plan is a type of retirement plan used by many public sector workers (state and local, not federal). These plans grow tax-deferred and are generally subject to the same contribution limits as 401(k) and 403(b) plans. Each has similar tax features and contribution allowances. The difference is in who may use them. 401(k) plans are used by for-profit employees, 403(b) plans by nonprofit and public school employees, while 457 plans are designed for the benefit of some local government workers.
Which of the following stocks would NOT be considered defensive?
A defensive stock is the stock of a company that is not drastically affected by a downturn in the economy. Those companies involved in the necessary areas of life are considered defensive. In addition to the choices given-- tobacco, food, and clothing-- soft drink and candy companies are examples of defensive stocks. Construction, mining, steel, and heavy equipment manufacturing companies are dramatically affected by an economic downturn.
During a deflationary period, interest rates:
A deflationary period is characterized by a sluggish economy where goods and services decline in value. Interest rates tend to trend downward, causing bond prices to rise.
If a customer wants to purchase securities in an account that has been frozen, when must he deposit the required cash in the account?
A frozen account requires the full amount of money to be deposited in the account before the order is accepted. If the client wants to sell securities in a frozen account, the securities must be in the account before the sale is made.
A client invested $35,000 in a mutual fund and receives a lower sales charge by signing a letter of intent based on a purchase level of $50,000. If, one year later, she has not contributed additional funds, which of the following choices is the BEST course of action for the RR handling the account?
A letter of intent (LOI) enables an investor to qualify for a reduced sales charge based on the breakpoint schedule of a mutual fund, without initially depositing the entire amount required. The LOI states the investor's intention to deposit the required money within 13 months of the inception of the letter. It may not be renewed for another 13 months. The letter of intent may be backdated for up to 90 days, but may not be extended for 90 days. Letters of intent are not binding on the investor. The investor is not obligated to contribute the additional $15,000. Investors who fail to make the additional investments are charged the amount that would equal the higher sales charge that applied to the original purchase. The fund insures that it will be able to recover the additional sales charge by withholding sufficient shares in escrow for this purpose.
Which of the following option positions is an example of a spread?
A spread is defined as the simultaneous sale and purchase of two options of the same class (same stock and same type of option), but it will have different strike prices and/or expirations. A long straddle is defined as the simultaneous purchase of two options that have the same expiration and strike price, but consist of one call and one put. A short straddle is defined as the simultaneous sale of two options that have the same expiration and strike price, but consist of one call and one put. Choice (b) is a long straddle and choice (d) is a short straddle. A combination is similar to a straddle, however, the strike prices and/or expirations must be different. Choice (c) is a long combination.
An advertisement for municipal securities states the following: "15-year 10% tax-free bond priced to yield 12% to maturity. Call us now for more details." According to MSRB rules, this advertisement should also state that:
According to MSRB rules, the advertisement must state that a portion of the yield to maturity for a discount bond may be subject to taxation and, therefore, does not represent a fully tax-free yield. In this question, the bond is being offered at a discount because the yield to maturity (12%) is greater than the nominal yield (coupon rate 10%). At maturity, the discount would be subject to taxation as ordinary income, causing the net yield to be between 10% and 12%.
According to Regulation T, when purchasing an option contract the transaction must be paid for within:
According to Regulation T, securities must be paid for within 2 business days of the standard (regular-way) settlement date. Since regular-way settlement is two business days, payment is required within four business days from the trade date. Although option transactions settle next day, the customer has four business days to pay for a purchase.
A mother wants to set up an investment account to provide funding for her child to attend private elementary and secondary schools. Which of the following choices is most suitable?
An advantage of ESAs (Education Savings Accounts) is the ability to make tax-free withdrawals to pay for private elementary, high school, and postsecondary school expenses. State-sponsored 529 plans allow tax-advantaged withdrawals only for postsecondary school (usually college) expenses.
An investor makes an opening sale of 10 option contracts when the bid price was $7.00 and the offer price was $7.10. Later in the day, the investor makes a closing purchase of 10 contracts when the bid price was $6.50 and the offer price was $6.55. Assuming both trades were market orders, what is the investor's gain or loss on these transactions?
An investor who places a market order will normally buy at the offer and sell at the bid. In this case, the investor sold 10 contracts at the bid price of $7.00, for sales proceeds of $7,000 (10 contracts x $700 per contract). To close out the position, the investor bought 10 contracts at the offer price of $6.55, for a total cost of $6,550 ($655 x 10 contracts). The $450 capital gain is based on the difference between the cost basis and sales proceeds.
An investor has been saving for her child's college education using a 529 plan. If her child will be attending college in a few years, which TWO of the following actions are MOST suitable? I.Moving money from equity and bond investments to money-market funds II.Moving money from money-market funds to equity funds III.Moving money from bond funds to equity funds IV.Moving money from equity funds to bond funds
As a child approaches college age, a suitable investment strategy is to move from growth-oriented securities, such as equities, to income-oriented securities, such as bonds, and money-market funds. Once a child begins to attend college, most of the funds should be invested in money-market funds or other types of short-term investments that are liquid with very little risk of capital.
