Series 7 Study Questions

A customer buys 100 shares of ABC stock at $51 and sells 1 ABC Jan 50 Call @ $4. The market rises to $55 and the call is exercised. The customer has a: A. $300 profit B. $400 profit C. $500 profit D. $900 profit

A. $300 profit

A customer buys 1 ABC Jan 40 Call @ $8 and sells 1 ABC Jan 55 Call @ $2 when the market price of ABC is $43. The customer will profit or breakeven at all of the following prices EXCEPT: A. $40 B. $46 C. $50 D. $55

A. $40

Many years ago, a customer bought 100 shares of ABC stock at $40. The customer makes a single gift to his daughter this year of the stock when it is valued at $50. The stock is sold by the daughter when it is worth $55. For tax purposes, the daughter's cost basis in the security is: A. $40 per share B. $50 per share C. $55 per share D. $60 per share

A. $40 per share

A customer buys 1 ABC Jan 30 Call @ $12 and sells 1 ABC Jan 45 Call @ $3 when the market price of ABC is $38. The maximum potential gain is: A. $600 B. $900 C. $1,500 D. unlimited

A. $600

On the same day a customer sells 1 ABC Jan 50 Call @ $2 and buys 1 ABC Jan 35 Call @ $8 when the market price of ABC is $41 The maximum potential loss is: A. $600 B. $800 C. $900 D. unlimited

A. $600

A customer's short margin account is properly margined and shows a credit balance of $40,000. Interest would be charged on a balance of: A. 0 B. $10,000 C. $20,000 D. $40,000

A. 0

A husband and wife both work, earning $150,000 each. Both are age 45 and are covered by employer-sponsored qualified retirement plans. What is the maximum deductible contribution that can be made to an IRA in 2019? A. 0 B. $3,000 each C. $6,000 each D. $9,000 each

A. 0

A married couple has a combined net worth of $14,000,000. If one dies in 2019, the taxable amount of the estate to the surviving spouse is: A. 0 B. $2,600,000 C. $11,400,000 D. $14,000,000

A. 0

Under the "penny stock rule," an established customer that is exempt from the rule is defined as a person who has effected a securities transaction or made a deposit of funds or securities with that broker-dealer more than: A. 1 year previously B. 2 years previously C. 3 years previously D. 5 years previously

A. 1 year previously

Distributions from Section 403(b) tax deferred annuities are: A. 100% taxable B. partial tax free return of capital and partial taxable income C. 100% tax free D. 100% tax deferred

A. 100% taxable

A company has reported earnings per share of $8.75. The company paid a $2.75 per share preferred dividend and a $1.00 per share common dividend. The company's dividend payout ratio is: A. 11% B. 16% C. 31% D. 42%

A. 11%

The shortest initial maturity available for Treasury Bills is: A. 4 weeks B. 13 weeks C. 26 weeks D. 52 weeks

A. 4 weeks

Under Rule 606 of Regulation NMS, if requested by a customer, broker-dealers must disclose the market venues to which that customer's orders were directed during the preceding: A. 6 months B. 9 months C. 12 months D. 18 months

A. 6 months

The penalty for making an excess contribution to an Individual Retirement Account is: A. 6% of the excess contribution B. 10% of the excess contribution C. 20% of the excess contribution D. 30% of the excess contribution

A. 6% of the excess contribution

If a foreign broker-dealer that does not have U.S. based operations wishes to solicit customers in the United States, the broker-dealer: I must establish an SEC-registered U.S. subsidiary II is not required to establish an SEC-registered U.S. subsidiary III can effect its business through another registered U.S. broker-dealer IV cannot effect its business through another registered U.S. broker-dealer A. I and III B. I and IV C. II and III D. II and IV

A. I and III

If a long margin account is restricted: I 50% of the proceeds of any sale are credited to SMA II 100% of the proceeds of any sale are credited to SMA III 50% of the proceeds of any sale must be retained in the account IV 100% of the proceeds of any sale must be retained in the account A. I and III B. I and IV C. II and III D. II and IV

A. I and III

SMA in a long account will be affected by which of the following? I Sale of securities in the account II Decline in the market value of securities III Money received from the customer IV Interest charged on the debit balance A. I and III B. II and III C. II, III, IV D. I, III, IV

A. I and III

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

A. I and III

To determine the Net Interest Cost on a bid for a new municipal issuer, any discount specified by the bidder to the issuer: I increases the net interest cost II reduces the net interest cost III is added when determining net interest cost IV is deducted when determining net interest cost A. I and III B. I and IV C. II and III D. II and IV

A. I and III

The loan value of a LEAP option contract with over 9 months to expiration is: A. 0 B. 25% C. 50% D. 100%

B. 25%

Which of the following would be considered to be owners of a corporation? I Common Shareholders II Preferred Shareholders III Convertible Bondholders IV Warrant Holders A. I only B. I and II only C. I, II, IV D. I, II, III, IV

B. I and II only

Preferred stock is issued with an "anti-dilutive" covenant. If the corporation declares a 5% stock dividend, which statements are TRUE? I The conversion ratio is increased II The conversion price is increased III The conversion ratio is decreased IV The conversion price is decreased A. I and II B. I and IV C. II and III D. III and IV

B. I and IV

Treasury Notes: I pay interest semi-annually II pay interest at maturity III mature in under 1 year IV mature between 1 and 10 years A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which function would be performed by the registrar? A. verifying the record of all shareholder names and addresses B. acting as disbursement agent for the corporation C. issuing new stock certificates D. canceling old stock certificates

A. verifying the record of all shareholder names and addresses

Which of the following are TRUE statements regarding Treasury Bills? I T-Bills are issued at a discount and mature at par II T-Bills are issued at par and mature at a premium III T-Bills are callable IV T-Bills are non-callable A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE about items reviewed or approved by a principal? I Complaint letters received from customers must be reviewed by a principal II Complaint letters received from customers do not have to be reviewed by a principal III Internal documents of a brokerage firm must be reviewed by a principal IV Internal documents of a brokerage firm do not have to be reviewed by a principal A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE about the taxation of interest on securities issued by the Federal Farm Credit Banks Funding Corporation? I Interest is exempt from state and local taxes II Interest is subject to state and local taxes III Interest is exempt from Federal tax IV Interest is subject to Federal tax A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE regarding Regulation T and minimum maintenance requirements on exempt securities? I There is no Regulation T margin requirement for exempt securities II The Federal Reserve sets the Regulation T margin requirement for exempt securities III There is no minimum maintenance requirement for exempt securities IV FINRA sets the minimum maintenance requirement for exempt securities A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following projects would be financed by a general obligation bond issue? A. The construction of a new subway line B. The construction of a new junior high school C. The construction of a new hydroelectric generating plant D. The construction of a new sewage treatment plant

B. The construction of a new junior high school

Which statement is TRUE about 401(k) Plans? A. They are established by the corporate employee B. The cost basis in the plan is "0" C. The maximum contribution amount is lower than that permitted for a SIMPLE IRA D. Distributions at retirement age are tax-free

B. The cost basis in the plan is "0"

A broker-dealer who acted as financial advisor to a municipality in structuring a new issue now wishes to act as underwriter in a negotiated offering. Which statement is TRUE? A. This is only permitted in competitive bid underwritings B. The financial advisor is prohibited from acting as the underwriter C. The broker-dealer must disclose to the issuer in writing all compensation received from the issuer D. The broker-dealer must inform the issuer in writing that a potential conflict of interest exists

B. The financial advisor is prohibited from acting as the underwriter

A customer buys 1 ABC Jul 50 Put @ $3. The customer lets the contract expire. Which statement is TRUE? A. The holder has a $300 capital loss as of the date the contract was purchased B. The holder has a $300 capital loss as of the date the contract expires C. The holder has a $4,700 capital gain as of the date the contract was purchased D. The holder has a $4,700 capital loss as of the date the contract expired

B. The holder has a $300 capital loss as of the date the contract expires

The Federal Reserve will lend funds at the discount rate to: A. savings and loans B. commercial banks C. investment banks D. insurance companies

B. commercial banks

When the market is reaching an "overbought" condition, it is expected that the next market move will be: A. upwards B. downwards C. sideways D. either upwards or downwards

B. downwards

SEC Rule 10b-18 allows an issuer to buy its shares in the open market: A. at any price that is reasonably related to the current market B. at the highest independent bid or the last reported sale price, whichever is higher C. at the lowest independent offer or the last reported sale price, whichever is lower D. under no circumstances, since this is considered to be market manipulation

B. at the highest independent bid or the last reported sale price, whichever is higher

Stabilizing bids are permitted: A. only below the Public Offering Price B. at, or below, the Public Offering Price C. only at the Public Offering Price D. at, or above, the Public Offering Price

B. at, or below, the Public Offering Price

TRACE reports trades of all of the following EXCEPT: A. corporate bonds B. municipal bonds C. government bonds D. agency bonds

B. municipal bonds

Municipal bonds purchased in the primary market at a premium to par: A. may be amortized B. must be amortized C. must be accreted D. may be accreted

B. must be amortized

SEC Regulation FD covers: A. notification to customers of a member firm's privacy policies and practices B. selective disclosure of material non-public information by issuers C. standardization of disclosure of financial and non-financial information by issuers D. registration filings with the SEC by small business issuers

B. selective disclosure of material non-public information by issuers

ABC Company has outstanding 10% noncumulative preferred stock. Two years ago, ABC paid a 6% preferred dividend. Last year, ABC paid a 7% preferred stock dividend. This year, ABC wishes to pay a common dividend. The preferred shareholders must receive: A. 0% B. 7% C. 10% D. 17%

C. 10%

A trade is considered to be a "block trade" if the amount is for a minimum of: A. 100 shares B. 1,000 shares C. 10,000 shares D. 100,000 shares

C. 10,000 shares

In 2019, a customer buys a 3 3/4% U.S. Government bond maturing in 2028 at 104-16. The customer elects to amortize the bond premium for tax purposes. If the bond is sold after 2 years, its cost basis at that time is: A. 104-16 B. 104 C. 103-16 D. 103

C. 103-16

XYZ Corporation announces a 10% stock dividend, followed by a 5% "spin off" of a subsidiary business. A customer who owns 200 shares of XYZ will receive: A. 20 shares of XYZ and 10 shares of the spin-off B. 10 shares of XYZ and 10 shares of the spin-off C. 20 shares of XYZ and 11 shares of the spin-off D. 20 shares of XYZ and cash equal to 5% of the value of the spin-off

C. 20 shares of XYZ and 11 shares of the spin-off

A 25-year old man receives $50,000 and wants to retire at age 65 with an income of $1,500 per month from his investment portfolio. The adviser should invest: A. 100% in bonds and 0% in stocks B. 65% in bonds and 35% in stocks C. 25% in bonds and 75% in stocks D. 0% in bonds and 100% in stocks

C. 25% in bonds and 75% in stocks

Under FINRA rules, research reports approved by a supervisory analyst must be kept by member firms for: A. 6 months B. 2 years C. 3 years D. 5 years

C. 3 years

A seller who has filed Form 144 can sell 1% of the outstanding shares or the weekly average of the last 4 week's trading volume. This amount may be sold: A. 1 time a year B. 2 times a year C. 4 times a year D. 12 times a year

C. 4 times a year

A corporation earned $200,000,000 after tax. The corporation pays $120,000,000 in preferred dividend and then pays a common dividend of $60,000,000. What is the dividend payout ratio? A. 30% B. 60% C. 75% D. 90%

C. 75%

The Consolidated Quotations Service is open during the hours of: A. 9:00 AM ET - 4:00 PM ET B. 9:30 AM ET - 4:00 PM ET C. 9:00 AM ET - 6:30 PM ET D. 9:30 AM ET - 6:30 PM ET

C. 9:00 AM ET - 6:30 PM ET

Which statements are TRUE about the NYSE automated trading system? I Orders are routed directly to the Specialist (DMM) for execution II Use of the system eliminates floor brokerage fees III Any size order can be accommodated on the system IV Completed trades are reported electronically without the use of floor generated execution tickets A. I and III B. III and IV C. I, II, IV D. I, II, III, IV

C. I, II, IV

Which of the following statements are TRUE regarding repurchase agreements? I Repurchase agreements typically mature in 1 to 90 days II Repurchase agreements are used by the Federal Reserve to influence money supply levels III Investors in repurchase agreements have no price risk IV Investors in repurchase agreements have no interest rate risk A. I and II only B. III and IV only C. I, II, and III only D. I, II, III, IV

C. I, II, and III only

Under MSRB rules, a registered representative can perform which of the following functions? I Trading municipal issues in the secondary market II Offering call and put options on municipal securities to customers III Overseeing the activities of other municipal registered representatives IV Offering new municipal issues to retail customers A. I and II only B. III and IV only C. I, II, and IV D. I, II, III, IV

C. I, II, and IV

To impose the maximum sales charge, under FINRA rules, mutual funds must offer investors which of the following benefits? I Breakpoints II Plan Completion Insurance III Rights of Accumulation IV Letter of Intent A. I and II only B. III and IV only C. I, III and IV D. I, II, III, IV

C. I, III and IV

Which of the following statements about 403(b) Plans are TRUE? I Contributions are tax deductible to the employee II Employees of any organization can contribute to this type of plan III Employees make voluntary contributions through their employers IV Earnings on contributions by employees are tax deferred A. I and II only B. III and IV only C. I, III and IV D. I, II, III, IV

C. I, III and IV

A customer sells short 200 shares of ABC at $30 in a margin account. The stock immediately falls to $20. Payment is received from the customer 6 business days after trade date. Which statements are TRUE? I The Regulation T requirement is $3,000 II The customer may reduce the Regulation T requirement by 50% of the subsequent profit III The customer may borrow $3,000 from the account IV If an extension was not requested, the account will be frozen A. I and II B. III and IV C. I, III, IV D. I, II, III, IV

C. I, III, IV

Credit analysis of an airport authority revenue bond would include evaluation of which of the following? I Competing facilities II Overlapping debt III Debt coverage ratios IV Flow of funds A. I only B. II and III C. I, III, IV D. I, II, III, IV

C. I, III, IV

Under Federal law, stock can be tendered from which of the following accounts? I Restricted margin account II Short margin account III Long margin account IV Cash account A. IV only B. I and III only C. I, III, IV D. I, II, III, IV

C. I, III, IV

Which of the following securities represent equity ownership of a corporation? I Convertible preferred stock II Warrants III Preferred stock IV Common stock A. IV only B. I and III only C. I, III, IV D. I, II, III, IV

C. I, III, IV

A customer account holds the following: 20% U.S. Stock Fund 20% International Stock Fund 40% Emerging Markets Stock Fund 20% Investment Grade Corporate Bonds Which asset classes are subject to currency risk (exchange rate risk)? I U.S. Stock Fund II International Stock Fund III Emerging Market Stock Fund IV Investment Grade Corporate Bonds A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A customer buys 100 shares of ABC stock at $50 and sells 1 ABC Jan 50 Call @ $4 and sells 1 ABC Jan 50 Put @ $3. This strategy is: I bearish II neutral III a covered straddle IV a covered spread A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A customer has the following investment mix: 25% Growth Stocks 25% U.S. Government Bonds 25% Investment Grade Corporate Bonds 25% Speculative Stocks Which asset classes have the greatest reinvestment risk? I Growth Stocks II U.S. Government Bonds III Investment Grade Corporate Bonds IV Speculative Stocks A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A customer owns a money market mutual fund. The customer exchanges the money fund shares for growth shares within the same family of funds. Which statements are TRUE? I The exchange is a non-taxable event II The exchange is a taxable event III When the shares are invested in the growth shares, a new cost basis is established IV The cost basis for the growth shares is the same as the cost basis for the money fund shares A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A municipal dealer offers bonds to another dealer "firm for one-half hour with a five minute recall." This means that the: I selling dealer can change the price at will II selling dealer cannot change the price for one-half hour unless the buying dealer is recontacted III buying dealer can solicit orders for the bonds before actually purchasing them IV buying dealer cannot solicit orders for the bonds before actually purchasing them A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Under Regulation M, which statements are TRUE regarding stabilizing bids entered by market makers? I Stabilizing bids can only be maintained for 5 consecutive business days II There is no time limitation on the period that a stabilizing bid can be maintained III A stabilizing bid cannot be placed unless a "Notice of Stabilization" is included in the prospectus IV A stabilizing bid cannot be placed unless an "Official Notice of Sale" is placed in the prospectus A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Under Regulation M, which statements are TRUE? I Syndicate members that are not market makers are restricted from buying Tier 1 securities for the 5 business day window of time prior to the effective date II Syndicate members that are not market makers are permitted to buy Tier 1 securities anytime prior to the effective date III Syndicate members that are not market makers are restricted from buying Tier 3 securities for the 5 business day window of time prior to the effective date IV Syndicate members that are not market makers are permitted to buy Tier 3 securities anytime prior to the effective date A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Under Rule 144, no filing is required if the sale amount every 90 days does not exceed: I 500 shares II 5,000 shares III $50,000 IV $500,000 A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Under the Know Your Customer Rule, in order to open and maintain a customer account, each registered representative must: I know "every" fact concerning the customer II know "every essential fact" concerning the customer III follow KYC procedures as part of an effective Anti-Money Laundering (AML) Program IV follow KYC procedures as part of an effective Customer Privacy program A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE about Eurodollar bonds? I Issuers include the United States Government II Issuers do not include the United States Government III The bonds are only issued outside the United States IV The bonds are only issued within the United States A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE regarding restricted securities being sold under Rule 144? I The securities must be sold on a dealer basis II The securities must be sold on an agency basis III The firm is prohibited from soliciting orders to buy 144 shares IV The firm can solicit potential customers to buy 144 shares A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Under MSRB rules, if a Final Official Statement is not yet ready, at the time of settlement of a new municipal securities purchase: A. the transaction becomes void B. settlement is delayed until the Final Official Statement is prepared C. the customer will be sent a copy of the Preliminary Official Statement D. the customer will be sent an abstract of the Official Statement

C. the customer will be sent a copy of the Preliminary Official Statement

The last day that a customer can buy stock and receive a dividend if he or she is willing to settle "for cash" is: A. two business days prior to record date B. three business days prior to record date C. the record date D. the payable date

C. the record date

ETFs are: A. non-negotiable B. redeemable C. traded on exchanges D. traded over-the-counter

C. traded on exchanges

Which of the following statements is (are) TRUE regarding variable annuity contracts? I The principal amount is guaranteed prior to annuitization by the insurance company that issues the contract II The principal amount is guaranteed after annuitization by the insurance company that issues the contract III The contract holder loses control of the principal amount prior to annuitization IV The contract holder loses control of the principal amount after annuitization A. I and III only B. II and IV only C. IV only D. I, II, III, IV

C. IV only

Which statements are TRUE about stock cost basis reporting? I Stock cost basis is reported on Form 1099-DIV II Stock cost basis is reported on Form 1099-B III If there are multiple purchases of the stock and no instructions are received from the customer, cost basis is reported on a FIFO basis IV If there are multiple purchases of the stock and no instructions are received from the customer, cost basis is reported on a specific identification basis A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE about the use of a "red herring" preliminary prospectus? I A preliminary prospectus may be sent to a prospect before the issue has entered into the 20-day cooling off period II A preliminary prospectus may be sent to a prospect once the issue has entered into the 20-day cooling off period III The preliminary prospectus can be sent to any potential customer IV The preliminary prospectus can only be sent to customers who have previously purchased new issues A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE regarding bonds? I Short term bonds fluctuate more in value than long term bonds due to interest rate movements II Long term bonds fluctuate more in value than short term bonds due to interest rate movements III Short term maturities are more liquid than long term maturities IV Long term maturities are more liquid than short term maturities A. I and III B. I and IV C. II and III D. II and IV

C. II and III

REITs can invest in which of the following? I Limited partnerships II Government securities III Mortgages IV Real estate A. IV only B. II and IV C. II, III and IV D. I, II, III, IV

C. II, III and IV

General obligation bond analysis would consider which of the following? I Protective covenants in the trust indenture II Trend of assessed valuation of property III Ratio of overall debt per capita IV Record of tax collections A. I and III only B. II and IV only C. II, III, IV D. I, II, III, IV

C. II, III, IV

Which of the following are TRUE statements regarding the activities of the registrar? I The registrar cancels old shares II The registrar transfers shares to new owners III The registrar accounts for the number of shares issued IV The registrar keeps the integrity of the shareholder record A. I and II B. II and IV C. III and IV D. I, II, III, IV

C. III and IV

Which of the following positions is profitable if the market is at $50? I Long 1 ABC Jan 50 Call @ $5 II Long 1 ABC Jan 50 Put @ $5 III Short 1 ABC Jan 50 Straddle @ $5 IV Long 100 shares of ABC @ $50 / Short 1 ABC Jan $50 Call @ $5 A. II only B. I and II C. III and IV D. I, II, III, IV

C. III and IV

The Trust Indenture Act of 1939 applies to: I U.S. Government Bonds II Municipal Bonds III Corporate Bonds A. I only B. II only C. III only D. I, II, III

C. III only

Which of the following investments gives a rate of return that cannot be affected by "reinvestment risk"? A. Treasury Notes B. Treasury Stock C. Treasury Strips D. Treasury Bonds

C. Treasury Strips

All of the following pay dividends EXCEPT: A. Preferred Stock B. ADRs C. Warrants D. Real Estate Investment Trust Shares

C. Warrants

All of the following statements are true about computerized trading of securities on exchanges EXCEPT: A. trades can be effected more efficiently and at lower cost B. trades bypass the floor broker C. orders are prioritized with member firm orders having priority over public orders D. orders can be accepted up to certain size limits

C. orders are prioritized with member firm orders having priority over public orders

A variable annuity prospectus includes an AIR illustration using a 5% rate. This means that the: A. purchaser is guaranteed a minimum 5% annual return B. annuity payment is guaranteed to grow at a minimum of 5% per year C. return could be less than 5% D. sales charge will be no higher than 5%

C. return could be less than 5%

Which of the following quotes are found in the Pink Sheets? I Firm Bid II Firm Ask III Bids Wanted (BW) IV Offers Wanted (OW) A. I and II only B. III and IV only C. I and III only D. I, II, III, IV

D. I, II, III, IV

Which of the following securities can be purchased in the "over-the-counter" market? I American Depositary Receipts II Initial Public Offerings III Mutual Fund Shares IV Limited Partnership Interests A. I only B. II and III only C. II and IV only D. I, II, III, IV

D. I, II, III, IV

Which of the following statements about warrants are TRUE? I At issuance, warrants are "out of the money" II Warrant valuation is influenced by the life of the instrument III Warrant valuation is directly influenced by the valuation of the company's common stock IV Warrant valuation reflects market expectations for future earnings of the company A. I and IV only B. II and III only C. I, II, IV D. I, II, III, IV

D. I, II, III, IV

A customer has purchased 1,000 shares of ABC stock at $44 per share, paying a commission of $1.00 per share for the transaction. ABC stock declares a 20% stock dividend. When the dividend is paid, the tax status of the investment is: A. 1,000 shares held at a cost basis of $44 per share B. 1,000 shares held at a cost basis of $45 per share C. 1,200 shares held at a cost basis of $36.66 per share D. 1,200 shares held at a cost basis of $37.50 per share

D. 1,200 shares held at a cost basis of $37.50 per share

Assuming that the Standard and Poor's 500 Index closes at 2,460, the U.S. listed equities markets will close its market for the balance of the day if the index declines below: A. 2,338 B. 2,288 C. 2,140 D. 1,968

D. 1,968

Customer fails to deliver must be bought in: A. 5 business days after trade date B. 5 business days after settlement date C. 10 business days after trade date D. 10 business days after settlement date

D. 10 business days after settlement date

A customer buys 100 shares of ABC at 50 in a margin account and deposits the Regulation T requirement. Later, he buys 1 ABC Jan 50 Put @ 5. To buy the put, the customer must deposit: A. 0 B. 25% C. 50% D. 100%

D. 100%

A 12%, $1,000 par corporate bond is trading at $900. What is the current yield? A. 9% B. 10% C. 12% D. 13.3%

D. 13.3%

At the beginning of the year, an investor buys 1,000 shares of XYZ stock, purchased at $33 per share. Subsequently, the stock rises to $40 by the end of the year and the stock pays a $4 dividend during the year. By the end of the following year, the stock has fallen to $25 and pays the same $4 dividend. What is the stock's dividend yield? A. 4% B. 10% C. 12% D. 16%

D. 16%

The Bond Buyer Revdex contains: A. 20 general obligation bonds with 20 years to maturity, rated A or better B. 25 general obligation bonds with 30 years to maturity, rated A or better C. 20 revenue bonds with 20 years to maturity, rated A or better D. 25 revenue bonds with 30 years to maturity, rated A or better

D. 25 revenue bonds with 30 years to maturity, rated A or better

A customer owns 400 shares of ABC stock. ABC is having a rights offering where 20 rights are needed to subscribe to 1 new share. The customer will receive: A. 1 right B. 20 rights C. 100 rights D. 400 rights

D. 400 rights

The longest initial maturity available for new issues of Treasury Bills is: A. 4 weeks B. 8 weeks C. 26 weeks D. 52 weeks

D. 52 weeks

A customer buys 10M of Allied Corporation 8% debentures, M '28, at 90 on Wednesday, May 29th. The interest payment dates are Mar. 1st and Sept. 1st. The trade settled on Friday, June 1st. The customer will receive how many months of interest in the next payment? A. 3 B. 4 C. 5 D. 6

D. 6

The time window during which the wash sale rule is in effect covers a total of: A. 30 days B. 31 days C. 60 days D. 61 days

D. 61 days

Under Keogh rules, distributions from a Keogh Plan must commence the year after the individual turns age: A. 55 B. 59 1/2 C. 60 1/2 D. 70 1/2

D. 70 1/2

PDQ Company $1 par common stock currently trading at $34. PDQ is currently paying a quarterly common dividend of $.75 per share. The current yield of PDQ stock is: A. 2.2% B. 4.4% C. 8.0% D. 8.8%

D. 8.8%

When making a recommendation of corporate commercial paper to a customer, which risk is the MOST important consideration? A. Inflation (purchasing power) risk B. Call risk C. Market risk D. Credit risk

D. Credit risk

A corporation is making a tender offer for all of its common shares. Which of the following customers CANNOT tender the shares? A. Customer A, who is long 100 shares of ABC in a custodian account B. Customer B, who is long 100 shares of ABC in a cash account C. Customer C, who is long 200 shares of ABC, and short 100 shares of ABC in a margin account D. Customer D, who is long 100 shares of ABC, and short 200 shares of ABC in a margin account

D. Customer D, who is long 100 shares of ABC, and short 200 shares of ABC in a margin account

Which of the following information is NOT required to be verified with the customer every 36 months? A. Customer investment objective B. Customer address C. Net worth D. Date of birth

D. Date of birth

An institutional client wishes to open an account at a brokerage firm, but wants the positions in the account held at a bank and not by the broker. What type of account should be opened? A. Trust account B. Fiduciary account C. Custodian account D. Delivery versus payment account

D. Delivery versus payment account

Which index is the narrowest measure of the market? A. Wilshire Index B. Value Line Index C. NYSE Composite Index D. Dow Jones Industrial Average

D. Dow Jones Industrial Average

When performing a municipal bond tax swap, the investor is: I selling existing bonds at a gain II selling existing bonds at a loss III using the proceeds from the sale to buy the same bonds back IV using the proceeds from the sale to buy similar, but not identical bonds A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE regarding REITs? I The REIT issues common shares representing a proportional interest in the investment company II The REIT issues shares of beneficial interest representing an undivided interest in a pool of real estate investments III REITs are similar to open end investment company shares IV REITs are similar to closed end investment company shares A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE regarding Rule 415, the shelf registration rule? I Rule 415 allows seasoned issuers to file a blanket registration statement which covers a period of 1 year II Rule 415 allows seasoned issuers to file a blanket registration statement which covers a period of 3 years III The issuer must comply with the 20-day cooling off period requirement IV The issuer avoids the 20-day cooling off period requirement A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following terms apply to mutual fund shares? I Negotiable II Redeemable III One-time stock issuance IV Continuous stock issuance A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A technical analyst has been charting the price movements of ABC stock. The stock has been fluctuating in price between $56 and $61 per share for the past 3 months. If the analyst expects a breakout through the support level, which order should be placed? A. Sell (Short) ABC @ $62 Stop GTC B. Sell (Short) ABC @ $61 GTC C. Sell (Short) ABC @ $56 Stop GTC D. Sell (Short) ABC @ $55 Stop GTC

D. Sell (Short) ABC @ $55 Stop GTC

To sell a variable annuity, what license(s) is (are) needed? A. Series 6 only B. Series 7 only C. Series 6 or Series 7 D. Series 6 or Series 7 plus a state insurance license

D. Series 6 or Series 7 plus a state insurance license

If ABC is at a market price of $50, which of the following positions will be profitable? A. Long 1 ABC Jan 60 Call @ $5; Long 1 ABC Jan 60 Put @ $5 B. Short 1 ABC Jan 60 Call @ $5; Short 1 ABC Jan 60 Put @ $5 C. Long 1 ABC Jan 50 Call @ $5; Long 1 ABC Jan 50 Put @ $5 D. Short 1 ABC Jan 50 Call @ $5; Short 1 ABC Jan 50 Put @ $5

D. Short 1 ABC Jan 50 Call @ $5; Short 1 ABC Jan 50 Put @ $5

A customer has a cash account holding $200,000 of securities and $340,000 of cash. If the broker-dealer were to fail, which statement is TRUE regarding the status of the account in an SIPC liquidation? A. SIPC will provide coverage for the $200,000 of securities only B. SIPC will provide coverage for the total of $540,000 of securities and cash C. SIPC will provide coverage for only $340,000 of cash D. The customer will become a general creditor in the amount of $90,000

D. The customer will become a general creditor in the amount of $90,000

Which statement is BEST regarding participating preferred stock? A. The dividend rate is fixed B. The dividend rate varies depending on the decision of the Board of Directors C. The dividend rate is fixed as to maximum but not as to minimum D. The dividend rate is fixed as to minimum but not as to maximum

D. The dividend rate is fixed as to minimum but not as to maximum

A father gives a $22,000 gift of securities to his son; and a $22,000 gift of securities to his daughter. Which statement is TRUE? A. The father has no gift tax liability B. The father has gift tax liability on the gift to the son C. The father has gift tax liability on the gift to the daughter D. The father has gift tax liability on both gifts

D. The father has gift tax liability on both gifts

Which statement is TRUE about the acceptance of an "indication of interest" for a registered offering during the 20 day cooling off period? A. The indication cannot be canceled by the customer; the indication cannot be canceled by the brokerage firm B. The indication cannot be canceled by the customer; the indication can be canceled by the brokerage firm C. The indication can be canceled by the customer; the indication cannot be canceled by the brokerage firm D. The indication can be canceled by the customer; the indication can be canceled by the brokerage firm

D. The indication can be canceled by the customer; the indication can be canceled by the brokerage firm

All of the following should be considered when constructing a diversified municipal bond portfolio EXCEPT: A. geographical location of the issuers B. revenue sources backing each issue C. credit ratings of each issue D. denomination of bonds in the portfolio

D. denomination of bonds in the portfolio

A closed end fund has a Net Asset Value of $10 per share. The minimum price at which the shares can be purchased is: A. $10 B. $10 plus a commission C. market price D. market price plus a commission

D. market price plus a commission

A customer sells 1 ABC Jan 50 Call and sells 1 ABC Apr 60 Put. The customer has created a: A. bull spread B. short straddle C. married put D. short combination

D. short combination

Non-interest bearing securities are quoted based on: A. 1/8ths B. 1/16ths C. 1/32nds D. yield basis

D. yield basis

All of the following statements can be made to customers about the trading of options EXCEPT: A. "Options involve a lower degree of risk than trading the underlying securities because the capital requirements are lower" B. "Options are available on stocks, foreign currencies, stock indexes and government debt instruments" C. "Options can be used to hedge stock positions from loss" D. "Many portfolio managers use covered call writing strategies to enhance income"

A. "Options involve a lower degree of risk than trading the underlying securities because the capital requirements are lower"

In 2019, the maximum contribution that an individual who earns $1,000 can make to an IRA is: A. $1,000 B. $4,000 C. $5,000 D. $6,000

A. $1,000

On the same day when the market price of ABC stock is $59, a customer takes the following options positions: Buy 1 ABC Jan 55 Call @ $7 Sell 2 ABC Jan 60 Calls @ $4 Buy 1 ABC Jan 65 Call @ $2 The maximum potential loss is: A. $100 B. $200 C. $300 D. $400

A. $100

The smallest denomination available for Treasury Bills is: A. $100 B. $1,000 C. $10,000 D. $100,000

A. $100

The loan value of a long option contract is: A. 0 B. 25% C. 50% D. 100%

A. 0

Which of the following is (are) progressive taxes? I Estate and Gift Tax II Sales Tax III Excise Tax A. I only B. II and III C. III only D. I, II, III

A. I only

The market sentiment of a customer who sells a "call spread" is: A. bullish B. bearish C. neutral D. volatile

B. bearish

If a stockholder wishes to receive a common dividend, that person must sell the stock in a regular way trade no earlier than the: A. business day prior to the ex date B. ex date C. business day following the ex date D. record date

B. ex date

A corporation's Debt / Equity ratio would measure: A. liquidity B. leverage C. profitability D. marketability

B. leverage

American Depositary Receipts would trade on which of the following exchanges? I New York Stock Exchange II American Stock Exchange III London Stock Exchange IV NASDAQ Stock Market A. I only B. IV only C. I, II, and IV D. I, II, III, IV

C. I, II, and IV

The Standard and Poor's 100 Index has closed at 575.12, up 2 points from the prior day's close. The holder of 5 "deep in the money" OEX Call contracts would have an approximate gain of: A. $50 B. $200 C. $500 D. $1,000

