SIE flash cards

An investor is long 6 MAS February 60 calls at 2.25 each. If at the time of the February expiration, the calls expire unexercised, how much money will the investor lose?

$1,350

Under the provisions of Rule 144, what percentage of outstanding stock may a control person sell every 90 days?

1

A registered representative was guilty of an undetected minor rule violation during the last year of employment at a broker-dealer firm. The representative has now decided to leave the industry. For how long might the representative still be subject to fines or other sanctions by FINRA if the violation is belatedly detected?

2 years

The Advisers Act of 1940 specifically deters gaining political favor via contributions made to candidates, officials, or political parties. As such, if a political contribution is made to any of these entities then under the Act, the firm may NOT provide advisory services to any government these individuals or parties represent for how long?

2 years

When a registered person leaves the securities business, FINRA retains jurisdiction over that person for how long?

2 years

A customer enters the following order: Sell 1,000 shares of XYZ at 23. Which of the following executions would the customer accept?

23.50

A registered person has left the securities industry and now holds a manufacturing job. Under what circumstances may this formerly registered person continue to receive commissions from work done at the person's old firm?

A contract must have been signed by the registered person and the firm specifying what commissions are still to be paid.

Which of the following must be a member of the Securities Investor Protection Corporation (SIPC)?

A firm that deals only in OTC and exchange listed stocks

Which of the following violates the FINRA Conduct Rules?

Allowing a former RR to keep a securities license with your firm, even though no business is expected to transpire

Accumulation Units

An accounting measure used to determine an annuitant's proportionate interest in the insurer's separate account during an annuity's accumulation (deposit) stage.

Of the following, which would NOT be considered institutional communications with the public?

An internal memo promoting a new product that will be offered to your firm's institutional customers only

Members and non-members alike can look into a broker's service and qualifications record by accessing which of the following services?

Broker Check

Which of the following orders can be used to close a short position in CDT stock that consists of 1,000 shares?

Buy 1,000 shares of CDT

For investors engaging in the trading of option contracts, which of the following is TRUE?

Buyers pay the premium for the right to exercise the contract.

Which of the following would be unlawful regarding use of a mutual fund prospectus?

Calling an investor's attention to a section that may be interesting

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 settlement arrangements has trade and settlement occurring on the same day?

Cash settlement

A broker-dealer and its associated persons may be subjected to sanctions for violations of FINRA and SEC rules. Which of the following penalties can be levied against the associated persons?

Censure

Accusations of FINRA Conduct Rule violations will heard and handled under the

Code of Procedure

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

Which of the following features of preferred stock allows the holder to reduce the risk of inflation?

Convertible

Which of the following preferred issues is most likely to fluctuate in line with the issuer's common shares?

Convertible

Which of the following records must be maintained for 6 years?

Customer ledgers (statements)

Which of the following oil and gas direct participation programs might be considered the riskiest?

Exploratory

Which of the following is an SRO?

FINRA

Which of the following obligations is backed by the full faith and credit of the United States Government?

GNMA

Which of the following are associated with manipulative, deceptive, or fraudulent devices? I. Breakpoint sale II.Preemptive III. Fill-or-kill IV. Capping

I and IV

Which of the following are available to participants in a 401(k) plan that are not available to IRA holders? I.Tax deferral on the earnings II.Hardship withdrawals III. The catch-up provision for those who are age 50 and older IV. Loans against the vested balance

II and IV

Continuing education (CE) requirements are a part of the securities industry's ongoing commitment to furthering the knowledge base for registered representatives. Which of the following CE requirements are needed by a registered rep? I. Blue-sky requirement II. Registration requirement III. Firm element training IV. Regulatory element training

III and IV

A registered representative is explaining discretionary and nondiscretionary accounts to a customer. Only one of the following statements is accurate and can be made by the RR. Which is it?

In a nondiscretionary account no order can be entered without your prior approval.

Which of the following is TRUE regarding a registered person who wishes to move her registration from one broker-dealer to another?

In no circumstances can a registration be transferred from one firm to another.

U.S. government and agency bonds

In safety of principal, municipal bonds are considered second only to

What is one of the advantages for the investor who invests in mutual funds that include foreign securities in the fund's portfolio?

Increased diversification

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.

An investor requests a preliminary prospectus for a new issue. Regarding the document which of the following is TRUE?

It is made available between the registration date and the effective date.

Under 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

All the following are exempt from the Securities Act of 1933 EXCEPT:

Limited partnership

Match the following statement to the BEST expression: A well-controlled, moderately increasing money supply leads to price stability and a healthy economy.

Monetarist Theory

Which of the following regarding monetary or fiscal policy is TRUE?

Monetary policy is what the FRB engages in when it attempts to influence the money supply.

Within the money supply, which of the following are part of M2 but NOT M1?

Money market mutual funds

An official statement is a disclosure document that would be used in connection with an offering of which of the following securities?

Municipal bonds

An associated person of a FINRA member firm would not be considered a municipal finance professional (MFP) if involved solely in which of the following?

Municipal securities sales to customers

Which of the following statements is TRUE?

Municipalities, the federal government, and corporations can raise funds in the capital markets.

Which if the following may NOT be purchased on margin but can be used as collateral for a margin loan after being held for 30 days?

Mutual funds

If left unexecuted, a good til cancel (GTC) order will automatically be canceled when?

On the last business day of April and the last business day of October

Registered broker-dealers must have fingerprint records for most of their employees and for which of the following?

Partners

Which of the following retirement plans does not require minimum distributions once the participant has reached age 70½?

Roth IRA

FINRA is concerned about potential conflicts of interest in providing incentives or rewards for selling a sponsor's product. Which of the following situations regarding a product sponsors product training or education for outside RRs would FINRA disallow?

Spouses are included in the invitation with travel expenses paid for.

Match the following statement to the BEST expression: Government should allow market forces to determine prices of all goods and that the federal government should reduce government spending as well as taxes.

Supply-side Economic Theory

Joe Jonas, a registered representative with Foxtail Advisors, has received an adverse ruling from a FINRA Department of Enforcement Hearing. He believes the DOE has misapplied a rule and wants to appeal the decision. He would file his appeal with

The National Adjudicatory Council (NAC)

Which of the following publishes and maintains a list of known terrorists and drug traffickers and those controlled by them or acting on their behalf?

The Office of Foreign Assets Control (OFAC)

Shelf offerings are covered under which if the following?

The Securities Act of 1933

Which of the following statements with regard to the issuance of securities is TRUE?

The Securities Act of 1933 provides criminal penalties for fraud

A corporation has a shareholders' meeting coming up wherein several controversial proposals will be made. A number of persons will be actively soliciting proxies, and the corporation plans to send out up-to-date material on the proposals to shareholders to permit them to make informed decisions. Which of the following must review this material before it is sent out?

The Securities and Exchange Commission

Which of the following is considered a benefit for broker-dealers offering margin accounts to their customers?

The additional income generated from the payment of margin interest

A 40-year-old individual is not covered by a retirement plan at work. What is the maximum contribution this individual can make to a Traditional IRA this year?

The current maximum allowed by the IRS, which will all be deductible.

When a new associated person is hired at a broker-dealer firm, which of the following is responsible for seeing that Form U-4 is completed and filed?

The employing broker-dealer firm

An investor looking to speculate in penny stocks would be exempt from the suitability statement requirement under which of the following circumstances?

The investor is an established customer.

Adjusted Basis

The value attributed to an asset or security that reflects any deductions taken on, or capitol improvements to, the asset or security

A weak U.S. dollar leads to more

U.S. exports and a balance of payments surplus

When an employee is either terminated from, or willfully leaves, a member firm, Form U-5 must be filed. Under these circumstances, which of the following is TRUE?

