Series 7 Quiz/Progress Exam Questions to Know
At expiration, an option that's in-the-money by at least $____ will be automatically exercised by the OCC
$0.01
What is the beta of the market (S&P 500)?
1
With index options, remember that there's no physical delivery of shares at the time of exercise. Instead, the writer of the option pays the buyer of the option an amount of cash that's equal to the difference between the contract's strike price and index value (the in-the-money amount). This cash amount is due ____ business day after the option is exercised.
1
The ex-dividend date for cash settlement trades is?
1 business day following the Record date
FINRA rules concerning Order Audit Trail System (OATS) reporting requirements are broken down into three areas:
1) Order Origination & Receipt 2) Order transmittal 3) Order Modifications, Cancellations & Executions
BrokerCheck provides information on individuals who are currently registered or have been registered within the last ____ years
10
For a delivery to be considered good delivery on stock transactions, certificates must be delivered in multiples of ____ shares
100
All equity options expire at?
11:59 pm ET on the 3rd Friday of the expiration month
he term high beta is usually associated with a beta of greater than?
2.0 and offers a customer a high risk, high reward investment
Once an Automated Customer Account Transfer Service (ACATS) transfer request has been validated, depository-eligible securities should be transferred within?
3 business days
After a registered person resigns or is terminated from a member firm, the firm is required to notify FINRA within ____ days on Form ____ and must provide the applicable details
30 U5
For DVP/RVP accounts delivery and payment can be made as late as ____days after the trade date
35
Member firms are required to maintain a separate file of all written complaints in each office of supervisory jurisdiction (OSJ) for?
4 years
An expiring option will cease trading at?
4pm ET
Although the option doesn't actually expire until 11:59 p.m., a buyer must express her intent to exercise the option by?
5:30pm ET
At times, registered representatives are asked to provide the executor with information regarding the value of securities for estate tax purposes. If this is the case, the securities are generally valued as of the date of death or as of an alternative date that's _____ months after the date of death
6
Disputes for FINRA Code of Arbitration must be filed within ___ years of occurrence
6
What is the Capital Asset Pricing Model (CAPM)?
A model of the relationship between expected risk and expected return
A municipal tombstone advertisement must be approved by?
A municipal securities principal
For a corporation that's in the 21% tax bracket, which of the following choices will provide the best return if the corporation wants to invest some of its surplus cash? A) A preferred stock paying a 7.50% dividend B) A corporate bond yielding 8% C) A common stock yielding 6% D) A municipal bond yielding 6%
A preferred stock paying a 7.50% dividend (Corporations receive a tax advantage on dividends that they received from investments in preferred stock and common stock of other corporations.)
LRR Corporation has earned $1.10 per share in each of the last four quarters and has paid out 20% of its earnings in the form of a cash dividend. If the stock is selling at $48 a share, what is its price/earnings ratio? A) 10.9 B) 13.6 C) 21.8 D) 43.6
A) 10.9 The price/earnings ratio is found by dividing the market price of $48 by the annual earnings per share.
Which of the following is considered a TRACE-eligible security? A) A U.S. government bond B) A municipal bond C) A foreign government bond D) Common Stock
A) A U.S. government bond TRACE-eligible securities include U.S. dollar denominated foreign and U.S. corporate bonds, debt securities issued by the U.S. government and U.S. government-sponsored enterprises (GSE). Foreign government securities, municipal securities and corporate money-market instruments are not TRACE-eligible
Which of the following description best defines the term duration? A) A measure of a fixed-income security's relative interest-rate risk B) A measure of a fixed-income portfolio's average yield C) The period before a fixed-income security will be called D) The measure of volatility that compares an equity security to the S&P 500 Index
A) A measure of a fixed-income security's relative interest-rate risk
An investor is looking for an investment that will generate deductions but also provide the potential for future cash flow. Which of the following is NOT an appropriate investment? A) A raw land program B) An existing properties real estate program C) An oil and gas drilling program D) An oil and gas exploratory program
A) A raw land program All of the choices provide potential for future cash flow and deductions except for a raw land program. In a raw land program, deductions are negligible and the profit potential comes in the form of capital appreciation, not cash flow
A conservative investor has a long-term time horizon. He wants an investment that will provide him with long-term capital appreciation, and will not be too volatile. Which of the following funds would be the MOST suitable for him? A) A value fund B) A growth fund C) A fund of funds D) An emerging markets fund
A) A value fund Of the choices given, a value fund would be the best option for the investor. As with a growth fund, the main objective of a value fund is long-term capital appreciation. Value funds are usually considered less volatile than growth funds, since they invest in companies that are priced low in relation to their earnings. They also tend to invest in more mature companies that are more likely to pay regular dividends than pure growth funds. Both a fund of funds and an emerging markets fund would be too risky for him
If a mutual fund changes or adds a portfolio manager, the greatest effect would be on the fund's: A) Alpha B) Beta C) Rating D) Expense Ratio
A) Alpha Simply stated, alpha is often considered to represent the value that a portfolio manager adds or subtracts from a fund portfolio's return
Which of the following choices is a valid reason for a carrying broker to protest an account transfer request? A) An account title mismatch B) A nontransferable asset C) An unsatisfied margin balance D) An unsettled trade
A) An account title mismatch
An investor had purchased a municipal bond at a discount which is currently selling at a premium. This is an example of: A) Appreciation B) Accretion C) Capital Gain D) Amortization
A) Appreciation
A member firm has decided to send all client account statements on a quarterly basis. The practice would: A) Be permitted B) Be permitted if there is no activity in the account C) Not be permitted, since all statements must be sent no less frequently than monthly D) Not be permitted, since statements must be sent monthly if there is activity in the account
A) Be Permitted SRO rules require member firms to send account statement no less frequently than quarterly, regardless of activity in the account. While it is normal practice for firms to send statements monthly when there is activity in the account, it is NOT required.
A customer sells 1,000 shares of stock and asks for the actual time of the execution. For a branch office manager, what is the appropriate action? A) To state that the firm is able to provide this information on written request B) To state that it is impossible to know the time of the trade C) To send the customer a copy of the order ticket D) To indicate that the customer should contact the equity trading desk
A) To state that the firm is able to provide this information on written request According to the SEC's confirmation rules, a broker-dealer must automatically disclose the time of execution or indicate that the time of execution is able to be furnished on written request by a customer
A customer's niece has third party authorization and has recently been appointed to be the customer's trusted contact person. Although the customer seemed disoriented when she appointed her niece, the paperwork was still signed. The niece begins making cash withdrawals and changing investments in the account. When the registered representative contacts the customer to confirm the transactions, the customer sounds surprised; however, she states, "since it's my niece, just go along with it." What action should the registered representative take? A) Contact a principal of the firm to discuss the niece's withdrawals. B) Contact a principal of the firm to discuss the niece's withdrawals. C) Contact the customer to suggest that she appoint a different trusted contact person. D) Contact the customer to suggest that she appoint a different trusted contact person.
A) Contact a principal of the firm to discuss the niece's withdrawals.