Which of the following is considered a leading economic indicator?
Economic indicators are classified as leading, coincident, or lagging. Leading indicators precede the change in the economy as a whole. Coincident indicators change with the economy as a whole, and lagging indicators change after the economy as a whole. New orders for consumer goods and materials (also referred to as new orders for durable goods) are a leading economic indicator, and industrial production is a coincident indicator. The average prime rate charged by banks and the average duration of unemployment are lagging indicators.
The federal funds rate may be described as: I.A money-market rate II.A long-term rate III.The most stable rate IV.The most volatile rate
Federal funds are excess reserves that one bank loans to another (usually overnight) when the borrowing bank must make up a deficit reserve position. The rate of interest charged is called the federal funds rate. The federal funds rate fluctuates daily, making it the most volatile money-market (short-term) rate.
Junius Arbor purchased stock in 2002 for $24,000. In April 20XX, Mr. Arbor passed away. His estate valued the stock at $82,000. The stock was willed in equal amounts to his daughter Cathy and his son Bob. Cathy sold her stock on September 2, 20XX for $48,000. Bob sold his stock on May 8, 20XX for $56,000. Which of the following statements is TRUE?
In the case of inherited securities, the value of the securities is determined at the time of death. The heirs are always considered to have long-term holding periods. The capital gains or losses for Bob and Cathy are found as follows: The securities at the time of death were valued at $82,000. Bob and Cathy were willed equal amounts of $41,000 each, establishing a cost basis for both of $41,000. To determine the gain, compare the cost basis to the sales proceeds. Cathy sold her stock for $48,000, creating a $7,000 gain, while Bob sold his stock for $56,000, creating a $15,000 gain.
Which item need NOT appear on a customer confirmation for a municipal bond transaction?
MSRB rules do not require that the name of the bond counsel be disclosed on a confirmation. The existence of call features, bond insurance, the applicability of the alternative minimum tax, or any special relationships between the issuer and the broker-dealer (such as financial advisory and control relationships) are among the numerous disclosures that must be made to customers on a confirmation.
A project financed through revenue bonds is experiencing difficulty in that revenues are not sufficient to meet debt service payments. If, through legislative approval, the state pays interest and principal in a timely manner, the issue is MOST LIKELY:
Moral obligation bonds are municipal revenue bonds that are payable by the state if revenues from the project do not satisfy debt service payments. However, in order for the state to service the debt, approval of the state legislature is required. Double-barreled bonds are issued as revenue bonds that are additionally backed by the general obligation of the full faith and credit of the issuing municipality.
Which of the following statements is TRUE concerning registered nontraded real estate investment trusts (REITs)?
Most REITs are traded on an exchange, such as the NYSE, and offer investors a high degree of liquidity. Nontraded REITs do not have their shares listed on an exchange and offer very limited liquidity, similar to limited partnerships. They would not be suitable for investors seeking liquidity. Both invest in various types of real estate and are subject to the same tax consequences (90% distribution on taxable income). Since they are both registered, they are required to make the same disclosures to investors.
According to SRO rules, an email message complaining about excessive commissions sent to an RR's personal electronic device:
Records of customer complaints must be maintained according to SRO record-keeping rules. Complaints may be delivered in any written format, including letters, email, IMs, and text messages. There is no requirement to follow up an electronic communication with a paper document or to send the complaint to the appropriate SRO.
Which TWO of the following statements are TRUE regarding the trading restrictions placed on a director of a publicly traded company? I.There is a limit on the amount of registered stock the director may purchase II.There is no limit on the amount of registered stock the director may purchase III.There is a limit on the amount of unregistered stock the director may sell IV.There is no limit on the amount of unregistered stock the director may sell
Restricted stock is stock that is not registered and is typically acquired by an individual through a private placement. With regard to restricted stock, the purchaser must hold the stock for six months before she may dispose of it. Control stock is registered stock that is acquired by an affiliate (control) person, such as an officer or director, in the secondary market. A control person who acquires stock through an open-market purchase may sell the stock anytime. There is no limit placed on the number of registered shares an insider may purchase. According to Rule 144, there is a restriction on the sale of both restricted and control stock.
Which TWO of the following statements are TRUE concerning revenue bonds? I.Revenue bonds may be issued only with voter approval II.Revenue bonds may be issued even though local debt limits have been reached III.Revenue bonds usually pay higher interest than general obligation bonds IV.Revenue bonds are not exempt from federal income taxes
Revenue bonds may be issued without voter approval and may be issued even though a local debt limit has been reached. They are backed by the revenue derived from a project and not the taxing power of a municipality. They usually pay higher rates of interest than general obligation bonds since they have no taxing power as do general obligation bonds. The interest from both GO and revenue bonds is exempt from federal income taxes.
From the issuer's perspective, when comparing serial bonds to term bonds, serial bonds have:
Serial bonds have several (a series of) maturity dates with a lower amount of debt outstanding as time goes by. Each series of bonds will have declining interest payments and declining principal amounts. In comparison, term bonds have one maturity date (i.e., the entire principal balance is paid on one date) and have stable interest payments.