D. $1,000

A registered representative has a customer, age 50, in the 35% tax bracket, who just sold his house for a 1-time gain. The customer intends to downsize, and after buying a smaller home, will have $400,000 to invest. The customer intends to retire in 15 years. The registered representative could recommend that the customer purchase a variable annuity separate account with a growth objective because: A. once the customer reaches retirement age, there is no tax due on distributions taken B. a variable annuity investment held long term will always outperform a fixed annuity contract C. the contribution will be tax deductible, giving the customer a substantial 1-time tax savings D. the earnings build tax-deferred during the 15 year period until retirement

D. the earnings build tax-deferred during the 15 year period until retirement

A customer buys 100 shares of ABC stock at $72 and sells 1 ABC Jan 75 Call @ $4. Prior to expiration, the customer closes the short call position at $6. The customer retains the long stock position. The gain or loss on the option is: A. $200 loss B. $200 gain C. $400 loss D. $600 loss

A. $200 loss

Limited partnership investors are subject to all of the following risks EXCEPT: A. prepayment risk B. marketability risk C. legislative risk D. tax audit risk

A. prepayment risk

On the same day, a customer: Sells 1 ABC Jan 50 Call @ $3 Sells 1 ABC Jan 50 Put @ $5 The market price of ABC at that time is $48. If the market rises to $60 and the call is exercised (the put expires out the money), the gain or loss is: A. $200 loss B. $700 loss C. $800 gain D. $1,000 gain

A. $200 loss

Maximum income limits that reduce permitted contributions do NOT apply to: I IRAs II Spousal IRAs III Roth IRAs IV Coverdell Education Savings Accounts A. I and II B. III and IV C. I and III D. II and IV

A. I and II

A customer purchases $100,000 of municipal bonds at 40% in a margin account. The customer must deposit: A. $6,000 B. $7,000 C. $30,000 D. $50,000

B. $7,000

A customer buys 1 ABC Jan 50 LEAP Call @ $10 that has 30 months left until expiration in a margin account. Regulation T requires that the customer deposit: A. $500 B. $750 C. $1,000 D. $5,000

B. $750

A customer buys 1 ABC Jan 70 Put @ $5 and sells 1 ABC Jan 90 Put @ $19 when the market price of ABC is $75. The breakeven point is: A. $71 B. $76 C. $85 D. $89

B. $76

A customer buys 100 shares of ABC stock at $80 and sells short 100 XYZ stock at $90 on the same day in a margin account. The initial margin requirement is: A. $4,700 B. $8,500 C. $13,250 D. $17,000

B. $8,500

Ford Motor Company has issued 8% convertible debentures, convertible at a 12.5:1 ratio. Currently the debenture is trading at 90. The stock is trading at $72. What is the conversion price of the stock? A. $72 B. $75 C. $80 D. $90

C. $80

The Master Manufacturing Company has just announced a tender offer for its own common stock. Master is offering to buy up to 100% of the company's stock at $20 per share contingent on at least 64% of the outstanding shares being tendered. After the announcement of the offer, the stock closed on the NYSE up 2.50 at $18.75. If a customer had 100 shares and sold at tomorrow's opening price, what is the price that he would receive per share? A. $18.75 B. $20.00 C. $20.50 D. $21.25

A. $18.75

On the same day in a margin account, a customer buys 5 ABC January 40 Calls @ $6 and sells 10 ABC January 50 Calls @ $1 when the market price of ABC is at $43. If the market moves to $48 and the contracts are closed at intrinsic value, the gain or loss is: A. $2,000 gain B. $2,000 loss C. $2,500 gain D. $2,500 loss

A. $2,000 gain

An individual sells 200 shares of stock short at $60 per share and buys back the position 2 years later at $50 per share. The investor has a: A. $2,000 short term capital gain B. $2,000 short term capital loss C. $2,000 long term capital gain D. $2,000 long term capital loss

A. $2,000 short term capital gain

A customer buys 100 shares of preferred at $51 per share. The par value is $50. The dividend rate is 8%. Each dividend payment would be: A. $200 B. $400 C. $600 D. $800

A. $200

A customer sells short 100 shares of PDQ at $61 and buys 1 PDQ Jul 60 Call @ $3. The customer's maximum potential loss is: A. $200 B. $300 C. $400 D. unlimited

A. $200

Options sales literature that makes a recommendation: I must be preceded or accompanied by the Options Disclosure Document II must be approved in writing by the designated ROP prior to use III must be filed with the exchange 10 days before use IV cannot include projections or show past performance A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

A. I and II only

Which of the following actions on the part of a corporation would NOT require registration statement filing with the SEC under Rule 145? I Stock dividend distribution II Stock split III Merger with another publicly held company IV Spin off of a subsidiary as a publicly held company A. I and II only B. III and IV only C. I, II, and IV D. I, II, III, IV

A. I and II only

Which of the following investment portfolios is LEAST liquid? A. An aggressive growth fund B. A U.S. Government securities fund C. A money market fund D. An income fund

A. An aggressive growth fund

Which statement is TRUE about donations into accounts opened under the Uniform Gifts to Minors Act? A. Any adult can donate into a custodian account for a minor B. Only a relative of the minor may donate into a custodian account for a minor C. Only a parent of the minor may donate into a custodian account for a minor D. Only a minor may donate into a custodian account for a minor

A. Any adult can donate into a custodian account for a minor

To smooth out cash flow, a municipality will issue all of the following EXCEPT: A. BAN B. RAN C. TAN D. TRAN

A. BAN

Which of the following municipal issues is a short term note that is retired by a later permanent bond sale? A. BAN B. RAN C. TAN D. TRAN

A. BAN

Which of the following index options are "narrow based"? I Hong Kong Index II Semi-Conductor Index III Major Market Index IV Value Line Index A. I and II only B. III and IV only C. I, II, IV D. I, II, III, IV

A. I and II only

New issues of municipal short term notes are available in which form? A. Book entry B. Bearer C. Fully registered D. Registered to principal and interest

A. Book entry

A pension fund manager has a large holding of 30-year Treasury Bonds, to fund a corporation's defined benefit pension plan liability. The manager is concerned that market interest rates are going to rise, causing Treasury Bond prices to fall. To hedge the position, the manager should: A. Buy TYX Calls B. Buy TYX Puts C. Sell TYX Calls D. Sell TYX Puts

A. Buy TYX Calls

Which of the following describes a position trade? A. Buying a security into inventory directly from a customer with a mark-down B. After receiving a buy order from a customer, the dealer then purchases the stock into inventory and resells it to the customer C. Simultaneously buying and selling short the same or equivalent security D. Selling stock at the direction of a customer and using the proceeds to buy another stock for that customer

A. Buying a security into inventory directly from a customer with a mark-down

Individual Retirement Account contributions can be made with: A. Cash B. Exempt Securities C. Non-Exempt Securities D. All of the above

A. Cash

The separation of investment banking/research and trading functions within a broker-dealer to stop the potential flow of inside information is known as the: A. Chinese Wall B. Berlin Wall C. Wall Street Wall D. Circuit Breaker

A. Chinese Wall

A registered representative has a dispute with his firm. Under FINRA rules, this will be settled by: A. litigation B. arbitration C. mediation D. negotiation

B. arbitration

All of the following statements are true regarding the conduct of the weekly treasury auctions EXCEPT: A. Competitive bids will always be filled B. Non-competitive bids take priority over competitive bids C. 3 month T-Bills are auctioned weekly D. 6 month T-Bills are auctioned weekly

A. Competitive bids will always be filled

What risk should an investor in an ETN consider that would not be associated with an ETF? A. Credit Risk B. Liquidity Risk C. Market Risk D. Volatility Risk

A. Credit Risk

Which statement is TRUE about the sending of customer account statements and confirmations? A. Customer mailings are sent by physical paper mail unless the customer requests that e-mail be used B. Customer mailings are sent by e-mail unless the customer requests that physical paper mail be used C. Customer mailings can only be sent by physical paper mail D. Customer mailings can only be sent by e-mail

A. Customer mailings are sent by physical paper mail unless the customer requests that e-mail be used

If a corporation with outstanding callable convertible preferred stock, calls these shares in a "forced conversion" which of the following will happen? I The number of common shares outstanding will increase II The number of common shares outstanding will decrease III Earnings per share will decrease IV Earnings per share will increase A. I and III B. I and IV C. II and III D. II and IV

A. I and III

If a couple that is not covered by another qualified retirement plan makes over $123,000 in year 2019, IRA contributions are: I permitted II not permitted III tax deductible IV not tax deductible A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statement is TRUE? A. Distributions from a Coverdell ESA and a 529 plan to pay for higher education costs are not taxable B. Distributions from a Coverdell ESA and a 529 plan to pay for higher education costs are taxable at ordinary income rates C. Distributions from a Coverdell ESA and a 529 plan to pay for higher education costs are taxable at long term capital gains rates D. Distributions from a Coverdell ESA and a 529 plan to pay for higher education costs are taxable free as long as the student attends an in-state school

A. Distributions from a Coverdell ESA and a 529 plan to pay for higher education costs are not taxable

The MSRB online system that gives non-professional investors key information about municipal securities, including issuer financial disclosures, notices of material events, real-time prices, and market statistics is called: A. EMMA B. SHORT C. RTRS D. MSIL

A. EMMA

The Capital Asset Pricing Model (CAPM) would be used by a proponent of: A. Efficient market theory B. Keynesian theory C. Monetarist theory D. Market equilibrium theory

A. Efficient market theory

Transfer on Death registration would likely be used by which of the following? A. Elderly father and adult son B. Middle age mother and minor daughter C. Unrelated business partners D. Husband and wife

A. Elderly father and adult son

A customer has previously entered an order to sell 100 shares of ABCD at $9.50. The quotations terminal shows the last trade of ABCD taking place at $9.50 yet the customer's order has not been executed. Which are valid reasons for this? I The trade at $9.50 was performed by another market maker II There were other limit orders at the same price ahead of the customer's order III The trading department has closed for lunch IV The firm sold the stock for its own account at $9.50 ahead of the customer's order A. I and II B. II and III C. I and IV D. I, II, III, IV

A. I and II

Which of the following is an exempt issue? A. Fixed annuity contract B. Variable annuity contract C. Government bond mutual fund D. Municipal bond unit investment trust

A. Fixed annuity contract

Which statements are TRUE regarding the taxation of capital gains? I A capital gain is considered to be short term if a position is liquidated at a profit after being held for 1 year or less II A capital gain is considered to be short term if a position is liquidated at a profit after being held for over 1 year III For investors in the maximum tax bracket, any short term capital gains will be taxed at the same tax rate as that bracket IV For investors in the maximum tax bracket, any short term capital gains will be taxed at a lower rate than that bracket A. I and III B. I and IV C. II and III D. II and IV

A. I and III

If the dollar appreciates against foreign currencies, which of the following statements are TRUE? I Foreign currencies buy fewer dollars II U.S. exports are likely to rise III Foreign imports are likely to rise IV Foreign goods are more expensive in the U.S. A. I and III only B. II and IV only C. I, II, IV D. I, II, III, IV

A. I and III only

Which of the following are an indicators of "market sentiment"? I Put / Call Ratio II Trading volume III Advance / Decline Ratio IV Price range A. I and III only B. II and IV only C. I, III, IV D. I, II, III, IV

A. I and III only

A customer buys 100 shares of ABC at $50 and buys 1 ABC Jan 50 Put @ $5. This position results in a profit when the market: I rises II falls III is stable A. I only B. II only C. I and III D. II and III

A. I only

Under MSRB rules, which of the following call provisions can affect the yield that is shown on a customer's municipal bond confirmation? I In-whole call II Sinking fund call III Extraordinary mandatory call A. I only B. III only C. II and III D. I, II, III

A. I only

Which of the following are defined as passive income? I Distributive share of income from a real estate limited partnership investment II Dividends received from a real estate investment trust investment III Interest received from a corporate debenture investment IV Proceeds from the sale of a partnership unit in excess of the tax basis of that unit A. I only B. I and II C. III and IV D. I, III and IV

A. I only

What is the main objective of investing in Equity REITs? A. Income and growth B. Capital appreciation and stability C. Tax deductions and tax credits D. Speculation and aggressive gains

A. Income and growth

Which of the following best describes a stock that pays out most of its earnings as dividends? A. Income stock B. Special situations stock C. Defensive stock D. Blue Chip stock

A. Income stock

Which of the following securities is NOT exempt from the Securities Act of 1933? A. Industrial Company issues B. Benevolent Association issues C. Small Business Investment Company issues D. Common Carrier issues

A. Industrial Company issues

Which statement is TRUE regarding a minor in a custodian account opened under UGMA reaching legal age? A. The new adult must take control of the account B. The new adult can let the custodian retain control of the account C. The new adult can appoint a successor custodian D. The new adult must liquidate the account, and open a new account with the proceeds

A. The new adult must take control of the account

A customer sells 1 ABC Jan 100 Call @ $8 and buys 1 ABC Jan 120 Call @ $3 when the market price of ABC is $105. The market price of ABC rises to $115 and the customer closes the 100 Call @ $19 and the 120 Call @ $6. The customer has a: A. $800 profit B. $800 loss C. $1,300 profit D. $2,000 profit

B. $800 loss

A branch manager puts a billboard in the branch window that states: "Now is a great time to invest in stocks!" This is considered to be: A. advertising B. sales literature C. public forum D. correspondence

A. advertising

Which position is profitable in a falling market? A. bear put spread B. bull call spread C. long stock position D. long call position

A. bear put spread

An investor believes that interest rates will be flat or falling into the future; and that prices may deflate. The MOST appropriate investment is: A. Long term U.S. Government bonds B. Real estate C. Gold D. Large Capitalization stocks

A. Long term U.S. Government bonds

Which rating would apply to municipal short term notes? A. MIG 2 B. P 1 C. Aa D. BBB

A. MIG 2

A bond trade takes place at 10:00 AM on Monday, July 10th for "cash." Settlement takes place: A. before 2:30 PM on July 10th B. before 2:30 PM on July 11th C. during business hours on July 15th D. during business hours on July 17th

A. before 2:30 PM on July 10th

A customer wants to know the principal difference between a market index linked CD and a regular CD. As the registered representative, you should inform the customer that: A. Market index-linked CDs give a rate of return tied to the S&P 500 Index, whereas regular CDs give a rate of return tied to market interest rates B. Market index-linked CDs can have a loss of principal if held to maturity whereas regular CDs cannot have a loss of principal if held to maturity C. Market index-linked CDs do not qualify for FDIC insurance whereas regular CDs do qualify for FDIC insurance subject to the $250,000 limit D. Market index-linked CDs have a minimum life of 10 years, whereas there is no minimum life for regular CDs

A. Market index-linked CDs give a rate of return tied to the S&P 500 Index, whereas regular CDs give a rate of return tied to market interest rates

Short sales rarely occur in the trading market for which of the following securities? A. Municipal bonds B. Corporate bonds C. Government bonds D. Agency bonds

A. Municipal bonds

What is the BEST investment recommendation for an individual in a high tax bracket who is risk averse? A. Municipal bonds B. Direct participation programs C. U.S. Government bonds D. Sovereign government bonds

A. Municipal bonds

All of the following publicly held issuers must report to the SEC under the Securities Exchange Act of 1934 EXCEPT: A. Municipalities B. Unit investment trusts C. Mutual funds D. Corporations

A. Municipalities

Which statement is TRUE about non-competitive bids placed at Treasury auctions? A. Non-competitive bids have priority over competitive bids B. Competitive bids have priority over non-competitive bids C. Both non-competitive and competitive bids have the same priority D. All bids are given priority based on the size of the bid

A. Non-competitive bids have priority over competitive bids

Institutional portfolio managers have been allocating an increasing percentage of their funds to common stock positions. This is an indication that their market sentiment is: A. bullish B. neutral C. bearish D. cautious

A. bullish

Which tool of the Federal Reserve is used most frequently? A. Open market operations B. Discount rate C. Reserve requirements D. Margin on securities

A. Open market operations

Credit analysis of an airport authority revenue bond would include evaluation of all of the following EXCEPT: A. Overlapping debt B. Competing facilities C. Flow of funds D. Debt coverage ratios

A. Overlapping debt

A United States corporation has contracted to receive goods from Japan six months from now, with payment to be made in Japanese Yen at the time of delivery. To protect against adverse currency fluctuations, the U.S. company can buy: A. PHLX Yen calls B. PHLX Yen puts C. PHLX U.S. dollar calls D. PHLX U.S. dollar puts

A. PHLX Yen calls

A middle-aged widowed customer has an investment objective of stable income and would also like to receive occasional "extra" income to help pay unexpected bills. What type of preferred stock would be the best recommendation? A. Participating preferred B. Convertible preferred C. Straight preferred D. Variable rate preferred

A. Participating preferred

The portfolio management technique that uses a market index as a performance benchmark that the asset manager must meet is called: A. Passive asset management B. Active asset management C. Strategic asset management D. Tactical asset management

A. Passive asset management

When purchasing a new registered securities offering from the underwriter, the customer will pay the: A. Public Offering Price stated in the prospectus B. Public Offering Price stated in the prospectus plus a commission C. Public Offering Price stated in the prospectus plus a mark-up D. prevailing market price for the security

A. Public Offering Price stated in the prospectus

A customer buys 1 ABC Jan 50 Call and sells 1 ABC Nov 50 Call. This is a: A. calendar debit spread B. calendar credit spread C. vertical debit spread D. vertical credit spread

A. calendar debit spread

Under the provisions of Regulation SHO, before a security can be "sold short," it must be determined that the security: A. can be borrowed and delivered by settlement B. has been traded on an + tick or a 0+ tick C. is not on the threshold list D. is subject to the short interest reporting rule

A. can be borrowed and delivered by settlement

All of the following indicators would be evaluated by a technical analyst EXCEPT: A. Quick Ratio B. Chart Formations C. 200 Day Stock Price Moving Average D. Advance / Decline Ratio

A. Quick Ratio

Collateralized mortgage obligations may be backed by all of the following securities EXCEPT: A. Real Estate Investment Trusts B. Freddie Mac Pass Through Certificates C. FNMA Pass Through Certificates D. GNMA Pass Through Certificates

A. Real Estate Investment Trusts

A start-up company looking to raise a small amount of "seed" capital would most likely use: A. Regulation Crowdfunding B. Regulation A C. Rule 147 D. Regulation D

A. Regulation Crowdfunding

A 25-year old single client has just started his own small business and is not covered by a retirement plan. He has $5,000 to invest and currently has a low level of income. He wishes to start saving for retirement. The BEST recommendation is a: A. Roth IRA B. SIMPLE IRA C. Traditional IRA D. Roth 401(k)

A. Roth IRA

All of the following insure municipal bonds EXCEPT: A. SIPC B. MBIA C. AMBAC D. FGIC

A. SIPC

A customer buys 5M of 3 1/4% Treasury Bonds at 98-8. How much will the customer receive at each interest payment? A. $35.00 B. $81.25 C. $162.50 D. $325.00

B. $81.25

ABC stock has just closed at $70.50. A customer has an open order on the firm's internal order entry system to sell short 100 shares of ABC at 70 Stop. ABC stock goes ex dividend $.55. The order on the firm's order book the next morning will be: A. Sell short 100 ABC at 69.45 Stop B. Sell short 100 ABC at 69.50 Stop C. Sell short 100 ABC at 69.55 Stop D. Sell short 100 ABC at 70.00 Stop

A. Sell short 100 ABC at 69.45 Stop

A customer who is long 1 ABC Jan 50 Put wishes to create a "bear put spread." The second option position that the customer must take is: A. Short 1 ABC 45 Put B. Short 1 ABC 55 Put C. Short 1 ABC 45 Call D. Short 1 ABC 55 Call

A. Short 1 ABC 45 Put

If a member firm routes a customer market order for an NYSE listed issue to the NYSE's automated trading system, the order will be sent to: A. Super Display Book B. Single Book C. OTCBB D. Pink OTC Markets

A. Super Display Book

Which of the following constitutes a municipal control relationship that must be disclosed to customers? A. The President of the municipal broker/dealer is the Treasurer of the municipality whose bonds are being recommended B. The municipal broker-dealer has its headquarters in the municipality whose bonds are being recommended C. The municipal broker-dealer has won every competitive bid for the municipality's securities over the past 3 years D. The municipal broker-dealer always makes a market in the municipality's securities that are being recommended

A. The President of the municipal broker/dealer is the Treasurer of the municipality whose bonds are being recommended

A customer buys 1 ABC Jul 45 Call @ $5. The customer lets the contract expire when the market price is $40. Which statement is TRUE? A. The customer has a capital loss of $500 B. The customer has a capital loss of $4,000 C. The customer has a capital loss of $4,500 D. The customer has a capital loss of $5,000

A. The customer has a capital loss of $500

An institutional customer places a marketable order to buy 10,000 shares of ABCD stock, a NASDAQ listed company. The customer directs that the trade be routed to an ECN for execution and not be sent to the NASDAQ. Which statement is TRUE about this? A. The customer's instructions are to be followed and the order must be sent to the designated ECN B. The order must be sent to the NASDAQ for execution C. The order must be sent to the market with the largest display size D. The order cannot be accepted from the customer

A. The customer's instructions are to be followed and the order must be sent to the designated ECN

Which statement is FALSE about a SIMPLE IRA? A. The maximum contribution amount is the same as for a SEP IRA B. The contribution is made by the employee, who gets a salary reduction for the amount contributed C. The plan is only available to smaller employers D. The employer must make a matching contribution

A. The maximum contribution amount is the same as for a SEP IRA

A father gives a $10,000 gift of securities to his son; and a $10,000 gift of securities to his daughter. Which statement is TRUE? A. The father has no gift tax liability B. The father has gift tax liability on the gift to the son C. The father has gift tax liability on the gift to the daughter D. The father has gift tax liability on both gifts

A. The father has no gift tax liability

A customer holds 500 shares of Telephone stock in a margin account. The company declares and pays a $1 per share quarterly dividend. Which statement is TRUE? A. The full amount of the dividend can only be withdrawn from the account within 30 days B. The full amount of the dividend can be withdrawn from the account at any time C. The full amount of the dividend can be withdrawn only if the account is not restricted D. The full amount of the dividend can be withdrawn only if the account is not below the minimum maintenance level

A. The full amount of the dividend can only be withdrawn from the account within 30 days

The self-supporting spouse of a registered representative has an account with your firm. Your firm is underwriting the initial public offering (IPO) of ACME Co. common stock, and the spouse inquires about whether it is possible to receive an allocation. The registered representative should inform the spouse that the issue: A. cannot be purchased through the IPO B. can only be purchased through the IPO if the amount purchased is insubstantial C. can only be purchased through the IPO with the approval of FINRA D. can be purchased through the IPO without restriction

A. cannot be purchased through the IPO

If sales of a municipal new issue by each syndicate member are used to extinguish liability of the group as a whole, then this indicates the account is a(n): I Undivided account II Divided account III Western account IV Eastern account A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A customer buys 100 shares of ABC stock at $20 per share. Two months later, the stock is quoted at $10.00 - $10.50. The registered representative that sold the stock to the customer offers to repurchase the shares at $18. Which statement is TRUE? A. This is prohibited because the FINRA Conduct Rules do not allow customer accounts to be guaranteed against loss B. This is prohibited because the registered representative is interpositioning himself between the customer and the current "inside" market C. This action is permitted, as long as the principal approves in writing prior to the proposed trade D. This action is permitted as a method of maintaining customer "goodwill" with the firm

A. This is prohibited because the FINRA Conduct Rules do not allow customer accounts to be guaranteed against loss

A registered representative conducts a seminar about investing in the meeting room of a local apartment complex. At the end of the talk, he hands out his business card and tells the attendees that if they want additional information, please write their contact information on the reverse side of the business card and return it to him. When he gets back to the office and starts to re-contact some of the attendees who returned the business card, he finds that one of them is blocked because the client name is on the National Do Not Call Registry. Which statement is TRUE? A. This prospect can be called by the registered representative B. This prospect cannot be called by the registered representative C. This prospect can only be called by the registered representative between the hours of 8:00 AM and 9:00 PM D. This prospect can only be called by the registered representative with written approval of the Branch Office Manager

A. This prospect can be called by the registered representative

In an underwriting, which of the following is earned by a syndicate member who sells the issue directly to the public? A. Underwriter's Concession B. Selling Concession C. Spread D. Management Fee

A. Underwriter's Concession

Primary offerings of agency securities are made at: A. par B. par plus a commission C. par plus a mark-up D. par plus a selling concession

A. par

An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Farm Credit System bonds with a 10 year maturity. An investor who purchases the new issue can expect to pay: A. par value B. par value less a discount C. par value plus a mark-up D. par value plus a commission

A. par value

If an investor sells stock short, and covers the position at a profit more than 12 months later, the gain will be taxed as: A. a short term capital gain B. a long term capital gain C. passive income D. earned income

A. a short term capital gain

The "total takedown" in a municipal underwriting is the: A. additional takedown plus the selling concession B. additional takedown minus the selling concession C. spread minus the reallowance D. spread minus the additional takedown

A. additional takedown plus the selling concession

Industrial development bonds are issued by municipalities to build facilities that are leased to: A. corporations B. government agencies C. municipalities D. sovereign governments

A. corporations

Transactions in the interbank market cause direct movements in the prices of: A. currencies B. currency options C. equities D. equity options

A. currencies

Short positions in margin accounts are marked to market: A. daily B. weekly C. monthly D. at year end

A. daily

The "death benefit" associated with a variable annuity contract means that if the contract holder dies: A. prior to annuitization, the amount invested in the contract is returned to a beneficiary B. after annuitization, the amount invested in the contract is returned to a beneficiary C. prior to annuitization, the insurance company will make a lump sum payment to complete the terms of the contract D. after annuitization, the insurance company will pay for the insured's burial expenses

A. prior to annuitization, the amount invested in the contract is returned to a beneficiary

XYZ Corporation, after many profitable years, declares a one-time special cash dividend of $20.00 per share. After the announcement, the stock is trading at $200 per share. Your customer holds 1 XYZ Jan 220 Call. As of the ex date, the customer will have: A. 1 XYZ Jan 180 Call B. 1 XYZ Jan 200 Call C. 1 XYZ Jan 220 Call D. 1 XYZ Jan 240 Call

B. 1 XYZ Jan 200 Call

A customer with $50,000 to invest could buy: A. 1 mortgage backed pass through certificate at par B. 2 mortgage backed pass through certificates at par C. 10 mortgage backed pass through certificates at par D. 50 mortgage backed pass through certificates at par

B. 2 mortgage backed pass through certificates at par

A customer owns 400 shares of ABC stock. ABC is having a rights offering where 20 rights are needed to subscribe to 1 new share. How many new shares can the customer purchase through this rights offering? A. 1 share B. 20 shares C. 100 shares D. 400 shares

B. 20 shares

Which statement is FALSE about DVP transactions? A. DVP transactions are used by institutional clients B. DVP transactions are subject to Regulation T C. Funds to pay for a DVP transaction must be deposited promptly D. The securities delivery must take place within 35 days of trade

B. DVP transactions are subject to Regulation T

All of the following statements are true regarding equipment trust certificates ("ETCs") EXCEPT: A. Equipment trust certificates are secured by specified corporate assets B. Default of ETCs is common during recessionary periods C. Equipment trust certificates are commonly issued by transportation companies D. Equipment trust certificates are issued in serial maturities

B. Default of ETCs is common during recessionary periods

All of the following are coincident economic indicators EXCEPT: A. Personal Income B. Employment Duration C. Employment Levels D. Industrial Production

B. Employment Duration

A customer is long 1,000 shares of fully paid XYZ stock, valued at $75 per share. The customer sells "short against the box" another 1,000 shares of XYZ. The minimum maintenance margin requirement is: A. 0 B. $3,750 C. $71,250 D. $75,000

B. $3,750

A customer buys 1 ABC Jan 85 Put @ $6 and sells 1 ABC Jan 75 Put @ $2 when the market price of ABC is $83. The customer must deposit: A. $200 B. $400 C. $600 D. $1,000

B. $400

A customer buys 100 shares of preferred at $101 per share. The par value is $100. The dividend rate is 8%. Each dividend payment will be: A. $80 B. $400 C. $800 D. $808

B. $400

A customer buys 1 ABC Jan 80 LEAP Call @ $6 that has 12 months left until expiration in a margin account. Regulation T requires that the customer deposit: A. $300 B. $450 C. $600 D. $8,000

B. $450

A customer buys 100 shares of DEF stock at $51 and sells 1 DEF Jan 50 Call @ $4. The breakeven point is: A. $46 B. $47 C. $54 D. $55

B. $47

A customer buys 100 shares of preferred at $80 per share. The par value is $100. The dividend rate is 10%. The customer will receive how much in each dividend payment? A. $400 B. $500 C. $800 D. $1,000

B. $500

An investor has sold short stock worth $20,000 in a margin account, depositing the Regulation T margin requirement. If the market value of the stock falls to $16,000, what is the SMA in the account? A. $4,000 B. $6,000 C. $8,000 D. $10,000

B. $6,000

A customer buys 1 ABC Jan 60 LEAP Call @ $8 that has 24 months left until expiration in a margin account. Regulation T requires that the customer deposit: A. $400 B. $600 C. $800 D. $6,000

B. $600

On the same day in a margin account, a customer buys 1 ABC Jan 60 Put @ $2 and sells 1 ABC Jan 70 Put @ $6 when the market price of ABC is $67. The customer must deposit: A. $400 B. $600 C. $1,000 D. $2,000

B. $600

If a technical analyst sees stock prices drop repeatedly to a certain level, from which they start rising again, then a market: A. "bottom" has been formed and stock prices can be expected to fall over the long-term B. "bottom" has been formed and stock prices can be expected to rise over the long-term C. "top" has been formed and stock prices can be expected to fall over the long-term D. "top" has been formed and stock prices can be expected to rise over the long-term

B. "bottom" has been formed and stock prices can be expected to rise over the long-term

A customer buys 2 ABC Jan 50 Puts @ $5 in a margin account when the market price of ABC is $51. The customer must deposit: A. $500 B. $1,000 C. $1,500 D. $2,000

B. $1,000

An investor buys 100 shares of an open-end investment company with a 5% contingent deferred sales charge. The sales charge is reduced by 1% for every full year that the fund is held. The investor redeems the 100 shares at an NAV of $15 per share after holding them for 5 months. The investor will receive: A. $1,350 B. $1,425 C. $1,475 D. $1,500

B. $1,425

Under Rule 147, intrastate offerings cannot be resold out of state for how long following completion of the initial offering? A. 3 months B. 6 months C. 12 months D. 24 months

B. 6 months

Which bond will exhibit the greatest price volatility? A. 10-year bond; 7% coupon; 8% yield; duration of 7.25 B. 8-year bond; 0% coupon; 7% yield; duration of 8.00 C. 4-year bond; 4% coupon; 3% yield; duration of 3.74 D. 2-year bond; 2% coupon; 1% yield; duration of 1.97

B. 8-year bond; 0% coupon; 7% yield; duration of 8.00

Which bond will exhibit the greatest price volatility? A. 11-year bond; 7% coupon; 8% yield; duration of 7.71 B. 9-year bond; 0% coupon; 7% yield; duration of 9.00 C. 5-year bond; 4% coupon; 3.50% yield; duration of 4.59 D. 3-year bond; 2% coupon; 1.50% yield; duration of 2.93

B. 9-year bond; 0% coupon; 7% yield; duration of 9.00

The portfolio management technique that uses a market index as a performance benchmark that the asset manager must exceed is called: A. Passive asset management B. Active asset management C. Strategic asset management D. Tactical asset management

B. Active asset management

An "accredited investor questionnaire" is required when which type of offering is made to investors? A. Rule 147 B. Regulation D C. Regulation A D. Rule 144

B. Regulation D

DEFF stock is currently trading at $24, down $4 from yesterday's close. A client places a market order to short 100 shares of DEFF. Which statement is TRUE? A. The order cannot be accepted because the stock has declined by more than 10% during the trading day B. The order can be accepted, but can only be filled on an up-bid C. The order can be accepted, but can only be filled if the stock is not on the threshold list D. The order can be accepted and filled without conditions

B. The order can be accepted, but can only be filled on an up-bid

A customer sends an IM to his registered representative with an order to buy 500 shares of ABCD at the market. Which statement is TRUE about accepting this order from the customer? A. The order cannot be accepted because all customer orders must be placed by telephone B. The order cannot be accepted because the firm cannot verify that it was the customer who actually sent the order C. The order cannot be accepted because FINRA requires that all customer orders be sent using an app that is encrypted D. The order can be accepted as given

B. The order cannot be accepted because the firm cannot verify that it was the customer who actually sent the order

Which statement is TRUE about the liquidity and risk associated with federal agency securities? A. There is minimal market risk B. There is minimal marketability risk C. Credit risk is the same as for U.S. Government securities D. Both short and long maturities fluctuate considerably in price over time

B. There is minimal marketability risk

A registered representative is considering prospecting a wealthy family member to see if she will open a brokerage account at his firm. The registered representative checks the National Do-Not-Call List and finds the family member there. The registered representative checks the firm's Do-Not-Call list and does not find the family member there. Which statement is TRUE? A. This prospect cannot be called by the registered representative B. This prospect can be called by the registered representative C. This prospect can only be called by the registered representative between the hours of 8:00 AM and 9:00 PM D. This prospect can only be called by the registered representative with written approval of the #24 General Principal

B. This prospect can be called by the registered representative

The physical securities which are the underlying collateral for Treasury Receipts are: A. Treasury Bills B. Treasury Notes C. Series EE Bonds D. Treasury Stock

B. Treasury Notes

A customer who buys a "put spread" believes that the market will: A. rise B. fall C. remain neutral D. be volatile

B. fall

Index options expire: A. weekly B. monthly C. quarterly D. yearly

B. monthly

A 65-year old retired teacher living on a pension has $200,000 invested in 2 year certificates of deposit that are yielding 4%. $20,000 of the CDs are maturing and the customer wants to diversify into an investment that gives a higher return and a moderate level of risk. The BEST recommendation would be: A. High yield corporate bonds B. Treasury strips C. Equity REITs D. Income bonds

C. Equity REITs

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

C. II and III

A customer buys 5 ABC Jan 60 Calls @ $4 and buys 5 ABC Jan 60 Puts @ $1 on the same day when the market price of ABC stock is $62. Assume that the market price falls to $56 and the call premium falls to $.50, while the put premium rises to $5.50. The customer closes the positions. The customer has a: A. $100 gain B. $100 loss C. $500 gain D. $500 loss