Under either circumstance, the employing firm is responsible for filing Form U-5

The law that provides the legal framework for state registration of securities is the

Uniform Securities Act

Acceptance

Waiver, and consent. A process for settling a charge or complaint.

Regarding purchases on margin, which of the following is TRUE?

Warrants can be purchased on margin, but rights cannot.

Your customer has purchased 1 February 35 call at 2 on Tuesday, December 4. This transaction will settle on

Wednesday, December 5

When must a new options customer return a signed option account agreement form?

Within 15 calendar days of the account approval

Hedge funds are considered

a form of private investment company and, therefore, unregulated

SKRAM corporation is appealing directly to the shareholders of IDNIC corporation to acquire shares of IDNIC stock. This appeal is best described as

a hostile takeover with IDNIC the target company

A customer has given permission for securities in an investment account to be used for the purpose of other customers who want to borrow them in order to sell those securities short. This would have entailed the customer signing

a loan consent form

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

The Securities Act of 1933 requires that

a new issue, unless specifically exempted from the Act, be registered with the Securities and Exchange Commission (SEC) before public sale

Treasury bond (T-bond) interest is stated as

a percentage of par value

A new registered representative receives a memo discussing the distribution of a "red herring." The RR knows that the memo is referencing

a preliminary prospectus

When choosing to issue additional bonds to the general public in order to raise more capital, a corporate issuer is engaging in

a primary offering

Broker-dealers must comply with SEC rules and regulations when conducting business. A broker-dealer that does not comply may be subject to all of the following EXCEPT

a prison sentence for principals of the firm ranging from 2 to 5 years

When an issuing company sells securities to primarily institutional investors and a small number of wealthy individuals, as opposed to the general investing public in an exempt offering, this is known as

a private placement

If a shareholder does not wish to attend an annual stockholders' meeting, but still wishes to vote, the shareholder may confer a limited power of attorney on another party to vote the shares. This power is known as

a proxy

All of the following are eligible to apply for FINRA membership EXCEPT

a real estate broker

Fingerprint records are required for each of the following employees of a registered broker-dealer EXCEPT

a receptionist greeting customers and directing them to the appropriate registered representative within the office

Recent reports indicate that the gross domestic product (GDP) has been declining steadily over the past 2 quarters. This would suggest

a recession

A mutual fund company may offer noncash compensation to associates of broker-dealer firms in the form of attendance at a meeting or convention, provided that

a record of compensation and meeting details is kept by the attendee member's firm

An offering in which one or more stockholders in the corporation are selling all or a portion of their own shares to the investing public for the first time is known as

a secondary offering

An investor with no existing positions in MMS stock sells 100 shares. This is

a short bearish position

All of the following unregistered persons may under certain circumstances receive commissions from a FINRA member firm EXCEPT

a suspended broker who recommends the broker's firm for a transaction

A bondholder has invested in a certificate backed by equipment that the issuer owns and utilizes in its daily operations. This issuer is most likel

a transportation company

An investor notices that a bond originally bought at 95 some years ago is now trading at a price of 88. The investor sells the bond, then buys it back the next day for 88.5 with the intention of declaring a loss from the original purchase and sale on this year's tax return. This would be known as

a wash sale, and taking the loss is prohibited

Hedge funds attempt to

achieve high returns and are, therefore, associated with high-risk investments

Sales for new issues of securities may be solicited

after the cooling-off period

In a leasing partnership program, loans are taken to purchase equipment that is then leased to companies in return for the lease payments. This process

allows for the loan interest and equipment depreciation to be taken as deductions that will shelter the income from the lease payments received

A company with previously issued shares outstanding wants to issue more shares to the public. These new shares are issued in what is known as

an APO

A market maker provides a firm quote to another broker/dealer then refuses to buy or sell at the price quoted. This is a violation where the market maker is said to be

backing away.

Money market instruments guaranteed by a bank that are used to provide capital for international trade are called

banker's acceptances

Intangible drilling costs associated with oil and gas DPPs can generally

be deducted completely in the first year of the program

An investor is long a call option. Over time, the underlying security rises in value above the strike price of the call. It is likely that the call would

be exercised

When interest rates in the open market move up or down, a bond's coupon rate will

be unaffected by the open-market interest rates

An investor sells one equity call option on DGF stock. This investor is

bearish on DGF the stock

Each of the following activities would require prior written notification by an associated person to the employing broker-dealer EXCEPT

becoming a limited partner in an oil and gas drilling program

If a customer wishes to open a cash account in his name only and allow a third party to make trading decisions, but not withdraw cash and securities, he must instruct his broker-dealer to open a

cash account with limited power of attorney

All associated persons must be fingerprinted if they handle

cash and securities

Margin calls can be met with deposits of

cash or fully paid for marginable securities

A registered representative with discretionary authority has been doing two or three trades per week in her customer's discretionary account. The volume of transactions is not in keeping with the historic activity in the account and the trades don't all align very well with the account objectives. A principal noted that other than generating commissions, the trades seem to have little profit potential. This is likely a red flag for

churning

All corporations will issue

common stock

The Uniform Practice Code (UPC) establishes uniform trade practices pertaining to all of the following EXCEPT

communications with the public

All of the following are exempt from the Federal Reserve Board (FRB) Regulation T margin requirements EXCEPT

corporate stocks

Shares to sell short have been located in order to be borrowed. Once sold short, these shares will be known as

covered

An investor in the United States is purchasing a security traded on a foreign securities exchange. The transaction on the exchange is priced in euros. The circumstances of this purchase and subsequent sale of the security exposes the investor to

currency risk

A minimum 4-year record retention is required for

customer complaints

Registered representatives who have not completed their regulatory element training in the prescribed time frame will have their registrations

deactivated by FINRA until the requirements of the program are met

A company's board of directors (BOD) approves a dividend payment. When this occurs it is recognized as the

declaration date

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

All of the following are stages of money laundering EXCEPT

diversification

All of the following information is required to be provided on the Form U-4 EXCEPT

education (degrees or designations)

All of the following are required when completing Form U-4 EXCEPT

educational degrees

A closing transaction can be

either a buy or a sell

An opening transaction can be

either a buy or a sell

The Federal Reserve Board (FRB) does all of the following EXCEPT

enact fiscal policy

An investor who has a short position in 500 shares of JKH common stock would eliminate that position by

entering a closing purchase order for 500 shares of JKH

A violation known as "churning" refers to

excessive transactions done solely for the purpose of generating commissions.

A broker-dealer may allow a registered representative to work from home - that is, to have a "home office." If this is the case, the registered representative must

expect the office to be treated like any branch office

FINRA's Conduct Rules are designed to promote

fair and ethical trade practices when dealing with the public.

A Federal Reserve member bank's deposits in excess of the amount required to be on reserve are known as

federal funds

A convertible feature for preferred shares allows the owner to exchange the shares

for a fixed number of shares of the issuing corporation's common stock

Should a registered representative enter into a private securities transaction that would entail earning compensation, the employing member will

have the opportunity to approve or disapprove of the associated person's participation

It is expected that financial markets

have transparent pricing for assets

All of the following are possible actions of an investor who has received stock rights EXCEPT

hold the rights for a possible long-term capital gain

Under regulation S-P nonpublic personal information would not include a customers

home address

An accredited investor is one who meets

income or net worth criteria with substantial investment experience

Deflationary periods are characterized by all of the following EXCEPT

increased consumer demand

When a company wants to issue additional shares of stock, the preemptive right given to existing shareholders allows those shareholders to

maintain their proportionate ownership in the corporation

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(n

market maker

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(n)

market maker

Common stockholders owning dividend paying stocks are exposed to

market risk and current income risk

A preliminary prospectus (red herring)

may be used to gather indications of interest

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

Automatic disqualification for registration from FINRA may occur if

misstatements are willfully made in an application for membership

Some institutions can function as a depository and intermediary for settling transactions between buyers and sellers of securities. All of the following are acceptable for this purpose EXCEPT

national banks

How an account is registered determines

ownership and control of the investments in the account

Both must pay principal as it comes due.

pay dividends and pass gains through to investors but not losses

Noncash compensation exceeding the $100 annual limit to another member firm's employee is

permitted if occasional

Industry rules regarding political contributions intended to preserve investor confidence and market integrity apply to contributions made to

political parties, candidates for office, and elected officials

An institutional investor selects a single 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(n)

prime brokerage account.