A transaction for a stock that's not DTCC eligible settles on a regular-way basis. This means that settlement occurs: A) In two business days at the buyer's premises B) In two business days at the seller's premises C) In four business days at the buyer's premises D) In four business days at the seller's premises
A) In two business days at the buyer's premises Regular-way settlement for stock transactions is in two business days. In most cases, settlement occurs electronically through DTCC. In this question, since the seller must make physical delivery of the securities, settlement takes place at the buyer's premises
If a firm places a temporary hold on a customer's account: A) It applies to either the entire account or specific disbursements B) It applies to the entire account C) It only applies to specific disbursements D) It is required to obtain the prior approval of FINRA
A) It applies to either the entire account or specific disbursements
Which of the following descriptions regarding the Capital Asset Pricing Model (CAPM) is NOT TRUE? A) It predicts future values for the stock B) It was developed to explain the behavior of security prices C) It provides a mechanism to assess risk and return D) It is based on the efficient market theory and assumes investors act rationally
A) It predicts future values for the stock
Which of the following actions by an applicant for registration are grounds for statutory disqualification? A) Making false or misleading statements concerning her business relationship with a person who has been banned from the securities industry B) Failing to graduate from high school C) Conviction in U.S. federal court of a securities-related felony 15 years ago D) Failing to notify the firm of a felony indictment for which the applicant was not convicted
A) Making false or misleading statements concerning her business relationship with a person who has been banned from the securities industry
When a margin requirement is designed to consider that the risk of one position is offset by another position, i.e., having a long S&P 400 position offset by a short S&P 100 position, this approach to calculating a margin requirement is considered: A) Portfolio-based B) Strategy-based C) Derivative-based D) Inversely correlated
A) Portfolio-based
A municipality may issue a Direct Pay Build America Bond to finance all of the following activities, EXCEPT to: A) Refund a mass transportation bond B) Raise capital to expand its school system C) Make a primary offering to establish a public sewer system D) Raise additional capital for a government housing project
A) Refund a mass transportation bond A Direct Pay Build America Bond may be used to raise capital for the same purposes as regular tax-exempt municipal debt, except for refundings, working capital, and private activity bonds.
A client's trusted contact person request a meeting with the client's registered representative (RR) and the client. The meeting location is the client's house, but when the RR arrives at the meeting, he's told that the client recently had a breakdown and cannot get out of bed. The trusted contact person asks for an account review, then requests a disbursement from the account for a family vacation. After getting back to the office and talking to his supervising principal about the meeting, what should be the RR's next step? A) Refuse the disbursement. B) Send the disbursement to the trusted contact person as long as a written request is obtained. C) Freeze the account until speaking with the client in person. D) Freeze the account until speaking with the client in person.
A) Refuse the disbursement.
A fundamental analyst is NOT interested in which TWO of the following metrics? A) Short interest and trading volume B) Current ratio and EPS C) The P/E ratio and working capital D) The P/E ratio and EPS
A) Short interest and trading volume
Which of the following factors is the LEAST useful when analyzing the credit risk of an issuer of general obligation bonds? A) The London Interbank Offered Rate (LIBOR) B) The tax base of the issuer C) The amount of unfunded pension liabilities D) The schedule of debt service requirements
A) The London Interbank Offered Rate (LIBOR) Current interest rates are factors that will affect all bond issuers and (of the given choices) is the LEAST useful when analyzing the credit risk of a specific issuer of general obligation bonds.
To compute equity in a margin account with both short and long positions, the formula is: A) The long market value plus the credit balance minus the short market value minus the debit balance B) The long market value minus the credit balance minus the short market value minus the debit balance C) The long market value plus the debit balance minus the short market value minus the credit balance D) The long market value plus the credit balance plus the debit balance minus the short market value
A) The long market value plus the credit balance minus the short market value minus the debit balance
On the NYSE, an investor enters an order to buy 400 shares of HRJ at $56 per share. Which of the following statements is TRUE regarding this order? A) The order may be partially filled B) The order must be executed in its entirety or not at all C) The order must be executed immediately or cancelled D) An order must be executed at $56 before this order can be executed
A) The order may be partially filled Since the order specifies a price, it's a limit order. A limit order may be executed at the limit price or better
A broker-dealer is underwriting an IPO. When is it permissible for a registered representative of the broker-dealer to be allocated shares? A) When the shares are allocated by the issuer and are not part of the underwriting allocation of the broker-dealer. B) When the shares are allocated by the issuer and are not part of the underwriting allocation of the broker-dealer. C) When the shares are allocated by the issuer and are not part of the underwriting allocation of the broker-dealer. D) Never, since RRs are restricted persons.
A) When the shares are allocated by the issuer and are not part of the underwriting allocation of the broker-dealer. Typically, registered representatives (RR) are restricted persons and not permitted to buy equity IPOs. However, an RR may purchase shares of an IPO if she buys them from the issuer (i.e., issuer-directed). The shares being purchased by the RR must be separate from the shares being allocated to the broker-dealer as a part of the underwriting.
An employee of a broker-dealer owns shares of XYZ in his personal account. His spouse is a director of XYZ Corporation. If XYZ is engaged in a secondary offering of stock, can shares be purchased in a joint account that's owned by the employee and his spouse? A) Yes, because secondary offerings are permitted to be sold to restricted persons. B) Yes, because secondary offerings are permitted to be sold to restricted persons. C) Yes, but only in the personal account of the spouse who's not a director of the issuer. D) No, unless there are unsold portions of the secondary offering.
A) Yes, because secondary offerings are permitted to be sold to restricted persons. Only the sale of initial public offerings (IPOs) of equity securities are prohibited to restricted persons. Since secondary offerings are not considered new issues, they can be sold to associated persons of broker-dealers. Since the spouse is a director of the issuer, the sale would be permitted even if it was an IPO.
What is a form of risk-adjusted return for an asset?
Alpha
What is a derivative security that may be used to speculate on the movement of an underlying asset, to protect an existing position, or to generate income in a portfolio?
An Option
Which of the following statements is TRUE regarding numbered accounts? A) An account may never be identified by a number B) Only a cash account may be identified by a number, provided the customer's name is on file C) Only a margin account may be identified by a number, provided the customer's name is on file D) Any type of account may be identified by a number, provided the customer's name is on file
Any type of account may be identified by a number, provided the customer's name is on file
The balancing of asset classes according to an investor's financial objectives in order to maximize returns for a given level of risk is known as?
Asset Allocation
A collateralized debt obligation (CDO) is BEST defined as a type of?