C. $500 gain

In 2019, a self-employed person earning $400,000 wishes to open a Keogh Plan. The maximum yearly contribution is: A. $6,000 B. $26,000 C. $56,000 D. $80,000

C. $56,000

A husband and wife wish to open a spousal IRA. The wife works while the husband does not. What is the permitted maximum contribution to this spousal IRA for the year 2019? A. $6,000 for the wife; $0 for the husband B. $6,000 for the wife; $3,000 for the husband C. $6,000 for the wife; $6,000 for the husband D. $60,000 for the wife; $60,000 for the husband

C. $6,000 for the wife; $6,000 for the husband

A customer sells 1 ABC Jan 50 Put @ $7 and buys 1 ABC Jan 40 Put @ $1 when the market price of ABC is $47. The maximum potential gain is: A. $100 B. $400 C. $600 D. $1,000

C. $600

A customer is short 1 ABC Jan 50 Put @ $7. The put is exercised when the market price of ABC is 45. The customer liquidates the stock position 3 weeks later at $49 per share. After the position is liquidated, the customer will have a: A. $200 capital gain B. $200 capital loss C. $600 capital gain D. $600 capital loss

C. $600 capital gain

A customer purchases 100 shares of MNO stock at $34.63 and buys 1 MNO Jan 30 Put @ $2.75 on the same day in a cash account. Subsequently, the stock goes to $43.50 and the customer's put expires and the customer sells the stock in the market at the prevailing market price. The customer has a(n): A. $275 loss B. $346.30 loss C. $612 gain D. $887 gain

C. $612 gain

On the same day, a customer buys 100 shares of ABC at $56 and sells short 200 shares of XYZ at $51 in a margin account. The customer then sells 1 ABC Jan 60 Call @ $1 and 2 XYZ Jan 50 Puts @ $4. The customer must deposit: A. $4,600 B. $5,500 C. $7,000 D. $7,900

C. $7,000

The maximum contribution in the year 2019 into an IRA for an individual, age 50 or older, is: A. $1,000 B. $6,000 C. $7,000 D. $9,000

C. $7,000

A customer is long 1,000 shares of fully paid XYZ stock, valued at $75 per share. The customer sells "short against the box" another 1,000 shares of XYZ. XYZ is listed on the New York Stock Exchange. The customer may borrow how much from his account? A. 0 B. $3,750 C. $71,250 D. $75,000

C. $71,250

A customer has a long margin account with $16,000 of stock and a $8,000 debit. If the market value of the stock remains unchanged and interest charges for the month are $50, the new debit balance will be? A. $7,950 B. $8,000 C. $8,050 D. $16,050

C. $8,050

DEFF ADR represents 20% of the value of a DEFF ordinary share. The ordinary shares trade on the London Stock Exchange, where the current price is 200 British Pounds (BP). The current exchange rate for the British Pound against the U.S. Dollar is $1.40. The ordinary share pays an annualized dividend of 12 BP, with payment made semi-annually. The DEFF ADR is listed on the NYSE. If a customer places an order to buy $560,000 of the ADR on the NYSE, how much will the customer receive in each dividend payment? A. $8,400 B. $10,000 C. $16,800 D. $33,600

C. $16,800

A customer sells short 100 shares of ABC stock at $25 as an initial transaction in a new margin account. The customer must deposit: A. $625 B. $1,250 C. $2,000 D. $2,500

C. $2,000

A customer sells short 100 shares of ABC stock at $30 as an initial transaction in a margin account. The customer must deposit: A. $750 B. $1,500 C. $2,000 D. $3,000

C. $2,000

A municipality has a tax rate of 12 mills. A piece of real property in the municipality is assessed at $225,000 and has a fair market value of $250,000. The annual tax liability on the property is: A. $120 B. $300 C. $2,700 D. $3,000

C. $2,700

In an existing margin account, a customer sells short 100 shares of ABC at $90. What is the minimum maintenance margin requirement for this stock position? A. $1,350 B. $2,000 C. $2,700 D. $4,500

C. $2,700

Short Positions: 100 ABC @ $45 100 XYZ @ $50 Credit = $25,000 SMA = $10,750 Reg. T = 50% What is the minimum maintenance margin requirement? A. $2,000 B. $2,375 C. $2,850 D. $4,750

C. $2,850

A customer buys 1,000 shares of XYZ at $60 in a margin account, regular way settlement. Two days after the trade, XYZ has risen to $80. The minimum maintenance margin requirement is: A. $15,000 B. $18,000 C. $20,000 D. $24,000

C. $20,000

An investor has sold short stock worth $45,000 in a margin account, depositing the margin requirement. If the market value of the stock falls to $30,000, what is the SMA in the account? A. $7,500 B. $15,000 C. $22,500 D. $30,000

C. $22,500

The minimum margin to open a day trading account is: A. $2,000 B. $5,000 C. $25,000 D. $50,000

C. $25,000

An individual who made a profit of $1,000,000 from insider trading would be subject to a civil penalty of: A. $1,000,000 B. $2,000,000 C. $3,000,000 D. $4,000,000

C. $3,000,000

A NASDAQ security is bid at $30.25 and offered at $30.75. An over-the-counter trader effects a trade at $30.75 and charges a commission of $.50 to the customer. The price that will show on the tape is: A. $30.25 B. $30.50 C. $30.75 D. $31.25

C. $30.75

Which one of the following orders requires specific customer authorization? A. "Buy 100 shares of ABC at the best price available" B. "Sell 100 shares of ABC at the market" C. "Buy 100 shares of any computer stock priced at under $40" D. "Sell 100 shares of ABC at $40 if it gets to that level"

C. "Buy 100 shares of any computer stock priced at under $40"

When discussing a 529 Plan with a client, which statement can be made? A. "There is no limit to the amount that can be contributed to the plan, because, as you know, college is very expensive" B. "If the beneficiary completes college without all the funds being spent, the unexpended funds can be used to pay for first time home purchase expenses without tax being due" C. "The amount contributed to the plan will not be deductible from federal income tax, but it is usually deductible from state income tax" D. Contributions are made into the account with pretax dollars

C. "The amount contributed to the plan will not be deductible from federal income tax, but it is usually deductible from state income tax"

A $1,000 par Treasury Note is quoted at 101-3 - 101-5. The spread is: A. 2 basis points B. $.0625 per $1,000 C. $.625 per $1,000 D. $6.25 per $1,000

C. $.625 per $1,000

A customer opens a new margin account with the following position: Long: 1,000 XYZ Cmn Mkt Value: $20,000 Debit: $10,000 If the market value rises to $22,000, how much SMA is created? A. 0 B. $500 C. $1,000 D. $2,000

C. $1,000

A customer sells short 100 ABC at $45 and buys 1 ABC Jan 45 Call @ $3. ABC goes to $30 and the customer lets the call expire and closes out the stock position at the market. The customer has a: A. $300 loss B. $1,200 loss C. $1,200 gain D. $1,600 gain

C. $1,200 gain

A customer sells 1 ABC Jan 100 Call @ $8 and buys 1 ABC Jan 120 Call @ $3 when the market price of ABC is $105. The maximum potential loss is: A. $300 B. $500 D. unlimited

C. $1,500

A pattern day trading account has a high market value during the day of $400,000 and has a "0" position at the end of the day. The minimum maintenance margin requirement is: A. 0 B. $25,000 C. $100,000 D. $200,000

C. $100,000

An individual buys 100 shares of ABC stock at $35. This person dies when the stock is trading at $60, and leaves the shares to his son. The son sells the stock when it is trading at $55. The son's cost basis is: A. $0 B. $35 C. $55 D. $60

D. $60

Keynesian Economic Theory postulates that production and economic growth are stimulated by: I Decreased government borrowing II Increased government borrowing III Lower government spending IV Higher government spending A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A customer buys 100 shares of ABC stock which is trading at $55. Subsequently, the market moves to $60. The customer thinks the market will remain at $60 in the following months, so he sells 1 ABC Sept 60 Call @ $3. ABC then goes to $58 and the customer's call contract expires and the customer decides to liquidate his stock position at the current market price. The customer has a: A. $300 loss B. $300 gain C. $600 loss D. $600 gain

D. $600 gain

On the same day, a customer buys 1 ABC Jan 50 Call @ $8 and sells 1 ABC Jan 65 Call @ $2. At which market price listed will the customer have the largest gain? A. $58 B. $60 C. $63 D. $65

D. $65

A customer sells 1 ABC Jan 60 Call @ $5 and buys 1 ABC Jan 70 Call @ $1 when the market price of ABC is $62. The customer will profit or breakeven at all of the following prices EXCEPT: A. $60 B. $62 C. $64 D. $66

D. $66

A customer buys 1 ABC Jan 50 Call @ $5.75 and 1 ABC Jan 50 Put @ $2.25 when the market price of ABC is at $50.75. The customer must deposit: A. $225 B. $350 C. $575 D. $800

D. $800

A hospital revenue bond issue is being underwritten on a negotiated basis. The offering consists of $100,000,000 par value of term bonds. The underwriter has agreed to a spread of $50 for each $5,000 bond. The manager has set the additional takedown at $20.00 per bond and the selling concession at $22.00 per bond. After the offering is completed, the issuer will receive: A. $80,000,000 B. $98,160,000 C. $98,500,000 D. $99,000,000

D. $99,000,000

A company's common stock is selling in the market at a "multiple" of 15. If the market price of the common stock is currently $15, what is the earnings per share? A. $.10 B. $.15 C. $.30 D. $1.00

D. $1.00

ABC Corporation stock is being sold in a primary offering. The total offering is $10,000,000, of which $7,000,000 is allocated to the syndicate and $3,000,000 is allocated to the selling group. The public offering price is set at $10.00 per share. The issuer received $9.00 per share from the underwriters. The management fee has been set at $.10 per share; the selling concession is $.30 per share. The spread is: A. $ .10 B. $ .30 C. $ .60 D. $1.00

D. $1.00

A mutual fund has a net asset value per share of $9.45. The maximum offering price per share is: A. $9.45 B. $9.95 C. $10.25 D. $10.33

D. $10.33

Ford Motor Company has issued 8% convertible debentures, convertible at a 10:1 ratio. Currently the debenture is trading at 94. The stock is trading at $80. What is the conversion price of the stock? A. $10 B. $80 C. $94 D. $100

D. $100

For the year 2019, the maximum contribution that a married couple, both under age 50, can make to an IRA is: A. $6,000 B. $9,000 C. $10,000 D. $12,000

D. $12,000

A customer makes a purchase of $22,100 of ACME Income Fund in her margin account. The customer must deposit: A. $5,525 B. $6,630 C. $11,050 D. $22,100

D. $22,100

A customer sells short 100 shares of PDQ at $30 as the initial transaction in a new margin account. Subsequently, PDQ declines to $20 per share in the market. What is account's equity after the change in market value? A. $500 B. $2,000 C. $2,500 D. $3,000

D. $3,000

A customer buys a real estate limited partnership interest by contributing $10,000 and signing a $20,000 non-recourse note. The customer's tax basis is: A. 0 B. $10,000 C. $20,000 D. $30,000

D. $30,000

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

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

All of the following information about corporate bonds would be found in the Standard and Poor's Bond Guide EXCEPT: A. Rating B. Yield C. Price D. Trading Volume

D. Trading Volume

Which investment does NOT have purchasing power risk? A. STRIPS B. TIPS C. Treasury Bonds D. Treasury Receipts

B. TIPS

Net tangible asset value of common stock is synonymous with which of the following? A. Stated Value B. Book Value C. Par Value D. Market Value

B. Book Value

Timing is the important factor in which portfolio management strategy? A. Strategic allocation B. Tactical allocation C. Rebalancing D. Indexing

B. Tactical allocation

What constitutes a failed auction for an Auction Rate Security? I Lack of bids II Lack of offers III Clearing rate below bid rate IV Clearing rate above bid rate A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following options positions has the greatest risk? A. long straddle B. short straddle C. long spread D. short spread

B. short straddle

Trades of options settle "regular way": I next business day II in 2 business days III in Clearing House funds IV in Federal Funds A. I and III B. I and IV C. II and III D. II and IV

A. I and III

A 4 ½%, 10-year corporate bond is priced to yield 4%. For an investor in the 35% tax bracket, the equivalent tax free yield is: A. 1.40% B. 2.09% C. 2.60% D. 2.76%

C. 2.60%

The maximum amount that can be invested by a client in a single issue under Regulation Crowdfunding is: A. $100,000 B. $500,000 C. $1,000,000 D. $5,000,000

A. $100,000

A customer sells short 1,000 shares of PDQ stock at $55 in a margin account. The stock starts to drift lower in price and 15 months later, the customer covers the short positions by purchasing the shares at $30. The customer will have a: A. $25,000 short term capital gain B. $25,000 short term capital loss C. $25,000 long term capital gain D. $25,000 long term capital loss

A. $25,000 short term capital gain

A customer buys 100 shares of ABC stock at $50 and sells 1 ABC Jan 50 Call @ $4 and sells 1 ABC Jan 50 Put @ $3. The customer's maximum potential gain is: A. $700 B. $4,300 C. $9,300 D. Unlimited

A. $700

A customer sells 1 ABC Jan 45 Put @ $9 and buys 1 ABC Jan 30 Put @ $1 when the market price of ABC is $42. The customer must deposit: A. $700 B. $800 C. $2,000 D. $4,500

A. $700

A customer sells 1 ABC Jan 50 Call @ $4 and sells 1 ABC Jan 50 Put @ $3 when the market price of ABC = $51. The maximum potential gain is: A. $700 B. $4,700 C. $5,400 D. unlimited

A. $700

A customer has an existing margin account with the following positions: Long: 1,000 XYZ Cmn Mkt Value: $20,000 Debit Bal: $15,000 SMA: $1,000 How much cash can the customer withdraw (borrow) from the account? A. 0 B. $500 C. $1,000 D. $2,000

A. 0

A customer has invested $20,000 in a variable annuity. In the first year, the NAV increases to $21,100. At what rate will the $1,100 gain be taxed? A. 0 B. 15% C. 20% D. 25%

A. 0

A customer is short 100 shares of ABC stock at $50 per share in a margin account. The customer wishes to sell 1 ABC Jan 50 Put @ $5. The customer must deposit: A. 0 B. $500 C. $2,000 D. $5,000

A. 0

An institutional customer borrows $10,000,000 and uses the funds to buy municipal bonds. How much of the annual interest expense on the borrowed funds is tax deductible? A. 0% B. 20% C. 80% D. 100%

A. 0%

ABC corporation is trading in the market for $51. The corporation declares a 25% stock dividend. After the ex date, the holder of 1 ABC Jan 50 Call will have: A. 1 ABC Jan 50 Call B. 1.25 ABC Jan 50 Calls C. 1 ABC Jan 40 Call D. 1.25 ABC Jan 40 Calls

A. 1 ABC Jan 50 Call

A customer holds 10 ABC Jan 60 Call contracts. ABC Corporation is paying a 20% stock dividend. On the ex date, the contracts will show as: A. 10 ABC Jan 60 Calls B. 10 ABC Jan 50 Calls C. 12 ABC Jan 60 Calls D. 12 ABC Jan 50 Calls

A. 10 ABC Jan 60 Calls

The margin required to buy an OEX option contract is: A. 100% of the premium B. 15% of the market value C. 100% of the premium + 15% of the market value D. 100% of the premium + 20% of the market value

A. 100% of the premium

The minimum maintenance margin for long stock positions is set at: A. 25% of the long market value B. 30% of the long market value C. 50% of the long market value D. 100% of the long market value

A. 25% of the long market value

Treasury bills: I are issued in minimum $100 denominations II are issued in minimum $10,000 denominations III mature at par IV mature at par plus accrued interest A. I and III B. I and IV C. II and III D. II and IV

A. I and III

XYZ Corporation has declared a rights offering to stockholders of record on Wednesday, November 15th. Under the offer, shareholders need 5 rights to subscribe to 1 new share at a price of $24. Fractional shares can be rounded up to purchase 1 full share. A customer owning 200 shares wishes to subscribe. The market price of the stock is currently $34. The customer can buy: A. 40 shares for $960 B. 40 shares for $1,360 C. 200 shares for $4,800 D. 200 shares for $6,800

A. 40 shares for $960

Trading halts in National Market System stocks will occur if the Standard and Poor's 500 Index drops by all of the following EXCEPT: A. 5% B. 7% C. 13% D. 20%

A. 5%

An investor must file a 13D report with the SEC if a: A. 5% or greater common stock holding is purchased of one issuer B. 10% or greater common stock holding is purchased of one issuer C. 15% or greater common stock holding is purchased of one issuer D. 20% or greater common stock holding is purchased of one issuer

A. 5% or greater common stock holding is purchased of one issuer

To avoid penalties, funds cannot be withdrawn from tax qualified retirement plans before age: A. 59 1/2 B. 65 C. 70 1/2 D. 75

A. 59 1/2

Which of the following will result in a "locked-in" trade? A. A market order placed for a NASDAQ issue quoted in the NASDAQ System (Single Book) B. A market order placed for an OTC equity issue quoted in the OTCBB C. A market order placed for an OTC equity issue quoted in the Pink Sheets D. All of the above

A. A market order placed for a NASDAQ issue quoted in the NASDAQ System (Single Book)

Which of the following parties of an account can give trading authorization to another party? A. A second party can give trading authorization to a first party B. A first party can give trading authorization to a second party C. A third party can give trading authorization to a second party D. A first party can give trading authorization to a third party

A. A second party can give trading authorization to a first party

Which of the following issues would be overlapping debts? I School district bond issue where the school district is coterminous with the town that 100% uses that school district II School district bond issue where the school district encompasses three neighboring townships III Water revenue bond issue where the water district is coterminous with the town that 100% uses that water system IV Water revenue bond issue where the water district encompasses three neighboring townships A. I and II only B. III and IV only C. I and III only D. II and IV only

A. I and II only

Which of the following pay dividends? I Preferred Stock II ADRs III Warrants IV Rights A. I and II only B. II and III only C. I, II, III D. I, II, IV

A. I and II only

Which of the following statements are TRUE about investment companies? I An open end fund is a type of management company II A closed end fund is a type of management company III An open end fund is a publicly traded fund IV A closed end fund is a mutual fund A. I and II only B. III and IV only C. I and IV only D. II and III only

A. I and II only

Which statements are TRUE about LEAPs? I Contracts are available on individual equity securities II Contracts are available on indexes III Contracts for equity securities may be exercised only at expiration IV Contracts have maximum expirations of 9 months A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

A. I and II only

Which statements are TRUE regarding variable annuities during the accumulation phase? I Periodic payments of fixed dollar amounts can be made into the separate account II Periodic payments of varying dollar amounts can be made into the separate account III Periodic distributions of fixed dollar amounts can be made to the holder from the separate account IV Periodic distributions of varying dollar amounts can be made to the holder from the separate account A. I and II only B. III and IV only C. I and III only D. II and IV only

A. I and II only

A municipal dealer offers bonds to another dealer "firm for one-half hour with a five minute recall." This means that the: I selling dealer cannot change the price for one-half hour II selling dealer cannot change the price for the next five minutes III selling dealer has the right to contact the other dealer during the half hour to change the quote if a transaction does not take place in the next five minutes IV buying dealer must call back the selling dealer in five minutes if it wishes to purchase the bonds A. I and III B. I and IV C. II and III D. II and IV

A. I and III

A municipal term bond with 9 years remaining has been pre-refunded at 102 to a call date 2 years in the future. If a customer buys this bond, the yield shown on the confirmation will be computed: I to the call date II to maturity date III including any call premium IV excluding any call premium A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Under SEC rules, filing of the Form 144, required when selling restricted stock, is: I the responsibility of the seller II the responsibility of the broker-dealer III filed at, or prior to, the time that the sell order is placed IV filed within 10 business days of the placement of the sell order A. I and III B. I and IV C. II and III D. II and IV

A. I and III

A registered representative completes a standard options worksheet for a customer. Which of the following statements are TRUE? I The customer must have received an Options Disclosure Document at or prior to receiving the options worksheet II The customer must have received an Options Agreement at or prior to receiving the options worksheet III Prior to its first use, the options worksheet must have been approved by the firm's designated Registered Options Principal IV Prior to its first use, the options worksheet must have been approved by the CBOE A. I and III B. I and IV C. II and III D. II and IV

A. I and III

A research analyst at PDQ Securities mentions to a registered representative at that firm that a new research report is coming out about ACME Corporation that is "highly positive." Prior to the issuance of the research report, the registered representative calls his customers and tells them to buy ACME stock. Based on this information, which statements are TRUE? I The research analyst has violated the insider trading rules II The research analyst has not violated the insider trading rules III The registered representative has violated the insider trading rules IV The registered representative has not violated the insider trading rules A. I and III B. I and IV C. II and III D. II and IV

A. I and III

A tombstone announcement would show which of the following? I Gross proceeds of a new issue offering to the issuer II Net proceeds of the new issue offering to the issuer III Syndicate member names IV Syndicate member participations A. I and III B. I and IV C. II and III D. II and IV

A. I and III

An increasing Consumer Confidence Index indicates that: I consumers are confident in the overall economy II consumers are not confident in the overall economy III future spending is likely to increase IV future spending is likely to fall A. I and III B. I and IV C. II and III D. II and IV

A. I and III

An over-the-counter brokerage firm receives a customer order to buy 100 shares of ABCD stock and another customer order to sell 100 shares of ABCD stock at the same time. If the firm "crosses" the orders, it: I acts as an agent in the transactions II acts as a principal in the transactions III charges a commission on each transaction IV earns a mark-up on each transaction A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Commercial paper is a(n): I Money Market Instrument II Capital Market Instrument III Exempt Security IV Non-Exempt Security A. I and III B. I and IV C. II and III D. II and IV

A. I and III

During the period when a new issue is "in registration," which of the following are permitted? I Obtaining an indication of interest from a customer II Accepting payment for the issue III Distributing a preliminary prospectus IV Soliciting an order for the issue A. I and III B. II and IV C. I and IV D. II and III

A. I and III

Homeowners will prepay mortgages: I when interest rates fall II when interest rates rise III so they can refinance at lower rates IV so they can refinance at higher rates A. I and III B. I and IV C. II and III D. II and IV

A. I and III

If a fund distributes a capital gain to shareholders, which statements are TRUE? I The capital gain is taxable if it is taken as a check II The capital gain is not taxable if it is taken as a check III The capital gain is taxable if it is automatically reinvested in the fund IV The capital gain is not taxable if it is automatically reinvested in the fund A. I and III B. I and IV C. II and III D. II and IV

A. I and III

If a person under the age of 59 1/2 wishes to withdraw money from her IRA, which statements are TRUE? I The withdrawal is subject to income tax II The withdrawal is not subject to income tax III The withdrawal is subject to a 10% penalty tax IV The withdrawal is not subject to a 10% penalty tax A. I and III B. I and IV C. II and III D. II and IV

A. I and III

If the balance of payments is running a deficit, which of the following statements are TRUE? I More U.S. dollars are being spent abroad than in the U.S. II Fewer U.S. dollars are being spent abroad than in the U.S. III There are increasing levels of net imports of foreign goods in the U.S. IV There are decreasing levels of net imports of foreign goods in the U.S. A. I and III B. I and IV C. II and III D. II and IV

A. I and III

In order to protect a gain on a long stock position, a customer could: I place a sell stop order II place a sell limit order III buy a put IV sell a put A. I and III B. I and IV C. II and III D. II and IV

A. I and III

The Chairman of XYZ Corporation, while playing golf with a neighbor, casually mentions that this quarter's earnings are likely to be lower than expected. Based on this information, the neighbor sells short XYZ stock the next day. Which statements are TRUE? I The Chairman has violated the insider trading rules II The Chairman has not violated the insider trading rules III The neighbor has violated the insider trading rules IV The neighbor has not violated the insider trading rules A. I and III B. I and IV C. II and III D. II and IV

A. I and III

The Internal Rate of Return: I considers the time value of money II does not consider the time value of money III represents the implicit rate of return that a limited partnership is expected to yield to the partners IV represents the rate at which the partnership is expected to return cash to the partners A. I and III B. I and IV C. II and III D. II and IV

A. I and III

To take a second job, an employee of a FINRA member firm: I must get written permission from his or her employer II is not required to get written permission from his or her employer III must amend his U-4 filing with FINRA and the SEC IV is not required to amend his U-4 filing with FINRA and the SEC A. I and III B. I and IV C. II and III D. II and IV

A. I and III

When a stock and a put option on that stock are purchased on the same day, which of the following statements are TRUE? I The put option is said to be "married" to the stock II The put option is said to be "covered" by the stock III The premium paid for the put option is treated as part of the cost basis of the stock IV The premium paid for the put option is treated independently of the stock position A. I and III B. I and IV C. II and III D. II and IV

A. I and III

When awarding a bid in a new competitive bid municipal issue, which of the following statements are TRUE? I The issuer chooses the winning bid II The underwriter chooses the winning bid III The lowest net interest cost wins the bid IV The highest net interest cost wins the bid A. I and III B. I and IV C. II and III D. II and IV

A. I and III

When bonds are trading at a large discount, which of the following statements are TRUE? I The deeper the discount, the more volatile the bond's price movement in response to interest rate changes II The deeper the discount, the less volatile the bond's price movement in response to interest rate changes III Discount bonds with long maturities are more volatile than ones with short maturities IV Discount bonds with short maturities are more volatile than ones with long maturities A. I and III B. I and IV C. II and III D. II and IV

A. I and III

When comparing mutual fund "Class A" and "Class B" shares, which statements are TRUE? I Class A shares impose a front-end sales charge; Class B shares impose a contingent deferred sales charge II Class A shares impose a contingent deferred sales charge; Class B shares impose a front-end sales charge III Class A shares impose a smaller 12b-1 fee; Class B shares impose a larger 12b-1 fee IV Class A shares impose a larger 12b-1 fee; Class B shares impose a smaller 12b-1 fee A. I and III B. I and IV C. II and III D. II and IV

A. I and III

When is a foreign broker-dealer permitted to solicit U.S. based clients? I If the foreign broker-dealer establishes an SEC-registered U.S. subsidiary II If the foreign broker-dealer only offers exempt securities III If the foreign broker-dealer only deals with major institutional investors IV If the foreign broker-dealer only deals with accredited investors A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following are TRUE statements regarding government agencies and their obligations? I Fannie Mae is a publicly traded company II Fannie Mae is a U.S. Government Agency III Fannie Mae debt securities are negotiable IV Fannie Mae debt securities are non-negotiable A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following can be distributed by an REIT to its shareholders? I Dividends II Interest III Capital Gains IV Capital Losses A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following customers is allowed a breakpoint on mutual fund purchases? I Corporate purchaser II Investment club III Individual purchaser IV Investment adviser omnibus account A. I and III B. II and IV C. I, II, III D. I, II, III, IV

A. I and III

Which of the following statements are TRUE about new stock offerings? I New issues are sold under a prospectus II New issues are not sold under a prospectus III New issues are sold at the Public Offering Price IV New issues are sold at the Public Offering Price plus a commission or mark-up A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding International Bond Funds? I The fund will hold securities denominated in foreign currencies II The fund will hold securities denominated in U.S. dollars III The fund will have a currency exchange gain when the dollar falls in value IV The fund will have a currency exchange gain when the dollar rises in value A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding MSRB rules on gifts and gratuities? I The maximum business related gift that may be given by a municipal securities employee is $100 per person per year II The maximum business related gift that may be given by a municipal securities employee is $200 per person per year III Business related entertainment is permitted under the rules, as long as it is not too excessive or frequent IV Business related entertainment is prohibited under the rules A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding NASDAQ Level II? I Each market maker posting a quote must be willing to trade at least 1 round lot of 100 shares II Each market maker posting a quote must be willing to trade at least 10 round lots of 100 shares III If a market maker refuses to honor a quote, this is called "backing away" IV If a market maker refuses to honor a quote, this is called "selling away" A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding a mutual fund that is considered to be "efficient"? I The fund has a low expense ratio II The fund has a high expense ratio III The fund has a relatively low level of operating expenses IV The fund has a relatively high level of operating expenses A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding contributions to 403(b) tax deferred annuities and the distributions from these plans after age 59 1/2? I Contributions are made with before tax dollars II Contributions are made with after tax dollars III Distributions are 100% taxable IV Distributions are tax free A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding fidelity bonds? I Member firms are required by FINRA to maintain fidelity bond coverage II Member firms are not required by FINRA to maintain fidelity bond coverage III A fidelity bond is insurance against loss due to employee theft IV A fidelity bond is insurance against casualty losses A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding the taxation of CMO interest income I CMO interest income is subject to Federal income tax II CMO interest income is exempt from Federal income tax III CMO interest income is subject to State and Local income tax IV CMO interest income is exempt from State and Local income tax A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding warrants? I The exercise price of a warrant is set at a premium to the stock's current market price II The exercise price of a warrant is set at a discount to the stock's current market price III Warrants are exercised when the exercise price is below the market price IV Warrants are exercised when the exercise price is above the market price A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statements are TRUE about accretion of bond discounts? I Annual accretion amounts increase reported interest income II Annual accretion amounts increase the interest amount received from the issuer III Annual accretion amounts increase the bond's cost basis IV Annual accretion amounts increase potential capital gain upon sale A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statements are TRUE about amortization of bond premiums? I Annual amortization amounts reduce reported interest income II Annual amortization amounts reduce the interest amount received from the issuer III Annual amortization amounts reduce the bond's cost basis IV Annual amortization amounts reduce potential capital gain upon sale A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statements are TRUE about amortization of bond premiums? I New issue municipal bonds purchased at a premium must be amortized over the life of the bond II New issue municipal bonds purchased at a premium may be amortized over the life of the bond III Secondary market municipal bonds purchased at a premium must be amortized over the life of the bond IV Secondary market municipal bonds purchased at a premium may be amortized over the life of the bond A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statements are TRUE about stabilizing bids? I A stabilizing bid is placed by the syndicate manager II A stabilizing bid is placed by each syndicate member III Only 1 stabilizing bid is permitted at any time IV Any number of stabilizing bids can be placed at any time A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statements are TRUE regarding Real Estate Investment Trusts? I REITs must distribute at least 90% of Net Investment Income to shareholders II REITs must invest at least 90% of assets in other REIT securities III Interest expense paid by REITs is deductible to the REIT IV REITs are registered as investment companies under the Investment Company Act of 1940 A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statements are TRUE regarding a company's use of leverage in its capital base? I The greater the leverage, the greater the percentage increase in Earnings Per Share as revenues increase II The greater the leverage, the smaller the percentage increase in Earnings Per Share as revenues increase III The greater the leverage, the greater the percentage decrease in Earnings Per Share as revenues decrease IV The greater the leverage, the smaller the percentage decrease in Earnings Per Share as revenues decrease A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which statements are TRUE regarding bids placed at the Treasury Auction? I Non-competitive bids are always filled II Non-competitive bids are not always filled III Individuals may place non-competitive bids IV Individuals may not place non-competitive bids A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Rule 144 allows the sale, every 90 days, of: I 1% of the outstanding shares II 10% of the outstanding shares III the weekly average of the prior 4 weeks' trading volume IV the weekly average of the prior 8 weeks' trading volume A. I or III, whichever is greater B. I or IV, whichever is greater C. II or III, whichever is greater D. II or IV, whichever is greater

A. I or III, whichever is greater

For bonds trading at a discount, rank the yield measures from lowest to highest? I Nominal II Current III Basis A. I, II, III B. III, II, I C. II, I, III D. I, III, II

A. I, II, III

Which of the following participate in the Eurodollar bond market? I Domestic investment banks II Foreign commercial banks III Domestic commercial banks IV Domestic thrift institutions A. I, II, III B. II, III, IV C. I, III, IV D. I, II, III, IV

A. I, II, III

If an investor has a gain on a short stock position, which of the following can be used to protect this gain? I Buy a call II Sell a put III Buy a put IV Place a buy stop order A. I, II, IV B. I, III, IV C. II, III, IV D. I, II, III, IV

A. I, II, IV

Which statement is TRUE? A. If the NYSE stops trading in a stock, the CBOE stops trading in options on that stock B. If the NYSE stops trading in a stock, the CBOE does not stop trading in options on that stock C. If the CBOE stops trading in an option, the NYSE stops trading in that stock D. If the CBOE stops trading in an option, the SEC closes the securities markets for 1 trading day

A. If the NYSE stops trading in a stock, the CBOE stops trading in options on that stock

A new customer, age 45, has been terminated from his assembly-line job of the past 20 years at an automotive parts supplier. During that time period, he has accumulated $124,000 in the company's 401(k) plan. He wishes to rollover the funds to an IRA account with your brokerage firm. This customer, who is an unsophisticated investor, has the entire 401(k) invested in a growth mutual fund and has no other investments. As the representative for this customer, your IMMEDIATE concern should be: A. communicating effectively with an unsophisticated customer in an understandable manner to assess financial goals and risk tolerance B. setting the investment allocation strategy that should be employed in order to provide sufficient retirement income for this individual C. creating a financial plan that emphasizes asset preservation and that is likely to provide a prolonged income stream for a prolonged period of retirement D. minimizing the tax consequences of any recommended transactions to increase the long-term growth potential of investments made

A. communicating effectively with an unsophisticated customer in an understandable manner to assess financial goals and risk tolerance

All of the following dates are needed to compute the total purchase price of a municipal bond traded on a yield basis in the secondary market EXCEPT: A. dated date B. maturity date C. settlement date D. interest payment date

A. dated date

A developmental oil and gas limited partnership program would: A. drill a new well near an existing oil field B. inject water into an existing well to increase underground pressure C. inject steam into an existing well to increase underground pressure D. drill a new well in unproven areas

A. drill a new well near an existing oil field

Fidelity bonds are maintained by brokerage firms to protect against loss due to: A. embezzlement by employees B. catastrophic events C. severe market volatility D. regulatory changes

A. embezzlement by employees

The majority of open-end investment companies impose: A. front-end load sales charges B. no sales load C. contingent deferred sales charges D. negotiated sales charges