The Federal Reserve Board (FRB) might impact the money supply by using all of the following EXCEPT

prime rate

FINRA rules regarding outside business activity (OBA) require that

prior written notice to the employing firm be provided

A written customer complaint has been received by a broker-dealer, alleging that the customer's signature was forged on a document. The broker-dealer must report this to FINRA

promptly but no later than 30 calendar days

Regarding registered representatives working from their residence, commonly known as their "home office," all of the following would be true EXCEPT

prospects would not be allowed to visit and be on the premises at this location

Associated persons who wish to enter into a private securities transaction for which they will receive no compensation must

provide prior written notice to their employer

An investor owns a bond purchased several years ago yielding 3%, which at the time was considered a fair return. However, these fixed 3% interest payments have not kept up with the inflation rate. This situation presents the investor with

purchasing power risk

The Federal Reserve Bank is raising interest rates, this will

push bond prices lower in the open market

To contract or slow economic growth U.S. fiscal policy should be to

raise taxes and cut government spending for programs and development

Purchased 15 years ago with a coupon of 6.25%, a corporate bond in an investor's portfolio has matured. With interest rates now substantially lower at 2.75%, this investor, having no immediate need for the proceeds, is now exposed to

reinvestment risk

A company's net worth belongs to its

stockholders

Rule 144 stipulates that after holding restricted stock fully paid for 6 months, an affiliate may begin selling shares

subject to volume restrictions within any 90-day period

A select pair or group of companies organized to underwrite corporate or municipal securities is BEST known as a(n)

syndicate

A company offers to repurchase outstanding debt securities it has issued directly from its bondholders for cash in what would commonly be known as a

tender-offer

An investor holds a November 35 call that was purchased on March 3. The investor, if wanting to exercise the contract, would need to do so no later than

the 3rd Friday of November

Registered representatives must complete or satisfy each of the following EXCEPT

the Form U-5

During a discussion with a customer about a potential investment opportunity involving securities, standing alone, all of the following would likely be permissible EXCEPT

the RR points out only that a tech firm has a brilliant product idea and the CEO has advanced degrees in science

If an associated person is barred by the SEC, no broker-dealer firm may allow that person to associate with it, unless

the SEC expressly permits it

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

Fingerprint cards are required by the SEC to be filed with

the U.S. Attorney General

In order to meet federal budget needs, the types and quantity of government securities to be issued are determined by

the U.S. Treasury Department

It would be expected that a repurchase (repo) agreement contract would include

the repurchase price and the maturity date

All of the following are true regarding market indexes EXCEPT

they track single stocks rather than hypothetical portfolios

An individual owning shares of a corporation's common stock would have all of the following rights EXCEPT

to declare dividends

All of the following are rights of limited partners in a DPP EXCEPT

to make day-to-day business decisions

If a broker-dealer firm wishes to become a FINRA member firm, it must make its application

to the FINRA district office where the applying firm has its home office

legislative risk

trade date + 1 business day

After receiving a written complaint letter from a client, an RR should

turn the complaint over to the appropriate supervisor or principal

FINRA requires that member firms provide at least how many names as emergency contacts as a part of their business continuity plan?

two

A company that offers sales of another company's securities would BEST be described as a(n)

underwriter

An investor is short a January 30 call at 5. Maximum loss for the investor is

unlimited

The business cycle includes all of the following classifications EXCEPT.

waves

An investor has purchased Class A mutual fund shares. The NAV (net asset value) per share of the fund is the price the investor

will receive upon redemption of the shares

The buyer of an option contract can be known as all of the following EXCEPT

writer

Gifts and gratuities directed to those who work at another firm may not be made by a member or associated person for amounts greater than

$100 per individual per year

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 SIPC coverage?

$400,000

An investor sells short 1 MJS June 55 put at 2. The current market value of LMN is 56. The investor's maximum loss potential is

$5,300

An investor has purchased a bond with a 5% coupon. This investor will receive

$50 annual interest until maturity

An investor purchases 1 KLP October 95 put at 6.50. What is the investor's maximum potential gain with this position?

$8,850

The minimum number of principals that a member firm of FINRA may have is

1

Money market debt instruments typically have maturities of

1 year or less

Treasury bonds mature in

10 years or more

Six days into the cooling-off period, an issuer receives a deficiency letter from the SEC requesting clarification and corrections. Once the issuer submits these, and assuming that they satisfy the deficiency, the cooling-off period will resume. With no other deficiencies arising, the issue should become effective in

14 days

An applicant who was unable to pass a FINRA qualifications exam 3 times would need to wait how long before another attempt would be permitted?

180 days

Interest on a 7% corporate bond would be paid to the investor as

2 semiannual checks for $35 each

MAS Corporation has enjoyed an extremely profitable year. It has been determined that those owning the MAS 4% preferred, participating to 6% preferred shares, will receive the full participating dividend. The participating shareholders will receive an additional dividend of

2%

After the issuer files a registration statement with the 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

For a new issue that qualifies for Nasdaq listing, a prospectus must be provided to all purchasers within how many days after the effective date?

25

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

An amended Form U-5 must be filed and a copy sent to the former employee within how many days of discovery of the inaccuracy?

30

Updates to the Form U-4 such as a change in address, and that do not point to disciplinary action must be made promptly but no later than

30 days

All of the following are considered unique or nonstandard corporate actions EXCEPT

3:1 stock split

An investor short a January 30 call at 4 has a maximum gain potential of

4 points or $400

The securities industry is highly regulated, and as such, it is important for broker-dealers to keep detailed records. If a customer complaint has been received regarding the actions of a registered representative, it will be maintained at the office of supervisory jurisdiction for a period of

4 years

For nonlisted and non-Nasdaq securities, a prospectus must be provided to all those who purchase securities for how many days after the effective date?

40

An investor owns 200 shares of MNO common stock. The company's management has proposed a 2 for 1 stock split. If the price of the stock at the time of the split is $50, what would the investor's adjusted position be?

400 shares at $25

Records relating to a currency transaction report must be retained for

5 years

Information on the Form U-4 is extensive and includes names (aliases) and addresses in addition to which of the following?

5 years of residency and 10 years of employment history

A nonaffiliated owns 3% of an issuer's common stock. This person will be considered a control person if a spouse owns

8% of the issuer's common stock

A broker-dealer firm managing an IPO wishes to give a gift to an associated person of one of the selling group members. Which of the following would be an unacceptable gift under the rules?

A $125 designer edition fountain pen and desk holder

Which of the following may receive a commission from a FINRA member firm?

A foreign nonmember firm that agrees to abide by FINRA rules

Which of the following need NOT be included in the annual reports a mutual fund provides to its shareholders?

A list of the most poorly performing portfolio securities

Which of the following statements would describe the Fourth Market?

A market for institutional investors in which large blocks of stock, both listed and unlisted, trade in transactions unassisted by broker-dealers.

