fr fr this time ( Ha you thought )

What price is a bond listed at 149.65 (Nearest cent)

1492.03

What price is a bond listed at 150.96

1503

A client has TIPS with a coupon rate of 3.5%. The inflation rate has been 4% for the last year. What is the inflation-adjusted return? A) 3.50% B) 7.50% C) 4.00% D) -0.50%

A

A new client is looking for a recommendation. The client is 72 years old, has sufficient income from Social Security, and has a pension plan to cover all of her living expenses. She has just inherited $100,000. She wants to invest this money to have a bit more income so she can spoil her grandchildren. Which of the following would be antipodal to her wishes? A) Treasury STRIPS B) Treasury bonds C) Public utility stock D) Jumbo CDs

A

A securities analyst's stock selection method is to begin by looking for superior companies, regardless of their industry sector or the condition of the overall economy. In so doing, this analyst is using A) the bottom-up approach. B) the top-down approach. C) the business cycle approach. D) the optimal portfolio approach.

A

All of the following are true of negotiable, jumbo certificates of deposit except A) they are secured obligations of the issuing bank. B) they are usually issued in denominations of $100,000 to $1 million or more. C) they usually have maturities of one year or less. D) they are readily marketable

A

All the following securities are issued at a discount except A) CDs. B) zero-coupon bonds. C) Treasury bills. D) commercial paper.

A

An investor purchases a Treasury note and the confirmation shows a price of 102.21. Rounded to the nearest cent, the investor's cost, excluding commissions, is A) $1,026.56. B) $1,022.21. C) $102.21. D) $1,022.10.

A

If a group of money managers was having a discussion and the term SOFR was mentioned, the topic would most likely be A) short-term borrowing rates. B) contract negotiations with the employee's union. C) current economic conditions in Liberia. D) long-term borrowing rates.

A

Investing in which of the following would maximize after-tax income and diversify the portfolio for a high-tax-bracket investor? A) A unit investment trust whose portfolio consists of municipal bonds B) GNMAs C) Preferred stock mutual fund D) Short-term municipal notes

A

One of the ways in which U.S. government agency issues differ from those offered directly by the U.S. Treasury is that agency issues A) typically carry higher returns than Treasury issues because of the lack of direct government backing. B) frequently trade on the NYSE while Treasuries never do. C) are taxable on the federal level while Treasury issues are not. D) are more likely to be issued in larger amounts.

A

One of your customers called you on Wednesday at 8:00 am ET and asked you to buy $10,000 of the Liberty Balanced Fund Class A shares. If the Wednesday morning financial pages show the fund's NAV to be $45.83 and the POP to be $48.24 and the Thursday morning quote shows the NAV as $46.22 and the POP as 48.65, how many shares did the customer receive? A) 205.550 B) 216.357 C) 218.198 D) 207.297

A

The final step in the approval process of the annual operating budget for the United States is A) the signature of the president. B) the signature of the Speaker of the House. C) the signature of the secretary of the Treasury. D) a majority vote of the cabinet.

A

To be in compliance with the Securities Act of 1933, the sale of which of the following securities would require delivery of a prospectus? I Primary offering of a closed-end investment company registered under the Investment Company Act of 1940 II Primary offering of 5-year U.S. Treasury notes sold to an individual investor III Private placement sold under the provisions of Regulation D IV Sale of shares of an open-end investment company whose first public offering was 23 years ago A) I and IV B) II and III C) I and II D) III and IV

A

Which of the following statements best describes a preemptive right? A) A privilege extended to existing holders of a company's common stock enabling them to maintain their proportionate interest in the company when additional shares are issued B) A privilege extended to existing holders of a company's common stock enabling them to sell their shares when additional shares are issued C) The right given to existing holders of a company's stock enabling them to vote ahead of preferred stockholders D) The right given to existing holders of a company's stock enabling them to receive dividends in proportion to their equity in the company

A

A bond analyst notices that the yield spread between corporate bonds and government bonds is widening. This is typically predictive of A) an expanding economy. B) an economic slowdown. C) increased concern over the national debt. D) increasing interest rates.