Asset Backed Security
Regulation NMS applies to which of the following choices? A) Listed debt trades B) Listed equity trades C) Quotes available for manual execution D) OTC equity trades
B) Listed equity trades
What is the maximum allowable percentage that may be sold above the original size of the offering that the syndicate can purchase from the issuer through a Green Shoe option? A) 10% B) 15% C) 20% D) 25%
B) 15%
Which of the following bonds has the most interest-rate risk? A) A three-month Treasury bill B) A 30-year Treasury STRIP C) A 6%-coupon, 30-year Treasury bond D) A 3%-coupon, five-year Treasury note
B) A 30-year Treasury STRIP Based on longest maturity and lowest coupon and since TSRIPS are zero coupon it has the lowest coupon rate in theory
Regulation SHO requires which of the following actions? A) A broker-dealer is required to be a market maker in order for its customers to execute short sales. B) A broker-dealer must satisfy the locate requirement before allowing a customer to execute a short sale. C) The customer is required to locate the stock in order to execute a short sale. D) Before executing a short sale, a customer is required to deposit 100% of the short sale amount.
B) A broker-dealer must satisfy the locate requirement before allowing a customer to execute a short sale.
When reading a research report on an automobile company, a registered representative's use of fundamental analysis determines that the stock is a good investment. When attempting to determine the best time to execute orders to buy the stock, the registered representative could refer to: A) A chart showing the price-earnings ratio for all automobile stocks B) A chart showing a recent history of the market price of the stock C) The company's dividend payout ratio D) The research report's past earning for the company
B) A chart showing a recent history of the market price of the stock
The breadth of the market is indicated best by the: A) Put-Call Ratio B) Advance-Decline Figures C) DJIA D) Short Interest Ratio
B) Advance Decline Figures
An equity security that is distributed under the provisions of Regulation S may be resold in U.S. markets: A) Immediately B) After a one-year waiting period is satisfied C) After regulatory approval is obtained from an SRO D) After a 40-day waiting period is satisfied
B) After a one-year waiting period is satisfied
A client wants to invest $250 per month and have broad exposure to the U.S. equity market. Which of the following recommendations is the MOST suitable for this client? A) A managed closed-end fund B) An S&P 500 Index mutual fund C) An S&P 500 Index exchange-traded fund D) An DJIA exchange-traded fund
B) An S&P 500 Index mutual fund Although each of these investments are suitable for a client who's seeking broad exposure to the U.S. equity market, the mutual fund is the most cost-effective method. The closed-end fund shares are purchased on an exchange and the client pays the current market price plus a commission. Exchange-traded funds (ETFs) also trade on an exchange. While most broker-dealers are not charging a commission on ETF trades, some still do charge a commission. Index mutual funds don't assess front-end or back-end sales charges (i.e., they're no-load funds)
How can a client minimize principal risk in bonds due to fluctuating interest rates? A) Buy long-term maturities B) Buy short-term maturities C) Buy discount bonds D) Do periodic trading to lock in maturities
B) Buy short-term maturities
Which of the following statements is TRUE concerning a customer who purchases an original issue discount (OID) U.S. government security? A) Each year the customer will pay both federal and state income tax B) Each year the customer will pay only federal income tax C) Each year the customer will not pay any tax D) The customer will only pay tax at maturity
B) Each year the customer will pay only federal income tax
Which of the following terms relates to the graph of optimal portfolios resulting from a comparison of risk and return? A) CAPM B) Efficient Frontier C) Duration D) Alpha
B) Efficient Frontier
Before a broker-dealer may offer a portfolio margin program to its clients, the firm must obtain approval from: A) The options exchange B) FINRA C) SEC D) The OCC
B) FINRA
Level I of Nasdaq indicates the: A) Cumulative trading volume of the security listed B) Inside market for the security listed C) Price of transactions as they occur D) Market makers for the security listed
B) Inside market for the security listed
Which of the following statements is NOT a feature of GNMA pass-through certificates? A) They are backed by the U.S. government B) Interest is subject to federal tax but is exempt from state tax C) Interest and principal payments are made on a monthly basis D) Pools consist of fixed-rate residential mortgages
B) Interest is subject to federal tax but is exempt from state tax Fully Taxable for all GSEs like Fannie Mae, Freddie Mac and Ginnie Mae
What represents the financial picture of a company as of a specific date?
Balance Sheet
Which of the following statements is TRUE concerning Modern Portfolio Theory? A) Portfolio management should be based on the risk and return of individual securities B) Portfolio management should focus on diversification among different classes of assets C) Portfolio management should focus only on the best performing securities D) Portfolio management should always avoid securities with greater risk
B) Portfolio management should focus on diversification among different classes of assets Modern Portfolio Theory creates optimal portfolios based on a client's risk tolerance and investment objectives, by allocating the portfolios among various classes of securities. It does not focus on individual securities or avoid risk. Instead, it focuses on diversifying investments across a wide spectrum of securities
The subscription agreement for a limited partnership does NOT specify: A) Suitability standards B) Priority provisions upon liquidation C) To whom the check must be made payable D) Who must sign the agreement
B) Priority provisions upon liquidation
If a company declares a cash dividend, which of the following is TRUE? A) Shareholders' equity increases B) Shareholders' equity decreases C) Current assets decrease D) Current assets increase
B) Shareholders' equity decreases It is important to note that this question refers to the declaration of a cash dividend, not the payment of a cash dividend. If a company declares a cash dividend, dividends payable (a current liability) will increase by the amount of the announced dividend and the retained earnings (part of shareholders' equity) will be reduced
If a portfolio manager is focused on keeping a client's assigned asset allocation properly balanced over the long term, she is using a: A) Tactical asset allocation strategy B) Strategic asset allocation strategy C) Risk management approach of laddering D) Rebalancing Approach
B) Strategic asset allocation strategy Strategic asset allocation attempts to maintain the assigned allocation over a long period and is more passive in nature than a tactical asset allocation strategy
When determining whether a customer is suitable to invest in a direct participation program, which of the following is NOT required? A) The customer is or will be in an appropriate financial position that will enable him to realize the tax benefits which are a significant aspect of the program. B) The customer is or will be in an appropriate financial position that will enable him to benefit from passive losses which are significant aspect of the program. C) The customer has a net worth that's sufficient to sustain the risks inherent in the program, including lack of liquidity. D) The customer has a net worth that's sufficient to sustain the risks inherent in the program, including the loss of investment.
B) The customer is or will be in an appropriate financial position that will enable him to benefit from passive losses which are significant aspect of the program.
When considering the credit strength of a municipal issuer, which TWO choices are the MOST important? A) The financial condition of the local economy and money supply figures B) The financial condition of the local economy and the general capability of the fiscal officers of the municipality C) The current financial status of the U.S. economy and money supply figures D) The current financial status of the U.S. economy and the general capability of the fiscal officers of the municipality
B) The financial condition of the local economy and the general capability of the fiscal officers of the municipality
A technical analyst does NOT review: A) The advance-decline theory B) The price-earnings ratio of the Dow Jones stocks C) Short interest D) The Trendline Theory
B) The price-earnings ratio of the Dow Jones stocks
A customer sells securities at $35 that she previously purchased at $29. The confirmation for the sale includes: A) The cost basis of $29 B) The sales proceeds of $35 C) Both the cost basis of $29 & the sales proceeds of $35 D) The profit of $6
B) The sales proceeds of $35
A registered representative enters an order for a client. In error, the RR purchases shares of the wrong security. Which of the following statements is TRUE? A) The shares must be placed in the RR's error account B) The shares must be placed in the broker-dealer's error account C) The RR must contact the client and cancel the original transaction D) The firm is required to report the error to the market in which the order was executed
B) The shares must be placed in the broker-dealer's error account All broker-dealers are required to maintain an error account. It is used by a broker-dealer if the firm or an RR executes a trade in error (e.g., the wrong security or the wrong side of the market). RRs do not have an error account. It is maintained by the firm. The firm should execute the original transaction immediately and maintain a record of the error. The firm is not required to notify the market where the order entered in error was executed.