Administrator

A person authorized by a court to liquidate an interstate decedent's estate. An official or agency that administers a state's security laws

Which of the following would most closely match the meaning of a "red herring"?

A preliminary prospectus

Which of the following scenarios would NOT violate general standards regarding member firm communications?

A recruitment advertisement promises substantial training to be delivered to incoming employees.

A member firm suspects financial exploitation of a senior customer. Which of the following is true regarding actions that can be taken?

A trusted contact person if one was named can be contacted and a temporary hold on disbursements from the account can be administered.

An applicant for registration was convicted of a misdemeanor within the past 5 years having to do with a motor vehicle driving infraction. For purposes of filing Form U-4 for registration with a member firm, the applicant I. must list the conviction II. need not list the conviction III. would be automatically subject to statutory disqualification, IV. whether the conviction was listed or not would not be subject to statutory disqualification

II and IV

An investment company wishes to provide incentives for registered representatives of several broker-dealer firms to sell their investment products. The company proposes to send some selected representatives to a sales training seminar. Which of the following would be acceptable features of the trip? I. The venue of the seminar is a resort in the Canary Islands. II. There is an incidental tour the representatives may attend at their own expense. III. The representatives may bring their spouses, whose expenses will also be paid. IV. The representatives must obtain their employing firms' permission to attend.

II and IV

An investor purchased 100 shares of LMN in 2013 at a price of $40 per share. Soon after, the LMN declared a 25% stock dividend. Three years after the shares were purchased, they were sold at $50. Which of the following statements are CORRECT? I. The adjusted cost basis of the shares is $30. II. The adjusted cost basis of the shares is $32. III. There is a short-term capital gain on all the shares sold. IV. There is a long-term capital gain on all the shares sold.

II and IV

During the cooling-off period, underwriters of new securities may accept orders to purchase shares not accept orders to purchase shares not accept indications of interest regarding potential purchases of shares accept indications of interest regarding potential purchases of shares

II and IV

If a broker-dealer holds the stock of an investor in street name, which of the following must be forwarded to the investor promptly upon receipt? I.Articles about the company found in financial industry literature II.Proxy statements relating to upcoming shareholder meetings III. Changes in the credit status of the issuing corporation IV. Quarterly financial and other reports generated by the issuer

II and IV

In a proxy contest, which of the following must register with the Securities and Exchange Commission? I. All shareholders who have been approached by solicitors II. All persons participating in proxy solicitation III. The upper management of the corporation who are also shareholders IV. All persons providing shareholders with unsolicited advice

II and IV

With money market securities, the risks are I. lack of liquidity II. a lower return than with longer-term instruments III. relative safety compared with other longer-term debt instruments IV. the potential reinvestment of principal at different rates over short periods of time

II and IV

Which of the following are TRUE of municipal revenue bonds? I. They are secured by a specific pledge of property. II. They are a type of general obligation bond. III. They are not subject to statutory debt limits. IV. They are backed by a facilities ability to generate revenue.

III and IV

Which of the following constitute a private securities transaction, or "selling away"? I. A registered representative executes a trade for a customer in securities of a type normally handled by the representative's broker-dealer. II. A registered representative's sibling has some old bonds that the representative sells as a favor through a municipal securities broker. III. A registered representative helps an old school friend issue securities for a small business under formation. IV. A registered representative helps an acquaintance sell some inherited stock certificates without the acquaintance becoming a customer of the firm.

III and IV

Which of the following would constitute improper use of a customer's securities or funds? I. Agreeing to a stock purchase the representative thinks is beyond the client's means II. Selling a bond at the client's insistence during a period of high interest rates III. Lending securities for a short sale when the client has agreed to it on the phone IV. Borrowing a client's funds without permission, though it will be repaid the same day

III and IV

Which of the following is TRUE regarding a member firm operating under FINRA membership or the membership of another self-regulatory organization (SRO)?

Member firms can offer all types of investment products, such as stocks, bonds, mutual funds, options and others, or limit the products they offer to only a few.

Which of the following can encourage economic growth because gradually increasing prices tend to stimulate business investment?

Mild inflation

Different degrees of inflation can impact the economy differently. Which of the following best reflects this?

Mild inflation can encourage growth and stimulate the economy.

Which of the following require voter approval?

Municipal general obligation bonds

Which of the following pairs are NOT covered by the Federal Deposit Insurance Corporation (FDIC) at any level?

Mutual funds and annuities

An individual is solicited with a cold call made by a registered representative. He tells the representative he is not interested in this investment or in making any future investments. Which of the following actions is required by the Telephone Consumer Protection Act of 1991?

No calls may be made to the prospect by anyone at the firm.

A registered representative has left one firm to join another. Sometime later, the former employer discovers that some information on Form U-5 filed at the time of termination was inaccurate. The firm need not file an amended U-5 if at least how much time has gone by?

No stated time limit

A municipal securities dealer has just made a contribution to the mayor's reelection campaign. How long must the firm wait before it can enter competitive bids on proposed bond issues by the city?

No waiting period

A broker-dealer's business continuity plan to be enacted in the event of a significant business disruption requires all of the following EXCEPT

Notification to regulators within 1 hour of the event

Which of the following would be least likely to directly impact a bonds yield?

Number of bonds in the issue

An investor has a long position in OMQ stock. After selling the stock at a loss, the investor could purchase which of the following and not violate the wash sale rule?

OMQ put options

Deductions for depletion would most likely apply to which of the following direct participation programs (DPP)?

Oil and gas income program

A partnership account wants to trade on margin. When would this be permitted?

Only if it is not restricted from doing so in the partnership resolution

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

A registered representative wants to place advertisements in his daughters youth athletic league quarterly sponsorship booklet. He wants to convey in the weekly bulletin at his church that he specializes in retirement planning and 529 plans. Which of the following statements regarding these advertisements is TRUE?

Pre-approval by a principal of the broker dealer is required.

Which of the following offerings is most likely exempt from the registration requirements of the Securities Act of 1933?

Private (nonpublic) securities offerings

Each of the following provides for an exemption from the registration requirement of the Securities Act of 1933 EXCEPT

Access equals delivery rule

AE

Account Executive

A corporate issuer of common stock has decided that it wants an agreement that its underwriter must either raise all of the capital needed or cancel the underwriting. To best accommodate this the underwriting should be a(n)

All-or-none

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

Firm element training requires member firms to prepare training how frequently?

Annually

Under the Uniform Securities Act, registrations must be renewed how frequently?

Annually

Short-term securities that generate funds for a municipality that expects alternate longer-term financing include all of the following EXCEPT:

REITs

What method is used to assign exercise notices to broker-dealers with short positions by Options Clearing Corporation (OCC)?

Random-selection basis

A registered securities broker-dealer that does not comply with FINRA and SEC rules and regulations is subject to each of the following sanctions EXCEPT:

Reductions in SIPC coverage.

The regulation enacted by the SEC to protect the privacy of customer information is known as

Regulation S-P

Which of the following statements about rights and warrants is TRUE?

Rights are short term; warrants are long term.

Which statement describes rights and warrants?

Rights are short term; warrants are long term.

An investor needs to decide whether or not they would like to maintain their percentage of ownership in a company that has decided to increase the number of outstanding shares. Which of the following is the best description of what is taking place?

Rights will be distributed to existing stockholders with an exercise price lower than the current market value

Broker-dealers and registered representatives may be subject to each of the following administrative and regulatory bodies EXCEPT?

SIPC

Which of the following regarding income is TRUE?

Salary or bonuses are earned income; interest and dividends are investment income.

