SIE
Which of the following choices would best describe a follow-on offering?
An issue of shares by a public company that is already listed on an exchange
Which of the following pairs are not covered by the Federal Deposit Insurance Corporation (FDIC) at any level?
Mutual funds and annuities
A stock's market value is directly determined by which of the following?
Supply and demand
When the Federal Reserve Board (FRB) utilizes the tools available to it, it is influencing
the money supply.
A preemptive right for existing shareholders is best described as
the right to purchase shares in an amount that would keep a shareholder's proportionate ownership in the corporation unchanged when a company issues additional shares.
All of the following are true of REITs except
they are registered as investment companies.
Each of the following is considered a control person under Securities and Exchange Commission (SEC) Rule 144 except
those persons who own 5% or more of the total beneficial interest of a company's common stock.
A market maker
trades in a proprietary account to facilitate trading of a security and provide liquidity.
Financial Industry Regulatory Authority (FINRA) regulates all matters related to investment banking, including
trading in the over-the-counter (OTC) market.
Which benchmark interest rate indicates the direction of the Federal Reserve Board's monetary policy?
The discount rate
Why is a fixed annuity not considered to be a security?
The fixed annuity buyer assumes no investment risk.
Which of the following characteristics are typical of an exchange-traded product (ETP)?
The value of an ETP is derived from other investment instruments, and it trades on a national securities exchange.
Which of the following regarding federal funds is true?
These funds may be loaned from one Federal Reserve Board (FRB) member bank to another.
An investor is viewing a company's prospectus on the Securities Exchange Commission's (SEC's) website. Which of the following is true?
This satisfies the access equals delivery rule for a final prospectus.
U.S. government deposits securities with a trustee against which certificates are sold representing principal only with no regular interest payments. These are known as
Treasury STRIPS.
Which of the following sets of FINRA rules focuses on broker-dealers doing business with other broker-dealers?
Uniform Practice Code
In an underwriting where fixing a minimum dollar amount to be sold in order to move forward with the entire offering is most commonly referred to as
mini-max.
The MSRB has jurisdiction for making rules in all of the following cases except
municipalities selling their own securities.
Limited partnerships
must end on a predetermined date or can be dissolved earlier by vote.
In the capital markets, securities such as stocks and bonds can be
offered by both public and private sectors.
State registration is not required if the transaction is exempt. An example of an exempt transaction would be
one that is unsolicited.
To stimulate the economy during a recession by expanding the availability of credit, the Federal Reserve Board (FRB) would do any of the following except
raise the federal funds rate.
Economists call mild, short-term contractions
recessions
Those holding the securities of a company where rules might change that impact or upset the way the company does business are exposed to
regulatory risk.
Benefits of mutual funds include all of the following except
reinvested dividends are not taxed until withdrawal.
The primary purpose of the Securities Act of 1933 is to
require full and fair disclosure in connection with the sale of securities to the public.
Securities acquired through some means other than a registered public offering are known as
restricted
If it finds that the registration statement needs revision, expansion, or to have corrections made, the Securities and Exchange Commission (SEC) may suspend the review of the new issue and issue a deficiency letter. Once the issuer submits a corrected registration statement, the 20-day cooling-off period
resumes where it had left off.
All of the following would be secondary market transactions except
securities sold to the public by the issuer.
Regarding different types of debt security maturities available to issuers, which of the following is accurate?
A balloon maturity uses elements of both serial and term maturities.
Which of the following must be a member of the Securities Investor Protection Corporation (SIPC)?
A firm that deals only in over-the-counter (OTC) and exchange-listed stocks
After the issuer files a registration statement with the Securities and Exchange Commission (SEC), the time known as the cooling-off period begins. This allows a registration to become effective as early as
20 calendar days after the date the SEC has received it.
The aftermarket prospectus requirement for nonlisted securities is
90 days.
Which of the following is a self-regulatory organization (SRO)?
Financial Industry Regulatory Authority (FINRA)
Municipal revenue bonds I. do not require voter approval. II. generally have a higher rating than general obligation (GO) bonds from the same issuer. III. are not subject to statutory debt limits. IV. are backed and supported by ad valorem (property) taxes. I and IV I and III II and III II and IV
I and III
Which of the following is an example of an unsecured debt security? I and II I and IV I and III II and IV
I and IV
Ensuring that the investing public is fully informed about a security and its issuing company when shares are first sold in the primary market is covered under which of the following federal acts?