A. front-end load sales charges

A new issue can be quoted on NASDAQ: A. immediately as of the effective date B. 10 days after the effective date C. 20 days after the effective date D. 30 days after the effective date

A. immediately as of the effective date

An investor in a limited partnership generating passive losses can offset these against: A. income generated from direct investments in real estate B. dividends received from blue chip corporations C. capital gains generated from the sale of partnership units D. income generated from investments in municipal bonds

A. income generated from direct investments in real estate

In a limited partnership investment, the cross-over point will occur as the program's: A. income increases at a faster rate than losses B. losses increase at a faster rate than income C. investments increase in market value at a faster rate than their tax basis D. investments increase in tax basis at a faster rate than their market value

A. income increases at a faster rate than losses

Upon annuitization, a customer's insurer calculated the assumed interest rate (AIR) of his annuity as 5 percent. The account earned 6 percent after the first year. The customer's next payout amount will: A. increase B. decrease C. remain unchanged D. increase by the changes in the CPI

A. increase

Straight line accretion for municipal bonds is the annual: A. increase in the cost basis of a discount bond performed according to IRS rules B. decrease of the cost basis of a discount bond performed according to IRS rules C. increase of the cost basis of a premium bond performed according to IRS rules D. decrease of the cost basis of a premium bond performed according to IRS rules

A. increase in the cost basis of a discount bond performed according to IRS rules

Promises made by corporate issuers to bondholders, as well as any restrictions placed on the issuer are found in the: A. indenture B. legal opinion C. prospectus D. underwriting agreement

A. indenture

Two unrelated women are interested in opening a brokerage account. Each one wants to be able to enter trades in the account, but one of the women does not intend to make an investment in the account and is concerned about tax implications if her name is on the account. The BEST recommendation would be for the account to be opened as a(n): A. individual account in the name of the woman making the investment with that person signing a third party trading authorization naming the other woman B. joint account, held as Joint Tenants with Rights of Survivorship, with the social security number of the woman making the investment used on the account C. joint account, held as Tenants in Common, with the social security number of the woman making the investment used on the account D. trust account, with both women named as co-trustees

A. individual account in the name of the woman making the investment with that person signing a third party trading authorization naming the other woman

Speculators in foreign currencies would NOT be subject to which of the following risks? A. interest rate risk B. exchange rate risk C. market risk D. political risk

A. interest rate risk

Index calls would be purchased by a customer who: A. is bullish on the direction of the market B. is bearish on the direction of the market C. believes that interest rates will rise D. believes that interest rates will fall

A. is bullish on the direction of the market

A customer owns 100 shares of an NYSE listed preferred stock and notices that the typical daily trading volume in the issue is less than 1,000 shares. The customer wants to sell the stock and asks his broker what will happen if there is no ready buyer for the stock. The broker should respond that the Specialist (DMM) on the NYSE floor: A. is obligated to buy the stock at the current market B. is obligated to buy the stock at the limit price, if one is specified by the customer C. must look for a buyer for the shares on the NYSE floor D. is not obligated to buy the stock at the market

A. is obligated to buy the stock at the current market

The trust indenture is a contract between the: A. issuer and trustee B. trustee and bondholder C. issuer and bondholder D. issuer and transfer agent

A. issuer and trustee

Which option strategy has the greatest gain potential? A. long straddle B. short straddle C. long put D. long put spread

A. long straddle

Regulation NMS requires: A. market centers to accept automated executions that do not discriminate against any class of users of their systems B. ECNs to register with FINRA as broker-dealers and to electronically display their quotes if they are responsible for 5% of the trades in that issue C. broker-dealers to charge commissions to customers that are fair and reasonable D. market makers to stop trading all equity securities in the United States if a circuit breaker is triggered

A. market centers to accept automated executions that do not discriminate against any class of users of their systems

The social security number(s) that is (are) used for Internal Revenue Service reporting in a custodian account is (are) the: A. minor's social security number B. custodian's social security number C. account has the choice of using either the minor's social security number or the custodian's social security number D. parent's social security number

A. minor's social security number

A 60-year old customer has a 401(k) account with your firm that has $280,000, mainly invested in growth mutual funds. The customer has an elderly widowed aunt who has died, and her estate attorney has contacted him, notifying him that he has been left $100,000 as an inheritance. The customer is single and has an annual income of $100,000 per year. He wants to use the inheritance to buy a retirement home, which he expects to do in 7 years. Over this investment time horizon, the general expectation is that interest rates will rise. The best recommendation to the customer is to invest the $100,000 in: A. money market instruments B. 7-year Treasury Bonds C. 7-year Treasury STRIPS D. 30-year Treasury Bonds

A. money market instruments

A customer buys $100,000 of a new issue 30 year General Obligation bond at 80. At maturity, the customer will have: A. no capital gain or loss B. a $2,000 capital gain C. a $20,000 capital gain D. a $20,000 capital loss

A. no capital gain or loss

A customer buys 100 shares of ABC stock which is now trading at $63. A month later the market goes to $65. The customer thinks the market will remain near $65 in the following months, so he decides to sell 1 ABC Sept 65 Call @ $3. ABC then goes to $60 and the customer's call contract expires and the customer decides to liquidate his stock position at the current market price. The customer has: A. no gain or loss B. a $300 gain C. a $300 loss D. a $500 loss

A. no gain or loss

A customer buys 100M of a newly issued municipal bond in the primary market at 90. The bond has 20 years to maturity. If the bond is held to maturity, the customer will have: A. no taxable gain or loss B. a $1,000 capital gain C. a $10,000 capital gain D. a $100,000 capital gain

A. no taxable gain or loss

A primary dealer buys Treasury Securities in a competitive bid at the weekly Treasury Auction. Settlement between the dealer and the Treasury occurs: A. on issue date B. the next business day after issue date C. the next business day after the auction D. 5 business days after issue date

A. on issue date

A customer owns 100 shares of ABC stock and owns 1 ABC Put option. The customer wishes to sell the stock by exercising the put, but wishes to retain a recently declared cash dividend. In order to receive the dividend, the customer must exercise the put: A. on the ex date B. on the record date C. before the ex date D. before the record date

A. on the ex date

MSRB rules allow all of the following when selling a new issue of municipal bonds EXCEPT: A. orally agreeing to repurchase the bonds at an agreed price B. not disclosing the spread on reofferings of competitively bid issues C. providing a customer with a Preliminary Official Statement if the Final Official Statement is not yet available at settlement D. disclosing order priority provisions upon the request of customers

A. orally agreeing to repurchase the bonds at an agreed price

If a company repurchases its own common shares, the number of: A. outstanding shares will decrease B. outstanding shares will increase C. issued shares will decrease D. unissued shares will increase

A. outstanding shares will decrease

The portfolio management technique that uses a performance benchmark such as a market index that any investments must match is called: A. passive management B. active management C. fundamental management D. technical management

A. passive management

The Bank of England is concerned that the British Pound is weakening against the U.S. Dollar. A method for the Bank of England to strengthen its currency would be to: A. raise British interest rate levels B. lower British interest rate levels C. raise U.S. interest rate levels D. lower U.S. interest rate levels

A. raise British interest rate levels

The "right of rejection" in a municipal bond sale refers to the: A. refusal by a municipal dealer to accept a delivery of bonds tendered to that firm by another municipal securities dealer B. return of municipal securities that have been previously accepted on a delivery C. procedure where a municipal dealer that bought securities, but has not yet received them, can close-out the transaction D. settlement method where payment is made on delivery, or, if the dealer does not have the monies, the delivery may be rejected

A. refusal by a municipal dealer to accept a delivery of bonds tendered to that firm by another municipal securities dealer

An NMS stock is current quoted at $16.10 Bid - $16.30 Ask. A customer wishes to place an order to buy 1,000 shares of the stock at $16.111. The registered representative should: A. refuse to accept the order B. route the order to an ATS C. route the order to an exchange D. accept the order and round the price to $16.11

A. refuse to accept the order

All of the following are terms associated with preferred stock EXCEPT: A. renewable B. cumulative C. negotiable D. convertible

A. renewable

The term "flow of funds" found in a trust indenture applies to municipal: A. revenue bonds B. general obligation bonds C. special assessment bonds D. bond anticipation notes

A. revenue bonds

The purchaser of a CMO tranche experiences extension risk during periods when interest rates: A. rise B. fall C. are stable D. are volatile

A. rise

Value investors: A. seek to find investments that are undervalued by the market B. determine the value of a security through fundamental analysis C. invest in securities included in the Value Line Index D. make their investment decision based upon the market performance of the security

A. seek to find investments that are undervalued by the market

CAPM helps investors by: A. selecting stocks with the highest expected return based on the investor's tolerance for risk B. selecting stocks with the lowest expected risk based on the investor's desired return C. measuring incremental return on an investment per unit of incremental risk assumed D. measuring incremental risk on an investment per unit of incremental return assumed

A. selecting stocks with the highest expected return based on the investor's tolerance for risk

A retired customer that has a portfolio of blue chip stocks is looking to supplement his retirement income. An appropriate recommendation would be to: A. sell covered calls B. sell naked calls C. sell covered puts D. sell naked puts

A. sell covered calls

Underwriting syndicate group members: A. share in both selling responsibility for the new issue and liability for any unsold portion of the new issue B. share in selling responsibility for the new issue but are not liable for any unsold portion of the new issue C. do not share in selling responsibility for the new issue and are liable for any unsold portion of the new issue D. do not share in selling responsibility for the new issue and are not liable for any unsold portion of the new issue

A. share in both selling responsibility for the new issue and liability for any unsold portion of the new issue

A customer who is long 1 ABC Jan 65 Put wishes to create a "long put spread." The second option position that the customer must take is: A. short 1 ABC Jan 55 Put B. short 1 ABC Jan 75 Put C. short 1 ABC Jan 55 Call D. short 1 ABC Jan 75 Call

A. short 1 ABC Jan 55 Put

A customer wishes to maximize liquidity and minimize interest rate risk. The best recommendation is (are): A. short term maturities B. long term maturities C. callable bonds D. non callable bonds

A. short term maturities

A customer is short 1 ABC Jan 90 Put @ $5. The put is exercised when the market price of ABC is $80. The cost basis of the shares is: A. strike price minus premium B. strike price plus premium C. market price minus premium D. market price plus premium

A. strike price minus premium

A portfolio with a beta of +1 has: A. systematic risk B. unsystematic risk C. both systematic and unsystematic risk D. no risk

A. systematic risk

Municipal dollar bonds are generally: A. term bonds B. series bonds C. serial bonds D. short term maturities

A. term bonds

Short put spreads are profitable in all of the following circumstances EXCEPT: A. the spread between the premiums widens above the credit received B. the spread between the premiums narrows below the credit received C. both positions expire D. the market falls by an amount that is less than the credit received

A. the spread between the premiums widens above the credit received

Equity options contracts for a given month expire on the: A. third Friday of the month at 11:59 PM Eastern Standard Time B. Friday following the third Saturday of the month at 11:59 PM Eastern Standard Time C. Friday before the third Wednesday of the month at 11:59 PM Eastern Standard Time D. Friday following the third Wednesday of the month at 11:59 PM Eastern Standard Time

A. third Friday of the month at 11:59 PM Eastern Standard Time

The maximum maturity on commercial paper is 270 days (9 months) because: A. this is the longest maturity for the security to be exempt from the provisions of the Securities Act of 1933 B. this is the maximum maturity for the security to be defined as a money market instrument C. longer duration issues are not readily marketable to institutional investors D. longer duration issues will not be rated by a nationally recognized ratings agency

A. this is the longest maturity for the security to be exempt from the provisions of the Securities Act of 1933

The parents of a high school student are planning to send the child to college in one year. The registered representative should recommend a portfolio that: A. tiers Treasury notes over a 5-year time frame B. emphasizes municipal bonds of the state where the customer resides C. emphasizes investment grade preferred stocks paying a high dividend rate D. allocates funds among aggressive growth stocks and large capitalization stocks

A. tiers Treasury notes over a 5-year time frame

In an over-the-counter agency trade, the member firm executing the order: I is a broker II is a dealer III charges a mark-up IV charges a commission A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A 7% general obligation bond matures in 1 year. A municipal dealer quoting the bond has just changed his quote from a 6.85 basis to a 6.95 basis. The approximate dollar change in price per $1,000 bond is: A. $.10 B. $1.00 C. $10.00 D. $100.00

B. $1.00

A customer sells 1 ABC Jan 55 Call @ $4 and 1 ABC Jan 65 Put @ $7 when the market price of ABC is at $58. ABC goes to $62 and the customer closes the positions at intrinsic value. The customer has a: A. $100 loss B. $100 gain C. $1,100 loss D. $1,100 gain

B. $100 gain

An investor contributes $75,000 of cash to a partnership and signs a $50,000 recourse note. During the first year, the investor is allocated partnership income of $50,000, debt service expense of $20,000 consisting of $15,000 of interest and $5,000 of principal amortization, operating expenses of $30,000 and depreciation expense of $25,000. The adjusted tax basis at year end is: A. $75,000 B. $100,000 C. $120,000 D. $125,000

B. $100,000

A customer buys 100 shares of ABC stock for $12,500. Over the next 2 years, the customer sells ABC Call contracts for an aggregate premium of $1,500. The call contracts expired unexercised. After expiration, the customer's cost basis in the ABC shares is: A. $11,000 B. $12,500 C. $14,000 D. This cannot be determined from the information provided

B. $12,500

A customer has an existing margin account that shows: $16,000 LMV $14,000 Debit The customer will receive a call for minimum maintenance margin of: A. $1,000 B. $2,000 C. $3,000 D. $4,000

B. $2,000

A customer has a restricted margin account with $2,500 of SMA. The customer wishes to buy $10,000 of a marginable listed stock. The customer must deposit: A. $0 B. $2,500 C. $5,000 D. $7,500

B. $2,500

On the same day in a margin account, a customer sells short 100 shares of ABC at $49 and buys 1 ABC Jan 50 Call @ $3. The customer's transactions on this day will generate a margin call of: A. $2,000 B. $2,750 C. $4,900 D. $5,200

B. $2,750

A waste disposal revenue bond issue is being underwritten on a negotiated basis. The offering consists of $10,000,000 par value of term bonds. The underwriter has agreed to a spread of $40.00 for each $5,000 bond. The manager has set the additional takedown at $15.00 per bond and the selling concession at $20.00 per bond. If a selling group member sells a $5,000 par value bond directly to the public, the selling group member earns: A. $5.00 B. $20.00 C. $35.00 D. $40.00

B. $20.00

A basis quote for a $10,000 municipal bond with one year left to maturity has just been raised by 20 basis points. The bond's change in price will be: A. $20.00 increase B. $20.00 decrease C. $200.00 increase D. $200.00 decrease

B. $20.00 decrease

A customer buys 1 ABC Jan 45 Call @ $7 and buys 1 ABC Jan 45 Put @ $3 on the same day when the market price of ABC stock is $49. Assume that the market price falls to $44 and the call premium falls to $5, while the put premium rises to $7. The customer closes the positions. The customer has a: A. $100 gain B. $200 gain C. $1,000 gain D. $1,200 loss

B. $200 gain

A customer has $10,000 in passive losses from a limited partnership investment. If the customer has $3,000 of passive income for that tax year, the customer may deduct: A. 0 B. $3,000 C. $5,000 D. $10,000

B. $3,000

A customer is long 400 shares of fully paid XYZ stock, valued at $150 per share. The customer sells "short against the box" another 400 shares of XYZ. XYZ is listed on the New York Stock Exchange. The minimum maintenance margin requirement is: A. 0 B. $3,000 C. $57,000 D. $60,000

B. $3,000

A customer margin account shows: 100 shares of ABC @ $50 300 shares of DEF @ $80 200 shares of PDQ @ $30 Debit = $20,000 SMA = $4,500 Reg. T = 50% If the customer sells the PDQ position, how much cash can be withdrawn from the sale proceeds? A. $1,500 B. $3,000 C. $4,500 D. $6,000

B. $3,000

A customer has $12,000 of capital losses and $4,000 of capital gains in a tax year. On that year's tax return, the investor has a: A. $3,000 capital loss deduction with no loss carryforward B. $3,000 capital loss deduction and a $5,000 loss carryforward C. $8,000 capital loss deduction with no loss carryforward D. $12,000 capital loss deduction

B. $3,000 capital loss deduction and a $5,000 loss carryforward

ABC Corporation has declared a rights offering to stockholders of record on December 10th. Under the offer, shareholders need 10 rights to subscribe to 1 new share at a price of $19. Fractional shares can be rounded up to purchase 1 full share. A customer owning 111 shares wishes to subscribe. The market price of the stock is currently $30. The customer can buy: A. 11 shares for $209 B. 12 shares for $228 C. 11 shares for $341 D. 12 shares for $372

B. 12 shares for $228

A customer buys a new municipal issue from an underwriter on Friday, January 16th, with settlement taking place on Tuesday, January 20th. The bond is dated January 1st. How many days of accrued interest must be paid by the customer to the underwriter? A. 14 B. 19 C. 20 D. 21

B. 19

An investor holds 1 ABC Jan 40 Call. ABC splits 2 for 1. On the ex date, the holder will have: A. 2 ABC Jan 20 Calls covering 50 shares B. 2 ABC Jan 20 Calls covering 100 shares C. 1 ABC Jan 20 Call covering 200 shares D. 1 ABC Jan 40 Call covering 100 shares

B. 2 ABC Jan 20 Calls covering 100 shares

PDQ Corporation has declared a rights offering to stockholders of record on Thursday, July 22nd. Under the offer, shareholders need 20 rights to subscribe to 1 new share at a price of $80. Fractional shares can be rounded up to purchase 1 full share. A customer owning 450 shares wishes to subscribe. The market price of the stock is currently $100. The customer can buy: A. 22.5 shares for $1800 B. 23 shares for $1,840 C. 22.5 shares for $2250 D. 23 shares for $2,300

B. 23 shares for $1,840

Under the "penny stock rule," a customer is considered to be "established" and does not have to sign a suitability statement to buy a penny stock if that customer has bought how many penny stock issues previously from that broker-dealer? A. 2 B. 3 C. 5 D. 10

B. 3

The minimum maintenance margin for short stock positions is set at: A. 25% of the short market value B. 30% of the short market value C. 50% of the short market value D. 100% of the short market value

B. 30% of the short market value

What portfolio construction is most appropriate for a retired school teacher who is age 60? A. 100% common stocks B. 40% common stock / 60% bonds C. 60% common stock / 40% bonds D. 100% bonds

B. 40% common stock / 60% bonds

An investor buys a 4% Treasury Bond, paying interest on March 1st and September 1st, on Tuesday, April 20th, in a cash settlement. How many days of accrued interest are due from buyer to seller? A. 0 B. 50 C. 51 D. 52

B. 50

Catch-up IRA contributions are permitted for individuals who are at least age: A. 40 B. 50 C. 60 D. 70

B. 50

To buy a listed stock in a margin account requires a deposit of: A. 25% of the price of the transaction B. 50% of the price of the transaction C. 25% of the closing price of the security that day D. 50% of the closing price of the security that day

B. 50% of the price of the transaction

A company has 1,000,000 shares outstanding. It plans to issue 2,000,000 additional common shares to raise funds to build a new manufacturing facility. Your client owns 50,000 shares of this company. How many rights will the customer receive? A. 25,000 B. 50,000 C. 75,000 D. 100,000

B. 50,000

A customer owns 500 shares of ABC preferred stock trading at $90 per share. Following a 3:1 common stock split, the customer will have: A. 500 shares at $30 per share B. 500 shares at $90 per share C. 1,500 shares at $30 per share D. 1,500 shares at $90 per share

B. 500 shares at $90 per share

A person can start withdrawing from his or her Individual Retirement Account without penalty at age: A. 50 1/2 B. 59 1/2 C. 60 1/2 D. 70 1/2

B. 59 1/2

The opinion as to the federal tax-exempt status of a municipal bond is provided by the: A. Internal Revenue Service B. Bond attorney C. Underwriter's counsel D. Securities and Exchange Commission

B. Bond attorney

A technical analyst has been charting the price movements of ABC stock. The stock has been fluctuating in price between $58 and $63 per share for the past 3 months. If the analyst expects a breakout through the resistance level, which order should be placed? A. Buy ABC @ $63 Stop GTC B. Buy ABC @ $64 Stop GTC C. Buy ABC @ $64 GTC D. Buy ABC @ $57 Stop GTC

B. Buy ABC @ $64 Stop GTC

A customer, age 69, has never invested in securities. She is retired with no dependents, living on a fixed pension of $35,000 per year. She has a savings account with $160,000 and her home is fully paid. She desires to supplement her retirement income, assuming minimal risk. The BEST recommendation would be for the customer to invest $100,000 of her cash savings into a(n): A. variable annuity contract B. CMO planned amortization class tranche C. SPDR D. income (adjustment) bond

B. CMO planned amortization class tranche

Which statement is TRUE about a Certificate of Participation (COP)? A. COPs are subject to statutory debt limits B. COPs are backed by a pledge of lease revenues C. COPs have a higher credit rating than G.O. bonds of the same issuer D. COPs are full faith and credit obligations of the issuer

B. COPs are backed by a pledge of lease revenues

Which of the following money market instruments trades "and interest" ? A. Commercial Paper B. Certificates of Deposit C. Banker's Acceptance D. Treasury Bills

B. Certificates of Deposit

All of the following are considered in determining a fair and reasonable price in a municipal agency transaction EXCEPT: A. Availability of the security B. Cost of the security C. Expenses associated with effecting the transaction D. Value of services rendered by the municipal broker

B. Cost of the security

All of the following statements are true regarding Eurodollar bonds EXCEPT: A. U.S. issuers of Eurodollar bonds are not subject to foreign currency risk B. Eurodollar bond issues are sold all over the world, including the United States C. Non-U.S. issuers of Eurodollar bonds are subject to foreign currency risk D. Eurodollar bonds are denominated in U.S. currency only

B. Eurodollar bond issues are sold all over the world, including the United States

SPDR ("Spiders"), QQQ ("Qubes") and DIA ("DIAmonds") are acronyms for: A. American Depositary Receipts B. Exchange Traded Funds C. Mutual Funds D. Collateralized Mortgage Obligations

B. Exchange Traded Funds

In an environment of rapid deflation, which inventory method would report the lowest net income? A. LIFO B. FIFO C. Average Cost D. FISH

B. FIFO

All of the following agencies may issue securities EXCEPT: A. TVA B. FRB C. FHLMC D. FHLB

B. FRB

An elderly female client has income from her pension plan and social security that meets her needs. She has extra money available that she would like to use to help fund her favorite 8-year old grandson's college education. Which investment would be the best recommendation? A. 10 year Treasury notes B. Growth stocks C. S&P 500 Index fund D. Income bonds

B. Growth stocks

An individual is declared incompetent in a court proceeding. What type of account can be opened for this person with appropriate documentation? A. Cash account B. Guardianship account C. Joint account D. An account may not be opened

B. Guardianship account

A customer has heard from a relative that he should invest money in a "hedge" fund. The customer asks you to tell him about this type of investment. Which statement about hedge funds is FALSE? A. Hedge funds are only suitable for wealthy investors that meet the "accredited investor" definition B. Hedge funds are regulated as "mutual funds" under the Investment Company Act of 1940 C. Hedge funds typically allow withdrawal of funds once per year D. Hedge funds use aggressive investment strategies that entail a high level of risk

B. Hedge funds are regulated as "mutual funds" under the Investment Company Act of 1940

Interest income from which of the following is SUBJECT to federal, state, and local taxes? I Federal National Mortgage Association issues II Government National Mortgage Association Issues III U.S. Treasury Bills IV Federal Intermediate Credit Bank issues A. I only B. I and II only C. III and IV only D. I, II, III, IV

B. I and II only

Which of the following would be considered owners of a corporation? I Common Shareholders II Preferred Shareholders III Right Holders IV Warrant Holders A. I only B. I and II only C. I, II, III, IV D. None of the above

B. I and II only

Which statements are TRUE regarding Individual Retirement Accounts? I Investment in U.S. minted gold coins is permitted II Investment in U.S. issued securities is permitted III Investment in art is permitted IV Investment in collectibles is permitted A. II only B. I and II only C. III and IV only D. I, II, III, IV

B. I and II only

A primary offering of $200,000,000 of ACME Corporation 10% debentures with a 20 year maturity would be regulated under the: I Securities Act of 1933 II Securities Exchange Act of 1934 III Trust Indenture Act of 1939 IV Investment Company Act of 1940 A. I only B. I and III C. II and IV D. I, II, III, IV

B. I and III

Which of the following corporate distributions are taxable to the recipient? I Cash dividend II Stock dividend III Product dividend IV Stock split A. I only B. I and III C. III and IV D. I, II, III, IV

B. I and III

If the market price of ABC is at $60, which of the following customer positions will have a profit? I Long 1 ABC Jan 50 Call II Long 1 ABC Jan 50 Put III Long 1 ABC Jan 70 Call IV Long 1 ABC Jan 70 Put A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A customer has a $1,000,000 portfolio that is invested in the following: $250,000 Large Cap Growth Stocks $250,000 Large Cap Defensive Stocks $250,000 U.S. Government Bonds $250,000 Investment Grade Corporate Bonds During a period of economic expansion, the securities which will enjoy the greatest price appreciation are likely to be the: I Large Cap Growth Stocks II Large Cap Defensive Stocks III U.S. Government Bonds IV Investment Grade Corporate Bonds A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A customer sells 1 XYZ July 40 Call @ $2 after having purchased 100 shares of XYZ @ $40 per share. If the customer is exercised, the tax consequences are: I cost basis of $40 per share II cost basis of $42 per share III sale proceeds of $38 per share IV sale proceeds of $42 per share A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A customer sells a call. In order to cover the position, the customer must: I buy a call with the same strike price or lower than the one he sold II buy a call with the same strike price or higher than the one he sold III buy a call with the same expiration or shorter than the one sold IV buy a call with the same expiration or longer than the one sold A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A customer that wishes to effect a securities trade through an ECN in the "after hours" market should be advised that the market is: I subject to high volatility II subject to low volatility III highly liquid IV highly illiquid A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A customer who has previously placed an order calls back and cancels. The representative informs the customer that the order already has been filled. Which statements are TRUE? I The order is binding on the customer II The order is not binding on the customer III The order can be canceled by the customer IV The order cannot be canceled by the customer A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A head and shoulders "bottom" formation is: I bullish II bearish III a reverse upward trend IV a reverse downward trend A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A municipal "workable" is a(n): I bid II offer III firm quote IV likely quote A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

ABC Corporation declares a dividend on June 15th with a Record Date of Friday, August 1st. If the stock is bought on Thursday, July 31st, which of the following statements are TRUE? I If the stock is purchased for cash, the customer will receive the dividend II If the stock is purchased for cash, the customer will not receive the dividend III If the stock is purchased regular way, the customer will receive the dividend IV If the stock is purchased regular way, the customer will not receive the dividend A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

An investor holds an international bond fund. Regarding the performance of the fund, which of the following statements are TRUE? I If the foreign currency value rises against the dollar, the fund's Net Asset Value will increase II If the foreign currency value rises against the dollar, the fund's Net Asset Value will decrease III If the dollar falls against the foreign currency, the fund will have an inferior performance relative to dollar denominated funds IV If the dollar falls against the foreign currency, the fund will have a superior performance relative to dollar denominated funds A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

An investor holds shares of a stock that declares a 10% stock dividend. Which of the following statements are TRUE regarding the stock position after the dividend is paid? I The cost basis per share is adjusted II The cost basis per share remains the same III The distribution is taxable IV The distribution is not taxable A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

An overlapping municipal debt is usually: I General Obligation II Revenue III Term IV Serial A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Broker-dealers are permitted to execute the following over-the-counter transactions? I Agency trades where the customer is charged a commission II Agency trades where the customer is charged a mark-up or mark-down III Principal trades where the customer is charged a commission IV Principal trades where the customer is charged a mark-up or mark-down A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Gross Domestic Product is: I the sum of all goods and services produced in the United States II the sum of all goods and services produced outside the United States III measured in inflated dollars IV measured in constant dollars A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

If a corporation has an unfunded pension liability which of the following statements are TRUE? I The expected payments from the retirement plan are in excess of the expected future assets in the plan II The expected payments from the retirement plan are lower than the expected future assets in the plan III The plan is in default and must be liquidated by the trustee IV The trustee must ensure that future funding is adequate A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Municipal variable rate demand notes: I have a market value which will never go below par II have a market value which will never go above par III have a yield which will never fall below the stated rate IV have a yield which will never rise above the stated rate A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

REITs are NOT permitted to distribute which of the following to their shareholders? I Income II Dividends III Capital Gains IV Capital Losses A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Regarding municipal discount bonds, which statements are TRUE? I Municipal original issue discount bonds must be accreted II Municipal original issue discount bonds may be accreted III Municipal market discount bonds must be accreted IV Municipal market discount bonds may be accreted A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Securities subject to reinvestment risk are those that: I make periodic payments to investors II do not make periodic payments to investors III are held for short time horizons IV are held for long time horizons A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Stock options contracts: I are American style II are European style III can be issued at any time IV can be exercised at any time A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

The Federal Reserve Bank has made a policy decision to try to strengthen the U.S. Dollar versus the Japanese Yen. Which of the following intervention actions would increase the U.S. Dollar's exchange value? I Buy U.S. Dollars II Sell U.S. Dollars III Buy Japanese Yen IV Sell Japanese Yen A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

The Market Maker on the CBOE: I buys and sells for his own account II does not buy or sell for his own account III holds a book of public orders IV does not hold a book of public orders A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Under Regulation SHO, in order to sell short a stock for a customer, the member firm MUST: I determine that the securities to be sold short can be borrowed and delivered on settlement II determine that the issuer of the securities to be sold short is current in its SEC filings III buy-in the securities sold short in 13 consecutive settlement days if the trade was not effected on an up-tick or up-bid IV buy-in the securities sold short in 13 consecutive settlement days if there is a fail to deliver and the security was on the "threshold" list as of trade date A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

When a corporation splits its stock, which of the following statements are TRUE? I An existing shareholder's proportionate ownership in the corporation will remain the same II An existing shareholder's proportionate ownership in the corporation will be increased III Individual investors are less likely to buy the stock IV Individual investors are more likely to buy the stock A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

When opening an options account which of the following statements are TRUE? I The Options Disclosure Document must be sent at, or prior to, opening the account II The Options Disclosure Document must be sent to the customer at account opening, and must be signed and returned within 15 days III The Options Agreement must be sent at, or prior to, opening the account IV The Options Agreement must be sent to the customer at account opening, and must be signed and returned within 15 days A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE about the spouse of an owner of 10% of the outstanding shares of a company? I The spouse is considered to be an affiliated person subject to Rule 144 II The spouse is not considered to be an affiliated person and is thus not subject to Rule 144 III The spouse can sell shares without filing Form 144 IV The spouse must file Form 144 when selling shares A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE regarding new issue government and new issue agency securities? I Agency securities are sold through a selling group II Agency securities are sold through auction III Direct U.S. government obligations are sold through a selling group IV Direct U.S. government obligations are sold through auction A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE regarding options advertising that is not accompanied by the ODD (Options Disclosure Document)? I It must be approved prior to use by the designated Registered Options Principal II It must be approved by the Branch Office Manager III The use of recommendations, or of past or projected performance, is permitted IV The use of recommendations, or of past or projected performance, is prohibited A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE regarding the sale of a long position in a restricted long margin account? I 50% of the proceeds of the sale are credited to SMA II 100% of the proceeds of the sale are credited to SMA III There is a 0% retention requirement of the sale for a restricted account IV There is a 50% retention requirement of the sale for a restricted account A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE about changes in market interest rates and collateralized mortgage obligations? I If interest rates drop, homeowners will refinance their mortgages, increasing prepayment rates on CMOs II If interest rates rise, homeowners will refinance their mortgages, increasing prepayment rates on CMOs III If interest rates drop, the market value of CMO tranches will decrease IV If interest rates drop, the market value of the CMO tranches will increase A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE about new offerings of 6-month T-Bills? I Treasury auctions are conducted on Monday of each week II Treasury auctions are conducted on Thursday of each week III Securities are issued, and settlement occurs, on the Monday following the auction IV Securities are issued, and settlement occurs, on the Thursday following the auction A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE when comparing a Roth IRA to a Traditional IRA? I Traditional IRAs are available to anyone who has earned income II Roth IRAs are available to anyone who has earned income III Traditional IRAs are not available to high-earning individuals IV Roth IRAs are not available to high-earning individuals A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE when comparing the NYSE and NASDAQ markets? I The Specialist (DMM) trades on the NYSE II The Specialist (DMM) trades on NASDAQ III The Market Maker trades on the NYSE IV The Market Maker trades on NASDAQ A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE? I Fiscal Policy is set by Congress II Fiscal Policy is set by the Federal Reserve III Monetary Policy is set by Congress IV Monetary Policy is set by the Federal Reserve A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE? I Orders and quotes for NMS stocks can only be accepted or posted in penny increments in exchange display books II Orders and quotes for NMS stocks can be accepted or posted in sub-penny increments in exchange display books III Trade executions of NMS stocks can only occur in penny increments IV Trade executions of NMS stocks can occur in sub-penny increments A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE? I Strategic portfolio management is the determination of the asset allocation percentages among different asset classes in the portfolio II Strategic portfolio management is the determination of the permitted variance within each asset allocation percentage assigned to a specific asset class III Tactical portfolio management is the determination of the asset allocation percentages among different asset classes in the portfolio IV Tactical portfolio management is the determination of the permitted variance within each asset allocation percentage assigned to a specific asset class A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following index options would be considered "narrow based"? I Oil and Gas Index II Major Market Index III Standard and Poor's 100 Index IV High Technology Index A. IV only B. I and IV only C. II and III D. I, II, III, IV

B. I and IV only

Trades of foreign currency options settle: I Cash II Spot III Forward IV Regular way A. I only B. I or IV C. II or III D. I, II, III, IV