All of the following are part of FINRA's manual regarding employee conduct and reportable events EXCEPT

Sales Practice Code

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

The primary regulatory body for the securities industry would be which of the following?

Securities and Exchange Commission (SEC)

To meet a Regulation T margin call, a customer would have how long?

Settlement plus 2 additional business days

Which of the following refers to prolonged periods of slow or little economic growth, unusually accompanied by high unemployment?

Stagnation

Which of the following would all be considered the same regarding yields on debt instruments?

Stated, nominal, and coupon yields

Which of the following records must be kept for the life of a broker-dealer firm?

Stock certificate books

Which of the following securities is exempt from the Regulation T margin requirements but still subject to an initial margin requirement as determined by the broker-dealer?

T-notes

Which of the following are potential benefits associated with a real estate direct participation program?

Tax deductions and credits

What does the mortality guarantee of a variable annuity insure?

That payments will continue for the life of the annuitant

Which of the following would you expect to have the lowest expense ratio?

The ABC Corporate Bond Fund

In the event that a customer complaint is received it is essential that the appropriate personnel are notified immediately. Which of the following need not be notified or only notified regarding specific scenarios?

The Financial Industry Regulatory Authority

A securities firm that is not a FINRA member wishes to do trades with a FINRA member firm. Which of the following statements is TRUE regarding this situation?

The nonmember firm will receive no concessions, but it will buy at the public offering price and sell at the public bid price.

accumulation stage

The period during which contributions are made to an annuity account

Associated persons or registered representatives who want to work outside of their existing employment with their current broker-dealer may do so if they provide prior written notice to the member. In which of the following would notice not be required?

They will be involved in extensive fundraising activities for a charitable institution.

A market in which exchange-listed securities are traded in the OTC market would BEST be described as the

Third Market

Which of the following statements best describes the term "churning"?

Trading in a customer's account considered excessive, and for which no discernible investment purpose is detected.

Which of the following are securities representing other securities held on deposit with a trustee where the principal and interest payments have been separated?

Treasury receipts and STRIPS

A corporate stock is purchased on Friday, April 2, regular way. When will the trade settle?

Tuesday, April 6

A strong U.S. dollar leads to more

U.S. imports and a balance of payments deficit

An individual would most likely be statutorily disqualified from working in the securities industry for which of the following reasons?

Willful failure to disclose personal bankruptcy or unsatisfied liens

The regulatory element of training requires that all registered persons complete a computer-based training session how frequently?

Within 120 days of the person's second registration anniversary and then every 3 years thereafter

When is the electronic filing of all information on customer complaints by broker-dealers with FINRA due?

Within 15 days of the end of each calendar quarter

Which type of accounts bills a single fee annually for a group of services that might include asset allocation, portfolio management, and executions?

Wrap account.

Your customer is a limited partner in a real estate partnership. This partner has the right to do all of the following EXCEPT

Your customer is a limited partner in a real estate partnership. This partner has the right to do all of the following EXCEPT

A company's board of directors has agreed that the company should be prepared to have shares of common stock ready to be issued that are intended to be distributed in the form of a one-time employee bonus. Not knowing exactly when the one-time bonus plan will be implemented and the shares will be needed, the type of registration or offering that would best suit the scenario is

a "shelf" registration

Your customer opens a position at 45 and then closes it later at 47. This represents

a 2-point gain or loss

A company's business operations are overseen by

a board of directors elected by shareholders

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

A firm that functions for the purpose of receiving and delivering payments and securities on behalf of both buyer and seller in a securities transaction is

a clearing agent

Mr. Smith enters a trade in a stock at the same time as Mr. Jones, who has inside information regarding that company. Mr. Smith is considered

a contemporaneous trader

All of the following people working for a registered broker-dealer would be required to be fingerprinted EXCEPT

a driver assigned to high-net-worth clients

An investor receives an unsolicited email about a startup company trading for pennies. The email notes that a patent for a new technology is forthcoming and investors need to get in now. The next day the investor sees lots of information on the same stock in an internet chat room. The hype seems to be similar to what was received in the email blast. Being cautious, the investor senses that this could be

an effort to spread market rumors in an attempt to manipulate the stock

A municipal finance professional (MFP) is

an employee of a FINRA member engaged in municipal security representative activities such as underwriting and trading

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 corporation sells shares to the investing public in order to raise capital. This is known as

an issuer transaction

Accredited Investor

an organization or individual investor who meets certain criteria established by the SEC and so qualifies to invest in unregistered securities

Tombstone Ads

are permitted before the effective date

Transactions where the penny stock rules are applicable would be those that

are solicited

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

All of the following are associated with being a carrying firm EXCEPT

being a fully disclosed firm

Advantages enjoyed by the limited partners in a partnership might be all of the following EXCEPT

being in a fiduciary position with responsibilities to others

Securities issued by the U.S. federal government are classified as

bills, notes, and bonds

Each of the following are likely to be found on a trade confirmation EXCEPT

bond credit rating

An individual has been a registered representative with a national firm for the past three years. Another member firm makes an attractive offer in an attempt to lure this individual to join them. In order to do so, the paperwork necessary would be

both a Form U-5 from the previous employer and a Form U-4 from the new one.

Regarding open-end and closed-end investment companies, all of the following are true EXCEPT

both offer an unlimited number of shares in a continuous public offering

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

Before submitting an application to enroll, part of the process for an associated person to engage in the investment banking or securities business, is to have the member firm that sponsors them ascertain the individuals

business reputation, character, education, and experience

When the Federal Reserve Board wants to expand (loosen) the money supply, it will

buy Treasury securities from banks in the open market

Recommendations regarding investment strategies under the "know your customer" (KYC) rule would NOT apply to recommendations to

buy or sell commodities

To keep up with recent developments in the industry regarding regulatory changes and other requirements imposed by FINRA, as well as needs identified by the broker-dealer firm, registered persons must fulfill the firm's

continuing education (CE) requirement

A person may not act as a registered representative or principal unless FINRA's eligibility standards regarding training, experience, and competence are met. In all of the following instances, a person may be statutorily disqualified from FINRA membership EXCEPT

conviction of a DUI resulting in a fine and probation

Reporting requirements for representatives and principals who are to be registered with FINRA include filling out a Form U-4 when the individual is hired. All of the following are required to make the registration effective EXCEPT

disclosure of convictions of a spouse employed by a financial institution

Limited partnership programs are categorized as direct participation programs. The term direct participation refers to the

flow-through of profits and losses of the partnership to the individual limited partners

All of the following would generally be associated with a limited partnership (LP) EXCEPT

freely transferrable interests

A customer has purchased a stock and then sold it before paying for the purchase. This is generally known as

freeriding

After the filing of a registration for a new issue with the SEC, and still in the registration's cooling-off period, broker-dealers may

give a red herring to prospective investors

Tax credits for partners in a real estate program can come primarily from

government-assisted housing and historic rehabilitation properties

During periods of economic decline and contraction, one would expect

gross domestic product (GDP) to decrease

A limited partnership (LP)

has 2 types of partners

An investor is long 1 July 40 call at 2. This investor

has paid $200 for the call contract

The firm element of a broker-dealer's continuing education requirement must be undergone by all registered persons who

have direct contact with the public

All of the following statements about a home office are true EXCEPT

home offices are restricted to servicing existing customers only

For the risk disclosures found in the options disclosure document (ODD), all of the following would be accurate disclosures EXCEPT

if a maintenance call is not met, the customer must direct which securities to sell

An officer of a public company buys 1,000 shares of the company's registered stock in the open market. Regarding the sale of these shares, the officer may sell

immediately, subject to Rule 144 volume limitations

An associated person of a 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

With CDT stock at 42, a September 40 call trading at 3 is

in the money by 2 points

When investors buy and sell securities to and from one another, these transactions occur

in the secondary market

When the Federal Open Market Committee (FOMC) directs that Treasury securities be purchased in the open market, this

increases the supply of money

An expansion in the business cycle would be characterized by

increasing consumer demand for goods and services, increasing industrial production, and rising stock markets and property values

A preliminary prospectus is used to solicit

indications of interest before the effective date

The cost of doing business is closely linked to the cost of money, which is known as

interest

When the demand for money exceeds the supply,

interest rates rise, making consumer borrowing more difficult

Anyone who, as part of their business, gives investment advice for compensation must register as a(n)

investment adviser under the Investment Advisers Act of 1940.