Securities Act of 1933
For nonexempt securities being offered to the public for the first time by a corporate issuer, which of the following would be applicable?
Securities Act of 1933 regulating issues that must be offered by prospectus
Regarding the registration statement filed with the Securities and Exchange Commission (SEC) when new securities are to be issued, all of the following are true except
the accuracy and adequacy of the registration documents is the responsibility of the underwriters.
The largest component of the U.S. balance of payments is
the balance of trade.
A put feature attached to a bond allows
a bondholder to put a bond back to the issuer for redemption at times that will benefit the bondholder.
Your broker-dealer, rather than clear its own securities transactions, chooses to introduce its business to another firm that will clear, processes and handle all back-office operations for it. The firm receiving the business is known as
a carrying firm.
Underwriters acting as principals and committing to purchase any unsold shares for the syndicate account would
a firm commitment.
Underwriters acting as principals and committing to purchase any unsold shares for the syndicate account would best be described as being engaged in
a firm commitment.
An investor has purchased bonds having a put feature attached. With this put feature, it is likely that these bonds were issued with
a lower coupon than similar bonds without the feature.
A broker-dealer that accepts the risk of holding a particular security in its account to facilitate trading and provide liquidity in that security is best described as
a market maker.
Having been told that a firm incorporates proprietary trading in its business model buying and selling securities into and out of its own inventory you would know that it is
a market maker.
When a firm engages in proprietary trading, buying into and selling out of its own inventory for profit, it is acting as
a market maker.
An institutional investor selects a single Financial Industry Regulatory Authority (FINRA)/NYSE member firm to provide for financing and custody of securities while orders to buy or sell are placed with executing brokers. This is an example of
a prime brokerage account.
Recent reports indicate that the gross domestic product (GDP) has been declining steadily over the past two quarters. This would suggest
a recession.
An individual who purchases securities for a personal account is called
a retail investor.
Sales for new issues of securities may be solicited
after the cooling-off period.
Municipal bonds are issued by all of the following government entities except
agencies
The U.S. gross domestic product is best described as
all goods and services produced within the nation.
Anyone who, as part of their business, gives investment advice for compensation must register as
an investment adviser under the Investment Advisers Act of 1940.
When the Federal Open Market Committee (FOMC) directs that Treasury securities be sold in the open market, this
decreases the money supply.
Economists refer to longer, more severe contractions in the economy as
depressions
MJS Corporation has called in its 6% preferred shares. Owners of these shares should expect that
dividend payments will cease on the call date.
Regarding registration for the sale of securities, those registered under the Investment Company Act of 1940, such as mutual funds, would be considered
federal covered securities and not required to register at the state level.
Laws increasing or decreasing taxation would be best associated with
fiscal policy enacted by the president and Congress.
After the filing of a registration for a new issue with the Securities and Exchange Commission (SEC), and still in the registration's cooling-off period, broker-dealers may
give a red herring to prospective investors.
A customer buys a 4% Treasury bond, maturing in 10 years, at a price of $96.08. The yield to maturity (YTM) is
greater than nominal yield.
The country's annual economic output of all of the goods and services produced within the nation, is known as
gross domestic product.
An investor is long 1 July 40 call at 2. This investor
has paid $200 for the call contract.
An investor is short 1 XYZ January 20 call at 3. This investor
has received $300 for writing the call contract.
If long one equity call option, the owner
has the right to purchase 100 shares of the underlying stock.
It is expected that financial markets
have transparent pricing for assets.
Money market instruments can be associated with all of the following except
high-yielding debt instruments.
Should a member firm or an associated person be found in violation of Financial Industry Regulatory Authority (FINRA)'s Conduct Rules, a number of sanctions may be imposed. However, under the Code of Procedure, FINRA may not
impose a prison sentence on the violator.
An associated person of a Financial Industry Regulatory Authority (FINRA) member firm has been found guilty of forging a customer's signature on a document relating to a securities transaction. Under the Code of Procedure, FINRA could impose any of the following sanctions except
imprisonment for a specified period.