Which of the following statements is TRUE concerning Trade Reporting and Compliance Engine (TRACE) reports? A) The system is used for mutual funds B) The system is used for corporate bonds C) The system is used for money-market instruments D) The system is used for municipal bonds
B) The system is used for corporate bonds
All of the following are characteristics of interval funds, EXCEPT: A) Their shares typically don't trade in the secondary market. B) They're only required to calculate their net asset value when investors redeems their shares. C) They typically charge investors a redemption fee. D) They're permitted to invest in private placements.
B) They're only required to calculate their net asset value when investors redeems their shares. Interval funds have an ongoing requirement to calculate their net asset value
Real estate investment trusts (REITs) invest in all of the following, EXCEPT: A) Shopping Centers B) Undeveloped Land C) Golf Courses D) Self Storage Facilities
B) Undeveloped Land Undeveloped land would not generate income and, therefore, would not be part of a REIT investment.
As a retirement vehicle, which of the following choices would probably provide the greatest protection of purchasing power? A) Fixed annuities B) Variable annuities C) Corporate bonds D) Mortgage backed securities
B) Variable annuities Variable annuities, theoretically, provide the greatest protection against loss of purchasing power. The payout is based on the securities (mostly equity securities) in the separate account, which historically have increased in inflationary periods. This provides for a larger cash payout to offset the effects of inflation. The other choices given have a fixed payout and do not offer protection against the loss of purchasing power in inflationary period
A customer is short 100 ABC at $120. The market is moving up sharply and the customer decides to cover her short position. The customer instructs her registered representative to cover the short position at the market on the close. The order: A) Will be executed only at the closing price of the day B) Will be executed as close as possible to the closing price C) Will be executed at any price within the last 15 minutes of trading D) Is not permitted to be entered by a retail customer
B) Will be executed as close as possible to the closing price
What Index represents the average of the prices of 40 long-term municipal bonds adjusted to a yield of 6%?
Bond Buyer Municipal Bond Index
Is the Dow Jones Industrial Average considered broad or narrow?
Broad
As is the case with Form U4 and U5, any information that's processed on this form feeds into the Central Registration Depository system and some of the content may be available to the public through FINRA's?
BrokerCheck System
Money received by a corporation when it sells its stock above its par value is called: A) Excess Capital B) Earned Surplus C) Paid-in Capital D) Stockholders' capital
C) Paid-in Capital
If a person adds cash, accounts receivable, and marketable securities and then divides by current liabilities, the result is: A) Current Ratio B) Cash Assets Ratio C) Quick Asset Ratio D) Working Capital
C) Quick Asset Ratio
In a _____ ______ arbitration proceeding, one public arbitrator decides the case based on written evidence and arguments, unless the public customer demands/consents to a hearing or the arbitrator calls for a hearing.
Simplified Customer
An account has $140,000 in fully paid marginable securities, $50,000 in non-marginable securities, and $80,000 of cash. What's the total amount of stock that can be purchased on margin? A) $230,000 B) $130,000 C) $300,000 D) $160,000
C) $300,000 Customers can buy two times the amount of cash they have in their account (e.g., Buy $160,000 stock, pay cash for $80,000 and create a debit of $80,000 in margin account). Marginable securities have a loan value of 50%, which means the customer can use 50% of the marginable securities' market value instead of a cash deposit. This means a customer could use 100% of the marginable securities' value to buy another stock on margin. For example, a customer could buy $140,000 of XYZ stock on margin; using $140,000 of marginable ABC stock. The customer would get credit for 50% of ABC's market value for $70,000 (i.e., $140,000 ABC x 50% loan value). The customer could then borrow the remaining $70,000 and increase their debit balance to acquire the $140,000 of XYZ stock. In this question the customer could buy a total of $300,000 on margin ($160,000 using cash + $140,000 loan value from marginable securities). Non-marginable securities don't provide customers with any loan value.
A customer is long both ABC stock and XYZ stock in his margin account. The ABC shares are trading at $20 per share and have a total value of $5,000. The XYZ shares are trading at $30 per share and have a total value of $6,000. The customer's debit balance is $5,000. If the price of ABC increases to $60 per share, what's the customer's new aggregate SMA balance? A) $10,500 B) $5,000 C) $5,500 D) $16,000
C) $5,500 A customer is long both ABC stock and XYZ stock in his margin account. The ABC shares are trading at $20 per share and have a total value of $5,000. The XYZ shares are trading at $30 per share and have a total value of $6,000. The customer's debit balance is $5,000. If the price of ABC increases to $60 per share, what's the customer's new aggregate SMA balance?
XYZ Corporation has $40 million of convertible bonds outstanding. Each bond is convertible into 20 shares of common stock. The conversion price is: A) $20 B) $25 C) $50 D) $100
C) $50 To find the conversion price, divide the $1,000 par value by the 20-share conversion ratio. This equals a conversion price of $50 ($1,000 par value divided by the 20-to-1 conversion ratio equals $50). The amount of bonds outstanding is not relevant in calculating the conversion price.
All of the following persons are permitted to be named as a trusted contact person for a senior investor, EXCEPT: A) A Family Member B) A Business associate C) A Law Firm D) A friend
C) A Law Firm To be a trusted contact person for a senior investor, the only requirements are that the person must be a natural person (not a law firm) and be at least 18 years old.