FINRA's Conduct Rules regarding gifts and gratuities would permit a branch manager to

invite a portfolio manager to see a popular Broadway show together

Regarding political contributions, the Investment Advisers Act of 1940

is designed to deter gaining political favor by employing what is commonly known as "pay to play"

If a margin deposit is late, an extension request made by the broker-dealer

is not required but can be made, and may or may not be granted

A fully disclosed broker-dealer

is one that introduces its business to a carrying firm to clear transactions

U.S. government securities are

issued by the U.S. Treasury in book-entry form

An underwriting group is currently assisting an issuer with the preparation and filing of the registration statement for a new issue. Who is responsible for the accuracy of the information within the registration statement?

issuing corporation

All of the following regarding the firm element of a broker-dealer's continuing education requirement are true EXCEPT

it is prepared by FINRA for the member firm to administer

An associated person is unable to work for any business other than his member firm without having the employing broker-dealer's

knowledge of the activity

Selling shares not yet borrowed or located to be borrowed is

known as a naked short sale and is prohibited

A change to tax rates on dividends would be an example of

legislative risk

The growth potential in the price of preferred shares is generally considered to be

less than that of the issuer's common shares

Each of the following may be traded on an exchange EXCEPT

life insurance

Passive investments do not fall under the definition of an outside business activity. Which of the following investments would be considered a passive investment?

limited partnership unit

Rules to protect the investing public during the public offering process include all of the following EXCEPT

limiting the number of shares of an IPO that may be purchased by the issuing company's employees

Ownership of a security indicates that one is

long the position and bullish

To ease its monetary policy, allowing consumers to borrow more easily, the Federal Reserve Board can

lower the discount rate

To prevent inflation by tightening the availability of credit, the FRB would do any of the following EXCEPT

lower the prime rate

A registered representative is opening a new account for a senior citizen age 68. The RR must

make a reasonable effort to obtain the name and contact information for a trusted contact person

Short-term purchases and sales of a mutual fund to take advantage of price fluctuation is known as

market timing

Those persons employed by a FINRA-registered broker-dealer to do nothing other than provide training for its associated persons

must be registered as a principal

Someone responsible only for training associated persons at a FINRA member firm

must be registered as a principal of the firm

The coupon on a bond can be described as its

nominal yield

An investor anticipates that a fall in interest rates is imminent. This investor, now wanting to purchase bonds in order to lock in interest income, would likely buy

noncallable bonds

While an associated person may work for an entity other than the member firm, the employing member firm's permission is

not required

Municipal revenue bonds are

not subject to statutory debt limits and do not require voter approval

A method of registering securities at the state level that is reserved only for federal covered securities is known as

notice filing

A provision for filing securities at the state level used solely for securities that are considered to be federal covered securities is known as

notice filing

A member firm receives an order to purchase shares in a common stock IPO from another broker-dealer for a customer. Regarding restricted persons, the member must

obtain a written representation that the buyer is not a restricted person

All of the following are valid terms describing stock splits EXCEPT

odd split

Under the USA PATRIOT Act, financial firms must create and maintain records of wire transfers only

of $3,000 or more

When securities are bought and sold, ownership changes hands between the buyer and the seller

on the settlement date of the transaction

All of the following are true for 529 plans EXCEPT

plan donors must be related to the student benefactor

Broker/dealers who reserve the right to disclose nonpublic private information about their customers to unaffiliated third parties must

provide notice to customers at the time of the account opening and provide reasonable means for customers to opt out of such disclosures

The general partner of a limited partnership has responsibility for all the following EXCEPT

providing all of the partnership capital

Each of the following activities would be deemed by market regulators to be manipulative behavior EXCEPT

proxy solicitation

A brokerage firm has accumulated a large holding in a little known company by purchasing several hundred thousand shares of the company's stock. The firm instructs its RRs to begin touting the stock to every one of its customers and to make cold calls to new potential customers as well. This is most likely a scheme known as

pump and dump

An investor has just received stock rights in the mail allowing the purchase of 250 shares of a stock offering at a discount. With these rights, the investor may take any of the following actions EXCEPT

purchase 125 shares at double the discount

To stimulate the economy during a recession by expanding the availability of credit, the FRB would do any of the following EXCEPT

raise the federal funds rate

In order to receive a declared dividend a shareholder must be an owner of record at the close of business on the

record date

For real estate program partners, tax credits will

reduce tax liability dollar for dollar

A commonality of all self-regulatory organizations (SROs) is that they all require their members and associated persons to

register with them

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

As interest rates rise, prices of preferred stock will

remain unaffected

All of the following are benefits of using a prime broker EXCEPT

research

If it finds that the registration statement needs revision, expansion, or to have corrections made, the 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 are types of direct participation programs (DPPS) EXCEPT

retail distribution

All of the following statements about securities purchases are true EXCEPT

securities may not be purchased with borrowed money

On behalf of a customer, a broker-dealer requested an extension for payment that was not granted. The broker-dealer must

sell out the securities purchased and freeze the account for 90 days

A registered representative has a customer who is interested in utilizing options strategies such as spreads and straddles. The RR's firm does not offer options transactions as part of their existing business model. As such, the RR directs the customer to open an account through another broker-dealer. This would be known in the securities industry as

selling away

When investors open a position by going long the security, they can close the position by

selling the security

An investor holding T-bonds will receive interest payments

semiannually

All of the following are bullish positions EXCEPT

short stock

Banker's acceptances are

short-term time drafts issued by banks to corporations

When a corporation issues a mortgage bond, the issue's total value

should be less than that of the real estate it is backed by

Opening a margin account for a client requires the client to do all of the following EXCEPT

signing the loan consent

The ratings on the debt instruments of a foreign country with outstanding loans from a number of other countries worldwide have been downgraded. The impact felt due to the risk of possible default is known as

sovereign risk

Economic reports show that there is a general rise in prices for consumer goods and a high unemployment rate occurring simultaneously. This combination can best be described as

stagflation

All of the following would require that updated account information be sent to the customer for confirmation within 30 days EXCEPT

the account records system has been changed to a new format

The flow of money between the United States and other countries is known as

the balance of payments

Meeting the location requirements and the borrowing of securities when a customer wants to sell short is done by

the broker-dealer on behalf of the short-selling customer

The broker loan rate charged by banks is also known as

the call loan rate

Raising funds is generally accomplished by corporations through the issuance of stock (equity) or bonds (debt). This is done in

the capital market

All of the following associated persons engaged in the investment banking and securities business are considered registered representatives, EXCEPT

the chairman of the board

With a discretionary account

the customer may still enter orders

The term investment strategy applies to all of the following EXCEPT

the customer's position in real estate

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

If an associated person is disciplined for violating SEC rules and regulations, and is ultimately suspended by the SEC, the member firm where the person is affiliated must report the suspension to

the exchanges where the firm is a member

The interest rate negotiated for an uncollateralized overnight loan between 2 money center banks is known as

the federal funds rate

Upon application for registration as a registered representative to ensure that any criminal past might be discovered by the employing firm, the Securities and Exchange Commission (SEC) requires

the filing of a fingerprint card with the U.S. Attorney General

A broker-dealer firm has just rehypothecated a thousand shares of MMS stock. This means

the firm has withdrawn the stock from a bank and pledged it to the customer

While a branch office manager can initially approve an options account for trading, it must ultimately be approved by

the firm's ROP

All of the following are true regarding breakpoints for mutual funds EXCEPT

the first breakpoint investors can achieve is mandated by industry rule to be at the $10,000 investment threshol