B. I or IV

Which of the following positions has unlimited loss potential? I Short Naked Call II Short Stock / Long Call III Short Straddle IV Short Call / Long Stock A. I only B. I, III C. II, III D. I, II, III, IV

B. I, III

A customer in the 20% tax bracket with a 15-year investment time horizon is considering investing $250,000 with an objective of current income and safety of principal. The registered representative is considering making the recommendation of either a managed investment grade bond mutual fund or an investment grade bond fixed unit investment trust. When presenting the 2 choices to the customer, the registered representative should mention that: I breakpoints are available on mutual funds, but not on unit investment trusts II breakpoints are available on both mutual funds and unit investment trusts III expense ratios for mutual funds tend to be higher than expense ratios for fixed unit investment trusts IV expense ratios for fixed unit investment trusts tend to be higher than expense ratios for mutual funds A. I and III B. II and III C. I and IV D. II and IV

B. II and III

An investor has bought 500 shares of a volatile growth stock and wishes to limit downside loss. Which strategies are appropriate? I Place a buy stop order II Place a sell stop order III Buy 5 put contracts IV Sell 5 put contracts A. I and IV B. II and III C. I and III D. II and IV

B. II and III

Which of the following maintain "Do Not Call" lists? I SEC II Member firm III FTC IV FINRA A. I and IV B. II and III C. I, II, III D. I, II, III, IV

B. II and III

Which statements are TRUE regarding Real Estate Investment Trusts? I Mortgage REITS can only invest in long term mortgages, but not short term loans II To be regulated under Subchapter M, 90% of Net Investment Income must be distributed to shareholders III Equity REIT income is derived from the difference between net rental income and interest paid on loans IV REIT losses can be passed through to shareholders under the "conduit" rules A. I and II B. II and III C. II, III, IV D. I, II, III, IV

B. II and III

The issuer of a variable annuity bears which of the following risks? I Interest rate risk II Expense risk III Mortality risk IV Investment risk A. I and IV only B. II and III only C. I, II, III D. I, II, III, IV

B. II and III only

When a firm "position trades," it: I trades on an agency basis for customers II trades on a dealer basis for its own account III takes inventory positions, both long and short IV interpositions itself between a customer and another dealer A. I and II only B. II and III only C. IV only D. II, III, IV

B. II and III only

Amortization of a bond premium will: I increase the bond's cost basis II decrease the bond's cost basis III increase annual reported interest income IV decrease annual reported interest income A. I and III B. II and IV C. II only D. II and III

B. II and IV

Under the short tender rule, a customer is prohibited from tendering common shares unless the customer is long a: I call option for that security and intends to exercise the call II call option for that security and has exercised the call III warrant for that security and intends to exercise IV warrant for that security and has exercised the warrant A. I and III only B. II and IV only C. I, II, IV D. I, II, III, IV

B. II and IV only

Which are TRUE statements regarding short term negotiable certificates of deposit? I The minimum denomination is $10,000 II Trading occurs in the secondary market III Short term negotiable CDs are callable IV They are issued by banks A. I and III only B. II and IV only C. II, III, IV D. I, II, III, IV

B. II and IV only

Which statements are TRUE regarding Eurodollar bonds? I Eurodollar bonds are issued within the United States II Eurodollar bonds are issued outside the United States III Eurodollar bonds pay interest and repay principal in Euros IV Eurodollar bonds pay interest and repay principal in U.S. Dollars A. I and III only B. II and IV only C. I, II, and IV D. I, II, III, IV

B. II and IV only

Which of the following are vertical spreads? I Long 1 ABC Jan 50 Call Short 1 ABC Jan 50 Call II Long 1 ABC Jan 50 Call Short 1 ABC Jan 60 Call III Long 1 ABC Jan 50 Call Short 1 ABC Apr 50 Call IV Long 1 ABC Jan 50 Call Short 1 ABC Apr 60 Call A. I only B. II only C. I and III D. II and IV

B. II only

If a U.S. investor buys Kingdom of Norway bonds at a discount, which statements are TRUE? I Interest income received is exempt from Federal tax II Interest income received is exempt from State tax III The discount on the bond is taxable IV A gain or loss on the bond may be realized if the bond is sold prior to maturity A. I and II B. III and IV C. I and III D. II and IV

B. III and IV

Which of the following statements are TRUE regarding Treasury Stock? I Treasury Stock receives dividends II Treasury Stock votes III Treasury Stock reduces the number of shares outstanding IV Treasury Stock purchases are used to increase reported Earnings Per Share A. I and II B. III and IV C. II, III, IV D. I, II, III, IV

B. III and IV

In a corporate new issue offering, the issuer's responsibilities include which of the following? I Managing the syndicate account II Determining each syndicate member's participation III Printing the certificates IV Registering the certificates A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

B. III and IV only

Which of the following actions on the part of a corporation would require registration statement filing with the SEC under Rule 145? I Stock dividend distribution II Stock split III Merger with another publicly held company IV Spin off of a subsidiary as a publicly held company A. I and II only B. III and IV only C. I, II, and IV D. I, II, III, IV

B. III and IV only

Which of the following can be purchased on margin? I Mutual Funds II Initial public offerings of Closed End Funds III Closed End Funds trading on the NYSE A. I only B. III only C. II and III D. None of the above

B. III only

For bonds trading at a premium, rank the yield measures from lowest to highest? I Nominal II Current III Basis A. I, II, III B. III, II, I C. II, I, III D. I, III, II

B. III, II, I

Rank the following investments from highest to lowest, for overall historical returns experienced by investors over long periods of time: I Treasury Bills II AAA Rated Corporate Bonds III Common Stocks A. I, II, III B. III, II, I C. II, III, I D. III, I, II

B. III, II, I

Competitive bidders at Treasury Auctions would typically include all of the following EXCEPT: A. Primary U.S. Government Dealers B. Individuals C. Money Market Mutual Funds D. Pension Funds

B. Individuals

Which of the following measures considers the "time value" of money? A. Current Yield B. Internal Rate of Return C. Net Interest Cost D. Return on Equity

B. Internal Rate of Return

The ultimate authority for determining the amount of the discount that must be accreted on a "market discount" bond is the: A. Municipality B. Internal Revenue Service C. Securities and Exchange Commission D. Bond Counsel

B. Internal Revenue Service

Political risk is generally associated with: A. Corporate bond investments B. International bond investments C. Municipal bond investments D. Treasury bond investments

B. International bond investments

Which of the following contracts when taken together would be known as a diagonal spread? A. Long 1 ABC Jan 50 Put; Short 1 ABC Jan 60 Put B. Long 1 ABC Jan 50 Put; Short 1 ABC Apr 60 Put C. Long 1 ABC Jan 50 Call; Long 1 ABC Apr 60 Put D. Long 1 ABC Jan 50 Call; Short 1 ABC Apr 60 Put

B. Long 1 ABC Jan 50 Put; Short 1 ABC Apr 60 Put

What risk is the greatest concern in a Rule 144A transaction? A. Inflation risk B. Marketability risk C. Interest rate risk D. Credit risk

B. Marketability risk

A 79-year old customer in the highest tax bracket with $1,000,000 to invest is risk averse. Which investment recommendation would be appropriate? A. Money market funds B. Municipal bonds C. A Dow Jones Industrial Average index fund D. Certificates of deposit

B. Municipal bonds

All of the following are suitable investments for an Individual Retirement Account EXCEPT: A. Corporate bonds B. Municipal bonds C. U.S. Government bonds D. Zero coupon bonds

B. Municipal bonds

A director of a publicly held company wants to sell 5,000 registered shares of that company's stock at $8 per share that she has held for 3 months. Does the Form 144 filing requirement apply to this sale? A. Yes, because any sale of shares by a director requires the filing of a Form 144 B. No, because the shares are being sold under a "de minimis" exemption C. Yes, because she has not held the shares for 6 months D. No, because the shares are not restricted

B. No, because the shares are being sold under a "de minimis" exemption

In the weekly auction of Treasury Bills, which orders are always filled? A. Competitive bids B. Non-Competitive Bid C. Bids from primary dealers D. Negotiated bids

B. Non-Competitive Bid

Under Regulation D, purchasers of private placement offerings must be given full disclosure through a(n): A. Prospectus B. Offering memorandum C. Registration statement D. Form D

B. Offering memorandum

A customer must sign and return which of the following documents within 15 days after opening an options account? A. Options Disclosure Document B. Options Agreement C. New Account Form D. Loan Consent Agreement

B. Options Agreement

A non-regulatory trading halt has been initiated on the NYSE due to an order imbalance. Which statement is TRUE? A. All other markets in the U.S. must stop trading XYZ stock B. Other markets in the U.S. may still trade XYZ stock C. Other markets in the U.S. can only trade XYZ stock if they get SEC approval D. All other markets in the U.S. must continue to trade XYZ stock

B. Other markets in the U.S. may still trade XYZ stock

Which of the following stocks would be considered defensive? A. Automobile manufacturer B. Pharmaceutical manufacturer C. Gold mining company D. Computer software developer

B. Pharmaceutical manufacturer

To smooth out tax collections, a municipality will issue a: A. BAN B. TAN C. RAN D. TRAN

B. TAN

A registered representative solicits a new customer to purchase a "penny stock." Prior to effecting the transaction, which procedure is required? A. Have the customer sign a letter of intent B. Prepare and have the customer sign a suitability statement C. Have the branch manager approve the initial order and then fill the order in the same manner as with any other security D. No special procedures are required

B. Prepare and have the customer sign a suitability statement

A 30-year old customer who has two young children wishes to make an investment that will provide for their college tuition. Which would be the BEST recommendation? A. Make yearly payments into a variable annuity separate account with a growth objective B. Purchase Treasury STRIPS yearly in custodian accounts for the children C. Purchase income bonds yearly in custodian accounts for the children D. Establish IRA accounts for the children and purchase zero-coupon obligations yearly

B. Purchase Treasury STRIPS yearly in custodian accounts for the children

All of the following statements are true about REITs EXCEPT: A. REITs are similar to closed end investment companies B. REITs issue redeemable shares C. REITs are listed and trade on stock exchanges D. REITs must invest at least 75% of their assets in real estate related activities to qualify for conduit tax treatment

B. REITs issue redeemable shares

An 85-year old risk averse investor is not happy about the minimal return she is earning on her current investments. She is stressed about having enough income because her cost of living has been increasing by more than 10% annually. Her current portfolio composition consists of: 40% Money Market Fund 50% Bonds 10% Equities What changes should you suggest to her portfolio? A. Reduce the Money Market Fund allocation by 10% (to 30%) and put the released funds in commodities such as gold B. Reduce the Money Market Fund allocation by 30% (to 10%) and put the released funds in AAA-rated corporate bonds C. Liquidate the entire Money Market Fund allocation and put the released funds in Equities, bringing that allocation up to 50% D. Liquidate the entire Money Market Fund allocation and put the released funds in U.S. Treasury securities

B. Reduce the Money Market Fund allocation by 30% (to 10%) and put the released funds in AAA-rated corporate bonds

Issuers that wish to give "earnings guidance" to research analysts must conform with the provisions of SEC: A. Regulation SB B. Regulation FD C. Regulation SK D. Regulation SP

B. Regulation FD

A 57-year old customer, earning $85,000 per year, is currently employed as an outside salesman. He enjoys his work so much that he has no intention of retiring until at least age 75. He wants to put extra money away for his retirement at that time and can make contributions of about $5,000 per year. He does not want to be forced to take distributions starting at age 70 1/2. The BEST type of retirement plan for this individual is a: A. Traditional IRA B. Roth IRA C. Coverdell ESA D. 401(k) Plan

B. Roth IRA

"Qualified Institutional Buyers" are permitted to buy and trade large blocks of unregistered securities among themselves under: A. Rule 144 B. Rule 144A C. Rule 147 D. Rule 415

B. Rule 144A

A customer, age 25, is looking to invest in securities with the objective of growth to protect against the effect of long term inflation on his portfolio's value. The customer believes that active asset management, along with its higher fees, is not worthwhile. Which recommendation is MOST suitable for this customer? A. Long-Term U.S. Government Bond Fund B. S&P 500 Index Fund C. High Technology Growth Fund D. Special Situations Fund

B. S&P 500 Index Fund

All of the following statements about Securities Investor Protection Corporation (SIPC) are true EXCEPT: A. SIPC is a non-profit corporation B. SIPC is a U.S. Government agency C. SIPC is an insurance fund protecting customer accounts against broker-dealer insolvency D. every broker-dealer registered under the Securities Exchange Act of 1934 must be a member of SIPC

B. SIPC is a U.S. Government agency

A technical analyst has been charting the price movements of ABC stock. The stock has been fluctuating in price between $49 and $54 per share for the past 3 months. If the analyst expects a breakout through the support level, which order should be placed? A. Sell (Short) ABC @ $48 GTC B. Sell (Short) ABC @ $48 Stop GTC C. Sell (Short) ABC @ $55 GTC D. Sell (Short) ABC @ $55 Stop GTC

B. Sell (Short) ABC @ $48 Stop GTC

During the 20-day "cooling-off" period when a new issue is in registration, which of the following is allowed? A. Sending a research report B. Sending a preliminary prospectus C. Advertising the issue D. Selling the issue

B. Sending a preliminary prospectus

A customer who is long 1 ABC Jan 40 Call wishes to create a "bear call spread." The second option position that the customer must take is: A. Long 1 ABC Jan 30 Call B. Short 1 ABC Jan 30 Call C. Short 1 ABC Jan 50 Call D. Short 1 ABC Jan 40 Put

B. Short 1 ABC Jan 30 Call

Which of the following options positions can only be taken in a margin account? A. Long call B. Short call C. Long stock/Long put D. Long stock/Short call

B. Short call

Which of the following is an exempt security under the Securities Act of 1933? A. Unit Investment Trust B. Small Business Investment Company C. Open-End Investment Company D. Closed-End Investment Company

B. Small Business Investment Company

Which of the following is defined as options "sales literature"? A. Member firm options website B. Standard option worksheet C. Options memorandums for internal use D. Letters of an "individual" nature sent to customers

B. Standard option worksheet

Which of the following is a potential money laundering activity? A. Laddering B. Structuring C. Diversifying D. Amortizing

B. Structuring

A husband and wife wish to open an account that provides for 50% of the account assets to go to the surviving spouse upon death, with the remaining 50% going to other heirs. They should be advised to use a: A. Transfer On Death (TOD) account B. Tenants in Common account C. Joint Tenants with Rights of Survivorship account D. Community Property account

B. Tenants in Common account

A customer has an account with a brokerage firm that is in receivership. The account holds $350,000 of securities and has a $150,000 debit. Which statement is TRUE regarding SIPC coverage? A. The customer must deposit $150,000 to receive the $350,000 of securities B. The account is covered for $200,000 C. The account is covered for $350,000 D. The account is covered for $500,000

B. The account is covered for $200,000

A 529 plan is set up for a child in state A. The child attends a college in state B. Which statement is TRUE? A. The funds in the 529 Plan are not portable and can't be used to pay for college in state B B. The funds in the 529 Plan are portable and can be used to pay for college in state B C. The funds must be transferred into a 529 Plan in state B if they are going to be used to pay for college in state B D. The child must renounce his or her residency in state A and become a resident of state B in order to use the funds in the 529 Plan for college in state B

B. The funds in the 529 Plan are portable and can be used to pay for college in state B

A customer buys 2 ABC Jul 50 Calls @ $4. The customer lets the contracts expire. Which statement is TRUE? A. The holder has a $400 capital loss at expiration B. The holder has an $800 capital loss at expiration C. The holder has a $5,400 capital gain as of the purchase date D. The holder has a $5,400 capital loss at expiration

B. The holder has an $800 capital loss at expiration

An issuer making a tender offer for its non-convertible bonds and later increases the price being offered by 10%. Which statement is TRUE? A. The increase in the tender price has no effect on the life of the offer B. The increase in the tender price increases the life of the offer by another 5 business days C. The increase in the tender price increases the life of the offer by another 10 business days D. The increase in the tender price increases the life of the offer by another 20 business days

B. The increase in the tender price increases the life of the offer by another 5 business days

Which statement is TRUE about a registered representative who wants to be appointed as trustee for a trust account being established by a client for the client's children? A. The registered representative can act as the trustee without restriction B. The registered representative can act as the trustee only with approval of the firm's compliance department C. The registered representative can act as trustee only if no trustee fee is accepted D. The registered representative cannot act as trustee under any circumstances

B. The registered representative can act as the trustee only with approval of the firm's compliance department

A customer owns 107 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 10 rights tendered, a shareholder may purchase one additional share at $22 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE? A. The shareholder can buy a maximum of 10 shares by paying $220 B. The shareholder can buy a maximum of 11 shares by paying $242 C. The shareholder can buy a maximum of 107 shares by paying $2,354 D. The shareholder can buy a maximum of 110 shares by paying $2,420

B. The shareholder can buy a maximum of 11 shares by paying $242

A customer owns 100 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 15 rights tendered, a shareholder may purchase one additional share at $25 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE? A. The shareholder can buy a maximum of 6 shares by paying $150 B. The shareholder can buy a maximum of 7 shares by paying $175 C. The shareholder can buy a maximum of 15 shares by paying $375 D. The shareholder can buy a maximum of 100 shares by paying $2,500

B. The shareholder can buy a maximum of 7 shares by paying $175

A 50-year old becomes disabled and wishes to withdraw money from his IRA. With regard to the withdrawal, how will it be taxed? A. There will be no tax due B. The withdrawal is subject to income tax only C. The withdrawal is only subject to penalty tax only D. The withdrawal is subject to both income tax and a penalty tax for early withdrawal

B. The withdrawal is subject to income tax only

A customer buys a 10% G.O. bond at 110. The issue is callable in 5 years at par and matures in 10 years. Which statement is TRUE? A. The yield to call is higher than the yield to maturity B. The yield to call is lower than the yield to maturity C. The yield to call is the same as the yield to maturity D. The nominal yield is lower than either the yield to call or yield to maturity

B. The yield to call is lower than the yield to maturity

All of the following actions taken by the Fed would increase interest rates EXCEPT: A. reverse repurchase agreements B. buying securities from government dealers C. draining money from the money supply D. raising the discount rate

B. buying securities from government dealers

A couple earning $70,000 in 2019 makes an annual contribution of $6,000 to a Traditional IRA. Which statement is TRUE? A. This couple can contribute a maximum of $3,000 to a Roth IRA B. This couple can contribute a maximum of $6,000 to a Roth IRA C. This couple can contribute a maximum of $12,000 to a Roth IRA D. This couple is prohibited from contributing to a Traditional Individual Retirement Account in that year

B. This couple can contribute a maximum of $6,000 to a Roth IRA

ABC Corporation has declared a cash dividend to stockholders of record on Monday, November 21st. The last day to buy ABC shares BEFORE they go ex dividend is? A. Wednesday, November 16th B. Thursday, November 17th C. Friday, November 18th D. Sunday, November 20th

B. Thursday, November 17th

A 60-year old man is looking to create a portfolio that will provide current income and preservation of capital. Which of the following portfolios would be the BEST recommendation to the client? A. Long term corporate bonds rated AA or better, high yield corporate bonds and blue chip stocks B. Treasury bills, a money market mutual fund and bank certificates of deposit C. Treasury STRIPS, corporate income bonds and PO tranches D. Growth stocks, defensive stocks and foreign stocks

B. Treasury bills, a money market mutual fund and bank certificates of deposit

True interest cost is preferred over Net interest cost as a method for awarding bids because: A. the computation is simplified B. True Interest Cost considers the time value of money C. the MSRB recommends its use D. municipal underwriters require the method be used before they will place a bid

B. True Interest Cost considers the time value of money

ABC Corporation has declared a cash dividend to stockholders of record on Friday, December 10th. The last day to buy ABC shares BEFORE they go ex dividend is? A. Tuesday, December 7th B. Wednesday, December 8th C. Thursday, December 9th D. Friday, December 10th

B. Wednesday, December 8th

When an investor disposes of an interest in a limited partnership, the taxable gain or loss is the difference between the sale proceeds and the: A. original cost basis B. adjusted cost basis C. stepped up cost basis D. original cost basis excluding sales charges and acquisition fees

B. adjusted cost basis

In a municipal bond contract, a "covenant of defeasance" would allow the issuer to: A. redeem the issue in part or full at predetermined date(s) and prices B. advance refund the issue under the terms specified in the bond contract C. omit interest or principal repayments if coverage ratios decline below specified limits D. reset interest rates periodically at predetermined dates based upon recognized interest rate indices

B. advance refund the issue under the terms specified in the bond contract

Credit can be extended on new issues: A. immediately after the offering is complete B. after 30 days have elapsed from the completion of the offering C. after 60 days have elapsed from the completion of the offering D. after 90 days have elapsed from the completion of the offering

B. after 30 days have elapsed from the completion of the offering

A customer has a 3-year old child and wishes to begin saving for the kid's college education using a tax advantaged investment. The best investment option to meet the customer's objective is a(n): A. zero-coupon bond investment B. age weighted 529 plan C. Coverdell ESA D. UGMA account

B. age weighted 529 plan

A potential client is 81 years old and has asked his representative for recommendations of speculative "Dot Com" stocks. The customer has a broadly diversified bond and high dividend paying stock portfolio that provides retirement income, in addition to the customer receiving social security. The customer is concerned that his purchasing power is decreasing and wishes to allocate an increased portion of his portfolio to aggressive growth stocks. The BEST recommendation for this customer is to: A. not allocate any of his portfolio to "Dot Com" stocks because they give no current income, which this customer needs B. allocate a portion of the customer's portfolio to "Dot Com" stocks that will not reduce the customer's retirement income below the amount needed for comfortable living C. allocate a portion of the customer's portfolio to "Dot Com" stocks as dictated by the customer, since he is making the investment decision D. tell the customer that aggressive growth stocks are not suitable for a person who is at such a late stage of life

B. allocate a portion of the customer's portfolio to "Dot Com" stocks that will not reduce the customer's retirement income below the amount needed for comfortable living

The designated Registered Options Principal is responsible for all of the following functions EXCEPT: A. approval of options advertising B. approval of options accounts C. writing of procedures for supervision of options accounts D. review of procedures for supervision of options accounts

B. approval of options accounts

Under MSRB rules, a registered representative can perform all of the following functions EXCEPT: A. offering new municipal issues to retail customers B. approving municipal advertising that will be sent to customers C. trading municipal issues in the secondary market D. offering call and put options on municipal securities to customers

B. approving municipal advertising that will be sent to customers

For any claims that a customer may have against a failed broker-dealer that are in excess of Securities Investor Protection Corporation coverage limits, the customer: A. can deduct the loss from that year's taxes B. becomes an unsecured general creditor with last claim in the liquidation C. becomes a super-secured creditor with first claim in the liquidation D. has no claim against the failed broker-dealer

B. becomes an unsecured general creditor with last claim in the liquidation

The Government National Mortgage Association: A. buys conventional mortgages from financial institutions for repackaging as pass through certificates B. buys FHA and VA guaranteed mortgages from financial institutions for repackaging as pass through certificates C. gives its implied backing to the payment of interest and principal on mortgages purchased from financial institutions D. issues mortgages directly on U.S. Government subsidized housing

B. buys FHA and VA guaranteed mortgages from financial institutions for repackaging as pass through certificates

Distributions from an Individual Retirement Account must commence: A. by April 1st of the year preceding that person reaching age 70 1/2 B. by April 1st of the year following that person reaching age 70 1/2 C. upon reaching age 70 1/2 D. upon reaching retirement

B. by April 1st of the year following that person reaching age 70 1/2

REITs can distribute all of the following to their shareholders EXCEPT: A. capital gains B. capital losses C. cash dividends D. stock dividends

B. capital losses

A customer, age 55, has a diversified portfolio of blue chip equity investments that pay a reliable cash dividend. The customer would like to retire at age 65. The customer has an expensive lifestyle, and even though he makes a good income, he uses the dividend income from his investments to pay his large monthly bills. The main problem that is evident here is that the: A. portfolio should be rebalanced to include a percentage allocation to fixed income securities because of the customer's age B. customer is unable to take advantage of the compounding effect of reinvesting dividends C. customer increases his tax liability by spending the dividends rather than reinvesting them D. customer needs to change his spending habits

B. customer is unable to take advantage of the compounding effect of reinvesting dividends

Rule 606 of Regulation NMS requires: A. each market center to prepare monthly electronic reports about its quality of executions and effective spreads B. each broker-dealer to prepare quarterly reports on its routing of non-directed orders, including the 10 largest venues where orders were routed C. market makers in OTC stocks to display any customer limit orders that are better-priced than the dealer's own quote D. any order execution facility to execute the order at the NBBO, even if that execution facility is posting an inferior quote

B. each broker-dealer to prepare quarterly reports on its routing of non-directed orders, including the 10 largest venues where orders were routed

The Securities Exchange Act of 1934 established "self regulatory organizations" (SROs) and empowered these organizations to do all of the following EXCEPT: A. set guidelines for fair dealing with the public B. establish commission rates to be charged to the public C. take administrative action against broker-dealers that violate industry regulations D. establish arbitration procedures to settle intra-industry disputes

B. establish commission rates to be charged to the public

All of the following statements are true regarding index LEAP option contracts EXCEPT: A. the contract can be traded at any time until expiration B. exercise settlement results in a delivery of the securities in the index C. the maximum life of the contract is 28 months for equity LEAPs and 36 months for index LEAPs D. each contract covers 100 shares of the underlying security for equity LEAPs or has a multiplier of 100 for index LEAPs

B. exercise settlement results in a delivery of the securities in the index

A new client has been employed as a manager at XYZ Corporation (NYSE listed) for the last 20 years and has a defined contribution pension plan at his employer that he has chosen to invest 100% in XYZ Common stock. The value of the pension plan is now $750,000. The customer is 7 years from retirement and has asked for advice about what steps he should take regarding his retirement account. As the adviser to the customer, your IMMEDIATE concern should be the: A. investment outlook for XYZ Corporation over the upcoming 7 years B. fact that the customer is concentrated in one stock and lacks diversification in his portfolio C. dividend rate paid by XYZ and whether it is sufficient to meet the customer's need for income in retirement D. the possibility that XYZ Corporation could go bankrupt prior to the death of the customer

B. fact that the customer is concentrated in one stock and lacks diversification in his portfolio

If the price of a stock breaks out through the support level, it is expected that the stock's price will: A. rise B. fall C. remain stable D. become volatile

B. fall

The money that a bank has in excess of its reserves is called: A. clearing house funds B. federal funds C. money market funds D. available funds

B. federal funds

A bond trader believes that he has too much inventory in 25-year ABC corporation bonds. The dealer would most likely: A. increase the mark-up on the bonds B. hedge the bond positions C. lower the reoffering yield on the bonds D. place an "OW" for the bonds in Bloomberg

B. hedge the bond positions

All of the following are sources of income available for general obligation bond debt service EXCEPT: A. ad valorem taxes B. highway tolls C. license fees D. assessments

B. highway tolls

A broker-dealer may hold fully paid customer securities: A. when authorized in writing by the customer B. if the securities are segregated and held in safekeeping C. if the firm notifies the customer every 3 months as to the amount of securities and the fact that they are "not segregated" D. only if the customer is traveling

B. if the securities are segregated and held in safekeeping

The reported net income of a company has declined at a faster rate than operating income. This could result only from an increase in: A. depreciation expense B. interest expense C. cost of goods sold D. product returns

B. interest expense

All of the following statements are true about the Government National Mortgage Association Pass-Through Certificates EXCEPT: A. GNMA is empowered to borrow from the Treasury to pay interest and principal if necessary B. interest payments are exempt from state and local tax C. certificates are issued in minimum units of $25,000 D. the credit rating is considered the highest of any agency security

B. interest payments are exempt from state and local tax

Municipal bonds are NOT a suitable recommendation for a(n): A. customer in a high federal tax bracket B. investment in a qualified retirement plan C. customer with substantial income who is moving to a state with a high income tax rate D. investment in a custodian account

B. investment in a qualified retirement plan

An uncle opens a Coverdell ESA for his niece and makes deposits over a number of years. When she enters college, the niece withdraws $10,000 from her Coverdell ESA to pay for expenses. The student only uses $9,000 of the funds. The remaining $1,000: A. must be redeposited to the account B. is taxable at ordinary income tax rates to the niece C. is taxable at ordinary income tax rates to the uncle D. is not taxable and can be used by the niece for any purpose

B. is taxable at ordinary income tax rates to the niece

The definition of Treasury stock is: A. authorized shares minus issued shares B. issued shares minus outstanding shares C. authorized shares minus outstanding shares D. capital in excess of par value minus par value

B. issued shares minus outstanding shares

The definition of Treasury Stock is: A. issued shares which are outstanding B. issued shares which are no longer outstanding C. unissued shares which are outstanding D. unissued shares which are no longer outstanding

B. issued shares which are no longer outstanding

The definition of Treasury Stock is: A. issued stock minus authorized stock B. issued stock minus outstanding stock C. authorized stock minus outstanding stock D. outstanding stock minus authorized stock

B. issued stock minus outstanding stock

The bondholder of a municipal bond issue is the: A. borrower of the bond proceeds B. lender of the bond proceeds C. guarantor of the payment of debt service on the bond issue D. fiduciary acting for the benefit of the bondholders

B. lender of the bond proceeds

Under Internal Revenue guidelines, a short term profit on securities is one which results from a A. short sale of securities that are subsequently repurchased at a higher cost at any date in the future B. long sale, at a price higher than the security's cost basis, made within one year following purchase C. sale of securities within 30 days of purchase D. sale of securities by an insider at a profit within 6 months of purchase

B. long sale, at a price higher than the security's cost basis, made within one year following purchase

The highest fee in a money market fund is typically the: A. registration and tax fee B. management fee C. custodian fee D. audit fee

B. management fee

A stock portfolio with a Beta of "+1" indicates coincidence with: A. interest rate risk as represented by 30 year Treasury Bond price movements B. market risk as represented by the Standard and Poor's 500 Average C. default risk as measured by Moody's Investors' Services D. non-systematic portfolio risk

B. market risk as represented by the Standard and Poor's 500 Average

The purchaser of a variable annuity bears all of the following risks EXCEPT: A. investment risk B. mortality risk C. legislative risk D. interest rate risk

B. mortality risk

A registered representative sends a prospecting letter to customers stating that significant profits can be achieved by purchasing call options in a rising market. This claim: A. is prohibited under the rules of the options exchanges B. must be balanced by a statement that trading options can also result in significant losses C. can only be made if it is documented by actual customer examples which occurred within the past year D. is permitted and does not require any prior approval

B. must be balanced by a statement that trading options can also result in significant losses

A customer asks the following; "One of my neighbors was talking about his investment in an ETF (Exchange Traded Fund) and said that it is tax-efficient. Is this true?" The registered representative should respond that: A. the tax treatment of all investment companies is the same, regardless of whether the investment company is a mutual fund or an exchange traded fund B. mutual funds are obligated to distribute capital gains to their shareholders once a year, which are taxable; whereas exchange traded funds are not under this obligation, so capital gains taxation generally occurs when the shares are sold C. exchange traded funds are obligated to distribute capital gains to their shareholders once a year, which are taxable; whereas mutual funds are not under this obligation, so capital gains taxation generally occurs when the shares are redeemed D. capital gains distributed by mutual funds are always taxed as short-term, whereas the tax treatment of capital gains on exchange traded fund shares depends on the holding period of the shares

B. mutual funds are obligated to distribute capital gains to their shareholders once a year, which are taxable; whereas exchange traded funds are not under this obligation, so capital gains taxation generally occurs when the shares are sold

Current assets minus current liabilities equals: A. net worth B. net working capital C. book value D. net tangible assets

B. net working capital

Trades of U.S. Government bonds settle: A. next business day in payment by check B. next business day in payment by Federal Funds C. the following Thursday in payment by Federal funds D. 2 business days after trade date

B. next business day in payment by Federal Funds

Variable annuities are: A. exempt securities that are sold without a prospectus B. non-exempt securities that must be sold with a prospectus C. insurance products that are sold without a prospectus D. futures products that are sold without a prospectus

B. non-exempt securities that must be sold with a prospectus

A "beta" of 1 indicates coincidence with all of the following EXCEPT: A. systematic risk B. non-systematic risk C. market risk D. market index volatility

B. non-systematic risk

When short term interest rates are lower than long term interest rates, the yield curve is said to be: A. flat B. normal C. inverted D. bell shaped

B. normal

The expense ratio of a mutual fund is a measure of: A. profitability B. operating efficiency C. liquidity D. stability

B. operating efficiency

Upon customer request, a dealer in a competitive municipal syndicate must disclose: A. the spread taken by the underwriters B. order priority provisions C. names of syndicate members D. name(s) of the person(s) from whom orders have already been received

B. order priority provisions

Distributions after age 59 ½ from non-tax qualified retirement plans are: A. 100% taxable B. partial tax free return of capital and partial taxable income C. 100% tax free D. 100% tax deferred

B. partial tax free return of capital and partial taxable income

If market rates of interest decline, bonds issued at par would trade at (a): A. discount B. premium C. par D. parity

B. premium

A "consolidating market" is one where trading: A. volumes are stable B. prices are stable C. volumes are volatile D. prices are volatile

B. prices are stable

A closed-end management company is a: A. mutual fund B. publicly traded fund C. fixed unit investment trust D. participating unit investment trust

B. publicly traded fund

In order to solicit competitive bids for a new bond issue, the municipality will: A. invite selected local investment banks and commercial banks to bid on the issue B. publish an Official Notice of Sale in the Bond Buyer C. hire a municipal financial advisor to find an appropriate underwriter D. publish an Offering Notice in Bloomberg

B. publish an Official Notice of Sale in the Bond Buyer

An oil and gas sharing arrangement where the general partner agrees to defer taking a percentage of revenues until all costs are recovered is a(n): A. overriding royalty interest B. reversionary working interest C. net profits interest D. disproportionate sharing arrangement

B. reversionary working interest

A customer buys 1 ABC Jan 45 Put @ $4 when the market price of ABC is $48. The put is exercised when the market price is $40. The tax consequence is a: A. cost basis of $4,100 B. sale proceeds of $4,100 C. cost basis of $4,900 D. sale proceeds of $4,900