When XYZ is trading at 30, an XYZ 40 put sold at 3 would be
in the money.
All of the following are restricted persons except
individual owning 5% or more of a member firm.
A hedge fund having a lock-up provision means that
investors are required to maintain the investment for a minimum length of time.
All of the following are true regarding the term market except
it is unique to the U.S. securities industry.
An August 15 call is written at 4. The call expires without being exercised by the owner. The writer of the call
loses the $400 paid when the call was written.
A preliminary prospectus (red herring)
may be used to gather indications of interest.
Carrying firms may not
mix customer funds and securities with their own.
A serial bond is best described as
portions of bond principal scheduled to mature at intervals over a period of years until the entire balance has been repaid.
The Federal Reserve Board (FRB) might impact the money supply by using all of the following except
prime rate.
Which of the following regulatory bodies regulates but has no enforcement powers?
Municipal Securities Rule Board (MSRB)
Which of the following securities is exempt from the Securities Act of 1933?
Municipal note
Once a dividend is initially declared by the board of directors (BODs), any future dividend payments
carry no guarantee of payment in any amount.
A corporation has issued debt securities backed by the shares of another corporation that it owns. These debt securities are known as
collateral trust bonds.
A company that offers sales of another company's securities would best be described as
an underwriter.
Inflation risk is most closely associated with
purchasing power risk.
Exempt from the penny stock rules are
unsolicited transactions.
Which of the following is a debt instrument that pays no periodic interest?
Treasury STRIPs
An investor opens an account with BNZ Government Securities, a broker-dealer limiting its transactions exclusively to securities issued by the U.S. government. The account holds $250,000 of Treasury bonds, $250,000 of Treasury notes, and $50,000 in cash. If BNZ's broker-dealer business should fail, the investor would receive Securities Investor Protection Corporation (SIPC) protection in the amount of
$0.
To arrive at M3, one would add to M2 which of the following?
$100,000 and larger time deposits and repurchase agreements
A customer owns cumulative preferred stock (par value of $100) that pays an 8% dividend. The dividend has not been paid this year and was missed in the two previous years. If the company wants to pay a dividend to common shareholders, how much must the company pay this customer per share first?
$24
An investor has a cash account with $300,000 in securities and $40,000 in cash. The investor also has a restricted long margin account containing securities with a market value of $220,000 and equity of $60,000. What is the extent of this investor's Securities Investor Protection Corporation (SIPC) coverage?
$400,000
The aftermarket prospectus requirement for exchange-listed securities is
0 days.
A corporation with 1 million shares of stock outstanding wishes to sell another 250,000 shares. When management conducts a rights offering, a shareholder owning 100 shares will be given stock rights to purchase how many additional shares?
25 shares
The current yield on a bond with a coupon (nominal) rate of 7.5% currently selling at 105½ is approximately
7.1%.
Which of the following would most closely match the meaning of a red herring?
A preliminary prospectus
Which of the following would be allowed during the cooling off period?
Placing a tombstone add
An officer of a broker-dealer firm would be categorized as a restricted person if that individual attempted to purchase
a new issue initial public offering (IPO) at the public offering price.
Treasury bond (T-bond) interest is stated as
a percentage of par value.
If a stock is at risk of failing to maintain the minimum price requirements to remain listed on the NYSE, the most likely corporate action taken to preserve the listing could be
a reverse split.
A toy company is experiencing sudden strong demand for a game. Purchasing this company's stock may prove profitable in the short run. This company's stock might best be termed as
a special situation.
A select pair or group of companies organized to underwrite corporate or municipal securities is best known as
a syndicate.
The SEC can do all of the following except
approve broker-dealers to participate in the securities business.
A registered representative provides financial support and housing at her home for her grandfather. Regarding the purchase of new issues,
both persons are considered restricted.
Under the Securities Exchange Act of 1934, registration is required for
broker-dealers.
An investor who is long LMN equity call options is
bullish on LMN stock.
When the Federal Reserve Board (FRB) wants to expand (loosen) the money supply, it will
buy Treasury securities from banks in the open market.