If interest rates increase, which of the following securities has the LARGEST price change? A) A Treasury note trading at a discount B)A Treasury note trading at a premium C) A Treasury bond trading at a discount D) A Treasury bond trading at a premium
C) A Treasury bond trading at a discount
The Bond Buyer contains a 20-Bond Index and an 11-Bond Index. The bonds included in the 11-Bond Index have an average rating of: A) AAA- B) AA C) AA+ D) A+
C) AA+
If a customer intends to engage in intraday trading and has an investment objective of capital growth, she may purchase: A) An index fund B) An index option C) An ETF D) A balanced fund
C) An ETF Of the choices given, only an ETF offers an investor the ability to engage in short-term trading and meet the objective of capital growth. Both index and balanced funds offer capital growth, but not short-term trading; on the other hand, index options offer short-term trading, but not capital growth
Which of the following investors would be LEAST suitable for an oil and gas direct participation program (DPP)? A) An investor in the highest federal tax bracket B) A retired investor who is in the highest federal tax bracket C) An investor who is concerned about the alternative minimum tax D) An investor who recently inherited $5,000,000
C) An investor who is concerned about the alternative minimum tax An investment in an oil and gas limited partnership may have excess depletion and depreciation as well as excess intangible drilling costs. These are tax preference items and may result in an investor being subject to the alternative minimum tax (AMT). The other investors may or may not be suitable for an oil and gas DPP. It would depend on many other factors. However, an investor concerned about the AMT would not want to invest in a security that normally has tax preference items
In a new municipal issue, what is a group order? A) An order placed by three or more members B) An institution purchasing bonds from a syndicate C) An order allowing all members to benefit D) A dealer buying for a group of investors
C) An order allowing all members to benefit
In order to be eligible for portfolio margin, a client must: A) Be an accredited investor B) Have at least $500,000 of investable assets at a firm C) Be approved for uncovered writing D) Have a minimum five years' experience in derivatives investing
C) Be approved for uncovered writing
In a customer's margin account, the interest charged on the debit balance is typically based on the: A) Prime Rate B) Federal Fund Rate C) Broker Call Rate D) LIBOR
C) Broker Call Rate
Which of the following securities has prepayment risk? A) Mortgage bonds issued by a utility company B) Bonds issued by Freddie Mac C) Collateralized mortgage obligations D) Commercial paper
C) Collateralized mortgage obligations Careful the Freddie Mac mentioned security is a bond just like the utility company which do not have a repayment risk not a mortgage backed pass through certificate
The process of a customer instructing his bank to deliver cash when securities are received from the clearing firm, is referred to as: A) Receipt versus Payment (RVP) B) Depository Trust Company (DTC) C) Delivery versus Payment (DVP) D) Power of Attorney (POA)
C) Delivery versus Payment (DVP)
Of the following broad-based indicators, the one with the narrowest measure of the market is the: A) Standard and Poor's 500 Index B) Wilshire Associates Equity Index C) Dow Jones Composite D) New York Stock Exchange Composite Index
C) Dow Jones Composite he Dow Jones Composite contains only 65 stocks
Which of the following choices is a feature of the Nasdaq Level II System? A) The price of transactions as they occur B) The cumulative volume of stocks traded as they occur C) Firm quotes of all the market makers in a stock D) Allowing a market maker to change his quotes
C) Firm quotes of all the market makers in a stock Nasdaq Level I shows the highest bid and lowest offer. This is known as the inside market. Level II shows firm quotes and the market makers who are making a market in the security. Level III allows the market makers to change their quotations in the system.
Buy-stop orders or sell-stop orders can provide all the following features, EXCEPT: A) Provide price protection for a short position B) Provide price protection for a long position C) Give a broker discretion when the order is activated D) Possibly cause a fluctuation in the market price of a stock
C) Give a broker discretion when the order is activated
Where can an investor find the remuneration of the CEO of an investment company? A) In the corporation's semiannual report B) From a nationally recognized statistical ratings organization (NRSRO) C) In the corporation's annual report D) From FINRA's BrokerCheck system
C) In the corporation's annual report
During periods of deflation, which of the following investments tends to perform the best? A) Common Stock B) Treasury inflation-protected securities C) Long-term debt D) Short-term debt
C) Long-term debt
A customer calls his representative to place a sell limit order at 24.925 when the stock is trading at 24.25 - 24.92. The representative should: A) Submit the order B) Submit the order as a market order C) Reject the order D) Submit the order after changing the limit price
C) Reject the order The Sub-Penny Rule prohibits accepting and displaying orders in pricing increments of less than one penny, unless the stock's value is less than $1.00
Which of the following investors is LEAST likely to purchase a collateralized debt obligation (CDO)? A) Agawam Commercial Bank & Trust Company B) Oakdale Pension Fund C) Robert & Susan Abramowitz, JTWROS D) Lincolnshire Hedge Fund
C) Robert & Susan Abramowitz, JTWROS Due to their highly complex nature, CDOs are generally not suitable for retail investors. A CDO (collateralized debt obligation) is a sophisticated financial instrument that begins with an individual loan (such as a mortgage or corporate debt). These loans are placed in a pool, and investors then purchase a security (bond, tranche, slice) that represents an interest in that pool. Each of these securities has a different maturity and credit risk, depending on the nature of the collateral behind it. This type of investment carries many risks and considerations that make it largely unsuitable for a typical retail investor.
Which of the following choices will NOT affect the SMA in a long margin account? A) Cash dividends paid on securities in a margin account B) Cash deposited in the account to reduce the debit balance C) Stock dividends paid on securities held in the margin account D) Appreciation in market value of the securities in a margin account
C) Stock dividends paid on securities held in the margin account
If an investor expects interest rates to fall significantly in the next two years, what would be the most appropriate investment? A) T-bills B) T-notes C) T-bonds D) Mortgage pass through certificates
C) T-bonds Long-term bond prices are more volatile than short-term bond prices. If the investor expects interest rates (yields) to decline, the investor is anticipating rising bond prices. Of the four choices, the investment that would appreciate the most is the Treasury bonds
Which of the following securities will provide an investor with protection against purchasing-power risk? A) T-bills B) T-notes C) TIPS D) STRIPS
C) TIPS
A registered representative's customer has recently died and her son has come to the broker-dealer's office with physical securities. What's the best course of action for the registered representative (RR)? A) Contact the customer's trusted contact person. B) Tell the customer's son to contact the DTCC which will handle the probate process. C) Tell the customer's son to contact the transfer agent since the shares were registered in his mother's name. D) Tell the customer's son to contact the transfer agent since the shares were registered in his mother's name.
C) Tell the customer's son to contact the transfer agent since the shares were registered in his mother's name. Tell the customer's son to contact the transfer agent since the shares were registered in his mother's name.
In which of the following documents are bid limitations for a new municipal bond issue found? A) The Official Statement B) The Indenture C) The Notice of Sale D) The Syndicate Letter
C) The Notice of Sale
Which of the following systems is used to report information on the origination, transmittal, and execution of an equity security? A) The Trade Reporting Facility (TRF) B) The Trade Reporting and Compliance Engine (TRACE) C) The Order Audit Trail System (OATS) D) The National Securities Clearing System (NSCC)
C) The Order Audit Trail System (OATS)
A trader at your firm executes an order for a corporate bond. The trade must be reported to the: A) Trade Reporting Facility (TRF) B) OTC Reporting Facility (ORF) C) Trade Reporting and Compliance Engine (TRACE) D) Real-Time Transaction Reporting System (RTRS)
C) Trade Reporting and Compliance Engine (TRACE) The Trade Reporting and Compliance Engine is a reporting system that was created to provide greater transparency in the bond market. The Trade Reporting Facility is the reporting system for stocks listed on Nasdaq. The OTC Reporting Facility is a reporting system for non-Nasdaq or OTC equity securities, which are quoted on the OTCBB or in the OTC Pink Market (Pink Sheets). The Real-Time Transaction Reporting System is the reporting system for municipal bonds.