B. sale proceeds of $4,100

The Master Manufacturing Company has just announced a tender offer for its own common stock. Master is offering to buy up to 100% of the company's stock at $20 per share contingent on at least 64% of the outstanding shares being tendered. After the announcement of the offer, the stock closed on the NYSE up 2.50 at $18.75. A customer has 100 shares of Master stock in his cash account. The customer tells you that he wishes to "cash out" his position. You should recommend that the customer: A. tender the shares B. sell long C. sell short D. hold the shares for a better offer

B. sell long

An 80-year old client lives on his social security payments that total $25,000 per year. 3 years ago, on the advice of the broker, he invested in a technology fund where he lost most of his assets. The remaining balance in his brokerage account is $17,000. The client has annual living expenses of $30,000 and a net worth of $128,000. The customer approaches a new broker to take over management of his account. The representative that receives the account should: A. do nothing B. sell the holding in the account and invest the proceeds in a more conservative fund within the same family of funds C. sell the holding in the account and invest the proceeds in a more conservative fund outside the family of funds D. sell the holding in the account and invest the proceeds in a more conservative fund that has a deferred sales charge

B. sell the holding in the account and invest the proceeds in a more conservative fund within the same family of funds

A corporation has issued $100 par, 8% convertible preferred stock, callable at par. The preferred is convertible into 1.4 shares of common stock. Currently, the preferred stock is trading at $104 while the common stock is trading at $71.50. The corporation calls the preferred stock at par. To realize the largest profit, a customer holding 100 shares of preferred stock should: A. tender the preferred shares at the call price B. sell the preferred shares at the current market price C. sell short the common stock and convert the preferred for delivery to cover the short D. continue to hold the preferred shares

B. sell the preferred shares at the current market price

In corporate underwritings, if there are unfilled orders placed by a syndicate member that has completed its participation; and securities remain unsold in the syndicate account; then these orders will be filled and the syndicate member placing the order will earn the: A. management fee B. selling concession C. underwriter's concession D. spread

B. selling concession

All of the following practices are prohibited under FINRA rules EXCEPT: A. selling dividends B. selling listed securities to customers on margin C. recommending purchases beyond a customer's financial capacity D. trading mutual fund shares

B. selling listed securities to customers on margin

Mutual funds must send their financial statements to shareholders: A. annually B. semi-annually C. quarterly D. monthly

B. semi-annually

A bond issue where the bonds have the same maturity but different dates of issuance is a: A. term bond offering B. series bond offering C. serial bond offering D. combined serial and term bond offering

B. series bond offering

The target allocation for a specific asset class has been set at 20% of total assets under an asset allocation scheme. The manager is permitted to reduce this percentage to 15%; and can increase it to 25%; as he or she sees fit. The setting of the 20% target allocation is called: A. portfolio rebalancing B. strategic asset management C. tactical asset management D. active asset management

B. strategic asset management

A customer is short 1 ABC Jan 90 Call @ $5. The call is exercised when the market price of ABC is $100. The sales proceeds of the shares is: A. strike price minus premium B. strike price plus premium C. market price minus premium D. market price plus premium

B. strike price plus premium

Supply Side Theory states that: A. increased government spending will stimulate the economy B. tax rate reductions and lower government spending will stimulate the economy C. the actions of the Federal Reserve are the driving force behind the economy D. tax rate increases will stimulate the economy

B. tax rate reductions and lower government spending will stimulate the economy

"Phantom income," which can occur in a limited partnership program, is: A. taxable income created if a partnership asset is ceded to a lender, when the loan balance exceeds asset depreciated value B. taxable income created if a partnership asset is ceded to a lender, when the loan balance exceeds asset fair market value C. non-taxable income created if a partnership asset is ceded to a lender, when the loan balance exceeds asset depreciated value D. non-taxable income created if a partnership asset is ceded to a lender, when the loan balance exceeds asset fair market value

B. taxable income created if a partnership asset is ceded to a lender, when the loan balance exceeds asset fair market value

A constant dollar investment plan requires: A. that the same dollar amount be invested periodically in new equities purchases B. that the same aggregate dollar amount be kept invested in equities C. the constant reinvestment of all dividends and interest received in the same securities D. that a constant dollar amount be invested in U.S. securities

B. that the same aggregate dollar amount be kept invested in equities

A constant ratio investment plan requires: A. that the same percentage amount be invested periodically in new equities purchases B. that the same percentage amount be kept invested in equities C. the constant reinvestment of all dividends and interest received in the percentage as the securities held in the portfolio D. that a constant percentage amount be invested in U.S. securities

B. that the same percentage amount be kept invested in equities

The ex dividend date for mutual funds is set by: A. FINRA B. the Fund Board of Directors C. the shareholders of the Fund D. the SEC

B. the Fund Board of Directors

Your customer, age 68, that has an IRA account at your firm valued at $500,000, passes away. The customer leaves the account to his son, age 38. He has no need for current income as he is still working, and wishes to know his best option to minimize taxes. He expects to retire in 22 years, at which time, he will need the funds to pay for annual living expenses. You should advise the son to: A. roll the funds over into a new IRA in the son's name B. transfer the IRA funds to a beneficiary distribution account C. cash out the inherited IRA account D. disclaim the inherited IRA account

B. transfer the IRA funds to a beneficiary distribution account

Your customer, age 68, that has an IRA account at your firm valued at $500,000, passes away. The customer leaves the account to his wife, age 48, who does not work. She needs current income and wishes to know her best option to minimize taxes. You should advise the spouse to: A. roll the funds over into a new IRA in the spouse's name B. transfer the IRA funds to a beneficiary distribution account C. cash out the inherited IRA account D. disclaim or give away the inherited IRA account

B. transfer the IRA funds to a beneficiary distribution account

Mutual funds must send their financial statements to shareholders: A. once a year B. two times per year C. three times per year D. four times per year

B. two times per year

If a customer buys a security that is part of the DTC DRS program, the customer will receive: A. physical stock certificates registered in customer name B. uncertificated book-entry registration in customer name C. physical stock certificates held in "street name" D. any of the above as designated by the customer

B. uncertificated book-entry registration in customer name

The investment strategy that involves paying a lower price for a security based on the expectation that the market is mispricing the issue is: A. growth investing B. value investing C. passive investing D. active investing

B. value investing

New issues of Treasury Bills are sold: A. through selling syndicates B. via weekly yield auction C. through subscriptions placed by registered purchasers D. via negotiated underwritings

B. via weekly yield auction

Which of the following can be purchased on margin? A. Mutual Funds B. Initial public offerings of Closed End Funds C. Closed End Funds trading on the NYSE D. Initial public offerings of Fixed Unit Investment Trusts

C. Closed End Funds trading on the NYSE

Which of the following movements in the Standard and Poor's 500 Index before 3:25 PM would INITIATE the market-wide "circuit breaker"? A. 2,400 to 2,352 B. 2,400 to 2,280 C. 2,400 to 2,232 D. 2,400 to 2,160

C. 2,400 to 2,232

A customer has purchased 10,000 shares of Fromage stock, a Swiss cheese company. The stock is not traded in the United States. Fromage declares and pays a dividend of 15,000 Swiss Francs, which, when converted to dollars, equals $10,000. Switzerland imposes a 20% withholding tax on dividends repatriated outside its borders. How is the dividend reported on this investor's U.S. tax return? A. No dividends are reported, since the investment is made outside the United States B. $8,000 of dividends are reported, since $2,000 was withheld in Switzerland C. $10,000 of dividends are reported, along with a $2,000 tax credit for monies withheld in Switzerland D. $10,000 of dividends are reported, with no tax credit available

C. $10,000 of dividends are reported, along with a $2,000 tax credit for monies withheld in Switzerland

A customer buys 5M of 6 1/4% Treasury Bonds at 100. How much interest income will the customer receive at each interest payment? A. $31.25 B. $62.50 C. $156.25 D. $312.50

C. $156.25

A customer buys 100 shares of ABC at $90, depositing the Regulation T requirement. She holds the position for two months, during which $100 of interest is charged on the debit balance. What is the adjusted debit balance at the end of the two month period? A. $4,400 B. $4,500 C. $4,600 D. $8,900

C. $4,600

On the same day in a cash account, a customer buys 100 shares of PDQ stock at $51 and sells 1 PDQ Jan 50 Call @ $2. To establish the positions, the customer must deposit: A. 0 B. $4,700 C. $4,900 D. $5,200

C. $4,900

A customer buys 1 ABC Jan 35 Call @ $3.50 and 1 ABC Jan 35 Put @ $.50 when the market price of ABC is at $36.75. The customer must deposit: A. $200 B. $300 C. $400 D. $2,000

C. $400

A customer sells 1 ABC Jan 30 Straddle for a total premium of $500. At expiration, ABC closes at $21 and the customer is exercised. As a result, the customer will have a: A. $100 gain B. $400 gain C. $400 loss D. $900 gain

C. $400 loss

A customer sells short 100 shares of PDQ at $58 and buys 1 PDQ Jul 60 Call @ $3. The customer's maximum potential loss is: A. $200 B. $300 C. $500 D. unlimited

C. $500

A customer purchases 100 shares of ABC stock at $34 and buys 1 ABC Jan 30 Put @ $2 on the same day in a cash account. Subsequently, the stock goes to $44 and the customer's put expires and the customer sells the stock in the market at the prevailing market price. The customer has a(n): A. $200 loss B. $800 loss C. $800 gain D. $1,000 gain

C. $800 gain

On the same day, a customer sells 1 ABC Jan 50 Call @ $2 and buys 1 ABC Jan 35 Call @ $8 when the market price of ABC is 41. The maximum potential gain is: A. $200 B. $400 C. $900 D. unlimited

C. $900

Which statement is TRUE about capital gains taxes? A gain on a security held over: A. 6 months is taxed at a lower rate than a gain on a security held over 3 months B. 9 months is taxed at a lower rate than a gain on a security held over 6 months C. 12 months is taxed at a lower rate than a gain on a security held over 9 months D. 15 months is taxed at a lower rate than a gain on a security held over 12 months

C. 12 months is taxed at a lower rate than a gain on a security held over 9 months

The maximum maturity on commercial paper is: A. 30 days, because a longer maturity would cause the issue to be non-exempt B. 90 days, because a longer maturity would cause the issue to be non-exempt C. 270 days, because a longer maturity would cause the issue to be non-exempt D. 360 days, because a longer maturity would cause the issue to be non-exempt

C. 270 days, because a longer maturity would cause the issue to be non-exempt

A company has filed a registration statement with the SEC that uses a method that is only available to seasoned issuers. This registration statement is good for: A. 1 year B. 2 years C. 3 years D. 4 years

C. 3 years

The spread on a new municipal offering is set at 3/4 point. The selling concession is 1/4 point and the additional takedown is set at 3/8 point. If a selling group member places an order for the bond, how much will the syndicate member earn on that sale? A. 0 B. 1/4 point C. 3/8 point D. 5/8 point

C. 3/8 point

The Regulation T initial margin required to buy LEAP options with over 9 months to expiration is: A. 25% B. 50% C. 75% D. 100%

C. 75%

Which of the following would have the greatest impact on a company's "alpha" coefficient? A. A major change in market sentiment B. A major change in the Standard and Poor's 500 Index C. A major change in the corporation's capital structure D. A major change in the Wilshire 5000 Index

C. A major change in the corporation's capital structure

Which of the following is NOT defined as an Outside Business Activity by FINRA? A. A registered representative who helps out in his or her family's restaurant at night, only earning tips B. A registered representative who is elected to the Board of Directors of her cooperative apartment house C. A registered representative who volunteers to make solicitations of contributions to her church D. A registered representative who teaches a course on financial literacy at a local community college

C. A registered representative who volunteers to make solicitations of contributions to her church

The ex date for a cash dividend is Wednesday, November 6th and the Record Date is Thursday, November 7th. Which statement is TRUE? A. A buyer of the stock in a regular way trade on November 6th will receive the dividend B. A buyer of the stock in a regular way trade on November 7th will receive the dividend C. A seller of the stock in a regular way trade on November 6th will receive the dividend D. A seller of the stock in a regular way trade on November 7th will not receive the dividend

C. A seller of the stock in a regular way trade on November 6th will receive the dividend

A municipality would defease its debt with all of the following EXCEPT: A. U.S. Government securities B. U.S. Government agency securities C. AAA Corporate securities D. Bank certificates of deposit

C. AAA Corporate securities

Which statement is FALSE about 401(k) Plans? A. The plan is established by the corporate employer B. The corporate employer can make matching contributions into the plan based on the contribution made by the employee C. All corporate employees must participate in the plan D. All contributions into the plan are made with pre-tax dollars

C. All corporate employees must participate in the plan

Which is the BEST definition of an "annuity unit"? A. An accounting measure used to determine the number of units the contract holder may purchase in the separate account B. An accounting measure used to establish the contract holder's ownership interest C. An accounting measure upon which the amount of pay out is determined D. An accounting measure used to determine the contract holder's death benefit

C. An accounting measure upon which the amount of pay out is determined

A customer has a discretionary account at a brokerage firm. The customer calls the registered representative handling the account and states "Buy $50,000 of investment grade corporate bonds" with at least 5 years to maturity and a minimum 8% yield. To comply with the customer's instructions, the registered representative must choose bonds that are rated, at a minimum: A. Aaa B. A C. Baa D. B

C. Baa

A 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. Which is the BEST recommendation? A. Mid-cap common stock B. Municipal bond C. Bank CD D. Treasure STRIPS

C. Bank CD

Which bond portfolio where all investment is made up front would be MOST negatively affected by a sharp rise in interest rates? A. Ladder B. Bullet C. Barbell D. Balloon

C. Barbell

An order ticket is filled out and sent to the New York Stock Exchange floor for execution. After being executed on the floor, it is discovered that the account number is incorrect. Under FINRA rules, the account number may be changed to the correct one by the: A. Registered Representative B. Specialist C. Branch Office Manager D. Floor Governor

C. Branch Office Manager

Which of the following positions is a Ratio Spread? A. Buy 1 ABC Jan 50 Call; Buy 1 ABC Jan 50 Put B. Buy 100 shares of ABC stock; Sell 2 ABC Jan 50 Calls C. Buy 1 ABC Jan 50 Call; Sell 2 ABC Jan 60 Calls D. Buy 1 ABC Jan 50 Call; Sell 1 ABC Jan 60 Call

C. Buy 1 ABC Jan 50 Call; Sell 2 ABC Jan 60 Calls

A 65-year old man is retired and living on social security. He is married and his wife does not work. The client has inherited a small amount of money that he wishes to invest. What should you recommend as an investment? A. Individual securities B. Variable annuities C. CDs D. Bond funds

C. CDs

All of the following securities are exempt from the registration provisions of the Securities Act of 1933 EXCEPT: A. U.S. Government bonds B. Government National Mortgage Association Pass Through certificates C. Collateral Trust certificate D. General Obligation bonds

C. Collateral Trust certificate

When a selling group member sells securities in a corporate underwriting, which of the following is earned? A. Takedown B. Spread C. Concession D. Reallowance

C. Concession

Which statement is TRUE about federal taxation of contributions to 529 plans? A. Contributions are tax deductible to the donor B. Contributions amounts above the gift tax exclusion amount are taxable to the recipient C. Contribution amounts above the gift tax exclusion amount are taxable to the donor D. The full contribution is taxable to the donor

C. Contribution amounts above the gift tax exclusion amount are taxable to the donor

Under Regulation D, issuers must provide which of the following to investors to obtain a private placement exemption? A. Copy of the Prospectus B. Copy of the Official Notice of Sale C. Copy of the Offering Circular or Private Placement Memorandum D. Copy of the Official Statement

C. Copy of the Offering Circular or Private Placement Memorandum

Changes in which of the following would affect a corporation's "alpha" coefficient? A. Standard and Poor's 100 Index volatility B. Advance / Decline Ratio C. Corporate Management D. Short Interest

C. Corporate Management

All of the following securities are redeemable EXCEPT: A. Common stock mutual funds B. Bond mutual funds C. Corporate debentures D. Series HH bonds

C. Corporate debentures

Equity in a Short Margin Account is: A. Short Market Value Minus Debit Balance B. Short Market Value Plus Debit Balance C. Credit Balance Minus Short Market Value D. Credit Balance Plus Short Market Value

C. Credit Balance Minus Short Market Value

To avoid the application of the "wash sale rule" securities sold at a loss on October 31st, can first be bought back on: A. November 29th B. November 30th C. December 1st D. December 2nd

C. December 1st

Which of the following would be least important in determining the level of diversification in a corporate bond portfolio? A. Bond ratings B. Industries represented in portfolio C. Domicile of issuers D. Maturities of the bonds in the portfolio

C. Domicile of issuers

An investor has a $1,000,000 portfolio that is split evenly between "blue chip" stocks and Treasury securities. The current economic environment is characterized by low interest rates and flat stock prices - and this is expected to remain unchanged for a number of years. However, the residential and commercial real estate market is expected to be strong. The investor would like to diversify the portfolio and enhance returns without adding much additional risk. Which of the following investment purchase recommendations would help achieve this objective? A. Mortgage REITs B. Mortgage Bonds C. Equity REITs D. Fannie Mae Pass-Through Certificates

C. Equity REITs

A customer wishes to buy a security that provides monthly payments for his retirement. Which of the following is suitable? A. Treasury Bonds B. Income Bonds C. GNMA Pass Through Certificates D. Treasury Notes

C. GNMA Pass Through Certificates

A new customer opens an account and buys a variable annuity contract, investing $20,000. 90 days later, the client calls and tells the representative that he wants to surrender the contract. The representative explains that this is not a good idea, since there will be a high surrender fee of 8% imposed. The client tells the representative that he does not care about the surrender fee and that he wants the net proceeds wired to an account at a bank in another country. What should the representative do? A. Follow the customer's instructions B. Have the firm file a CTR with FinCEN C. Have the firm file a SAR with FinCEN D. Refuse the customer's request

C. Have the firm file a SAR with FinCEN

Which of the following investments is the most illiquid? A. Mutual fund B. Closed-End Fund C. Hedge Fund D. Exchange Traded Fund

C. Hedge Fund

Which statement is TRUE about hedge funds? A. Hedge funds attempt to minimize risk by applying options hedging strategies to stock positions held by the fund B. Hedge funds are traded as Exchange Traded Funds on stock exchanges and thus are highly liquid investments C. Hedge funds are illiquid investments that use aggressive investment strategies to maximize returns, and thus have high risk levels D. Hedge funds are suitable only for smaller investors that wish to protect their investments from adverse market movements

C. Hedge funds are illiquid investments that use aggressive investment strategies to maximize returns, and thus have high risk levels

Who would be MOST likely to invest in a BDC? A. Low risk investor seeking preservation of capital B. Moderate risk investor seeking higher returns C. High net worth investor seeking dividends D. Sophisticated investor seeking a tax shelter

C. High net worth investor seeking dividends

Which of the following is (are) taxable in the year of receipt? I Interest earned from investments II Cash dividends from investments III Stock dividends from investments A. I only B. II only C. I and II D. I, II, III

C. I and II

Quotes for which of the following are shown on the Consolidated Quotations Service (CQS)? I American Stock Exchange (NYSE American) listed issues II New York Stock Exchange listed issues III NASDAQ Global Market issues IV NASDAQ Capital Market issues A. I only B. II only C. I and II only D. I, II, III, IV

C. I and II only

Under MSRB rules which of the following statement(s) is(are) TRUE when selling a new issue of municipal bonds? I Order priority provisions must be disclosed at customer request II The spread must be disclosed in negotiated offerings III The spread must be disclosed in competitive bid offerings A. I only B. II and III only C. I and II only D. I, II, III

C. I and II only

A tender offer is announced for ABC common stock. Which of the following customer accounts can tender 100 shares of ABC on the offer? I Long 100 shares of ABC II Long 100 shares of ABC; Short 100 shares of ABC III Long 200 shares of ABC; Short 100 shares of ABC IV Long 100 shares of ABC; Short 200 shares of ABC A. I only B. III and IV C. I and III D. I, II, III, IV

C. I and III

Regarding the notification of a broker-dealer's financial condition to customers, a brokerage firm must send semi-annual statements which include the firm's: I Balance sheet II Income statement III Net capital computation A. I only B. I and II C. I and III D. II and III

C. I and III

Which orders guarantee price but not execution? I Buy Limits II Buy Stops III Sell Limits IV Sell Stops A. I and II B. III and IV C. I and III D. II and IV

C. I and III

Diversification among multiple asset classes reduces the: I market risk of the portfolio II marketability risk of the portfolio III standard deviation of portfolio returns A. I only B. II and III only C. I and III only D. I, II, III

C. I and III only

Which of the following are acceptable methods for opening an investment adviser account? I Each individual client of the adviser opens an account under the client's name II Each individual client of the adviser opens an account under the adviser's name III The adviser opens a Third Party account for each client IV The adviser opens an Omnibus account holding all of his clients' funds and securities A. I and II only B. III and IV only C. I and IV only D. II and III only

C. I and IV only

Which of the following information is disclosed on an options confirmation? I Trade date II Trade volume III Open interest IV Option expiration A. I and II only B. III and IV only C. I and IV only D. I, II, III, IV

C. I and IV only

A young couple wishes to save $50,000 as the down payment on a new house that they plan to purchase in the next 6 months. Which of the following are suitable investment vehicles to recommend to the couple? I Money market funds II Bank certificates of deposit III Blue chip stocks IV Commercial paper A. I only B. II and III C. I, II and IV D. I, II, III, IV

C. I, II and IV

Which of the following rate commercial paper? I Standard and Poor's II Fitch's III Best's IV Moody's A. I and II only B. III and IV only C. I, II and IV D. I, II, III, IV

C. I, II and IV

Which of the following statements are TRUE regarding REITs? I REITs are similar to closed end investment companies II REITs issue shares of beneficial interest representing an undivided interest in a pool of real estate investments III REITs are similar to open end investment companies IV REITs are registered under the Securities Act of 1933 A. I and II only B. III and IV only C. I, II and IV D. I, II, III, IV

C. I, II and IV

A customer buys stock in a margin account, but does not pay within the 4 business day maximum permitted under Regulation T. The brokerage firm can take which of the following actions? I Use existing SMA (credit line) in the margin account to meet the requirement II Request an extension from the self-regulatory organization III Sell out the unpaid position and freeze the account for 90 days IV Liquidate the account and remit any balance due to the customer A. I only B. II and III only C. I, II, III D. I, II, III, IV

C. I, II, III

A municipal bond dealer typically engages in which of the following activities? I Distributing bona-fide quotes to interested parties II Participating in syndicates bidding on new issues III Acting as a market maker by taking long positions IV Acting as a market maker by taking short positions A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

A premature withdrawal can be made from an Individual Retirement Account without penalty for which of the following reasons? I Excess medical expenses II Disability III Higher education expenses IV Birth of first child expenses A. I and II B. III and IV C. I, II, III D. I, II, III, IV

C. I, II, III

Fiscal policy encompasses which of the following? I Government spending II Social security payment levels III Tax policy IV Monetary policy A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

Limited partnership investors are subject to which of the following risks? I Marketability risk II Legislative risk III Tax audit risk IV Call risk A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

Preferred stock has which of the following features? I Fixed rate of return II Priority claim to assets upon dissolution compared to common stock III Priority claim to dividends declared compared to common stock IV Fixed maturity A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

The Federal Reserve open market trading activities affect which of the following? I M 1 levels II GDP growth III Treasury's accounts IV National debt levels A. I only B. II and III only C. I, II, III D. I, II, III, IV

C. I, II, III

The sale of Direct Participation Programs is regulated by (the): I Securities Act of 1933 II State Blue Sky Laws III FINRA Rules IV MSRB Rules A. I and II only B. III and IV only C. I, II, III D. II, III, IV

C. I, II, III

The transfer agent will typically perform which of the following functions? I Canceling old stock certificates II Issuing new stock certificates III Acting as disbursement agent for the corporation IV Maintaining the integrity of the record of all shareholder names and addresses A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

Under MSRB rules, confirmation disclosure for bonds sold at par must include which of the following? I Whether the securities are callable II Capacity in which the broker-dealer acted III Total dollar amount of the transaction IV The yield at which the transaction was effected and the resulting dollar price A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

Which of the following are purchase and payout options for variable annuity contracts? I Lump sum payment; Immediate annuity II Periodic payments; Immediate annuity III Lump sum payment; Deferred annuity IV Periodic payments; Deferred annuity A. I and II only B. III and IV only C. I, III and IV D. I, II, III, IV

C. I, III and IV

Under MSRB rules, which of the following statements are TRUE about a registered representative sharing in a customer account? I Sharing in a customer account is prohibited unless the registered representative receives approval to do so from the principal II Sharing in a customer account is prohibited unless the registered representative shares only in proportion to the capital contributed III Sharing in a customer account is prohibited unless the registered representative shares in both gain and loss IV Sharing in a customer account is prohibited unless the MSRB is notified in advance of the sharing arrangement A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

Which of the following are evaluated in the feasibility study prepared prior to the issuance of revenue bonds? I Expected demand for the facility II Effect of competing facilities III Expected operating costs of the facility IV Bond trust indenture A. I and III only B. III and IV C. I, II, III D. I, II, IV

C. I, II, III

Which of the following are functions of the transfer agent? I Mailing dividend payments to shareholders II Canceling old shares and issuing new shares III Preparing and mailing proxies IV Setting the Declaration Date A. I and II B. III and IV C. I, II, III D. I, II, III, IV

C. I, II, III

Which of the following securities are exempt from the Securities Act of 1933? I Benevolent Association issues II Small Business Investment Company issues III Common Carrier issues IV Industrial Company issues A. I and III B. II and IV C. I, II, III D. I, II, III, IV

C. I, II, III

Which of the following statements are TRUE about REITs? I 90% of Net Investment Income must be distributed to shareholders to be "regulated" under Subchapter M II 75% of assets must be invested in real estate related activities to be "regulated" under Subchapter M III Gains may be passed through to shareholders under "conduit" tax treatment IV Losses may be passed through to shareholders under "conduit" treatment A. I and IV only B. II and III only C. I, II, III D. I, III, IV

C. I, II, III

Which of the following statements are TRUE regarding Group orders? I The identity of the account for whom the order is placed must be disclosed II Group orders generally have priority over Designated or Member orders III The syndicate account receives credit for the order IV The manager must fill each Group order for the entire amount submitted A. I and II B. III and IV C. I, II, III D. I, II, III, IV

C. I, II, III

Which of the following statements are TRUE regarding options sales literature that includes a recommendation? I It must be approved prior to use by the designated Registered Options Principal II It must be accompanied or preceded by a copy of the latest Options Disclosure Document III Showing past or projected performance is permitted IV It must be pre-filed with the exchange A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

In a corporate new issue offering, the issuer is responsible for which of the following? I Printing the certificates II Delivering the certificates III Transferring the certificates into the names of the purchasers IV Registering the securities with the Securities and Exchange Commission A. I and II only B. III and IV only C. I, II, IV D. I, II, III, IV

C. I, II, IV

The bond counsel for a new municipal issue will opine on which of the following? I The legal validity of the issue as a binding obligation on the issuer II Federal and Local tax status of the interest income to be received by holders of the issue III The fairness and reasonableness of the reoffering yields IV The compliance of the issuer with Treasury arbitrage regulations A. II, III, IV B. I, II, III C. I, II, IV D. I, III, IV

C. I, II, IV

The municipal bond counsel opines on which of the following? I Validity II Legality III Feasibility IV Tax exempt status A. I and II only B. III and IV only C. I, II, IV D. I, II, III, IV

C. I, II, IV

To evaluate investor sentiment, a technical analyst would examine which of the following? I Odd lot transactions II Put / Call ratio III Revised corporate earning reports IV Short Interest figures A. I and II B. III and IV C. I, II, IV D. I, II, III, IV

C. I, II, IV

Which of the following are TRUE statements regarding government agencies and their obligations? I Fannie Mae is a publicly traded company II Ginnie Mae obligations trade at lower yields than Fannie Mae obligations III Federal agency obligations have the direct backing of the U.S. Government IV Ginnie Mae securities are directly backed by the U.S. Government A. I only B. II and IV only C. I, II, IV D. I, II, III, IV

C. I, II, IV

Which of the following are prohibited practices under FINRA rules? I Interpositioning II Free riding III Arbitrage Trading IV Backing Away A. I and II only B. III and IV only C. I, II, IV D. I, II, III, IV

C. I, II, IV

Which of the following statements are TRUE about listed securities? I Under Regulation T, all listed securities are marginable II Listed securities are subject to Regulation SHO III Listed securities trade in the Second Market IV Listed companies must be registered with, and report their results to, the SEC A. I and II only B. II and III only C. I, II, IV D. I, II, III, IV

C. I, II, IV

Which of the following statements are TRUE regarding electronic communications sent by registered representatives at member firms that have a communications compliance program in place? I Registered representatives must be trained by the firm about what content is permitted in such communications II Registered representative communications must be supervised and reviewed by the member firm III Registered representative communications must be approved in advance by the member firm IV Registered representative communications may only be sent from a location supervised by the member firm A. I and II only B. III and IV only C. I, II, IV D. I, II, III, IV

C. I, II, IV

Pension funds seeking safety of principal and maximum income would use which investment strategies? I Purchase Government and Agency securities II Sell short Government and Agency securities III Sell covered Treasury Bond calls IV Enter into Overnight Repurchase Agreements with government dealers A. I and IV only B. II and III only C. I, III and IV D. I, II, III, IV

C. I, III and IV

Under MSRB rules, which of the following records must be kept for specified time periods? I Trade comparisons II Official Statements III Customer account statements IV Customer complaints A. III and IV only B. I and II only C. I, III and IV D. I, II, III, IV

C. I, III and IV

A customer buys a $1,000 par Treasury Inflation Protection security with a 4% coupon and a 10 year maturity. If the inflation rate during the first year of the security's life is 5%, the: I coupon rate is adjusted to 9% II coupon rate remains at 4% III principal amount is adjusted to $1,050 IV principal amount remains at $1,000 A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A customer buys a NASDAQ stock in a principal transaction at $79 plus a $1 mark-up. Which statements are TRUE? I The cost basis for tax purposes is $79 per share II The cost basis for tax purposes is $80 per share III The trade will be reported to the tape at $79 per share IV The trade will be reported to the tape at $80 per share A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A preliminary prospectus: I contains the public offering price of the issue II does not contain the public offering price of the issue III contains the financial statements of the issuer IV does not contain the financial statements of the issuer A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A registered representative is notified verbally by the nephew of a client that his uncle has passed away. Which statements are TRUE regarding the actions that the registered representative can take based on this information? I The registered representative can freeze the assets in the account because the nephew is considered to be an immediate family member II The registered representative cannot freeze the assets in the account because the nephew is not considered to be an immediate family member III A certified copy of the customer's death certificate must be provided before the assets in the account can be frozen IV A copy of the customer's will must be provided before the assets in the account can be frozen A. I and III B. I and IV C. II and III D. II and IV

C. II and III

A wealthy customer has been asked by his neighbor to invest in the private placement of a "start-up" technology company as a venture capital investor. This is the first time that the customer has considered such an investment. The customer contacts his registered representative and asks: "Aside from the investment risk associated with a "start-up" company, what are the other issues that I should consider before making such an investment." The registered representative should inform the customer that: I because these securities are not registered with the SEC, such an offering would be illegal in the United States II because the securities are not registered with the SEC, they can only be resold in the public markets if the company effects a registered primary distribution and is current in its SEC filings III public resale of these securities can only occur if the customer holds the securities for 6 months "at risk" and then sells the securities in measured quantities IV these securities can only be resold by the customer to underwriters that will buy the securities into their inventory and then register them with the SEC A. I and III B. I and IV C. II and III D. II and IV

C. II and III

An inverted "saucer" formation is: I bullish II bearish III a reverse upward trend IV a reverse downward trend A. I and III B. I and IV C. II and III D. II and IV

C. II and III

An investor buys 100 shares of ABC stock at $60 in January of 2019. In March of 2020, the stock is worth $100 per share and the investor donates it to a charity. The tax consequences are: I a $6,000 charitable deduction II a $10,000 charitable deduction III no tax due on the appreciation IV tax is due on the appreciation A. I and III B. I and IV C. II and III D. II and IV

C. II and III

As interest rates move, which statements are TRUE regarding bond price volatility? I The shorter the maturity, the greater the bond's price volatility II The longer the maturity, the greater the bond's price volatility III The lower the coupon rate, the greater the bond's price volatility IV The higher the coupon rate, the greater the bond's price volatility A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Bond interest expense of a corporation is deductible: I before operating expenses II after operating expenses III before taxes IV after taxes A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Debit price spreads are profitable if: I both contracts expire II both contracts are exercised III the spread between the premiums widens IV the spread between the premiums narrows A. I and III B. I and IV C. II and III D. II and IV

C. II and III

During a tender offer, which of the following activities are prohibited? I Purchase the stock in a cash account and tender 2 business days after trade date II Purchase a call option in a cash account and tender 2 business days after trade date III Tender shares held in an arbitrage account where the position is "short against the box" IV Exercise a call option held in a cash account and issue irrevocable instructions to deliver the acquired shares A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Eurodollars are: I European currency deposits II U.S. dollar deposits III held in foreign branches of U.S. banks IV held in U.S. branches of foreign banks A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Generally, which of the following statements are TRUE regarding the taxation of a municipal security? I Capital gains from selling municipal bonds are taxable only on the State and Local levels II Capital gains from selling municipal bonds are fully taxable III Interest income received from municipal bonds is taxable only on the State and Local levels IV Interest income received from municipal bonds is fully taxable A. I and III B. I and IV C. II and III D. II and IV

C. II and III

If a person is convicted of insider trading: I the amount of any profit achieved or loss avoided must be paid II three times the amount of any profit achieved or loss avoided must be paid III payments are made to the Department of Treasury IV payments are made to the Securities and Exchange Commission A. I and III B. I and IV C. II and III D. II and IV

C. II and III

If interest rates fall, issuers most likely will call: I preferred issues with low interest rates II preferred issues with high interest rates III preferred issues with low call premiums IV preferred issues with high call premiums A. I and III B. I and IV C. II and III D. II and IV