B

A company has two outstanding bond issues, both with a coupon rate of 10%. Bond A will mature in 3 years while Bond B will mature in 20 years. If interest rates were to decrease to 8%, which of the following statements is correct? A) The issuer will attempt to call in Bond A. B) Bond B will be selling at a greater premium than Bond A. C) Bond B will be selling at a greater discount than Bond A. D) Both bonds will be selling at a discount.

B

A corporation has issued a 4% $60 par convertible stock with a conversion price of $20. With the preferred stock selling at $66 per share, an investor holding 100 shares of this stock will benefit by converting if the price of the common stock is A) below $22.00 per share. B) above $22.00 per share. C) above $20.00 per share. D) above $18.20 per share.

B

A farmer entered into a forward contract to sell his produce at $2.25 per bushel. At the expiration date of the contract, the price was $2.00 per bushel. The farmer would receive A) $2.00. B) $2.25. C) $2.125 per contract. D) a price negotiated between the buyer and the seller.

B

A potential investor in mutual funds is bewildered by the different share classes. You are asked for advice. When comparing Class A, B, and C shares, it would be fair to state that all of the following are features unique to Class A shares except A) low or no 12b-1 charges. B) the method of calculating the redemption price. C) rights of accumulation. D) breakpoints.

B

An individual purchases a $10,000 CD with a 5-year maturity from her local bank branch. In doing so, she is eliminating A) inflation risk. B) interest rate risk. C) purchasing power risk. D) opportunity cost.

B

Components of a company's net worth would include all of these except A) inventory. B) operating income. C) goodwill. D) fixed assets.

B

Derivatives can serve many purposes. However, investors should be aware that there are positions which can result in A) potential gains. B) unlimited loss. C) asset protection. D) generation of income.

B

If an investor wants to invest in the electronics industry but does not want to limit his investments to only one or two companies, which type of fund would be most suitable? A) Hedge B) Specialized C) Bond D) Money market

B

On the initial public offering, an investor buys a $10,000 Aa-rated, 20-year corporate bond with a 4% coupon rate. One year later, the prevailing market rate is 5% and the bond has had its rating increased to Aa1. Which of the following statements is most likely true with reference to the current market price of this bond? A) The bond would be selling at par value. B) The bond would be selling at a discount. C) The yield to maturity of this bond is above 4%. D) The bond would be selling at a premium.

B

One year ago, ABC Widgets, Inc., funded an expansion to its manufacturing facilities by issuing a 20-year first mortgage bond. The bond is secured by the new building and land. The bond was issued with a 5.5% coupon and is currently rated Aa. The current market price of the bond is 105, resulting in a current yield of approximately A) 5.50%. B) 5.24%. C) 5.61%. D) 4.99%.

B

Programs allowing for the direct pass-through of losses and income to investors include all of the following except A) oil and gas drilling direct participation programs. B) REITs. C) S corporations. D) new construction real estate direct participation programs.

B

The most common form of investment vehicle for venture capital is A) the limited liability company. B) the limited partnership. C) the venture capital fund of funds. D) the corporate venture capital funds.

B

The shares of the LMN closed-end management investment company are selling at $45, while LMN's net asset value (NAV) is $40. It would be most accurate to say that LMN's shares are trading at A) an 11.1% premium to NAV. B) a 12.5% premium to NAV. C) an 11.1% discount to NAV. D) a 12.5% discount to NAV.

B

The term derivative would apply to all of the following except A) forwards B) hedge funds C) options D) futures

B

Under the Investment Company Act of 1940, SEC Rule 12b-1 allows a fund to charge distribution and sales expenses to net assets as a percentage of the total assets. Normally, the cost of distribution of the shares is paid by the underwriter out of the sales load paid by the individual purchaser. For a fund to impose 12b-1 charges, which of the following conditions apply (applies)? I The board of directors has sole approval authority. II The majority of the outstanding shares has sole approval authority. III Both the board and the majority of outstanding shares must approve it. IV A distribution plan must be written. A) I and III B) III and IV C) II and III D) I only

B

Under the Investment Company Act of 1940, which of the following statements is true about an investment company that wishes to contract with an outside investment adviser to manage its portfolio? A) The initial contract must be approved by either the board of directors or a majority vote of the outstanding shares. B) The contract between the investment company and the investment adviser must be in writing. C) The contract must provide for a minimum notice of at least two weeks if the contract is to be terminated. D) The investment adviser must be under common control with the investment company.