To expand the overall economy, the Federal Reserve Board (FRB), acting as agent for the U.S. Treasury department, will
buy securities via open-market operations, pushing interest rates down.
Common shareholders wanting to vote on issues at a shareholder meeting can do so in all of the following ways except
by telephone or text message.
A clearing corporation agent or depository for securities transactions
can be a commercial bank.
An allowable deduction to compensate for decreasing natural resources in an oil and gas DPP are known as
depletion allowances.
During the cooling-off period, underwriters may not
distribute sales literature or advertising material.
A customer has a significant amount of money in bank deposit accounts: $225,000 in a savings account titled in the customer's name; $240,000 in a checking account titled jointly with a spouse; and $100,000 in an account where the customer is custodian for a grandchild. Should that bank fail, the Federal Deposit Insurance Corporation (FDIC) insurance would cover
the entire $565,000.
To contract or slow economic growth U.S. fiscal policy should be to
raise taxes and cut government spending for programs and development.
According to economists which of the following is the correct characterization of the money supply?
M3 includes all of M1 and M2.
A company's management team has agreed to issue additional shares of common stock in part to provide an employee stock ownership plan. It is agreed the issuance of the stock is not urgent and can wait until more favorable market conditions exist. What type of registration is most suitable under these conditions?
A shelf registration
An issuer has a subordinated debt issue outstanding. Which of the following is true?
A subordinated debenture has a claim that is junior to all other debt but senior to preferred stock.
ABC and MNO both have the same market price and shares outstanding for their common stock. If ABC's price-toearnings ratio is higher, that would indicate
ABC's net income is less than MNO's.
Which of the following preferred stocks' price would remain most stable in an environment of changing interest rates?
Adjustable rate preferred
Your client is about to retire and wants to rearrange his portfolio in order to have predictable income. Which of the following would not be a good investment vehicle?
Adjustment bonds
Regarding sales loads, management fees, and operating expenses for mutual funds, which of the following is true?
All reduce investor returns because they reduce the amount of money available for the fund to invest.
Which one of the following best describes a debenture?
An unsecured corporate debt obligation
Under the Uniform Securities Act (USA), registrations must be renewed how frequently?
Annually
Which of the following acts created the SEC?
The Securities Exchange Act of 1934
The Federal Deposit Insurance Corporation (FDIC) protects which of the following?
Bank depositors
Which of the following calls for the underwriters to buy securities from the issuer acting as an agent, not as principal?
Best efforts underwriting
Your broker-dealer executes trades for other broker-dealers and after execution settles those transactions for them. Your firm would be classified as which of the following?
Carrying firm
Which of the following sets of FINRA rules focuses on disputes in the industry and with customers who have filed a predispute agreement?
Code of Arbitration
Accusations of Financial Industry Regulatory Authority (FINRA) Conduct Rule violations will heard and handled under the
Code of Procedure.
Which of the following corporate bonds is backed by the securities of other corporations or those of a subsidiary?
Collateral trust bond
Which of the following best fits the description of a growth stock?
Common shares in companies that retain earnings and pays little or no dividends
Rank the following investors from lowest to highest priority in liquidation.
Common stock, preferred stock, subordinate debentures, debentures, secured debt
Which of the following sets of FINRA rules focuses on fair dealing with the public?
Conduct Rules
Which of the following is a unique risk incurred by investors in mutual funds that specialize in holding securities in the fund portfolio from foreign issuers?
Currency risk
What is the formula for calculating working capital?
Current assets - current liabilities
Which of the following statements regarding systematic risk as it relates to an investment portfolio is true?
Diversification will not eliminate it.
A prospectus must be delivered to customers following a transaction in all of the following except
ETFs
When speaking to a customer about exchange-traded funds (ETFs), a registered representative could make which of the following correct statements?
ETFs have different potential tax consequences than mutual funds.
Regarding different types of risk, which of the following is true?
Enactment of, or changes in laws, represent potential legislative risk.
Which of the following securities would most likely have the lowest expense ratio?
Exchange-traded fund (ETF)
Which of the following statements is true regarding Exchange-traded notes?
Exchange-traded notes (ETNs) are senior, unsecured debt securities issued by a bank or financial institution.