C. II and III

If investors expect a recession, the best investment strategy would be to: I sell U.S. Government bonds II sell corporate bonds III buy U.S. Government bonds IV buy corporate bonds A. I and III B. I and IV C. II and III D. II and IV

C. II and III

If the Federal Reserve is pursuing a "easy money" policy, which interest rate options strategies would be profitable? I Buy interest rate calls II Buy interest rate puts III Sell interest rate calls IV Sell interest rate puts A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Intrastate offerings are subject to: I SEC registration II State registration III FINRA regulation A. I only B. II only C. II and III D. I, II, III

C. II and III

On the same day in a margin account, a customer buys 1 ABC Jan 35 Call @ $8 and sells 1 ABC Jan 50 Call @ $2 when the market price of ABC is $41. The position will be profitable if: I both contracts expire II both contracts are exercised III the spread between the premiums widens IV the spread between the premiums narrows A. I and III B. I and IV C. II and III D. II and IV

C. II and III

PDQ Corporation has declared a rights offering to stockholders of record. The company has 5,000,000 shares outstanding and is selling an additional 1,000,000 shares via the rights offer. Which statements are TRUE regarding a customer who owns 500 shares of PDQ stock? I The customer will receive 100 rights II The customer will receive 500 rights III The customer may buy 100 shares IV The customer may buy 500 shares A. I and III B. I and IV C. II and III D. II and IV

C. II and III

The Federal Telephone Consumer Protection Act permits: I solicited calls to be made only after 8 AM or before 9 PM in the time zone of the recipient II unsolicited calls to be made only after 8 AM or before 9 PM in the time zone of the recipient III solicited calls to be made anytime IV unsolicited calls to be made anytime A. I and III B. I and IV C. II and III D. II and IV

C. II and III

To open a portfolio margin account: I the account must be approved for covered options writing II the account must be approved for naked options writing III minimum equity of $100,000 must be maintained IV minimum equity of $1,000,000 must be maintained A. I and III B. I and IV C. II and III D. II and IV

C. II and III

When comparing fixed fee accounts to those that charge a per trade commission charge accounts: I Fixed fee accounts are considered to be a brokerage product II Fixed fee accounts are considered to be an advisory product III Per trade commission charge accounts are considered to be a brokerage product IV Per trade commission charge accounts are considered to be an advisory product A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which asset classes are MOST susceptible to interest rate risk? I Growth Stocks II U.S. Government Bonds III Investment Grade Corporate Bonds IV Speculative Stocks A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which characteristics make a security most subject to liquidity risk? I Short term maturity II Long term maturity III Low credit rating IV High credit rating A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following option strategies are profitable in a falling market? I Long Call II Long Put III Short Call IV Short Put A. I and II B. I and IV C. II and III D. III and IV

C. II and III

Which of the following options positions are on the same "side" of the market? I Long Calls II Short Calls III Long Puts IV Short Puts A. I and II B. I and III C. II and III D. III and IV

C. II and III

Which of the following statements are TRUE about a stock's Beta coefficient? I A Beta of +1 indicates that the stock moves as fast as, but in the exact opposite direction of, the market II A Beta of +1 indicates that the stock moves as fast as, and in the same direction as, the market III A stock with a low beta is a defensive stock IV A stock with a low beta is a speculative stock A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE about capital gains taxes for investors who are not extremely high earners? I The maximum tax rate on a short term capital gain is 15% II The maximum tax rate on a short term capital gain is 37% III The maximum tax rate on a long term capital gain is 15% IV The maximum tax rate on a long term capital gain is 37% A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE about the expense ratio of a mutual fund? I The lower the ratio, the less efficient the fund is II The lower the ratio, the more efficient the fund is III The higher the ratio, the less efficient the fund is IV The higher the ratio, the more efficient the fund is A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE for an original issue corporate bond purchased at a discount? I If the bond is held to maturity, the customer has capital gains tax liability II If the bond is held to maturity, the customer will have no capital gains tax liability III At maturity, the bonds will be redeemed at par IV At maturity, the bonds will be redeemed at a discount to par A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE regarding Eurodollar deposits? I Eurodollar deposits are in European currency II Eurodollar deposits are in U.S. currency III The interest paid on these deposits is based on LIBOR IV The interest paid on these deposits is based on the Federal Funds rate A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE regarding corporate zero coupon bonds? I The rate of return for zero coupon bonds is subject to reinvestment risk II The rate of return for zero coupon bonds is not subject to reinvestment risk III The interest income from such obligations is taxable annually IV The interest income from such obligations is not taxable until maturity A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE regarding municipal bonds trading in the secondary market? I Municipal market discount bonds must be accreted II Municipal market discount bonds may be accreted III Municipal market premium bonds must be amortized IV Municipal market premium bonds may be amortized A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE about Equity REITs? I Equity REIT share prices and overall stock prices are positively correlated II Equity REIT share prices and overall stock prices are negatively correlated III Equity REIT dividends paid to shareholders are taxed at regular income tax rates IV Equity REIT dividends paid to shareholders are taxed at a preferential 15% or 20% maximum rate A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE about a Certificate of Participation (COP)? I COPs are considered to be a general obligation of the issuer II COPs are considered to be backed by a revenue pledge III Payments to security holders are contingent on the governing body making an annual appropriation from budgeted funds IV Payments to security holders are not contingent on the governing body making an annual appropriation from budgeted funds A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE about variable annuities? I Contributions to the separate account are tax deductible II Contributions to the separate account are not tax deductible III Earnings in the separate account build tax-deferred IV Earnings in the separate account are taxable each year A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE regarding purchase limitations under Regulation A? I Tier 1 offerings are subject to purchase limitations II Tier 1 offerings are not subject to purchase limitations III Tier 2 offerings are subject to purchase limitations IV Tier 2 offerings are not subject to purchase limitations A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE regarding the NYSE Specialist (DMM)? I The Specialist/DMM is under the obligation to act as the intermediary if there are 2 other floor brokers that are willing to trade with each other II The Specialist/DMM is under the obligation to act as the intermediary if there are no other floor brokers that are willing to trade that security III The Specialist/DMM is under the obligation to disintermediate himself if there are 2 other floor brokers that are willing to trade with each other IV The Specialist/DMM is under the obligation to disintermediate himself if there are no other floor brokers that are willing to trade that security A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE when comparing UTMA Custodian Accounts to Coverdell Education Savings Accounts? I Contributions to UTMA accounts are limited to $2,000 annually II Contributions to Coverdell Education Savings Accounts are limited to $2,000 annually III Earnings in UTMA accounts are subject to Federal income tax IV Earnings in Coverdell Education Savings Accounts are subject to Federal Income tax A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE when comparing VC Funds to BDCs? I VC funds are available to the general public II VC funds are only available to wealthy accredited investors III BDCs are available to the general public IV BDCs are only available to wealthy accredited investors A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE when comparing traditional CDs to market index linked CDs? I Traditional CDs have market risk if redeemed prior to maturity II Traditional CDs do not have market risk if redeemed prior to maturity III Market index linked CDs have market risk if redeemed prior to maturity IV Market index linked CDs do not have market risk if redeemed prior to maturity A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE? I A registered representative is permitted to buy a new issue directly from the underwriter(s) II A registered representative is prohibited from buying a new issue directly from the underwriter(s) III A registered representative is permitted to buy a new issue once it starts trading in the secondary market IV A registered representative is prohibited from buying a new issue once it starts trading in the secondary market A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE? I Most of the value of a bond is established by the present value of the first payment II Most of the value of a bond is established by the present value of the last payment III The lower the coupon of a bond, the greater the bond's price volatility IV The higher the coupon of a bond, the greater the bond's price volatility A. I and III B. I and IV C. II and III D. II and IV

C. II and III

High earning individuals are prohibited from making contributions to: I Traditional IRAs II Roth IRAs III Coverdell ESAs A. I only B. I and II only C. II and III only D. I, II, III

C. II and III only

A customer sells 1 XMI June 515 Call @ $4 and buys 1 XMI June 495 Call @ $19 when the Major Market Index closed at 505. A profit will be realized when: I the spread between the premiums narrows II the index goes above 510 III the index declines below 510 IV both contracts are exercised A. I and II B. I and III C. II and IV D. II and III

C. II and IV

Rule 103 of Regulation M requires that a market maker in a stock that is also a syndicate member in an "add-on" offering of that issue, during the 20-day cooling off period: I can continue to act as a market maker II must resign as a market maker III can act as a passive market maker IV can act as an active market maker A. I or III B. I or IV C. II or III D. II or IV

C. II or III

The Securities and Exchange Commission is empowered to administrate which of the following Acts? I Uniform Securities Act II Securities Act of 1933 III Trust Indenture Act of 1939 IV Investment Company Act of 1940 A. II only B. I and II only C. II, III, IV D. I, II, III, IV

C. II, III, IV

To opine on a new issue of Turnpike Revenue bonds, the bond counsel will evaluate which of the following documents? I Feasibility Study II Enabling Legislation III Internal Revenue Regulations IV Relevant Judicial Decisions A. I only B. III only C. II, III, IV D. I, II, III, IV

C. II, III, IV

Trading in the Interbank market will DIRECTLY affect: I American Depositary Receipt prices in terms of U.S. dollars II Foreign Currency prices in terms of U.S. dollars III Future trade deficit or surplus figures IV Future economic growth A. I and II only B. III and IV only C. II, III, IV D. I, II, III, IV

C. II, III, IV

Which of the following are covered under the Securities Exchange Act of 1934? I Registration of new issues II Stabilization of new issues III Registration of exchanges IV Registration of broker/dealers A. I and II only B. III and IV only C. II, III, IV D. I, II, III, IV

C. II, III, IV

Which of the following callers are subject to the provisions of the Federal Telephone Consumer Protection Act of 1991? I Non-profit Organization II Securities Firm III Telemarketing Firm IV Real Estate Company A. II only B. III only C. II, III, IV D. I, II, III, IV

C. II, III, IV

Which options orders are permitted? I A corporation selling calls against its underlying stock II A custodian selling calls against securities in a custodian account III An individual selling naked calls in a discretionary account IV An investment company selling calls against securities in its portfolio A. I and II only B. III and IV only C. II, III, and IV D. I, II, III, IV

C. II, III, and IV

A customer has purchased 5,000 shares of ABC corporation stock in lots of 100 shares over an extended period of time at varying prices. The customer now sells 500 of the shares. Which statement is TRUE? A. IRS rules require that First-In, First-Out (FIFO) accounting be used to identify the shares sold when computing any gain or loss B. IRS rules require that Last-In, First-Out (LIFO) accounting be used to identify the shares sold when computing any gain or loss C. IRS rules allow the taxpayer to specify which shares are being sold D. IRS rules require that the method giving the largest capital gain be used

C. IRS rules allow the taxpayer to specify which shares are being sold

Interest income from which of the following bond issues is SUBJECT to State and Local tax? I Issues of territories purchased by residents of that territory II Issues of territories purchased by non-residents of that territory III Issues of states purchased by residents of that state IV Issues of states purchased by non-residents of that state A. I and II only B. III and IV only C. IV only D. I, II, III, IV

C. IV only

Which of the following orders would be reduced on ex date? I Buy 100 ABC @ 50 DNR II Buy 100 ABC @ 60 Stop III Sell 100 ABC @ 60 IV Sell 100 ABC @ 50 Stop A. I and II B. III and IV C. IV only D. I and IV

C. IV only

Arrange the following from smallest to largest? I Underwriter's Concession II Selling Concession III Spread IV Reallowance A. I, III, II, IV B. III, I, II, IV C. IV, II, I, III D. III, IV, I, II

C. IV, II, I, III

Which statement is FALSE regarding Treasury Inflation Protection securities? A. In periods of inflation, the coupon rate remains unchanged B. In periods of inflation, the amount of each interest payment will increase C. In periods of inflation, the principal amount received at maturity will be par D. In periods of inflation, the principal amount received at maturity is more than par

C. In periods of inflation, the principal amount received at maturity will be par

Which of the following securities is NOT exempt from the Securities Act of 1933? A. Municipal revenue bond issues B. Common carrier issues C. Income bond issues D. U.S. Government bond issues

C. Income bond issues

Which is considered to be a coincident economic indicator? A. Stock market prices B. Corporate profits C. Index of industrial production D. Orders for machinery

C. Index of industrial production

Which of the following actions taken by a fiduciary would NOT be consistent with the obligations imposed under the "Prudent Man Rule"? A. Diversifying a fixed income portfolio with securities of varying maturities B. Selecting AA rated corporate convertible bond investments to meet an investment objective of both income and capital gains C. Investing in small capitalization unlisted new issue investments for long term growth D. Writing covered calls against securities positions held in the account to increase income

C. Investing in small capitalization unlisted new issue investments for long term growth

A customer who is retired wants to select an investment that is marketable, and that provides the highest rate of return. The BEST choice would be to recommend: A. Treasury Bills B. Treasury Notes C. Investment Grade Preferred Stock D. Certificates of Deposit

C. Investment Grade Preferred Stock

Payment for U.S. Government securities that are sold through auction is made on: A. Auction Date B. Auction Date + 1 C. Issue Date D. Issue Date + 1

C. Issue Date

A customer can have a long term capital loss if which of the following options positions are taken on their first offering date and expire worthless at expiration? A. Long Equity Option B. Short Equity Option C. Long Equity LEAP Option D. Short Equity LEAP Option

C. Long Equity LEAP Option

An inverse ETF is most similar to taking what options position(s) on the reference index? A. Long Call B. Short Call C. Long Put D. Short Put

C. Long Put

The manager of a pension plan would invest in all of the following EXCEPT: A. Agency Bonds B. Corporate Bonds C. Municipal Bonds D. Government Bonds

C. Municipal Bonds

Trades of all of the following securities will settle in Fed Funds EXCEPT: A. Treasury Bills B. Treasury Notes C. Municipal Bonds D. Agency Bonds

C. Municipal Bonds

Under MSRB rules, all of the following are defined as advertisements EXCEPT: A. Form Letters B. Circulars C. Official Statements D. Abstracts or Summaries of Official Statements

C. Official Statements

Regarding options sales literature, which statement is TRUE? A. Options sales literature is prohibited from containing specific recommendations B. Options sales literature must be accompanied by complete documentation that supports any claims C. Options sales literature that shows performance must be accompanied or preceded by the latest Options Disclosure Document D. Options sales literature is prohibited from containing annualized yield calculations

C. Options sales literature that shows performance must be accompanied or preceded by the latest Options Disclosure Document

Which of the following is defined as options "advertising"? A. Options disclosure document B. Standard option worksheet C. Options website D. Letters of an "individual" nature sent to customers

C. Options website

On the CBOE, customer good-til-canceled orders are handled by the: A. Specialist (DMM) B. Market Maker C. Order Book Official D. Floor Broker

C. Order Book Official

Which of the following joint accounts CANNOT be opened? A. Adult brother and sister B. Husband and wife C. Parent and minor D. Business partner and business partner

C. Parent and minor

During a period of stable interest rates, which type of preferred stock would show the greatest price volatility? A. Cumulative B. Adjustable rate C. Participating D. Callable

C. Participating

For tax purposes, cash dividend payments by issuers to securities holders are taxable as of which date? A. Declaration date B. Record date C. Payable date D. Ex date

C. Payable date

Which CMO tranche will be offered at the lowest yield? A. Plain vanilla B. Targeted amortization class C. Planned amortization class D. Companion

C. Planned amortization class

Which bond portfolio with a 20-year life would be expected to give the highest long-term return? A. Portfolio #1 with an expected rate of return of 6% and a default risk of 5% over the portfolio life B. Portfolio #2 with an expected rate of return of 8% and a default risk of 10% over the portfolio life C. Portfolio #3 with an expected rate of return of 10% and a default risk of 20% over the portfolio life D. Portfolio #4 with an expected rate of return of 12% and a default risk of 40% over the portfolio life

C. Portfolio #3 with an expected rate of return of 10% and a default risk of 20% over the portfolio life

A customer with additional funds to invest seeks income, but thinks his portfolio is too heavily weighted in debt securities. The BEST recommendation to the customer is: A. Treasury securities B. Municipal securities C. Preferred stocks D. Industrial development bonds

C. Preferred stocks

Which of the following investments is LEAST liquid? A. Mutual funds B. Long term corporate bonds C. Private placements D. Closed-end funds

C. Private placements

What does a BDC invest in? A. Publicly-held small-cap companies B. Publicly-held mid-cap companies C. Privately-held small-cap and mid-cap companies D. Privately-held large-cap companies

C. Privately-held small-cap and mid-cap companies

Permitted purchasers of Rule 144A issues are: A. Accredited Investors B. Financial Institutions C. Qualified Institutional Buyers D. Major Institutional Investors

C. Qualified Institutional Buyers

When comparing Real Estate Investment Trusts (REITs) to Real Estate Limited Partnerships (RELPs), all of the following statements are true EXCEPT: A. REITs allow for flow through of gain B. RELPs allows for flow through of gain C. REITs allow for flow through of loss D. RELPs allow for flow through of loss

C. REITs allow for flow through of loss

All of the following statements are true about Real Estate Investment Trusts EXCEPT: A. REITs may be traded on stock exchange floors B. REITs may be traded on NASDAQ C. REITs are securities which are redeemable with the sponsor D. REITs are securities that are negotiable in the market

C. REITs are securities which are redeemable with the sponsor

A self-employed individual makes $200,000 per year. To which type of retirement plan can the maximum contribution be made? A. Traditional IRA B. Roth IRA C. SEP IRA D. SIMPLE IRA

C. SEP IRA

A small business owner of a firm that has 25 employees wants to establish a retirement plan and make contributions for her employees. What type of plan can the employer establish? A. Traditional IRA B. Roth IRA C. SEP IRA D. 403(b)

C. SEP IRA

A smaller business with variable cash flow is looking to establish a pension plan for its 50 employees. It wants a plan that allows it to contribute the largest possible amount for its employees, but wants the flexibility to reduce contributions in lean years. The BEST recommendation is a: A. 401(k) plan B. 403(b) plan C. SEP IRA D. SIMPLE IRA

C. SEP IRA

Under IRS rules, if a customer selling shares of stock wishes to use specific identification instead of FIFO for cost basis reporting, the broker-dealer effecting the trade must be notified of this no later than: A. Trade Date B. Confirmation Date C. Settlement Date D. Statement Date

C. Settlement Date

A single mother has 2 children, ages 5 and 9. She earns $150,000 per year and wishes to open Coverdell ESAs for each child to pay for qualified education expenses. Which statement is TRUE? A. She can open the account for each child and make an annual $2,000 tax-deductible contribution for each B. She can open the account for each child and make an annual $2,000 non tax-deductible contribution for each C. She is prohibited from opening an account for each child because she earns too much D. She is prohibited from opening an account for each child because Coverdell ESAs are only available to married couples with children

C. She is prohibited from opening an account for each child because she earns too much

A customer who is long 1 ABC Jan 45 Put wishes to create a "bull put spread." The second option position that the customer must take is: A. Short 1 ABC 30 Call B. Short 1 ABC 30 Put C. Short 1 ABC 55 Put D. Short 1 ABC 55 Call

C. Short 1 ABC 55 Put

Which of the following positions would receive the greatest benefit of reduced margin requirements from portfolio margining? A. Short spread B. Long spread C. Short stock/Long call D. Short stock/Short put

C. Short stock/Long call

A registered representative has a wealthy client who has placed $1 million under management with the representative. The client has recently been elected to his town's Board of Estimate and Taxation, and the municipal securities firm that employs the representative has done underwritings in the past for the town. The representative wishes to take the client out to dinner, which is expected to cost $250. Which statement is TRUE about doing this? A. Taking this individual to dinner violates the MSRB $100 gift limit B. Taking this individual to dinner is permitted because it has a de minimis value under the MSRB Political Contribution rule C. Taking this individual to dinner is permitted because this is business entertainment D. This individual cannot be taken to dinner because it is a conflict of interest

C. Taking this individual to dinner is permitted because this is business entertainment

A customer dies, leaving his $300,000 IRA account to his 3 daughters, who are age 46, 50, and 52. Which daughter's life expectancy would be used to determine the minimum annual payout to be made from the IRA? A. The 46 year old daughter's age B. The 50 year old daughter's age C. The 52 year old daughter's age D. The arithmetical average of the 3 daughters' ages

C. The 52 year old daughter's age

A municipal issuer sells $5,000,000 of a $10,000,000 bank qualified issue to a bank trust department. Which statement is true? A. The bank cannot deduct any of the related interest carrying charges on the funds used to purchase the bonds B. The bank can deduct 20% of the related interest carrying charges on the funds used to purchase the bonds C. The bank can deduct 80% of the related interest carrying charges on the funds used to purchase the bonds D. The bank can deduct 100% of the related interest carrying charges on the funds used to purchase the bonds

C. The bank can deduct 80% of the related interest carrying charges on the funds used to purchase the bonds

A client has an options account that is qualified to buy options and sell covered calls. The client calls his representative, telling him that he wants to sell naked calls in the account. Which statement is FALSE about this? A. The customer must be sent a new Options Agreement which must be signed and returned within 15 days B. The Registered Options Principal must reapprove the account for naked options writing C. The customer must cross-guarantee the account because of the increased risk level D. The "Special Statement for Uncovered Options Writers" must be provided before executing the transaction

C. The customer must cross-guarantee the account because of the increased risk level

Which statement is FALSE regarding the NASDAQ System (Single Book)? A. Orders may be aggregated for execution within System size limitations B. Orders may be split for execution to be within System size limitations C. The maximum order size for System execution is 100,000 shares D. Agency and Principal trades may be entered into the System

C. The maximum order size for System execution is 100,000 shares

Which statement is FALSE about a SIMPLE IRA? A. The maximum annual contribution is higher than for a Traditional IRA B. The contribution is made by the employee, who gets a salary reduction for the amount contributed C. The plan is available to any size employer D. The employer must make a matching contribution

C. The plan is available to any size employer

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

C. The sale proceeds are $33 per share

A mother, aged 60, wishes to withdraw monies from her variable annuity to pay for her son's college education. Which statement is TRUE regarding the taxation of the withdrawal? A. The withdrawal is 100% taxable and is also subject to a 10% penalty tax B. The withdrawal is 100% taxable C. The withdrawal is partially taxable; and a partial tax free return of invested capital D. The withdrawal is not subject to tax

C. The withdrawal is partially taxable; and a partial tax free return of invested capital

A customer buys a 10% G.O. bond at par. The issue is callable in 5 years at par and matures in 10 years. Which statement is TRUE? A. The yield to call is higher than the yield to maturity B. The yield to call is lower than the yield to maturity C. The yield to call is the same as the yield to maturity D. The nominal yield is higher than either the yield to call or yield to maturity

C. The yield to call is the same as the yield to maturity

A retired customer has an existing stock portfolio held in a cash account. He has heard that "leveraging" his portfolio can increase his return. The portfolio holds blue chip stocks that pay current dividends. He wants to transfer the positions to a margin account and use them as collateral to buy more stocks of the same blue chip companies. Which statement is TRUE? A. This is an appropriate strategy that will increase the customer's income B. This is not an appropriate strategy because the customer's tax liability will increase if the securities appreciate and are sold C. This is not an appropriate strategy because the customer's income will decline D. This is an appropriate strategy because the customer has the potential for larger capital gains

C. This is not an appropriate strategy because the customer's income will decline

If interest rates are rising rapidly, which U.S. Government debt prices would be MOST volatile? A. Treasury Bills B. Treasury Notes C. Treasury Bonds D. Series EE Bonds

C. Treasury Bonds

A customer has a term loan that is maturing in 3 years in the amount of $100,000. The customer has the cash now, and wants to know the best investment to make for the 3 years until the loan payment is due. The BEST recommendation is to buy: A. Blue chip stocks B. AA rated debentures with a 3 year maturity C. Treasury notes maturing in 3 years D. AA general obligation bonds maturing in 3 years

C. Treasury notes maturing in 3 years

All of the following can issue Eurodollar Bonds EXCEPT: A. Domestic Corporations B. Foreign Corporations C. U.S. Government D. Foreign Governments

C. U.S. Government

Earlier this year, a client of yours wrote a letter to the firm, requesting that his mail be held for 2 months, which your firm did. Later in the year, the customer writes another letter, asking that the mail be held for another 3 months. Which statement is TRUE about this? A. You can follow the customer's written instructions and hold the mail for an additional 3 months B. You can follow the customer's written instructions and hold the mail for an additional 3 months only if the branch manager approves C. You can follow the customer's written instructions and hold the mail for an additional 3 months if the letter included an acceptable reason for holding the mail D. You cannot hold the mail for any additional length of time

C. You can follow the customer's written instructions and hold the mail for an additional 3 months if the letter included an acceptable reason for holding the mail

All of the following statements are true regarding the exercise of PHLX World Currency options EXCEPT: A. the contracts settle in U.S. dollars B. the contracts can only be exercised at expiration C. a variety of standard contract sizes are available for each currency D. performance of the writer on an exercise is guaranteed by the O.C.C.

C. a variety of standard contract sizes are available for each currency

An "annuity unit" of a variable annuity contract is a(n): A. share of common stock representing an interest in the underlying portfolio B. accounting measure of the owner's interest in the separate account C. accounting measure of the annuity amount to be received by the owner D. share of beneficial interest in a fixed portfolio

C. accounting measure of the annuity amount to be received by the owner

All of the following statements are true regarding "indications of interest" EXCEPT indications of interest: A. allow an underwriter to gauge investor interest in the issue B. help the underwriter to decide the final Public Offering Price C. are binding on both the customer and the underwriter D. can be canceled by both the customer and the underwriter

C. are binding on both the customer and the underwriter

Institutional portfolio managers have been allocating an increasing percentage of their funds to cash and cash equivalent positions. This is an indication that their market sentiment is: A. bullish B. neutral C. bearish D. cautious

C. bearish

AMBAC insurance guarantees the timely payment of: A. interest only from the time of default B. principal only from the time of default C. both interest and principal from the time of default D. sinking fund deposits from the time of default

C. both interest and principal from the time of default

A portfolio with a beta of +1.5 has: A. systematic risk B. non-systematic risk C. both systematic and non-systematic D. no risk

C. both systematic and non-systematic

"Access equals delivery" means that any purchaser of a new securities issue offered by prospectus: A. must be delivered a paper copy of the prospectus, at or prior to confirmation of sale B. must be delivered an electronic copy of the prospectus, at or prior to confirmation of sale C. can be delivered an electronic copy of the prospectus in lieu of a paper copy if the member firm knows that the customer has internet access D. can be delivered a paper copy of the prospectus in lieu of an electronic copy if the member firm knows that the customer has internet access

C. can be delivered an electronic copy of the prospectus in lieu of a paper copy if the member firm knows that the customer has internet access

The "AIR" shown in a variable annuity prospectus is the: A. minimum guaranteed rate of return on investment B. maximum guaranteed rate of return on investment C. conservative illustration of the rate of return on investment D. aggressive illustration of the rate of return on investment

C. conservative illustration of the rate of return on investment

Under MSRB rules, if a Final Official Statement is not yet ready at the time of settlement of the purchase of a new municipal securities issue, the customer would receive a(n): A. apology letter B. copy of the Prospectus C. copy of the Preliminary Official Statement D. abstract of the Official Statement

C. copy of the Preliminary Official Statement

Stabilization rules for new issues are: A. set by FINRA B. covered under the Securities Act of 1933 C. covered under the Securities Exchange Act of 1934 D. covered under the Securities Investor Protection Act of 1970

C. covered under the Securities Exchange Act of 1934

The "Monetary Environment" is: A. the spending and taxation policies in current use by the U.S. Government B. the dollar level of imports entering the United States versus the dollar level of exports leaving the United States C. current money supply levels, interest rate levels, and economic policies D. the current rate of exchange of the U.S. Dollar against major foreign currencies

C. current money supply levels, interest rate levels, and economic policies

The majority of corporate bond trades take place: A. on the New York Stock Exchange floor B. through Electronic Communications Networks C. dealer-to-dealer in the over-the-counter market D. directly from seller to buyer without the use of a broker

C. dealer-to-dealer in the over-the-counter market

XYZ Company has 100,000,000 authorized common shares. 25,000,000 shares have been issued and another 10,000,000 shares are currently in registration. The sale of the 10,000,000 shares will result in all of the following EXCEPT a(n) A. decrease in earnings per share B. increase in net worth C. decrease in net working capital D. increase in the number of shares outstanding

C. decrease in net working capital

A young aggressive investor gets laid off from her job. She has a net worth of $80,000 and has received a 1-time severance payment of 3 times her annual salary ($240,000 payment). In addition, she gets medical coverage for 1 year. The appropriate action for the registered representative to take is to: A. change the account investment objective to income and safety and invest the $240,000 severance payment based on these objectives B. do nothing unless written instructions are received from the customer C. discuss the situation with the client to determine if it is appropriate to change the investment objective before making any further investments D. recommend a balanced mutual fund investment that will give this younger client moderate income in addition to growth

C. discuss the situation with the client to determine if it is appropriate to change the investment objective before making any further investments

The primary criteria for a person to be appointed to a securities industry arbitration panel is that the person be: A. registered B. interested C. disinterested D. retired

C. disinterested

All of the following statements are true regarding both mutual funds and variable annuities EXCEPT: A. the return to investors is dependent on the performance of the securities in the underlying portfolio B. the Investment Company Act of 1940 is the regulating legislation C. distributions from the underlying mutual fund are taxable to the holder in the year the distribution is made D. the underlying portfolios are managed

C. distributions from the underlying mutual fund are taxable to the holder in the year the distribution is made

The "essential" difference between an ARS and a VRDO is: A. weekly reset of interest rate B. long-term security with short-term interest rate C. embedded put option D. money market instrument similarity

C. embedded put option

All of the following statements about 403(b) Plans are true EXCEPT: A. employees make voluntary contributions through their employers B. contributions are tax deductible to the employee C. employees of any organization can contribute to this type of plan D. earnings on contributions by employees are tax deferred

C. employees of any organization can contribute to this type of plan

The Board of Directors of a company will set all of the following EXCEPT: A. declaration date B. record date C. ex date D. payable date

C. ex date

The municipal bond counsel opines on all of the following EXCEPT: A. validity B. legality C. feasibility D. tax exempt status

C. feasibility

A "consolidating market" is one where prices are: A. rising B. falling C. flat D. volatile

C. flat

If the dollar falls against foreign currencies, all of the following statements are true EXCEPT: A. U.S. goods are cheaper to foreign countries B. U.S. exports are likely to rise C. foreign currencies buy fewer dollars D. foreign imports are likely to fall

C. foreign currencies buy fewer dollars

A municipality is at its constitutional debt limit. Voter approval would be required for a municipality to float a(n): A. revenue bond B. industrial revenue bond C. general obligation bond D. moral obligation bond

C. general obligation bond

Customer Name: John Doe Age: 41 Marital Status: Married Dependents: 1 Child, Age 13 Occupation: Engineer Household Income: $140,000 Net Worth: $240,000 (excluding residence) Own Home: Yes Investment Objectives: Total Return / Tax Advantaged Investment Experience: 12 years Current Portfolio Composition: 8% Common Stocks 62% Corporate Bonds 30% Money Market Fund This client has just been informed that he has been promoted and will be earning $190,000 per year instead of $140,000 per year. The customer intends to use this extra income to fund his 13-year old child's college education. Based on the customer's existing asset mix, the best recommendation would be for the customer to invest the extra $50,000 per year into a(n): A. money market fund B. income fund C. growth fund D. inflation protected fund

C. growth fund

An elderly customer that is currently invested in bonds for income is concerned about declining yields due to record low interest rates. He has contacted his registered representative and inquires about purchasing a reverse convertible note on a Blue Chip stock because it offers a higher yield. The customer should be informed that: A. the note is safe because it is an obligation of a Blue Chip corporation B. the note gives the customer the possibility of gains due to an equity price rise C. he or she can potentially lose 100% of the principal amount due to a stock price decline D. the "knock-in" price of the underlying security gives the customer the right to put the note back to the issuer at par at maturity

C. he or she can potentially lose 100% of the principal amount due to a stock price decline

The Capital Asset Pricing Model (CAPM) would identify the most efficient investments as those with the: A. lowest return for the lowest level of risk assumed B. lowest return for the highest level of risk assumed C. highest return for the lowest level of risk assumed D. highest return for the highest level of risk assumed

C. highest return for the lowest level of risk assumed

The purpose of OFAC (Office of Foreign Assets Control) is to: A. set higher margin requirements for foreign nationals that wish to invest in the United States B. monitor the activities of foreign investors in the U.S. markets C. impose economic sanctions against hostile foreign countries and groups D. monitor foreign currency inflows into the U.S. markets

C. impose economic sanctions against hostile foreign countries and groups

Principal repayments on a CMO are made: A. all at once at maturity date of the tranche purchased B. in constant dollar amounts every month C. in varying dollar amounts every month D. according to the amortization schedule of the underlying mortgages

C. in varying dollar amounts every month

A registered representative receives an order from a corporate issuer to buy 500,000 shares of that issuer's stock in the market, 5 minutes prior to market close. The registered representative should: A. reject the order B. accept the order as given C. inform the company that this is a possible market manipulation under the Securities Exchange Act of 1934 D. route the order to an ECN

C. inform the company that this is a possible market manipulation under the Securities Exchange Act of 1934

All of the following would be considered to be a "retail communication" EXCEPT a(n): A. direct mailing sent to 30 existing retail clients B. password-protected website maintained by a broker-dealer C. institutional communication D. internet bulletin board

C. institutional communication

All of the following statements are true about the interbank market EXCEPT the market: A. is unregulated B. responds to central bank intervention C. is located in New York City D. operates 24 hours a day

C. is located in New York City

Responsibility for printing and delivering stock certificates in a new issue offering rests with the: A. registrar B. transfer agent C. issuer D. managing underwriter

C. issuer

Two brothers wish to open an account to trade stocks, with one brother depositing $100,000, and the other brother depositing $200,000. When opening the account, the brothers specify that they want their respective interests to go to their beneficiaries if they should die. The account should be opened as a(n) A. individual account in the name of the larger contributor; with trading authorization granted to the smaller contributor B. joint account with rights of survivorship C. joint account with tenancy in common D. partnership account requiring a signed copy of the partnership agreement