B

When a bank that is a member of the Federal Reserve System borrows from another member bank, the rate that is charged is known as A) the call loan rate. B) the federal funds rate. C) the prime rate. D) the discount rate.

B

When a bond is selling at a premium, a bond callable at par will A) have a YTC that is more than the coupon. B) have a YTC that is less than the YTM. C) have a current yield that is less than the YTM. D) have a YTM that is more than the coupon.

B

When discussing employment and production, which of the following industries are typically more affected by a recession? Capital goods Consumer durable goods Consumer nondurable goods Services A) III and IV B) I and II C) II and IV D) I and III

B

Which of the following best describe the balance sheet formula? I Assets minus liabilities equals net worth. II Sales minus expenses equals operating income. III Liabilities plus equity equals assets. IV Dividends plus retained earnings equals net income. A) I and IV B) I and III C) II and IV D) II and III

B

Which of the following is not considered a derivative? A) Futures contract B) Unit investment trust C) Warrant D) Call option

B

Which of the following regarding corporate debentures are true? They are certificates of indebtedness. They give the bondholder ownership in the corporation. They are unsecured bonds issued to finance capital expenditures or to raise working capital. They are the most senior security a corporation can issue. A) III and IV B) I and III C) II and IV D) I and II

B

Which of the following statements regarding the economics of fixed-income securities are true? I Short-term interest rates are more volatile than long-term rates. II Long-term interest rates are more volatile than short-term rates. III Short-term bond prices react more than long-term bond prices given a change in interest rates. IV Long-term bond prices react more than short-term bond prices given a change in interest rates. A) II and III B) I and IV C) II and IV D) I and III

B

Which of the following would make a corporate bond more subject to liquidity risk? Short-term maturity Long-term maturity High credit rating Low credit rating A) II and III B) II and IV C) I and IV D) I and III

B

Which term refers to the taxation, expenditures, and debt management of the federal government? A) Open-market operations B) Fiscal policy C) Monetary policy D) Revenue code procedures

B

Which type of contract obligates both parties to act? I Forward contract II Futures contract III Options contract IV Warrant A) II and III B) I and II C) I and IV D) I, II, and III

B

You have a client who is bullish on XYZ stock and currently owns 100 shares that last traded at $50. He has a CD coming due in March, six months from now, and is afraid that by the time those funds are available, XYZ will have shot up in price. How can he ensure that he'll be able to pick up the stock at today's price six months from now and not miss out on that market appreciation? A) Sell an XYZ March 50 put option. B) Buy an XYZ March 50 call option. C) Buy XYZ stock rights. D) Buy an XYZ March 50 put option.

B

Your client in the 35% federal income tax bracket currently owns some corporate bonds with a coupon yield of 7%. In order to receive the same income after taxes, he would need to buy municipal bonds with a coupon of A) 9.45%. B) 4.55%. C) 7.00%. D) 2.45%.

B

A client in the 30% tax bracket owns a 5% XYZ, Inc., debenture due to mature shortly. What yield in a municipal bond will result in the same after-tax return that now exists has with the debenture? A) 2.0% B) 1.5% C) 3.5% D) 5.3%

C

A client is interested in purchasing a REIT and asks you what the differences are between a listed REIT and an unlisted REIT. You could respond that all of the following are differences except A) suitability requirements. B) liquidity. C) fees and expenses. D) regulatory oversight.

C

A customer has been following several investment company quotes in the newspaper. She notices that the GEM Fund has an net asset value (NAV) of $12 and an ask price of $12.50, and that the ABC Fund has an NAV of $11.50 and an ask price of $10.98. The customer should conclude that A) both are open-end funds. B) ABC and GEM are both unit investment trusts. C) GEM may be an open- or closed-end fund and ABC is a closed-end fund. D) ABC is an open-end fund and GEM is a closed-end fund.

C

A customer purchased new issue bonds at par two years ago. Since then, the cost of living as measured by the consumer price index (CPI) has declined by almost half and the current yield on the bonds has also declined. Which of the following best describes the value of the bonds purchased? A) Their market price has declined. B) It cannot be determined from the information presented. C) Their market price has increased. D) Their market price has remained unchanged.