Of the statements listed, which best characterizes the potential impact of factors occurring outside our domestic economy and markets?
Factors outside the United States can have immediate and prolonged impact on our securities and trade markets and thus our domestic economy
Which of the following organizations was created to protect investors financially from a bank failure?
Federal Deposit Insurance Corporation (FDIC)
Each self-regulatory organization (SRO) functions under the Securities and Exchange Commission's (SEC's) oversight and is accountable to the commission for enforcing federal securities laws. While the Municipal Securities Rule Board (MSRB) regulates all matters related to the underwriting and trading of state and municipal securities, it does not have enforcement powers of its rules. Which of the following does the MSRB rely on for enforcement of these rules?
Financial Industry Regulatory Authority (FINRA)
While the Municipal Securities Rule Board (MSRB) writes the rules and regulations regarding underwriting and trading for municipal securities, it does not enforce those rules. Who does?
Financial Industry Regulatory Authority (FINRA)
If an arbitration agreement has not been signed, under which two of the following circumstances would a dispute between a Financial Industry Regulatory Authority (FINRA) member firm and a retail customer go to arbitration? I. The dispute cannot otherwise be resolved to the satisfaction of both parties. II. The customer requests that the dispute go to arbitration. III. The amount under dispute is less than $50,000. IV. The FINRA director of arbitration so rules.
I and II
Under the Uniform Securities Act (USA), state laws require that registered representatives must register in a state in which of the following circumstances? I. The registered representative is a resident of the state. II. The registered representative solicits business in the state. III. The registered representative vacations in a state more than twice per year. IV. The registered representative owns rental property in a state.
I and II
A firm designated as self-clearing can I. act in a back-office capacity for an introducing firm. II. not act in a back-office capacity for an introducing firm. III. clear and settle transactions executed by other firms. IV. only clear transactions it executed.
I and III
A firm designated as self-clearing can I. act in a back-office capacity for an introducing firm. II. not act in a back-office capacity for an introducing firm. III. clear and settle transactions executed by other firms. IV. only clear transactions it executed.
I and III
Exports from the United States would likely increase if I. the Japanese yen strengthened against the dollar. II. the U.S. dollar strengthened against the euro. III. the U.S. dollar weakened against the British pound. IV. the Swiss franc weakened against the dollar.
I and III
A customer believes the price of MJS stock will rise but is not currently in a position to purchase the stock outright. How could the customer use options to profit from a rise in the stock's price? I. Buy calls II. Write calls III. Buy puts IV. Write puts
I and IV
Regarding a shelf registration filed with the Securities and Exchange Commission (SEC), which of the following statements are true? I. A supplemental prospectus must be filed before each sale. II. This registration is for issuers who want to issue securities for the first time. III. Portions of a shelf offering can be sold over a 10-year period without having to reregister the security. IV. Portions of a shelf offering can be sold over a three-year period without having to reregister the security.
I and IV
In what order do the following economic phases typically occur? I. Recovery II. Trough III. Decline IV. Prosperity
I, IV, III, II
A private securities transaction I. is nonexempt and must be register under the Act of 1933. II. is exempt from registration under the Act of 1933. III. can be sold to individual accredited investors. IV. can be sold to institutional investors only.
II and III
During the 20-day cooling-off period, I. solicitations of sales can be made II. solicitations of sales may not be made. III. deficiency letters, if issued, are sent to the issuer. IV. deficiency letters, if issued, are sent to the underwriters.
II and III
During the 20-day cooling-off period, I. solicitations of sales can be made. II. solicitations of sales may not be made. III. deficiency letters, if issued, are sent to the issuer. IV. deficiency letters, if issued, are sent to the underwriters.
II and III
Fiscal policy I. is the most efficient means for solving short-term economic issues. II. is not considered the most efficient means to solve short-term economic issues. III. is reflected in the budget decisions enacted by our president and Congress. IV. is reflected in the money supply decisions enacted by the Federal Reserve Board (FRB).
II and III
During the cooling-off period, underwriters of new securities may I. accept orders to purchase shares. II. not accept orders to purchase shares. III. not accept indications of interest regarding potential purchases of shares. IV. accept indications of interest regarding potential purchases of shares.
