Final #6

Mutual funds that have an automatic reinvestment provision will typically reinvest: I dividends at NAV II dividends at POP III capital gains at NAV IV capital gains at POP A - I and III B - I and IV C - II and III D - II and IV

A - I and III

A customer in the 28% tax bracket has $4,000 of capital gains and $12,000 of capital losses. How much unused loss is carried forward to the next tax year? A - 0 B - $3,000 C - $5,000 D - $8,000

C - $5000

When is the earliest date that the stock can be sold regular way and still allow the customer to receive the dividend payable April 30th? A - April 16th B - April 17th C - April 18th D - April 19th

C - April 18th If the stock is sold prior to this date, the new buyer would be on record to receive the dividend. If the stock is sold on the ex date or later, the seller is on the record books for the dividend payment.

All of the following are money market instruments EXCEPT: A - BAs B - REPOs C - CDs D - ADRs

D - ADRs

All of the following securities would be used as "collateral" for a collateralized mortgage obligation EXCEPT: A - "Sallie Maes" B - "Freddie Macs" C - "Ginnie Maes" D - "Fannie Maes"

A - "Sallie Maes"

A customer sells short 100 shares of DEF stock at $63 and sells 1 DEF Oct 60 Put @ $6. The market rises to $68 and the put expires. The customer buys the stock in the market covering her short stock position. The gain or loss is: A - $100 gain B - $100 loss C - $300 gain D - $300 loss

A - $100 gain $68 - $63 = 5pt/$500 loss $600 premium - $500 loss = $100 gain

A customer sells short 100 shares of ABC stock at $40 and buys 1 ABC Mar 40 Call @ $5. The breakeven point is: A - $35 B - $40 C - $45 D - $50

A - $35 Short sale price - premium $40 - $5 = $35

Which TWO of the following choices would create a "spread"? I Long 1 ABC Jan 80 Call; Short 1 ABC Jan 70 Call II Long 1 ABC Jan 50 Put; Short 1 ABC Jan 60 Put III Long 1 ABC Jan 60 Call; Long 1 ABC Jan 70 Put IV Short 1 ABC Jan 70 Call; Short 1 ABC Jan 80 Put A - I and II B - III and IV C - I and IV D - II and III

A - I and II Spread is the purchase and sale of either 2 calls or 2 puts with differing strike prices and/or differing expirations

Straight line accretion of a municipal bond discount will cause the: I bond's cost basis to be increased by equal amounts each year II bond's cost basis to be increased by decreasing amounts each year III amount of any potential capital gain on sale to decrease each year IV amount of any potential capital gain on sale to increase each year A - I and III B - I and IV C - II and III D - II and IV

A - I and III

Trades of options settle "regular way":I next business dayII in 2 business daysIII in Clearing House fundsIV in Federal Funds A - I and III B - I and IV C - II and III D - II and IV

A - I and III

Which of the following create a straddle? I Long 1 ABC Jan 50 CallLong 1 ABC Apr 50 Put II Short 1 ABC Jan 50 CallShort 1 ABC Jan 50 Put III Short 1 ABC Jan 50 CallLong 1 ABC Jan 50 Put IV Short 1 ABC Jan 50 CallShort 1 ABC Jan 60 Put A - II only B - I and III C - II and IV D - III and IV

A - II only Straddle is the purchase of a call and a put on the same underlying security with the same strike price & expiration

Qubes (QQQs) are securities whose value is based upon the securities in the: A - NASDAQ 100 Index B - NASDAQ Composite Index C - Standard and Poor's 500 Index D - Russell 2000 Index

A - NASDAQ 100 Index

The minimum price at which an open end fundshare can be purchased is: A - Net Asset Value B - Net Asset Value plus a commission C - Market Price D - Market Price plus a commission

A - NAV

A corporation issues $100 par convertible preferred stock, convertible at $10 per share, when the market price of the common is currently $5. Which statement is TRUE? A - The conversion ratio is 10:1 B - The conversion ratio is 5:1 C - The conversion ratio is 2:1 D - The conversion ratio cannot be determined

A - The conversion ratio is 10:1 NOTE "COMMON" DOES NOT APPLY TO PREFERRED

A customer has accumulated a stock position over a period of years at different stock prices. The stock has appreciated in the last year and the customer places an order to sell part of the position. Regarding the customer's cost basis of the shares being sold, which statement is TRUE? A - The customer may specify which shares are sold so that the highest cost shares are sold first B - The lowest price shares must be sold first C - The customer must use a weighted average price per share as the cost basis D - LIFO accounting is required for any shares sold

A - The customer may specify which shares are sold so that the highest cost shares are sold first

On the same day a customer buys 100 shares of ABC stock at $30 and sells 1 ABC Jan 30 Call @ $3 and sells 1 ABC Jan 30 Put @ $2. This strategy is known as a: A - covered straddle B - covered call writer C - ratio write D - butterfly spread

A - covered straddle The short call is covered by the long stock position, the short put is naked

A customer buys 1 ABC Jan 55 Put @ $9 when the market price of ABC is $50. The put is exercised when the market price is $40. For tax purposes, the sale proceeds are: A - $3,100 B - $4,600 C - $4,900 D - $6,400

B - $4,600 $55 - $9 = $46

What is the "out the money" amount for the following contract? 1 ABC Jan 30 Call @ $5 ABC Market Price = $26 A - 0 B - 4 C - 5 D - 9