C

A prospect has primary investment objectives of current income and safety of principal. During the initial public offering of a closed-end government bond fund, an agent explains to the prospect that the fund invests in U.S. government-backed bonds, which are very safe as to principal, and plans to make monthly distributions. Little could therefore go wrong. Taken as a whole, this representation is A) misleading because government bonds experience considerable credit risk. B) accurate because the fund invests in government bonds. C) misleading because closed-end fund shares are subject to market pricing. D) accurate because the fund offers current income.

C

A purchaser of which of the following investments has an obligation? A) Stock rights B) Options C) Forwards D) Warrants

C

A respected analyst reports that last week's T-bill rate at 6% is lower than the rate for the preceding week and lower than the average for the past month. Which of the following is true? A) The general level of interest rates is increasing. B) Stock prices are rising. C) Investors are paying more for T-bills. D) Investors are paying less for T-bills.

C

A retiree contacts an agent to discuss investing his retirement savings of approximately $2.1 million. His investment objective is long-term growth. The agent and customer discuss the advantages and disadvantages of diversifying among five different mutual funds within two fund families, as opposed to purchasing within just one fund family. Consequently, the agent made the following purchase recommendations: XYZ Emerging Growth Class B $495,000 XYZ Research Class B $310,000 XYZ Investors Growth Stock Class B $495,000 ABC Capital Enterprise Class B $495,000 ABC Capital Opportunity Class B $310,000 Total $2,105,000 These recommendations are A) suitable because the customer fully understands all of the ramifications and is satisfied. B) suitable because they achieve the diversification the customer seeks. C) unsuitable because Class A shares in either (or both) fund family could be purchased for a sales charge breakpoin

C

Among the characteristics of exchange-traded funds (ETFs), what distinguishes them from mutual funds is that A) their NAV is computed daily. B) they are registered with the SEC. C) they are traded on listed exchanges. D) their portfolio may be designed to mimic an index.

C

An investor buys five put contracts with a strike price of $55 per share. The current price of the underlying stock is $60 and the option premium is $7. The commission schedule is as follows: Trade Amount: Commission Rate: ≤ $2,500 $35 + 0.9% of trade amount $2,501-$11,999 $35 + 0.7% of trade amount ≥ $12,000 $35 + 0.5% of trade amount Using the information provided, what is the total commission cost for this trade? A) $199.50 B) $297.50 C) $59.50 D) $39.90

C

An investor in the 28% income tax bracket is considering purchasing either an 8% municipal bond or a 10% corporate bond. Which of the following regarding the bonds is true? A) The yield difference cannot be determined. B) The corporate bond yield is higher than the municipal yield after taxes. C) The municipal yield is higher than the corporate yield on an after-tax basis. D) The yields of the bonds are equivalent on an after-tax basis.

C

An investor invests $25,000 into the KAPCO Balanced fund. It would be unlikely for this investor to be required to pay a CDSC when redeeming A) any shares, regardless of class. B) Class C shares. C) Class A shares. D) Class B shares.

C

Country A develops a new product that is in high demand around the world. The likely effect of this would be A) a decrease in the value of the currency of Country A. B) an increase in the income tax rates of Country A. C) a trade surplus for Country A. D) a trade deficit for Country A.

C

Federal securities laws require publicly traded companies to disclose certain information on a regular basis. Which of these forms must be submitted quarterly? A) Form 8-K B) Form PF C) Form 10-Q D) Form 10-K

C

If the net present value of a series of discounted cash flows is less than zero, one could conclude that A) the internal rate of return equals the discount rate. B) the return on investment is higher than the internal rate of return. C) the discounted cash flows are lower than the investment outlay. D) the rate of return is higher than the cost of capital.

C

Investors interested in acquiring convertible debentures as part of their investment portfolio would A) want the assurance of a guaranteed dividend on the underlying common stock. B) be interested in tax advantages available to convertible debt securities. C) want the safety of a fixed-income investment along with potential capital appreciation. D) seek to minimize changes in the bond price during periods of steady interest rates.

C

Issuing callable bonds is advantageous to the issuer because it allows the company to A) take advantage of high interest rates. B) call in the bonds at less than par value and capture the difference as income. C) replace a high, fixed-rate issue with a lower issue after the call date. D) issue fixed-income securities at a yield lower than usual.