II and IV
During the cooling-off period, underwriters of new securities may I. accept orders to purchase shares. II. not accept orders to purchase shares. III. not accept indications of interest regarding potential purchases of shares. IV. accept indications of interest regarding potential purchases of shares.
II and IV
Regarding primary and secondary offerings, which of the following are true? I. An offering can only be either a primary or secondary. II. An offering can be a combination of primary and secondary. III. An initial public offering (IPO) is a secondary offering. IV. An additional primary offerings (APO) is a primary offering.
II and IV
Which of the following bonds trade flat (without interest) unless interest payments are declared by the board of directors (BOD)?
Income bonds
When the Federal Open Market Committee (FOMC) directs that Treasury securities be sold in the open market, this will do which of the following?
Increase interest rates on loans to consumers
A broker-dealer has a line of business restricted solely to the purchase and sale of securities with trade executions being handled by another member firm. Which of the following would best describe this type of firm?
Introducing/fully disclosed
A broker-dealer's business model allows for only the purchase and sale of securities for retail customer accounts. It does not execute, settle, or clear its customer's transactions, nor does it tend to any back-office functions such as sending trade confirmations or forwarding proxies. This broker-dealer would best be described as what type of firm?
Introducing/fully disclosed
For the primary market, which of the following is true?
Issuer transactions occur in the primary market, and securities are offered at a public offering price.
Which of the following is true regarding the primary market?
Issuer transactions occur in the primary market.
Under Financial Industry Regulatory Authority (FINRA)'s Code of Procedure, which of the following is not a sanction that could be imposed against a firm or registered person?
Jail sentence for an associated person of the firm
Match the following statement to the best term: Government intervention in the economy is a significant force in creating prosperity by engaging in activities that affect aggregate demand.
Keynesian Theory
Which of following securities is least likely to have an active trading market?
Limited partnership interests
Which of the following option positions would offer a full hedge to a long stock position?
Long put
When the Federal Open Market Committee (FOMC) directs that Treasury securities be purchased in the open market, this will do which of the following?
Lower interest rates on loans to consumers
All currency held by the public, including coins, checking accounts plus time deposits of less than $100,000, and money market mutual funds, is what economists define as
M2
A customer has a short-term investment time horizon and a fairly certain need for funds she wishes to invest. Which of the following might meet those two investment objectives?
Money market instruments
Within the money supply, which of the following are part of M2 but not M1?
Money market mutual funds
A corporation is issuing a bond with an interest rate below that which is commonly being offered for this type of bond. To improve the bond's marketability without reducing the capital to be obtained, which of the following actions might the corporation take?
Offer a warrant on the stock with each bond
Deductions for depletion would most likely apply to which of the following direct participation programs (DPP)?
Oil and gas income program
Which of the following documents must be provided to the customer prior to approval of an options account?
Options Disclosure Document
Just as markets can be influenced by many factors, so can the market price of a single company's stock. While all of the following could impact a company's stock price to some extent, which would be the least likely to have a direct and immediate impact?
Political elections
Which of the following is the most junior security?
Preferred stock
Which of the following offerings is most likely exempt from the registration requirements of the Securities Act of 1933?
Private (nonpublic) securities offerings
Which of the following projects would be funded by general obligation (GO) bonds?
Public schools
For municipal debt issues, which of the following is true?
Revenue bonds are self-supporting, while general obligation (GO) bonds are backed by the municipality's good faith and credit.
Primary market transactions would include which of the following?
Sale of $10 million of corporate bond by a broker-dealer acting as an underwriter
Which of the following companies was created by an act of Congress and provides securities investors limited financial coverage in the event that the investor's servicing broker-dealer fails financially?
Securities Investor Protection Corporation (SIPC)
The primary regulatory body for the securities industry would be which of the following?
Securities and Exchange Commission (SEC)
All of the following are self-regulatory organizations (SROs) except
Securities and Exchange Commission (SEC).
If a customer bought puts to open, which of the following transactions would be allowed if the options agreement was not returned signed within 15 days?
Sell puts to close
A corporation has issued a single bond having successive maturity dates set from 2020 through 2030. This is known as what type of bond?