B - 4 Strike price - market price 30 - 26 = 4

Which of the following securities can be sold by an individual holding an investment companies/variable annuities (Series 6) registered representative's license? I Municipal Investment Trusts II Real Estate Investment Trusts III Municipal Bond Funds IV Revenue Bonds A - I and II only B - I and III only C - III and IV only D - I, II, III, IV

B - I and III only

In an oil and gas program which has an overriding royalty interest arrangement, which statement is TRUE? A - The general partner agrees not to take a percentage of revenue until all costs are recovered B - The general partner takes a percentage from the first barrel of oil produced, without regard to costs C - The general partner gets a percentage of defined "net profits" from the first barrel produced D - The general partner agrees to bear some costs in return for a greater percentage of oil revenue

B - The general partner takes a percentage from the first barrel of oil produced, without regard to costs

Which of the following can affect the holding period of a stock held short term? A - Buy a call B - Buy a put C - Sell a call D - Sell a put

B - buy a put

An investor has bought 1 ABC Jan 50 Call and has sold 1 ABC Apr 60 Call. This is a: A - combination B - diagonal spread C - horizontal spread D - straddle

B - diagonal spread Diagonal spread is the purchase and sale of the same class of option with different strike prices and expirations

Third Market Makers must report their trades of exchange listed stocks to the Consolidated Tape: A - within 10 seconds of execution during all hours of the day B - within 10 seconds of execution during the hours that the NYSE is open C - at the close of the trading day D - at the opening of the trading day

B - within 10 seconds of execution during the hours that the NYSE is open

What source of information provides dealer offerings of municipal bonds in the secondary market? A - Munifacts B - EMMA C - Bloomberg D - The Bond Buyer

C - Bloomberg

Income from which of the following securities is partially tax exempt to a corporate investor? I Common Stock II Preferred Stock III Preferred Stock Mutual Fund IV Convertible Bonds A - I only B - II and III only C - I, II, III D - I, II, III, IV

C - I, II, III

The "after hours" market is characterized by: I Narrow Spreads II Wide Spreads III Low Trading Volume IV High Trading Volume A - I and III B - I and IV C - II and III D - II and IV

C - II and III

Which of the following statements are TRUE about Eurodollar bonds? I Interest received from the bonds is subject to U.S. taxation II Interest received from the bonds is not subject to U.S. taxation III The bonds are purchased only by foreigners IV The bonds are purchased only by U.S. citizens A - I and III B - I and IV C - II and III D - II and IV

C - II and III Only issued outside the U.S. and are purchased by foreigners, not registered for sale in the U.S, and are not subject to withholding taxes

A customer is short 100 shares of DEF stock at $35 per share. The stock goes up to $50 and the customer covers the position. If, 30 days later, the customer decides to re-establish this short position when the market for DEF is $48, which statement is TRUE? A - The cost basis is $33 per share B - The cost basis is $48 per share C - The sale proceeds are $33 per share D - The sale proceeds are $63 per share

C - the sales proceeds are $33 per share

A customer buys an oil and gas limited partnershipinterest by contributing $10,000 and signing a $20,000 recourse note. The customer's tax basis is: A - 0 B - $10,000 C - $20,000 D - $30,000

D - $30,000 Tax basis = $10,000 paid in cash + $20,000 recourse note

On November 10th, a customer buys 200 shares of ABC stock at $50 per share. On November 29th of the same year, the customer sells the stock at $44. On December 15th of the same year, the customer buys ABC stock at $49. The customer's cost basisin ABC stock is: A - 0 B - $43 C - $44 D - $55

D - $55 $50 - $44 = $6 $49 + $6 = $55

When the Standard and Poor's 500 Index is at 2,460 on a given day, the U.S. listed equities markets will close its market for the rest of the day if the index declines by a total of: A - 124 points B - 172 points C - 320 points D - 492 points

D - 492 20%

All of the following actions by a corporation will affect an individual common shareholder's equity EXCEPT: A - Issuance of additional common shares B - Conversion of convertible preferred stock C - Repurchase of common shares D - Declaration of a stock dividend or stock split

D - Declaration of a stock dividend or stock split

Which of the following would create a bear price spread? I Short 1 ABC Jan 70 Call; Long 1 ABC Jan 60 Call II Long 1 ABC Jan 70 Call; Short 1 ABC Jan 60 Call III Short 1 ABC Jan 70 Put; Long 1 ABC Jan 60 Put IV Long 1 ABC Jan 70 Put; Short 1 ABC Jan 60 Put A - I and III B - I and IV C - II and III D - II and IV

D - II and IV Bear spread is the purchase and sale of either 2 calls or 2 puts with different strike prices and/or different expirations

A customer switches from a growth fund to an income fund within the same "family of funds." Which statement is TRUE? A - No tax liability is incurred because this is treated as a "wash sale" B - No tax liability is incurred because this is treated as a "like kind exchange" of assets C - Tax must be paid on any amount by which the Net Asset Value of the new fund exceeds the old fund's Net Asset Value D - The sale results in a "taxable event" on which tax on any gain is due, and the purchase establishes a new cost basis

D - The sale results in a "taxable event" on which tax on any gain is due, and the purchase establishes a new cost basis

All of the following securities represent ownership of a corporation EXCEPT: A - common stock B - preferred stock C - convertible preferred stock D - warrants

D - warrants Warrants do not represent ownership of a corporation - only if they are exercised do they