C

One of the most important definitions found in the Investment Company Act of 1940 is that of investment company. Included in that definition are all of the following except A) unit investment trusts. B) face-amount certificate companies. C) REITs. D) management investment companies.

C

Standardized equity options are issued and guaranteed by A) the Commodities Futures Trading Commission (CFTC). B) the National Futures Association (NFA). C) the Options Clearing Corporation (OCC). D) the Chicago Board Options Exchange (CBOE).

C

The Administrator may, by rule, A) suspend the registration of a federal covered adviser because the contract did not meet the requirements for a state-sanctioned investment advisory contract. B) allow an agent to waive provisions of the USA. C) forbid investment advisers registered in that state from taking custody of client funds. D) suspend federal law if the Administrator believes it to be in the public interest.

C

The gross domestic product (GDP) for the United States is composed of A) the sum of all goods and services, imports, and foreign investments. B) the national debt. C) the sum of all consumer goods, capital goods, and services produced in the United States and net exports to other countries. D) the balance of payments.

C

When compared to mutual funds, which of the following statements regarding hedge funds is least accurate? A) Hedge funds are generally only appropriate for qualified investors. B) Hedge funds use derivatives to a greater extent. C) Hedge funds tend to be more diversified in order to hedge risk. D) Hedge funds can take both long and short positions.

C

Which of the following U.S. government securities do not bear a stated interest rate but are sold at a discount through weekly auctions? A) Treasury bonds B) TIPS C) Treasury bills D) Treasury notes

C

Which of the following definitions involving derivatives is inaccurate? A) A long straddle consists of a long call and a long put on the same underlying stock with the same strike price and the same expiration date. B) The seller of a put option has a neutral outlook. C) A call option gives the owner the right to sell the underlying asset at a specific price for a specified time period. D) An option writer is the seller of an option.

C

Which of the following investment vehicles provides for redemption by the issuer? A) Face-amount certificate (FAC) B) Closed-end fund (CEF) C) Unit investment trust (UIT) D) Exchange-traded fund (ETF)

C

Which of the following is not a leading economic indicator? A) New housing permits B) Money supply C) Duration of unemployment D) Orders for durable goods

C

Which of the following statements describes the federal funds rate? A) Base rate on corporate loans at large U.S. money center commercial banks B) Charge on loans to depositary institutions by the New York FRB C) Rate charged on reserves traded among commercial banks for overnight use in amounts of $1 million or more D) Charge on loans to brokers on stock exchange collateral

C

Which of the following statements regarding a unit investment trust is not true? A) It invests according to stated objectives. B) It is considered an investment company. C) Overall responsibility for the fund rests with the board of directors. D) It charges no management fee.

C

Which of the following would probably not be an attractive investment during periods of rising inflation? A) Gold B) Real estate C) Corporate bonds D) Oil stocks

C

Yield curve analysis plays an important role as a benchmarking and forecasting tool for the future direction of interest rates. In most cases, this analysis involves examining bonds of A) varying quality of similar maturities. B) similar quality over varying maturities. C) a single issuer over varying maturities. D) varying quality over a number of maturities.

C

You have a client who originally invested $25,000 into the ABC Growth Fund. Over the past five years, there have been no distributions and the value of the shares is now $35,000. If the client should ask about exchanging the entire holding for shares of the ABC Income Fund, you would explain that A) the new shares would be acquired at the public offering price. B) taking advantage of the exchange privilege results in taxes being deferred until the liquidation of the account. C) there is a long-term capital gain of $10,000. D) the new shares will have the same cost basis as the old ones.

C

A bond with a par value of $1,000 and a coupon rate of 8% paid semiannually is currently selling for $1,150. The bond is callable in 10 years at $1,100. In the computation of the bond's yield to call, which of these would be a factor? A) Future value of $1,150 B) 60 payment periods C) Present value of $1,100 D) Interest payments of $40

D

A business reporter claims that we are suffering from inertial inflation. This means A) the economy is about to enter a deflationary period. B) the business cycle is heading toward a trough. C) prices are increasing at a steady rate. D) the current rate of inflation will remain at this level until economic shocks cause it to change.