A broker-dealer wants to give an employee of another firm a gift. This is permitted provided all of the following conditions are met EXCEPT

the gift or compensation is preapproved by the firm's SRO

Listed options can be exercised by

the holder from the time of purchase until they expire

The coupon rate on a debt security represents

the interest rate the issuer has agreed to pay the investor

A customer wanting to open a margin account is told that the securities will be held in street name. This means that the securities will be registered in

the name of the broker-dealer

An underwriter is placing a tombstone advertisement for a company's new issue. A prospective investor might expect to see all of the following information on the advertisement EXCEPT

the names of the company's officers

A customer writes (sells) a call. This customer will realize the maximum gain if

the option contract expires without being exercised

An investor pays 102 ($1,020) for a $1,000 par value bond. At maturity,

the premium paid decreases the return

An investor owns a bond carrying a 4% coupon. Interest rates in the marketplace have been moving downward and are currently at 2.5%. Given the current interest rates in the marketplace, this investor should see

the price of the bond move higher

Failure to complete the regulatory element continuing education requirement within the allotted time period will result in

the registration being deactivated until the requirements are met

FINRA and the other SROs place extreme importance on knowing your customer. That involves knowing both financial and non- financial considerations. All of the following are non-financial considerations EXCEPT

the salary paid to the client by her employer

A shareholder had arranged to vote by proxy at the corporation's annual shareholders' meeting, but later decided to vote the shares personally. All of the following statements regarding this situation are true EXCEPT

the shareholders must accept the proxy's decision

All of the following would be included in a notice of corporate action regarding a stock dividend EXCEPT

the stock's issue date

Your customer has purchased an MJS October 35 call at 4. Their proof of ownership will be

the trade confirmation

The party who is short an option contract is known as

the writer and receives the premium

Mary Alice McVey, a registered representative with a FINRA member broker-dealer, has recently remodeled her home and now has an area with a private entrance that she would like to use instead of commuting each day to her office 20 miles away. Under FINRA rules

this would be permitted with FINRA's approval

FINRA has a continuing education requirement with the goal of making sure that all registered personnel are aware of industry changes. If a registered representative has just observed her second anniversary in the industry and did the required regulatory element CE, the next time she will be required to sit for the regulatory element is

three years from now

Discretion given to a registered representative to make transactions applies to all of the following EXCEPT

timing and price only

A market maker

trades in a proprietary account to facilitate trading of a security and provide liquidity

FINRA regulates all matters related to investment banking, including

trading in the OTC market

Commercial paper is

unsecured debt with a maximum maturity of 9 months

Which of the following is a characteristic shared by both corporate debentures and income bonds?

Both must pay principal as it comes due.

Which of the following correctly states the impact of open-market operations taken by the Federal Reserve Board (FRB)?

By buying securities, the FRB puts money into the banking system, expanding the money supply and reducing interest rates.

An application for FINRA membership carries the applying firm's specific agreement to do which of the following?

Comply with the association's rules and regulations

Those industries that are LEAST affected by normal business cycles are

Defensive industries

Which of the following points to a general decline in prices occurring during severe recessions and the unemployment rate is rising.

Deflation

A prospectus displays which of the following?

Description of how the proceeds will be used

A customer's account has been frozen. Which of the following is TRUE if the customer wants to purchase more securities?

Funds to pay in full must be available in the account before the buy order is entered.

Which of the following would NOT be considered ordinary income for tax purposes?

Gains gotten from the sale of securities

At the time of a limited partnership's dissolution, who is the last to be paid?

General partners

A married couple have equal 50% ownership interests in a tenants in common account (TIC). If one party to the account dies, what happens to the shares in the account?

Half, or 50% of the shares, would belong to the remaining party and the balance would be distributed to the estate of the deceased party.

A "free lunch" seminar is advertised among senior citizens who may be looking to improve the results of their investment portfolio. Which of the following activities by the registered hosts of the seminar would be deemed a potential violation? I. Use of a designation such as Chartered Senior Advisor, a largely unknown designation II. The representative is introduced as someone approved by FINRA to answer questions from senior investors III. Use of degrees and registration licenses IV. Promoting technology stocks

I and II

Firms applying for FINRA membership are required to agree to be in compliance with all federal securities laws I, pay dues, assessments, and other charges the association levies II. pass the appropriate qualification exam(s) III.attend a FINRA annual conference no less frequently that once IV. every 3 years

I and II

If an arbitration agreement has not been signed, under which 2 of the following circumstances would a dispute between a 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

Which of the following are considered systematic risks—those that would impact all businesses? I Market risk II Inflation risk III Regulatory risk IV Business risk

I and II

Which of the following would be TRUE with regard to capital gains? I. If an asset is sold within one year (12 months or less) of its purchase, the gain is considered to be short-term and taxed at the same rate as the taxpayer's ordinary income. II. If the asset is held for more than a year, the gain is considered to be a long-term and is taxed at a favorable long-term rate. III.Capital gains are usually associated with the distribution of dividends including stock splits. IV. Capital gains can be defined as the income earned from interest, wages, rents, royalties, and similar income streams.

I and II

A common stockholder's voting rights apply to which of the following? I. Election of the board of directors II. Declaration of dividends III. Authorization or issue of more common shares IV. Changing suppliers for raw material or parts used in production

I and III

A deficit in the U.S. balance of payments can occur if I. interest rates in foreign countries are higher than U.S. domestic rates II. interest rates in foreign countries are lower than U.S. domestic rates III. U.S. consumers are purchasing (importing) foreign goods IV. foreign consumers are purchasing (importing) U.S. goods

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

A registered representative has left a firm and joined another. The new firm must obtain a copy of the Form U-5 filled out by the old firm. Where might the new firm obtain a copy of the form? I. From the new employee II. From the Securities and Exchange Commission III. From FINRA's Central Registration Depository IV. From the representative's former employer

I and III

An exception report would be most likely generated by which of the following observations? Seeing activity in the account of a deceased person Noting that a customer's telephone area code matches the ZIP code provided Receiving an execution for 300 shares when the order was for only 100 Receiving a written complaint from a customer

I and III

As long as it is not restricted in any documentation, margin trading is permissible in which of the following accounts? i.Corporate II.IRA III.Partnership IV.Fiduciary

I and III

Which of the following regarding established customers of a broker-dealer and the purchase of penny stocks are TRUE? I. They are exempt from the suitability statement requirement. II. They are not exempt from suitability statement requirement. III. They are exempt from the disclosure rules. IV. They are not exempt from the disclosure rules.