Which TWO of the following securities are typically sold at a discount? A) TIPS and bankers' acceptances B) TIPS and collateralized mortgage obligations C) Treasury bills and bankers' acceptances D) Treasury bills and collateralized mortgage obligations
C) Treasury bills and bankers' acceptances
A woman with a low income has saved $5,000 to invest for her young son's college education. Which of the following investments would be the MOST appropriate? A) T-bills B) Municipal bonds C) Zero-coupon bonds D) A real estate limited partnership
C) Zero-coupon bonds Since the woman has a low income, municipal bonds and limited partnerships would not be of benefit. Since the son is young, a long-term investment would be most appropriate
What system is an automated database that contains information concerning the employment and disciplinary histories of registered persons?
Central Registration Depository (CRD)
What is this point called when the buyer and seller must agree on the terms of the transaction?
Clear the Trade
An auction rate security (ARS) is a type of investment that has its interest rate or dividend rate reset periodically. The reset rate is referred to as the?
Clearing Rate
What FINRA Code of Conduct rule establishes the process that's used for the settlement of disputes between members and other members, between members and any clearing corporation, or between member firms and persons associated with a member, but not for disputes between a member firm and FINRA?
Code of Arbitration
The PSA Model is used when pricing?
Collateralized Mortgage Obligations
Dividend Payout Ratio =
Common Dividend / EPS
How is book value per share calculated?
Common stockholders' equity / number common shares outstanding
In a ____ _____ arbitration proceeding, one public arbitrator decides the case without a hearing, unless the demand for a hearing is made by either of the parties involved
Simplified Industry
P/E Ratio =
Current Market Price / EPS
Who is responsible for safeguarding the mutual fund's cash and securities and collecting dividend and interest payments from these securities?
Custodian
What theory states that all known relevant information is reflected in a security's price?
Efficient Market Theory (Random Walk Theory)
The initial transaction in a margin account is a short sale of 100 shares of stock at $17.50 a share. The customer will be required to deposit: A) $0 B) $875 C) $1,750 D) $2,000
D) $2000
On October 25, Mr. Smith purchased 5 listed XYZ Corporation July 50 calls and paid a $3 premium on each call. The current market price of XYZ Corporation is $48 per share. According to SRO rules, when will the calls expire? A) 2:00 p.m. Central Time, 3:00 p.m. Eastern Time on the third Friday of the month B) 3:10 p.m. Central Time, 4:10 p.m. Eastern Time on the third Friday of the month C) 4:30 p.m. Central Time, 5:30 p.m. Eastern Time on the third Friday of the month D) 10:59 p.m. Central Time, 11:59 p.m. Eastern Time on the third Friday of the month
D) 10:59 p.m. Central Time, 11:59 p.m. Eastern Time on the third Friday of the month
A 75-year-old client is looking for a high level of income for his retirement fund. He wants to maintain a balance between income and safety of principal. Which of the following funds will MOST LIKELY meet this requirement? A) A high-yield fund B) An investment-grade fund C) A balanced fund D) A GNMA fund
D) A GNMA fund Now, what remains are the investment-grade fund and the GNMA fund. The GNMA fund is a better choice; but why? For starters, the GNMA fund will consist of GNMA securities which are fully backed by the U.S. government. In contrast, the investment-grade bond fund will consist of bonds that are issued by corporations with ratings as high as AAA and as low as BBB. Overall, the backing of a corporation is not as secure as the backing of the U.S. government. It's important to note that neither fund is backed by the government; instead, it's the contents of the GNMA fund that's backed by the U.S. government. Although the investment-grade fund may pay a little more in income, another benefit of the GNMA fund is that it will pay more interest than Treasury securities because GNMA yields are based on mortgages. These two facts are what make the GNMA fund a better choice for this investor.
A registered representative (RR) has changed broker-dealers. The RR is in the process of implementing the Automated Customer Account Transfer Service (ACATS) for all of the clients he has done business with over the past five years. The previous employer may NOT take which of the following actions? A) Attempt to convince the clients to remain with the firm B) Refuse to transfer positions in proprietary mutual funds C) Accept an order from a client to liquidate her entire account D) Accept an order from a client to liquidate her entire account
D) Accept an order from a client to liquidate her entire account
On a when-issued municipal bond transaction, the interim confirmation will show the: A) Settlement date B) Final money amount C) Accrued interest amount D) Accrued interest amount
D) Accrued interest amount
Securities purchased under a Rule 147 exemption may be sold to an out-of-state resident: A) Immediately B) After 30 days C) After 3 months D) After 6 months
D) After 6 months
A registered person is concerned that his boss is making inappropriate advances. This allegation must be settled by: A) Arbitration B) Litigation C) Mediation D) Any method of the registered person's choosing, including remediation through the court system
D) Any method of the registered person's choosing, including remediation through the court system FINRA rules require that disputes between firms, a firm and its employee, or a firm and a clearing corporation must go to arbitration. An exception exists when the dispute involves statutory discrimination claims, such as sexual harassment. The aggrieved party (the employee) may choose mediation, or may pursue his claim in either arbitration or the court system
Prior felony convictions must be disclosed on Form U4 if the conviction occurred: A) Within the last 2 years B) Within the last 5 years C) Within the last 10 years D) At any time
D) At any time Any person filing Form U4 is required to disclose all felony convictions regardless of when they occurred. The person seeking registration will be statutorily disqualified if the conviction was within the last 10 years. The person may be registered if she requests and receives permission at a special hearing
Which of the following statements concerning duration is TRUE? A) A well-diversified index stock fund will have duration of approximately 1.0. B) Due to their extended holding period, long-duration funds are right only for young investors with a suitable time horizon. C) Duration is the measurement of the period in which a CDSC will be assessed on a Class B share. D) Duration is a measurement of a given bond's sensitivity to interest-rate swings.
D) Duration is a measurement of a given bond's sensitivity to interest-rate swings.
If an investor was primarily interested in safety of principal, which of the following securities would you LEAST likely recommend? A) State GO Bond B) GNMA security C) Railroad equipment trust bond D) Industrial development revenue bond
D) Industrial development revenue bond Industrial development revenue bonds are secured by a lease agreement with a corporation and are only as secure as the corporation. State GOs are generally of high quality and a GNMA is secured by the U.S. government. The holder of an equipment trust bond has a lien on the equipment that secures the issue.