D

A client asks her investment adviser representative what footnotes to the financial statements are for. The best reply would be that footnotes A) contain a detailed history of the enterprise and its products or services. B) are used to explain how the various ratios are computed because companies recognize that many shareholders do not have a financial background. C) serve as a bibliography indicating where additional information may be obtained. D) contain information that doesn't have a place in the main body of the financial statements.

D

A mutual fund would have net redemptions when A) the fund is performing below the average of other funds with the same objectives. B) the fund manager is selling more securities in the portfolio than are being purchased. C) the fund increases its sales charge. D) the number of shares being liquidated by investors exceeds those being purchased.

D

All of the following actions will increase the deficit in the U.S. balance of payments except A) U.S. foreign aid. B) investments by U.S. firms abroad. C) Americans buying Japanese cars. D) the purchase by foreigners of U.S. securities.

D

An investor purchasing gold bullion is most likely looking for an investment that is A) exchange traded. B) income producing. C) cyclical. D) countercyclical.

D

Corporations have found that one way to increase employee motivation is to grant options to purchase stock in the company. Incentive (qualified) options differ from nonqualified options in all of the following respects except A) the holder of an ISO can recognize capital gain (loss) as a result of exercise and sale, whereas ordinary income (loss) is the result with an NSO. B) there is a maximum 10-year limit for exercising an ISO; no such time limit exists for an NSO. C) ISOs may only be granted to employees, while NSOs may be given to virtually anyone. D) at the time of the grant, the recipient of the grant of the ISO has no income tax consequences while the recipient of the NSO treats the bargain element as compensation.

D

If the value of the U.S. dollar increases against other currencies, which of the following are true? I U.S. exports are more competitive in foreign countries. II U.S. exports are less competitive in foreign countries. III Foreign imports into the United States are more competitive in U.S. markets. IV Foreign imports into the United States are less competitive in U.S. markets. A) I and IV B) II and IV C) I and III D) II and III

D

The SEC requires that reporting companies (those registered with the SEC) file certain information within specified time limits. Which of the following reports carries the shortest time limit? A) Annual report B) Form 10-K C) Form 10-Q D) Form 8-K

D

When a bank's reserve account is running low, it might choose to borrow from the Fed. When doing so, the bank will be charged A) the federal funds rate. B) the prime rate. C) the call loan rate. D) the discount rate.

D

When a broker-dealer registers with the state Administrator, which of the following persons are automatically registered as agents of the broker-dealer in the state? A) Agents registered in another state who are employed by the broker-dealer B) Those persons employed at the broker-dealer prior to its registration in the state C) Persons employed by the broker-dealer who are residents of the state but employed in a state other than that of the Administrator D) Any agent who is a partner, officer, or director, or a person occupying a similar status or performing similar functions

D

Which of the following are the most common characteristics of a REIT? It is traded on an exchange or over the counter. It is professionally managed. It passes through both gains and losses to investors. It is a type of limited partnership. A) III and IV B) II and III C) I and IV D) I and II

D

Which of the following investments would not be considered exchange-traded derivatives? A) Warrants B) Options C) Futures D) Forwards

D

Which of the following statements best describes a preemptive right? A) The right given to existing holders of a company's stock enabling them to vote ahead of preferred stockholders B) The right given to existing holders of a company's stock enabling them to receive dividends in proportion to their equity in the company C) A privilege extended to existing holders of a company's common stock enabling them to sell their shares when additional shares are issued D) A privilege extended to existing holders of a company's common stock enabling them to maintain their proportionate interest in the company when additional shares are issued

D

Which of the following would not be considered a defensive security? A) Tobacco stock B) Food chain stock C) Utility company stock D) Steel company stock

D

With respect to the specific commodity that is the subject of the contract, all of the following are standardized parts to an exchange-traded futures contract except A) the quantity. B) the quality. C) the time for delivery. D) the market price.

D

Capital Structure consist of what?

Debt and Equity

Fiscal Policy=

Debt management

What are exempt transactions under the USA.

Isolated non issuer, Unsolicited, and Transactions between issuers and underwriters

List the yields greatest to least if the bond is selling at a premium

N CY YTM YTC

How do you work a conversion price problem?

Par/Conversion price = # of shares Market Price/ x = Parity

What does SOFR mean?

Secured Overnight Federal Rate

List the yields greatest to least if the bond is selling at a discount

YTC YTM CY N