I and IV

An investor makes several statements regarding what they know about exchange-traded funds. All of them are correct EXCEPT

I can't buy them on margin because they represent an entire basket of stocks like mutual funds do

A bond with 10 years to maturity and callable in 5 years at par is sold at a discount. Rank the following yields from lowest to highest. i. Nominal yield II. Current yield III. Yield to call IV. Yield to maturity

I, II, IV, III

An investor has opened an individual brokerage account for use in a small business and has given a business partner a power of attorney (POA) over the account. Which of the following persons may have access to the account for trading purposes? I. The attorney who administers to the business's legal needs II. The investor's partner who was given the POA III. The investor who opened the account IV. A secretary at the business, but only in an emergency

II and III

Regarding oil and gas DPPs, tan¬gible drilling costs are associated with items that I. have no salvage value at the end of the program II. have some salvage value at the end of the program III. can be depreciated IV. cannot be depreciated

II and III

Which of the following positions would give an investor an unlimited loss potential? I. Short 1 IBS Jul 50 put II. Short 100 shares of IBS stock III. Short 1 IBS Jul 50 uncovered call IV. Short 1 IBS Jul 50 covered call

II and III

Which of the following statements regarding Treasury receipts are TRUE? I. Interest is paid annually. II. Interest is paid at maturity III. They are sold at a discount. IV. They are sold at par.

II and III

Which of the following would be unacceptable reasons for an officer of a member firm to make a contribution to the election campaign of a political candidate? I. The candidate is a member of the officer's political party. II. The candidate has promised to steer business to the officer's firm. III. The candidate is a close relative of a potential customer of the firm. IV. The officer approves of the policies and programs the candidate has proposed.

II and III

Your firm must provide an account statement to a customer this month if I. 5 months have passed since the last activity in his account II. there are penny stocks in the account III. activity has occurred in the account this month IV. some of the securities in the account have lost significant market value this month

II and III

A surplus in the U.S. balance of payments can occur if I. interest rates in foreign countries are higher than U.S. domestic rates II. interest rates in foreign countries are lower than U.S. domestic rates III. U.S. consumers are purchasing (importing) foreign goods IV. foreign consumers are purchasing (importing) U.S. goods

II and IV

Which of the following might be considered a red flag in a customer's account activities?

Funds and securities are moved from one account to another for no apparent reason.

Which is the most common way investors pay a mutual fund's sales charge?

Front-end load

Which of the following would lead to a standardized cost-base adjustment for stockholders?

Dividend

A common stock shareholder's residual right to corporate assets refers to which of the following?

During the dissolution of corporate assets, common shareholders will be paid if there are any funds left after debtholders and preferred shareholders are paid.

A prospectus must be delivered to customers following a transaction in all of the following EXCEPT

ETFs

All of the following would be considered advantages of exchange traded funds as opposed to mutual funds EXCEPT

ETFs are commissionable

AGI

Earned income plus net passive income, portfolio income and capital gains.

Which of the following organizations was created to protect investors financially from a bank failure?

FDIC

The rules to prevent "pay to play" regarding contributions made to political parties, candidates, and elected officials by firms involved in the underwriting or sales of municipal securities are enforced by

FINRA

Which of the following organizations looks to promote self-discipline among members and investigate and resolve grievances between the public and members and between members?

FINRA

Which regulatory body oversees trading in the over-the-counter (OTC) market?

FINRA

Which of the following would be the interest rate charged for overnight, uncollateralized loans negotiated between two money center banks?

Federal funds rate

A registered representative is discussing fee-based and commission based accounts with a customer. All of the following are true EXCEPT

Fee-based accounts are most suitable for those who do very little trading during the course of the year.

Subject to market liquidity, which of the following orders is most likely to be executed immediately?

Fill-or-kill order

To register an associated person with FINRA, a member firm will fill out and submit which of the following forms?

Form U-4

In general, the first industry form that a new applicant for registration sees is the Form U-4. This lengthy form requests information about the applicant's I. name including any aliases II. residency history back through the previous two years III. 10-year employment history IV. convictions, but not arrests, dealing with any securities related violationsI and III

I and III

Regarding limited partnerships, which of the following are TRUE? I. A general partner can be held personally liable for business losses and debts. II. A limited partner can be held personally liable for business losses and debts. III. A general partner business decisions are legally binding on the partnership. IV. A limited partner business decisions are legally binding on the partnership.

I and III

The tax rate on qualified dividends depends on which of the following? I. The current IRS tax code II. The financial status of the issuer III. The tax bracket of the shareholder IV. The price per share of the stock

I and III

When an issuer has equipment trust certificates outstanding, title to the assets backing the certificates are held in trust the equipment is held in trust the assets can be repossessed and sold by the trustee the certificates are unsecured because they represent the debt owed on the assets

I and III

Which of the following corporate actions are designed to allow investors to buy shares of stock under specific, defined conditions? I.A rights offering II.A forward split III.Issuing warrants IV. A stock dividend

I and III

Advantages to the investor offered by investment companies include I. ability to invest small amounts in many different securities II. special securities prices available only to investment companies III. elimination of market risk through pooling of investments IV. increased purchasing power in the marketplace

I and IV

For Treasury bills, which of the following are TRUE? I. T-bills are issued at a discount to par. II. T-bills have maturities of 1 to 10 years III. Most T-bill issues are callable and convertible. IV. T-bills are a direct obligation of the U.S. government.

I and IV

One of the FINRA Conduct Rules is concerned with private securities transactions. Under that rule, it would be CORRECT to state that I. if the member approves the RR participating in a transaction for compensation, it must treat the transaction as if it is being done on its own behalf by entering the transaction on its own books and supervising the associated person during the transaction II. as long as no compensation to the RR is involved, notification to the member is not required III. sale of a securities product to the RR's mother where there is only nominal compensation is not covered under the rule IV. if the member disapproves of the RR's participation in a transaction for compensation, the associated person may not participate in it

I and IV

Regarding the purchase of new equity issues by restricted persons, which statements are TRUE? I. An investment club is permitted to buy a new equity issue at the offering price. II. An investment club is not permitted to buy a new equity issue at the offering price. III. An investment club that has eight members with equal ownership, one of which is a registered representative, is permitted to buy a new equity issue at the offering price. IV. An investment club that has twelve members with equal ownership, one of which is a registered representative, is permitted to buy a new equity issue at the offering price.

I and IV

Which of the following are considered tools used to implement fiscal policies? I. Government spending II. Operations of the FOMC III. Changing the reserve requirements IV. Taxation

I and IV

Which of the following orders need NOT be immediately filled in their entirety? I. Immediate or cancel (IOC) II. Fill or kill (FOK) III. Market at open IV. All or none (AON)

I and IV

Which of the following bonds trade flat (without interest) unless interest payments are declared by the board of directors (BOD)?

Income bonds

For revenue bonds issued by a state or municipality, which of the following is TRUE?

Interest will be paid only if the enterprise owned and operated by the state or municipality has sufficient earnings to cover the interest payments or the debt service reserve.

An example of securities that are established by states to provide other government entities such as cities, towns, school districts or state agencies with a short-term investment vehicle to invest funds include

Local Government Investment Pools

A bank is likely to do which of the following when the Federal Reserve Board (FRB) eases the money supply?

Lower its prime rate.

Characteristics common to penny stocks would include which of the following?

Market price less than $5 per share and unlisted

For securities held in "street name," which of the following is TRUE?

The customer is the beneficial owner.

Which of the following is a nonfinancial investment consideration?

The customer's place of employment and status

If a registered representative is involved in a securities transaction outside the scope of employment with the firm, a practice known as "selling away," and will receive compensation for it, which of the following must see that the representative is properly supervised for the transaction?

The employing firm

In which of the following circumstances would a firm be denied FINRA membership?

The firm has been expelled or suspended by the foreign equivalent of an SRO.

The Conduct rules permit specific types of lending arrangements between RR's and their firms and customers. Which arrangement below would not be permitted?

The firm lends the customer's securities without a consent agreement.

A shareholders' meeting for ABC Corporation will take place in 8 days. A customer whose stock is being held in street name has not returned the proxy statements. Which of the following is TRUE?

The member firm may vote the shares as it wishes on minor matters.