Which of the following statements is TRUE regarding a trade using the seller's option settlement? A) It must settle on the same day as the trade date. B) It must settle on the next business day after the trade date. C) It must settle within two business days after the trade date D) It must settle at least three business days after the trade date
D) It must settle at least three business days after the trade date A seller's option settlement is an extended settlement and is used when the seller is unable to deliver on a cash or regular-way settlement basis. This type of settlement must be agreed to by both the buyer and the seller, and must settle at least three business days after the trade date
Which of the following annuities offers the shortest surrender period to avoid sales charges? A) B Shares B) A Shares C) C Shares D) L Shares
D) L Shares
Which of the following choices gives the best indication of current interest rates on revenue bonds? A) Visible Supply B) Placement Ratio C) List of 20-bonds D) List of bonds with 30-year maturities
D) List of bonds with 30-year maturities The Bond Buyer computes the Revenue Bond Index which is the average yield of 25 revenue bonds with 30-year maturities
A CMO would be suitable for an investor seeking: A) Monthly tax-free income, assuming he does need the principal returned at maturity B) Quarterly income, assuming he does not need the principal returned at maturity C) Monthly income, assuming he needs the entire principal returned at maturity D) Monthly income, assuming he does not need the entire principal returned at maturity
D) Monthly income, assuming he does not need the entire principal returned at maturity CMOs pay monthly income made up of interest, which is taxable, and principal, which is a tax-free return of capital. Due to the structure of a CMO, a fluctuating amount of principal is returned monthly, not at maturity, which makes CMOs different from most other fixed-income securities
The stock that's borrowed by a customer to facilitate a short sale must be returned within: A) 5 business days B) 7 business days C) only after a profit or loss is realized D) No specified time period; however, the broker-dealer can demand that the shares be returned at any time
D) No specified time period; however, the broker-dealer can demand that the shares be returned at any time
Upon the death of the insured, the proceeds of a variable life policy: A) Are taxable as ordinary income B) Are taxable as long-term gains C) Are taxable as long-term gains D) Pass to the beneficiary free from federal income tax
D) Pass to the beneficiary free from federal income tax
A customer, who is going on vacation, enters a GTC order to buy a stock. The order is executed. The customer tells the registered representative that he wants the stock but will not return in time to pay for the security by the payment date. The customer states he will send in a check a few days late. The registered representative should: A) Cancel the trade B) Pay for the stock himself with a principal's approval C) Transfer the order to a margin account D) Request an extension
D) Request an extension The customer has indicated that he wants to purchase the stock but will not be able to pay for it in time because he will be on vacation. The order was a good-until-cancelled (GTC) order, so the customer did not know if and when the order would be executed. The reason for the late payment is due to the customer being on vacation. This is a valid reason, and the registered representative should request an extension.
Which of the following municipal securities are MOST likely to be backed by ad valorem taxes? A) Special assessment bonds B) State general obligation bonds C) Certificates of participation D) School district bonds
D) School district bonds Ad valorem tax is a tax whose amount is based on the value of property (i.e., property tax is a form of ad valorem tax). Local governments, such as school districts, secure their general obligation bonds by ad valorem taxes. On the other hand, state G.O. bonds are secured by forms of taxes other than property taxes (e.g., income and sales tax)
Which of the following statements is NOT TRUE regarding a comparison of strategic versus tactical asset allocation? A) Strategic asset allocations are passive and tactical asset allocations are more active strategies. B) Strategic asset allocation has a long-term outlook, while tactical asset allocation encompasses short-term decisions. C) Strategic asset allocation has a long-term outlook, while tactical asset allocation encompasses short-term decisions. D) Strategic asset allocation has a short-term outlook, while tactical asset allocation encompasses long-term decisions.
D) Strategic asset allocation has a short-term outlook, while tactical asset allocation encompasses long-term decisions.
For a new municipal issue, which of the following choices is the responsibility of the underwriting syndicate? A) To file the official statement with the SEC B) To submit the final official statement to FINRA C) To hire the bond counsel that provides the legal opinion D) To submit the official statement to the MSRB's EMMA system
D) To submit the official statement to the MSRB's EMMA system
The largest portion of the underwriting spread in a new municipal securities issue is the: A) Commission B) Additional Takedown C) Concession D) Total Takedown
D) Total Takedown
An investor's goal is to buy a security that establishes a fixed return, for a long period, with no reinvestment risk. Which of the following securities BEST suits the investor's needs? A) Treasury Bonds B) Common Stock C) Highly rated corporate bonds D) Treasury STRIPS
D) Treasury STRIPS The typical yield-to-maturity calculation assumes that each interest payment is reinvested at the same yield. There is no guarantee that the investor could reinvest at the same yield (reinvestment risk). Treasury STRIPS are zero-coupon bonds (long-term). Interest is automatically reinvested and compounded at the same yield and reinvestment risk is avoided
Are Visible Supply figures compiled daily or weekly?
Daily
Which of the following choices is NOT present in an equipment leasing program? A) Depletion B) Depreciation C) Interest Expense D) Possibility of Recapture
Depletion
What securities are those that may be deposited at the clearing agency for which ownership can be transferred through bookkeeping entries rather than through physical delivery of certificates?
Depository Eligible Securities
What system allows investors to hold securities in book-entry form, rather than receiving physical delivery?
Direct Registration System
What are some of the advantages offered by mutual funds?
Diversification Professional Management Liquidity Exchanges at NAV Convenience Recordkeeping
When transacting business for a discretionary account, the registered representative must have written power of attorney (POA) authorizing him to act for the customer. How often must this be updated?
Doesn't have to be updated
What date represents the date on which a stock begins to trade without its dividend?
Ex-dividend date
What describes the disciplinary process used in the event that a member firm or any of its associated persons violate FINRA rules, SEC rules, or fail to pay dues or assessments.?
FINRA's Code of Procedure
Rules for settlement of contracts between member firms are governed by?
FINRA's Uniform Practice Code
The date on which customer payment must be made (Reg. T payment) is set by?
FRB
The Investment Company Act of 1940 identified 3 different types of investment companies
Face Amount Certificate Unit Investment Trusts Management Companies
A broker-dealer is NOT required to maintain a record of which of the following items? A) Institutional Communication B) Final Prospectus C) Customer Complaints D) Research Reports
Final Prospectus
Private label mortgage-backed securities are issued by?
Financial Institutions
Important items for a fundamental analysts includes what 4 things?
Financial Statements (Balance Sheet & income statement) Company product line Experience & expertise of the company's management Outlook for the company's industry
What analysis focuses on analyzing individual companies and their industry groups?
Fundamental Analysis
What analysis relies on reviewing financial statements and other forms of traditional research to ascertain the prospects of a given securities issuer
Fundamental Analysis
What type of analysts is interested in earnings per share (EPS), the Price-to-Earnings (P/E) ratio, current ratio, and working capital?
Fundamental Analysts
The spot prices of foreign currencies are determined?
In the Interbank Market
A U.S. importer needs to purchase British pounds to pay for a shipment of goods. The exchange of U.S. dollars for British pounds would occur: A) On the Philadelphia Stock Exchange B) In the Interbank market C) In the third market D) In the over-the-counter market
In the Interbank market Foreign exchange rates are established in the Interbank market. The Interbank market involves the purchase and sale of foreign currencies between commercial banks. The Philadelphia Stock Exchange is where foreign currency option transactions take place.
TIPS are subject to what type of risk?
Interest Rate Risk
A mutual funds prospectus includes what information about the fund?
Investment Objectives Investment policies & restrictions Principal risk of investing in the fund Performance information Fund's Managers Operating Expenses Sales Charges Classes of Shares the fund offers How the fund's NAV is calculated How investors redeem or purchase shares Exchange Privileges
What's the FINRA filing requirements for communication that's exclusively made available to institutions?