A customer has realized a capital gain from the sale of a municipal bond. To reduce the customer's tax liability, the capital gain can be offset against a capital loss from which of the following investments? I.A general obligation bond II.An equity security III.A corporate bond IV.A real estate investment trust
Since all of the investments are considered capital assets, a capital loss in any of these can offset a capital gain from the sale of a municipal bond. Capital assets include stocks, bonds, options, municipal securities, real estate, and interests or shares in partnerships.
How would preferred stock most likely be affected by an increase in interest rates?
Since preferred stock is a fixed-income security paying a fixed dividend each quarter, it is affected by interest rates in the same way as bonds. If interest rates rise, the value of existing bonds and preferred stock will fall. If interest rates fall, the value of existing bonds and preferred stock will rise.
ABC Corporation has net income of $6,000,000. It had $1,000,000 in interest expense and is in the 34% tax bracket. ABC has 500,000 shares of common stock and 10,000 shares of 10% preferred stock ($100 par value) outstanding. What are the earnings per share for ABC?
Since the question gives ABC Corporation's net income, interest and taxes have already been deducted. Earnings per share is equal to net income minus the preferred dividend divided by the number of common shares outstanding. ($6,000,000 net income - $100,000 preferred dividend) divided by 500,000 shares outstanding = $11.80 earnings per share.
Structured products may: I.Offer returns linked to equity securities II.Not offer returns linked to commodities III.Not offer returns linked to interest rates IV.Be formulated to provide principal protection
Structured products are prepackaged securities that often combine securities, such as a bond with a derivative. The structured security may be linked to equity securities, commodities, or interest rates. The products may also be structured to provide principal protection. Structured products are not bank deposits and are not insured by the Federal Deposit Insurance Corporation (FDIC). This fact should be disclosed by an RR when offering this product to clients.
Which of the following statements concerning a tax-qualified annuity is TRUE?
Tax-qualified annuities are employer-sponsored plans that are available to certain nonprofit organizations, public school, and/or state/city university/college employees. These annuities, sometimes referred to as TSAs may be placed into a 403(b) or a 501(c)(3) plan. Since these plans are funded on a pretax basis, contributions are deducted from an individual's taxable income. An investor's cost basis is considered to be zero since none of the contributions have been recognized for tax purposes. Income grows tax-deferred not tax-free. Upon distribution, every dollar is taxable as unearned ordinary income. Tax-free growth means that none of the distributions will be subject to taxation. This is not the case with these types of plans.
The 30-Day Visible Supply of municipal securities refers to new municipal bonds that:
The 30-Day Visible Supply of municipal securities refers to the face amount of new municipal bonds that will be sold in the next 30 days through competitive and negotiated sales of general obligation and revenue bonds. It is an indication of expected supply in the new issue market and is published each day in The Bond Buyer.
Which choice BEST describes The Bond Buyer's Revenue Bond Index?
The Bond Buyer publishes different indexes. They include: 1. The 20-Bond Index -- The average yield to maturity on a particular day of 20 specific GO bonds with 20-year maturities 2. The 11-Bond Index -- The average yield to maturity on a particular day of 11 of the 20 specific GO bonds from the 20-Bond Index 3. The Revenue Bond Index (Revdex) -- The average yield to maturity on a particular day of 25 specific revenue bonds with 30-year maturities
Which of the following statements is NOT TRUE regarding a firm's anti-money laundering program?
There is no anti-money laundering blueprint or template supplied by either the SEC or FINRA to broker-dealers. However, any program implemented by the broker-dealer must be designed to comply with the provisions of the Bank Secrecy Act (BSA) and must provide for annual testing of the systems as well as ongoing employee training. Broker-dealers must appoint a compliance person to oversee anti-money laundering regulation compliance, and must identify that person to FINRA.
When a stock sells ex-rights, which of the following orders on a designated market maker's book will be reduced? I.Buy limit order II.Sell stop order III.Buy stop order IV.Sell limit order
When a stock sells ex-rights (similar to ex-dividend), the designated market maker will reduce those orders on his book that were entered below the market. A buy limit order and a sell stop order will be reduced by the amount the stock sells ex-rights since these orders are entered below the market.
A customer purchased 10 ABC January 50 calls, paying a $2 premium and 10 ABC January 50 puts, paying a $2 premium. The market price of ABC stock is $50 per share. The buyer of these 10 straddles will need to deposit:
When buying options, 100% of the purchase price (the premium) must be deposited. The customer paid a $2 ($200) premium for the call and a $2 ($200) premium for the put (a $4 premium for one straddle). The customer has purchased 10 straddles and paid $400 per straddle for a total of $4,000 (10 straddles x $400 = $4,000).
The payout on a variable annuity is based on a
When payments begin on a variable annuity, the annuitant is credited with a specific number of annuity units. This number will remain fixed. The annuitant's monthly payment will vary according to the value of the securities representing the units.
A client wants all trade confirmations sent to his investment adviser. This will require:
Written approval is required only from the client.