Serial
Your customer has one position in her account and it poses an unlimited loss potential. Which of the following is it?
Short call
If large money center commercial banks begin to lower their prime rates, which of the following is most likely to occur?
Smaller banks will lower lending rates for credit worthy corporate customers as well.
When the economy shows high unemployment and is failing to expand as measured by a lack of consumer demand and business activity, but prices for goods and services are still rising, this could be described as what?
Stagflation
Which of the following would be allowed during the cooling off period?
Taking indications of interest
All of the following names describe the Securities Act of 1933 except
The Exchange Act.
Which of the following has the greatest influence on the money supply within the United States?
The Federal Open Market Committee (FOMC)
Which of the following entities is chiefly responsible to conduct U.S. monetary policy and maintain the stability of the financial system?
The Federal Reserve Board (FRB)
Which of the following entities establishes the rules, regulations, and membership eligibility standards to be registered with the Securities and Exchange Commission (SEC)?
The National Adjudicatory Council (NAC)
When must a new options customer return a signed option account agreement form?
Within 15 calendar days of the account approval
An institution or a person responsible for making all investment, management, and distribution decisions in an account maintained in the best interests of another who has been legally appointed to provide these services is best described as
a trustee.
An indication of interest given by an investor during the cooling-off period is
an investor's declaration of potential interest in purchasing some of the issue after the security comes out of registration.
A tombstone advertisement would be expected to include all of the following information except
any inherent risks associated with the offering or the issuer offering the securities.
T-bonds and T-notes
are both priced as a percentage of par.
Treasury bills
are issued at a discount without a stated interest rate.
Tombstone ads
are permitted before the effective date.
Regarding options, it should be recognized that the maximum movement for any underlying stocks price could be
as low as zero or as high as infinity.
On a long put, when the premium equals the intrinsic value, the put is
at parity.
A tombstone advertisement placed before the effective date can
be placed by the issuer directly or by the underwriters.
All of the following are associated with being a carrying firm except
being a fully disclosed firm.
All of the following are acceptable choices to function as a depository and intermediary for transactions between buyers and sellers of securities except
credit unions.
To grow or expand the economy, U.S. fiscal policy should be to
cut taxes and increase government spending for programs and development.
Industries that tend to be highly sensitive to inflation, deflation and the ups and downs of business trends would best be described as
cyclical
To contract the overall economy, the Federal Reserve Board (FRB), acting as agent for the U.S. Treasury department, will
sell securities via open-market operations, pushing interest rates up.
The Depository Trust Company (DTC)
serves the custody needs of securities industry participants.
Rules to protect the public during initial public offerings (IPOs) include all of the following except
shares may be held to reward others who can direct business to the member.
Tighter credit will
slow economic expansion, preventing inflation.
Economic growth has slowed to a halt with little consumer demand, but prices for goods and services are still rising. This is known as economic
stagflation
The economy is showing that employment is low, there is little consumer demand, and loans for expansion and retooling are way down, showing a lack of business activity. Yet prices for consumer goods are still rising. Economists would call this a period of
stagflation
The maximum potential loss for an investor short a put option is
strike price minus premium.
Bonds can typically be issued with
term, serial, or balloon maturities.
The measure of the inflation rate is
the Consumer Price Index.
Federal Reserve member banks needing to borrow money can borrow from
the Federal Reserve Bank at the discount rate.
A member of the Federal Reserve System wanting to increase its reserves could do so by borrowing money from
the Federal Reserve Board (FRB) at the discount rate.
The federal law requiring companies offering public equity or debt securities to provide a prospectus to investors is known as
the Securities Act of 1933.
Broker-dealers that transact securities business with customers or other broker-dealers must apply and be approved for registration with
the Securities and Exchange Commission (SEC).
A barometer of short-term interest rates and one that is therefore considered the most volatile interest rate in the U.S. economy is
the federal funds rate.
For those owning preferred classes of stocks, priority of asset dissolution refers to
the order in which preferred shareholders are paid in the event of a bankruptcy liquidation.
The market forces that typically drive the price of a bond trading in the secondary market would include all of the following except
the price of the issuer's stock.