Its not required to be filed with FINRA
For inventory purposes, what is the benefit of using LIFO versus FIFO during an inflationary period?
LIFO would create lower earnings; therefore, a lower tax expense.
When orders are entered at increasing or decreasing prices to influence the direction, it's referred to as?
Layering
For customers who are subject to the alternative minimum tax, a registered representative should understand the implications of investing in?
Limited Partnership
Auction Rate Securities are considered what type of security?
Long-term investments with short period twists where interest rates or dividend payments that are reset at frequent intervals
If a client eliminates unsystematic or diversifiable risk in his portfolio, he is willing to accept ______ risk
Market
What is an informal process in which the two parties to a dispute attempt to reach a mutually acceptable resolution without resorting to arbitration or litigation?
Mediation
According to the _____ _____Theory, a graph of optimal portfolios can be created on what is referred to as the efficient frontier
Modern Portfolio
What is a system that facilitates the reporting and clearing of Nasdaq and OTC transactions by allowing order-entry and market-making firms to enter priced trades?
Nasdaq's Automated Confirmation Transaction Technology Platform
EPS Ratio =
Net Income - Preferred Dividend / Common Shares Outstanding
The sponsor of the ABC Funds wants to publish some advertisements in several personal finance magazines which describe the past performance of ABC's Balanced Fund. Which documents can contain the fund's performance?
Omitting Prospectus & Supplemental Sales Literature
What type of companies are more commonly referred to as mutual funds?
Open-Ended Management Companies
Define earnings before interest and taxes (EBIT)
Operating income (adjusted for other income (or expenses) that is not generated by normal operations
The transfer agent will not remove the legend unless the client has obtained the consent of the issuer in the form of an?
Opinion Letter
What allows FINRA to effectively review market activity that relates to customer orders within a member firm, to conduct surveillance, and to enforce rules?
Order Audit Trail System (OATS)
Cash dividends received from REITs are taxed as?
Ordinary Income
The sales charge of a mutual fund share is stated as a percentage of the POP and the percentage is calculated using the following formula?
POP - NAV / POP
What is the reporting system for municipal bonds?
Real Time Transaction Reporting System
What is operated by the MSRB and is open each business day from 7:30 a.m. until 6:30 p.m. Eastern Time. Transactions that are reported to the system will be made available to registered securities associations and to other appropriate regulatory agencies in order to assist in compliance and enforcement of MSRB rules?
Real Time Transaction Reporting System (RTRS) Rule G-14
What regulation requires a broker-dealer to make a notation on every sell order ticket to indicate whether the transaction is a long sale or a short sale?
Regulation SHO
The index showing the average yield on 25 revenue bonds with 30-year maturities is called the ______________________.
Revenue Bond Index
What analysts seek to predict the future performance of marketable securities?
Securities Analysts
If trade settlement cannot be completed on a regular-way or for-cash basis, the seller may request a ____ _____ settlement?
Sellers Option
Ultimately, the buyer is expected to pay for the security and the seller is expected to deliver the security. This simultaneous payment and delivery process between the two parties is referred to as?
Settlement
______ arbitration procedures are used if the amount in dispute doesn't exceed $50,000
Simplified
What securities are those that are considered investment-grade by one nationally recognized statistical ratings organization (NRSRO) and non-investment-grade by another NRSRO?
Split-Rated Securities
Entering orders with the intent to cancel them just prior to execution is referred to as?
Spoofing
A Yes answer to any of the questions related to violations of laws or SRO rules generally requires an explanation on the appropriate disclosure reporting page (DRP) of the U4 and could lead to a?
Statutory Disqualification
What type of asset allocation strategy may include the periodic rebalancing of the portfolio on a monthly, quarterly or annual basis in order to keep the original asset allocation intact?
Strategic
The beta of a stock is useful when measuring?
Systematic Risk (Market Risk)
What type of asset allocation strategy is more dynamic and attempts to exploit inefficiencies in the markets by rebalancing the portfolio frequently in response to changes in economic and market conditions?
Tactical
Which of the following factors is the most important to consider when deciding to recommend a municipal bond unit investment trust to a client? A) Age B) Tax Bracket C) Ability to Tolerate Risk D) Amount is Retirement Accounts
Tax Bracket (While it is useful to know all of these things about a client, the tax advantages of municipal bonds are most important to clients in higher tax brackets. For clients in low tax brackets, a taxable investment is often more appropriate than a tax-exempt security.)
What analysis focuses on market sentiment or trading trends?
Technical Analysis
What is a reporting system that was created to provide greater transparency in the bond market?
The Trade Reporting and Compliance Engine
In which the following situations would the NAV per share of a fund decline? A) The fund pays a dividend and all shareholders choose to reinvest B) The investment adviser liquidates some portfolio positions C) Fund shareholders liquidate or add to their holdings D) The investment advisor uses the funds cash positions to buy more common shares of a company
The fund pays a dividend and all shareholders choose to reinvest
The most significant factor affecting the net asset value of a mutual fund on a day-to-day basis is?
The market value of the portfolio
A client is notified by his broker-dealer that certain trades may be executed by an electronic communication network (ECN). Which of the following choices is a risk of using this type of system? A) Trades are not subject to SRO regulations. B) The system can have excess liquidity. C) Higher commissions are possible. D) The system may only accept certain types of orders.
The system may only accept certain types of orders. (If the ECN cannot match a buyer with a seller, a client's order may not be executed (i.e., illiquid market). Some ECNs will accept only certain types of orders (e.g., limit order)
How do you determine the NAV of a mutual fund?
Total Net Assets / Number of Outstanding Shares
What was created to provide greater transparency in the corporate bond market, but it's not a quotation or an execution system?
Trade Reporting & Compliance Engine (TRACE)
What is the reporting system for stocks listed on Nasdaq?
Trading Reporting Facility
Who distributes capital gains and income dividends to the mutual fund's shareholders, and often handles the mailing of required documents such as statements and annual reports?
Transfer Agent
True or False: When prices are rising, switching from a LIFO to FIFO inventory method will reduce COGS?
True. Switching from a LIFO to FIFO inventory method will reduce COGS.
Regulators, states, and/or jurisdictions use Form ____ to report disciplinary actions against an RR or firm. FINRA also uses Form ___ to report final arbitration awards against RRs and firms
U6
Which type of insurance product has adjustable premium payments?
Variable Universal Life Insurance
Is the Placement Ratio compiled daily or weekly?
Weekly
What information can be found on the Consolidated Quotation System?
What information can be found on the Consolidated Quotation System?
Municipal bearer bonds that are in default of interest, trade?
With unpaid coupons attached
A Form 4 must be filed?
Within two business days of the date on which a director buys or sells securities
The tranche with the longest maturity and, therefore, the last to receive interest and principal payments within a CMO, is known as the?
Z-Tranche
An _____ _____ pools funds from numerous investors and purchases securities that are held in a portfolio for the benefit of those investors
investment company
A balance sheet is also called a?
statement of financial condition
The ex-dividend date is set by?
the SROs, e.g., FINRA