C. joint account with tenancy in common

A review of major newspapers across the United States reveals that "help wanted" advertisement lineage has been decreasing. This is a: A. coincident indicator showing that economic activity is likely to increase B. coincident indicator showing that economic activity is currently at low levels C. leading indicator showing that economic activity is likely to be slowing down D. lagging indicator showing that economic activity has slumped

C. leading indicator showing that economic activity is likely to be slowing down

Which of the following option positions is used to hedge a long stock position? A. long call B. short call C. long put D. short put

C. long put

A customer buys 1 PHLX Euro Jul 143 Call @ 1.75 and 1 PHLX Euro Jul 143 Put @ 1.25 when the Euro is trading at $1.4325. The contract size is 10,000 Euros. This position is a: A. long spread B. short spread C. long straddle D. short straddle

C. long straddle

All of the following statements are true regarding mutual funds that have adopted "12b-1" plans EXCEPT: A. plan adoption requires majority vote of the outstanding shares; the Board of Directors; and its disinterested members B. discontinuance of the plan requires majority vote of the outstanding shares or the disinterested members of the Board C. mailings to existing shareholders of the fund are an acceptable "12b-1" charge D. expense ratios for funds that have adopted 12b-1 plans can be expected to be higher than for similar funds without 12b-1 fees

C. mailings to existing shareholders of the fund are an acceptable "12b-1" charge

When making a recommendation of a 10 year Treasury Note to a customer, the MOST important risk consideration is: A. liquidity risk B. credit risk C. market risk D. call risk

C. market risk

Monies that have accumulated in a Coverdell Education Savings Account that are not used by the beneficiary to pay for qualified educational expenses: A. may be rolled over into a Traditional IRA without any tax liability B. may be rolled over into a Roth IRA without any tax liability C. may be transferred to a Coverdell Education Savings Account for a sibling that so qualifies without any tax liability D. are tax-deferred until a Traditional IRA is established by the beneficiary

C. may be transferred to a Coverdell Education Savings Account for a sibling that so qualifies without any tax liability

A FINRA member firm's research department has prepared a report on ACME Corp. that changes the firm's recommendation from "Buy" to "Hold." Based on this information, a registered representative calls all of his customers and tells them that "This report will create an exceptional opportunity to buy this stock at a more favorable price. I recommend you increase the size of your holdings." This action: A. requires the prior approval of the branch manager B. requires the prior approval of FINRA C. misrepresents the findings of the firm's research report D. is consistent with the findings of the firm's research report

C. misrepresents the findings of the firm's research report

Under MSRB rules, yield to worst means that: A. all municipal bonds quoted on a yield basis must be priced to maturity B. municipal par bonds quoted on a yield basis must be priced to maturity C. municipal discount bonds quoted on a yield basis must be priced to maturity D. municipal premium bonds quoted on a yield basis must be priced to maturity

C. municipal discount bonds quoted on a yield basis must be priced to maturity

Customer Z is a single 26-year-old man who earns $125,000 annually. He informs you that he is getting married and that his new wife's income of $75,000 per year will put them into the highest federal tax bracket. The couple will have investable income of $25,000 per year. The couple wishes to buy a house in 5 years that will be substantially more expensive than the condominium in which they currently reside. To meet the customer's needs for the large cash down payment in 5 years and to reduce taxable income, the BEST recommendation is to: A. open a margin account and invest in income bonds B. open an Individual Retirement Account and invest in tax-deferred variable annuities C. open a cash account and invest in mutual funds holding high yielding common and preferred stocks D. open a trust account and invest in Treasury STRIPs

C. open a cash account and invest in mutual funds holding high yielding common and preferred stocks

The essential difference between an open end fund and closed end fund is that a(n): A. open-end fund is managed; while a closed-end fund is not managed B. closed-end fund is managed; while an open-end fund is not managed C. open-end fund has a different capital structure than a closed-end fund D. open-end fund computes Net Asset Value daily; while a closed-end fund does not

C. open-end fund has a different capital structure than a closed-end fund

Under Regulation D, all of the following are accredited investors EXCEPT a(n): A. investment company B. trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person C. partnership with assets in excess of $5,000,000 formed for the specific purpose of acquiring the securities offered D. savings and loan institution

C. partnership with assets in excess of $5,000,000 formed for the specific purpose of acquiring the securities offered

An annuitized account in a variable annuity is most similar to: A. a mutual fund B. a whole life insurance unit C. pension payments D. an individual retirement account

C. pension payments

A registered representative takes a customer out to a dinner and a show, spending $180. This activity is: A. a violation of FINRA rules B. permitted because less than $100 was spent on a per-person basis C. permitted if it complies with the firm's policies and procedures D. permitted under all circumstances

C. permitted if it complies with the firm's policies and procedures

Pre-arranged trades by insiders are: A. prohibited B. permitted under Rule 10b-5 C. permitted under Rule 10b-5-1 D. permitted under Regulation FD

C. permitted under Rule 10b-5-1

The flow of funds set forth in a revenue bond Trust Indenture details the: A. dates on which bondholders will be paid interest and principal on the issue B. dates and prices on which the issue can be called by the issuer C. priority of collecting and disbursing pledged revenues D. priority of the bondholder's claim to the assets of the issuer

C. priority of collecting and disbursing pledged revenues

General obligation bond analysis would consider all of the following EXCEPT the: A. record of tax collections B. ratio of total debt per capita C. protective covenants in the trust indenture D. trend of assessed valuation of property

C. protective covenants in the trust indenture

Corporate officers who wish to trade their own company's stock must comply with all of the following rules EXCEPT: A. filing change of holding reports with the SEC B. prohibitions on short sales of that company's stock C. purchase restrictions through the exercise of stock options D. trading is restricted to decisions based on publicly available information

C. purchase restrictions through the exercise of stock options

On the same day in a margin account, a customer buys 5 ABC January 40 Calls @ $6 and sells 10 ABC January 50 Calls @ $1 when the market price of ABC is at $43. The customer has created a: A. short combination B. long combination C. ratio spread D. back spread

C. ratio spread

Modified Accelerated Cost Recovery System (MACRS) deductions are NOT available for which of the following assets? A. aircraft B. oil drilling rig C. real property D. equipment

C. real property

All of the following terms apply to publicly traded fund shares EXCEPT: A. one-time issuance B. managed C. redeemable D. negotiable

C. redeemable

The record date for a cash dividend is Wednesday July 5th. A client buying the stock would receive the dividend in all of the following circumstances EXCEPT the stock is purchased in a: A. regular way trade on Wednesday, June 28th B. regular way trade on Friday, June 30th C. regular way trade on Monday, July 3rd D. cash trade on Wednesday, July 5th

C. regular way trade on Monday, July 3rd

Under the terms of a municipal revenue bond trust indenture, any funds that are appropriated for additions and improvements are required to be deposited to a(n): A. sinking fund B. escrow fund C. renewal and replacement fund D. reserve maintenance fund

C. renewal and replacement fund

A head and shoulder "top" formation is a(n): A. uptrend B. downtrend C. reverse upward trend D. reverse downward trend

C. reverse upward trend

All of the following statements are true about Regulation A offerings EXCEPT: A. the maximum offering amount permitted under the rule is $50,000,000 within a 12 month period B. an offering circular must be provided to all purchasers C. sales are limited to purchasers who are "resident" in the state where the issuer resides D. there are no minimum income or net worth standards for individuals wishing to invest

C. sales are limited to purchasers who are "resident" in the state where the issuer resides

A corporation publishes a Notice of Redemption for the purpose of retiring an entire debt issue at par by calling it at the first call date. The corporation plans to refund the debt by issuing new bonds at lower current interest rates. Which action could be taken by a holder of the outstanding bonds? The holder could: A. retain the old bonds and continue to receive the higher interest rate B. retain the old bonds and receive the lower interest rate of the new refunding bonds C. sell the bonds at the current market price D. exchange the old bonds for the new refunding bonds

C. sell the bonds at the current market price

All of the following will affect the counting of the holding period of ABC stock EXCEPT: A. selling ABC "short against the box" after the position has been held for 6 months B. buying an ABC put contract after the position has been held for 9 months C. selling an ABC put contract after the position has been held for 9 months D. selling ABC "short against the box" after the position has been held for 9 months

C. selling an ABC put contract after the position has been held for 9 months

The person who acts as agent helping find customers for a new issue, but neither participates in selling responsibility nor liability in a new issue syndicate, is known as the: A. managing underwriter B. syndicate member C. selling group member D. broker's broker

C. selling group member

Bonds quoted on a yield to maturity basis are generally: A. term bonds B. series bonds C. serial bonds D. short term maturities

C. serial bonds

A customer who is long 1 ABC Jan 60 Put wishes to create a "long put spread." The second option position that the customer must take is: A. long 1 ABC Jan 50 Call B. long 1 ABC Jan 70 Call C. short 1 ABC Jan 50 Put D. short 1 ABC Jan 70 Put

C. short 1 ABC Jan 50 Put

The definition of a "short swing" profit under the Securities Exchange Act of 1934 is a completed round turn trade effected at a profit within: A. the same day by any investor B. six months by any investor C. six months by an insider D. within one year by an insider

C. six months by an insider

Covered call writing is an appropriate strategy in a: A. declining market B. rising market C. stable market D. fluctuating market

C. stable market

A married couple, the husband is age 27 and the wife is 25, have 2 young children, no retirement plan and no investments. Based on this information, an agent should: A. tell the clients to establish a Roth IRA B. tell the clients to establish 529 plans for their children C. talk to the clients about their financial goals D. determine that the clients have cash available for investment

C. talk to the clients about their financial goals

Section 529 Plans are established by: A. the IRS B. the SEC C. the State D. FINRA

C. the State

If a member firm believes that a senior citizen with an account at the firm is being financially exploited, the member would contact the client's A. attorney B. closest relative C. trusted contact person D. registered representative

C. trusted contact person

All of the following statements about warrants are true EXCEPT: A. warrants have a longer term than rights B. warrants are issued to make corporate senior securities offerings more attractive to investors C. warrants give the holder a perpetual interest in the issuer's underlying common stock D. warrants trade separately from the stock of the company

C. warrants give the holder a perpetual interest in the issuer's underlying common stock

If the holder of an OEX option contract decides to exercise, the holder: A. must pay the strike price of the contract B. will receive the current premium on the contract C. will receive the in the money amount on the contract D. will receive the in the money amount less the premium paid for the contract

C. will receive the in the money amount on the contract

If a customer buys a pre-refunded bond, the yield shown on the confirmation will be computed based upon the: A. current yield B. yield to maturity C. yield to call D. yield to put

C. yield to call

All of the following are allowed investments into an Individual Retirement Account EXCEPT: A. Preferred Stock B. U.S. Government Bonds C. U.S. Government Gold Coins D. Antiques, Art, and Other Collectibles

D. Antiques, Art, and Other Collectibles

The trade-through rule of Regulation NMS applies to: I NYSE listed issues II NYSE American (AMEX) listed issues III NASDAQ listed issues A. I only B. I and II C. II and III D. I, II, III

D. I, II, III

Under FINRA rules, a registered representative must obtain and retain which of the following information relating to the customer's account? I Customer Address II Country of Citizenship III Financial Status A. I only B. I and II C. II and III D. I, II, III

D. I, II, III

On the same day in a margin account, a customer sells short 100 shares of ABC at $43 and buys 1 ABC Jan 45 Call @ $4. The customer will break even at: A. $49 per share B. $47 per share C. $41 per share D. $39 per share

D. $39 per share

A customer buys 100 shares of XYZ stock at $43 per share. The customer then sells 1 XYZ $45 Call contract for a premium of $500. The call contract expires unexercised. After expiration, the customer's cost basis in the XYZ shares is: A. $3,800 B. $4,000 C. $4,200 D. $4,300

D. $4,300

A corporation has issued $10,000,000 of 7 1/4%, 20 year, $1,000 par, convertible debentures, convertible at a ratio of 25:1. The bond is currently trading at 101, while the company's common stock is at 38. The conversion price per share is: A. $25 B. $25.25 C. $26.32 D. $40

D. $40

On the same day in a margin account, a customer sells 1 ABC Jan 50 Put @ $5 and buys 1 ABC Jan 40 Put @ $2. Below which of the following prices will every dollar gained on the long put be exactly offset by a dollar lost on the short put? A. $50 B. $47 C. $42 D. $40

D. $40

A customer has an existing margin account that shows the following: Long Market Value: $200,000 Debit Balance: $120,000 The market value declines to $120,000, the customer is sent a maintenance call, which the customer wishes to meet by depositing fully paid stock. The amount of stock that must be deposited is: A. $10,000 B. $20,000 C. $30,000 D. $40,000

D. $40,000

A customer shorts 1,000 shares of ABC stock @ $5 per share in a margin account. The customer must deposit: A. $2,000 B. $2,500 C. $4,000 D. $5,000

D. $5,000

A customer buys 5M of 3 1/2% Treasury Bonds at 101-16 The customer will pay how much for the bonds? A. $1,011.60 B. $1,015.00 C. $5,058.00 D. $5,075.00

D. $5,075.00

As an initial transaction in a new margin account, a customer sells short 200 shares of ABC at $16 per share. After the customer deposits the appropriate margin, the credit balance in the account will be: A. $1,600 B. $2,000 C. $4,800 D. $5,200

D. $5,200

A customer sells 5 ABC Jan 60 Calls @ $4 and sells 5 ABC Jan 60 Puts @ $1 on the same day when the market price of ABC stock is $62. Assume that the market price falls to $56 and the call premium falls to $.50, while the put premium rises to $5.50. The customer closes the positions. The gain or loss is: A. $100 gain B. $100 loss C. $500 gain D. $500 loss

D. $500 loss

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

D. $55

On June 9th, a customer buys 100 shares of DEF stock at $56 per share. On June 15th of the same year, the customer sells the stock at $52. On June 30th of the same year, the customer buys DEF stock at $53. The customer's cost basis in DEF stock is: A. $52 B. $53 C. $56 D. $57

D. $57

A $100,000 municipal bond is purchased by a financial institution in the secondary market at 95. For tax purposes, the institution opts to not accrete the bond. The bond has 10 years to maturity. The bond is sold after 4 years at 98. The tax consequence is: A. no gain or loss B. a 1 point capital gain C. a 2 point capital gain D. 2 points of interest income and a 1 point capital gain

D. 2 points of interest income and a 1 point capital gain

A customer owns 200 shares of ABC stock. ABC is having a rights offering where 20 rights are needed to subscribe to 1 new share. The customer will receive: A. 1 right B. 10 rights C. 100 rights D. 200 rights

D. 200 rights

Under Regulation T, if no payment for a trade is received, the account is "frozen" for how many days? A. 3 days B. 5 days C. 60 days D. 90 days

D. 90 days

An older customer, age 63, who is in the lowest tax bracket, seeks an investment that will give him an income stream. The BEST recommendation would be: A. Variable annuity B. Municipal bond C. Certificate of deposit D. AAA Corporate bond

D. AAA Corporate bond

All of the following are permitted to purchase a 144A issue EXCEPT a(n): A. Bank B. Trust company C. Insurance company D. Accredited investor

D. Accredited investor

Contributions to Individual Retirement Accounts must be made by: A. December 31st of the calendar year in which the contribution may be claimed on that person's tax return B. April 15th of the calendar year in which the contribution may be claimed on that person's tax return C. December 31st of the calendar year after which the contribution may be claimed on that person's tax return D. April 15th of the calendar year after which the contribution may be claimed on that person's tax return

D. April 15th of the calendar year after which the contribution may be claimed on that person's tax return

What is the first age at which distributions must commence from a 401(k) Plan? A. 59 1/2 B. April 1st of the year after reaching age 59 1/2 C. 70 1/2 D. April 1st of the year after reaching age 70 1/2

D. April 1st of the year after reaching age 70 1/2

Which of the following will increase the tax basis of a limited partnership interest? A. Distributive share of partnership losses B. Cash distribution from the partnership C. Principal repayment of recourse debt by the partnership D. Assumption of recourse debt by the partner

D. Assumption of recourse debt by the partner

A client of yours has heard about private equity investing from some wealthy friends and asks you, the registered representative about it. This customer is age 51 and earns $160,000 per year. He is willing to assume a moderate level of risk in pursuit of higher returns. This customer has a liquid net worth of $450,000 and has a diversified equity and bond portfolio. You should tell the customer that the best way to make a private equity investment is to invest in a(n): A. Hedge Fund B. VC Fund C. REIT D. BDC

D. BDC

Which statement is FALSE regarding the conduct of Treasury Bill auctions? A. 4 week, 13 week and 26 week T-Bills are auctioned weekly B. 1 year T-Bills are auctioned monthly C. Non-competitive bids take priority over competitive bids D. Bids are awarded based on the lowest discount yield except for 26 week bills which are sold at par

D. Bids are awarded based on the lowest discount yield except for 26 week bills which are sold at par

A technical analyst has been charting the price movements of ABC stock. The stock has been fluctuating in price between $44 and $49 per share for the past 3 months. If the analyst expects a breakout through the resistance level, which order should be placed? A. Buy ABC @ $48 Stop GTC B. Buy ABC @ $49 GTC C. Buy ABC @ $50 GTC D. Buy ABC @ $50 Stop GTC

D. Buy ABC @ $50 Stop GTC

A technical analyst has been charting the price movements of ABC stock. The stock has been fluctuating in price between $63 and $67 per share for the past 3 months. If the analyst expects a breakout through the resistance level, which order should be placed? A. Buy ABC @ $62 GTC B. Buy ABC @ $62 Stop GTC C. Buy ABC @ $68 GTC D. Buy ABC @ $68 Stop GTC

D. Buy ABC @ $68 Stop GTC

Quotes for NYSE listed issues from all of the following sources are shown on the Consolidated Quotations Service EXCEPT: A. New York Stock Exchange B. Boston Stock Exchange C. Chicago Stock Exchange D. Chicago Board Options Exchange

D. Chicago Board Options Exchange

A married couple has a teenage child who has expressed interest in going to a vocational school. They both work, have a moderate level of income and would like to save a modest amount each year for this purpose without the concern of paying taxes on annual account earnings. The best recommendation to this couple is to make an annual contribution to a(n): A. 529 Plan B. UTMA Account C. HSA D. Coverdell ESA

D. Coverdell ESA

Which of the following indexes is the narrowest measure of the market? A. Value Line Index B. Dow Jones Averages C. Wilshire Index D. Dow Jones Industrial Average

D. Dow Jones Industrial Average

Monetary policy is set by: A. Supreme Court decisions B. Congressional action C. Presidential edict D. Federal Reserve action

D. Federal Reserve action

All of the following persons can approve the opening of an account under MSRB rules EXCEPT the: A. Branch Office Manager B. Municipal Securities Principal C. General Principal D. Financial and Operations Principal

D. Financial and Operations Principal

An individual wishes to receive a fixed amount monthly from her investment company. She should elect which type of withdrawal plan? A. Fixed shares B. Fixed period C. Fixed percentage D. Fixed dollar

D. Fixed dollar

The regular way ex date for a dividend payable to stockholders of record on Monday, June 11th, is: A. Tuesday, June 5th B. Wednesday, June 6th C. Thursday, June 7th D. Friday, June 8th

D. Friday, June 8th

Trades of all of the following securities settle in Fed Funds EXCEPT: A. U.S. Government bonds B. U.S. Agency bonds C. GNMA Pass-Through certificates D. General Obligation bonds

D. General Obligation bonds

All of the following securities are sold through auction EXCEPT: A. Treasury Bills B. Treasury TIPS C. General Obligation Bonds D. Government National Mortgage Association Bonds

D. Government National Mortgage Association Bonds

In order to recommend a variable annuity to a customer, the representative should have a reasonable basis to believe that the customer would benefit from: I tax-deferred growth of the separate account II the assurance of receiving income for life III any living or death benefit provided by the contract A. I only B. I and II C. II and III D. I, II, III

D. I, II, III

Recommendations by a registered representative to a customer about uncovered call writing strategies are unsuitable if the: I customer has not received the Options Disclosure Document II opening of the account has not been approved by the Registered Options Principal III representative is unsure about the client's ability to assume the risk associated with this strategy A. I only B. II only C. III only D. I, II, III

D. I, II, III

Under MSRB rules, a principal must review and approve: I each municipal transaction II each piece of customer correspondence relating to municipal transactions III the handling of each customer complaint A. I only B. I and II C. II and III D. I, II, III

D. I, II, III

Which of following will create a "covered" short put position under O.C.C. rules? I Long a put on the same stock with the same strike price or higher with the same expiration or later II Bank Guarantee Letter III Short stock position in the underlying security A. I only B. I and II C. II and III D. I, II, III

D. I, II, III

Which of the following are appropriate investment strategies for a client with a 20-year time horizon? I Holding less cash II Holding more stock III Holding less bonds A. I only B. II only C. I and III D. I, II, III

D. I, II, III

Which of the following statements are TRUE regarding the rights agent? I The rights agent usually handles the mechanics of a rights offering II The rights agent is usually the existing transfer agent of the issuer III The rights agent issues the additional shares upon presentation of the rights certificates with payment A. I only B. I and II C. II and III D. I, II, III

D. I, II, III

Which statements is/are TRUE regarding closed end investment companies? I The portfolio of investments is managed II The initial offering of shares is made under a prospectus III Shares trade in the secondary market at prevailing market prices A. I only B. III only C. II and III D. I, II, III

D. I, II, III

A municipality has issued a general obligation bond. Which of the following are sources of income available for debt service? I Collected current ad valorem taxes II Collected back due ad valorem taxes III Fines IV Assessments A. I and IV B. II and III C. I, III, IV D. I, II, III, IV

D. I, II, III, IV

A registered representative believes that municipal bonds may be an appropriate investment for her customer. In order to determine whether such a recommendation would be suitable, which of the following would be considered? I The state in which the customer resides II The components of the customer's existing portfolio III The tax bracket of the customer IV Whether the customer is subject to the alternative minimum tax A. III only B. I, IV C. I, II, III D. I, II, III, IV

D. I, II, III, IV

A woman is the owner of 200,000 shares of XYZ stock. XYZ is a publicly traded company with 1,000,000 shares outstanding. Which of the following statements are TRUE? I She is considered an "insider" under the Securities Exchange Act of 1934 II She is prohibited from selling XYZ stock short III She must report trading activity to the SEC IV She must be registered with the SEC as a holder of more than 5% of the company's stock A. I and II B. II and III C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Federal Reserve actions can directly influence which of the following? I Discount Rate II Federal Funds Rate III Money Multiplier IV Money Velocity A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

If a customer is solicited to buy a "penny stock," which of the following statements are TRUE? I Detailed financial information about the client must be obtained II It should be determined if the customer is "established" with the firm III If the customer is not "established," a suitability determination must be completed IV Suitability determinations must be signed by the customer prior to executing any orders for "penny stocks" A. I only B. II and III only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

If the IRS considers a tax shelter to be abusive, which of the following can happen? I Tax deductions are disallowed II Interest and penalties are charged on the tax due III Any tax refund claims will be withheld by the IRS IV The IRS can charge the tax shelter promoter and investors with fraud A. I only B. II and III only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

If the SEC sends a deficiency letter to the issuer regarding an issue in registration, which of the following statements are TRUE? I Disclosure in the registration documents is not complete II The issuer must file an amendment with the SEC to cure the deficiency III The 20-day cooling off period starts again once the amendment is filed IV The SEC can issue subsequent deficiency letters after amendments are reviewed A. I and III B. II and IV C. I, II, III D. I, II, III, IV

D. I, II, III, IV

In most states, uniform state law requires that individuals representing broker-dealers that sell managed accounts: I register as agents in the state II register as investment adviser representatives in the state III pass the Series 63 examination IV pass the Series 65 examination A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

In order to open a new account for an individual customer, which information is required on the new account form? I Customer Name II Residence Address III Date of Birth IV Social Security Number A. I and III B. II and IV C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Listed options are traded on which of the following? I American Stock Exchange II Philadelphia Stock Exchange III Chicago Board Options Exchange IV Pacific Stock Exchange A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

New non-exempt debt issues in excess of $50,000,000 are subject to which of the following requirements? I Registration of the issue with the SEC under the Securities Act of 1933 II Sale of the securities with a prospectus under the Securities Act of 1933 III Appointment of an independent trustee to protect the bondholders under the Trust Indenture Act of 1939 IV Anti-fraud Rule 10b-5 under the Securities Exchange Act of 1934 for any subsequent resales of the securities A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Quotes for which of the following are found in Bloomberg? I General obligation bonds II Revenue bonds III Industrial development bonds IV Corporate bonds A. I only B. II and III C. I, II, III D. I, II, III, IV

D. I, II, III, IV

The Consolidated Quotations Service shows quotes from which of the following sources for NYSE listed issues? I New York Stock Exchange Specialist/DMM II Boston Stock Exchange Specialist III Pacific Stock Exchange Specialist IV Third Market Maker A. I only B. IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

The Securities Exchange Act of 1934 established "self regulatory organizations" (SROs) and empowered these organizations to: I set guidelines for fair dealing with the public II handle complaints against broker-dealers for securities law violations III take administrative action against broker-dealers that violate industry regulations IV establish arbitration procedures to settle intra-industry disputes A. I and II only B. I, II, III C. II, III, IV D. I, II, III, IV

D. I, II, III, IV

The certificate of a limited partnership would contain which of the following? I The name of the partnership and its purpose II Partnership address III The names of each limited and general partner with their percentage ownership IV The life of the partnership A. I and II only B. III and IV only C. I, II and IV D. I, II, III, IV

D. I, II, III, IV

To determine the suitability of recommendations made to a customer, inquiry should be made about which of the following? I Investment objective II Investment experience III Financial situation IV Financial needs A. I only B. I and II C. III and IV D. I, II, III, IV

D. I, II, III, IV

Under MSRB rules, confirmation disclosure for bonds sold at a discount or premium must include which of the following? I The yield at which the transaction was effected and the resulting dollar price II Whether the securities are callable III Capacity in which the broker-dealer acted IV Total dollar amount of the transaction A. I and III only B. II and IV only C. II, III, and IV D. I, II, III, IV

D. I, II, III, IV

When discussing hedge funds with customers, the registered representative should make the customer aware that hedge funds: I often hold illiquid investments II use leverage and other speculative practices III place limitations on withdrawal of funds IV are not regulated and offer much less investor protection A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Which of the following are primary purchasers of Treasury securities? I Investment companies II Broker-dealers III Unit Investment Trusts IV Commercial banks A. I and II only B. III and IV only C. I and III only D. I, II, III, IV

D. I, II, III, IV

Which of the following are standardized for listed option contracts? I Contract size II Expiration date III Strike price interval IV Expiration time A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Which of the following information is disclosed on an options confirmation? I Commission II Trade date III Settlement date IV Expiration A. I and II only B. III and IV only C. I, II, IV D. I, II, III, IV

D. I, II, III, IV

Which of the following statements are TRUE about variable annuities? I Investment risk is carried by the purchaser of the annuity II Salespeople must register with both FINRA and the State Insurance Commission III Variable annuities are considered to be securities regulated by the Investment Company Act of 1940 IV Annuity payments may not be reduced because of increased expenses experienced by the insurance company A. I and III B. II and IV C. II, III, IV D. I, II, III, IV

D. I, II, III, IV

Which of the following statements are TRUE regarding Eurodollar bonds? I Eurodollar bonds are issued by both domestic and foreign corporations II Eurodollar bonds are denominated in U.S. dollars only III Trading does not take place in the United States IV The securities are not registered with the SEC A. I and III only B. II and IV only C. II, III, IV D. I, II, III, IV

D. I, II, III, IV

Which of the following statements are TRUE regarding a municipal bond issue that is advance refunded? I The security that backs the advance refunded bonds will change after the issue is refinanced II The bondholder's lien on pledged revenues will be defeased in accordance with the terms of the bond contract III The marketability of the advance refunded bonds will increase IV The funds to pay the debt service requirements on the advance refunded bonds are set aside in escrow A. II only B. III and IV only C. I, II, IV D. I, II, III, IV

D. I, II, III, IV

Which of the following statements are TRUE regarding gift and estate taxes? I Tax liability rests with the donor or estate II Gifts valued up to $15,000 in 2019, per person per year, are excluded from tax III Estates of married persons that are willed to the surviving spouse are eligible for an unlimited exclusion from tax IV Taxes are levied in proportion to the size of the gift or estate A. I only B. II and III only C. II and IV only D. I, II, III, IV

D. I, II, III, IV

Which of the following statements are TRUE regarding options sales literature that is accompanied or preceded by delivery of the ODD (Options Disclosure Document)? I It must be approved prior to use by the designated Registered Options Principal II It can recommend a specific options contract III The use of recommendations, or of past or projected performance, is permitted IV The illustration of annualized rates of return achieved from various options strategies is permitted A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Which statements are TRUE about trading of stocks in the Second market? I The OTC market is a negotiated market II A greater number of companies trade OTC than are listed on a single exchange III The OTC market does not have listing standards IV FINRA regulates the OTC market A. I and III B. II and IV C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Which statements are TRUE regarding ETFs (Exchange Traded Funds)? I ETFs are available on broad-based stock indexes II ETFs are available on narrow-based stock indexes III ETFs are available on international stock indexes IV ETFs are available on bond indexes A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Which statements are TRUE regarding market index linked certificates of deposit? I Early redemption can result in the imposition of a penalty of 3-5% of the principal amount invested II The CD can only be redeemed on a specified date during each calendar quarter III The rate of return may be capped to a limit that is lower than the return of the reference stock index IV Market index linked CDs typically have a minimum life of 3 years A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

New U.S. Government agency securities are: I underwritten via competitive bid II underwritten via negotiated offering III offered through the Federal Reserve IV offered through selling groups A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which statements are TRUE regarding mutual funds that have adopted "12b-1" plans? I Acceptance of the plan requires a majority vote of the outstanding shares; the Board of Directors; and the disinterested members of the Board II Discontinuance of the plan requires majority vote of the outstanding shares or the disinterested members of the Board III Mailings to prospective purchasers of the fund are an acceptable "12b-1" charge IV Expense ratios for funds that have adopted 12b-1 plans can be expected to be higher than for similar funds without 12b-1 fees A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Which of the following can issue Eurodollar bonds? I Domestic Corporations II Foreign Corporations III U.S. Government IV Foreign Governments A. I only B. II only C. II and III D. I, II, IV

D. I, II, IV

Municipal bonds would be an appropriate investment for which of the following? I Individuals II Individual Retirement Accounts III Bank Holding Companies IV Casualty Companies A. II, III, IV B. I, II, III C. I, II, IV D. I, III, IV

D. I, III, IV

If the market price of the underlying security remains the same as the strike price of the option contract, which of the following will have a profit? I The buyer of an "at the money" straddle II The seller of an "at the money" straddle III The seller of an "at the money" call A. I only B. II only C. III only D. II and III

D. II and III

Which of the following formations are bearish? I Saucer II Head and Shoulders III Inverted Saucer IV Inverted Head and Shoulders A. I and II B. III and IV C. I and IV D. II and III

D. II and III

403(b) Plans are: I non-tax qualified plans II tax qualified plans III plans available to "for profit" organizations IV plans available to "not for profit" organizations A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A "breakpoint sale" is: I advising a customer to buy enough of a mutual fund to qualify for lowered sales charge shown in a breakpoint schedule II advising a customer to buy an amount of a mutual fund that is just below the minimum threshold needed to qualify for a lowered sales charge shown in a breakpoint schedule III permitted under FINRA rules IV a violation of FINRA rules A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A customer sells 1 XYZ July 45 Call @ $2 after having purchased 100 shares of XYZ @ $42 per share. If the customer is exercised, the tax consequences are: I cost basis of $40 per share II cost basis of $42 per share III sale proceeds of $44 per share IV sale proceeds of $47 per share A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A customer sells short 200 shares of ABC at $30 in an initial transaction in a margin account. The stock falls to $20. Which of the following statements are TRUE? I The initial Regulation T margin requirement is $2,000 II The initial Regulation T margin requirement is $3,000 III The customer may borrow $2,000 cash from the account IV The customer may borrow $3,000 cash from the account A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A municipal bond dealer quotes 10 year 4% Revenue bonds at 95 1/2 - 97. The dealer's spread per $1,000 is: I $1.50 II $15.00 III 15 basis points IV 150 basis points A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A newly hired registered representative finds a standard form letter on the firm's intranet and wants to send it to 20 of his friends. Which statements are TRUE? I The letter must be filed with FINRA prior to use II The letter must be used without change III The letter must include the FINRA logo IV The letter must be maintained on file by the firm for at least 3 years after use A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

A support level is: I above the current market price of the stock II below the current market price of the stock III a point through which the stock's price tends not to rise IV a point through which the stock's price tends not to fall A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

An interval fund is a type of closed-end fund that: I only offers its shares at stated intervals II only redeems its shares at stated intervals III trades in the market IV does not trade in the market A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

During the 20-day cooling off period when a non-exempt new issue is in registration with the SEC, which of the following is permitted? I Sale of the issue to interested parties II Distribution of a preliminary prospectus III Recommendation of the purchase of the issue IV Solicitation of indications of interest for the issue A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

During the accumulation phase of a variable annuity: I funds can be distributed to unit holders II funds cannot be distributed to unit holders III as interest, dividends, and capital gains are received, the investor has the option of reinvesting in more shares IV as interest, dividends, and capital gains are received, these must be reinvested in more accumulation units A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

If a firm effects trades solely on an agency basis, the firm: I carries inventory II does not carry inventory III is a market maker IV is not a market maker A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

If factory inventory levels are increasing, which of the following are TRUE? I Economic conditions are improving II Economic conditions are deteriorating III Consumer demand is increasing IV Consumer demand is decreasing A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

If the U.S. dollar appreciates against foreign currencies, which statements are TRUE? I U.S. exports should increase II U.S. exports should decrease III Any trade deficit should narrow IV Any trade deficit should widen A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Index options expire at: I 4:15 PM EST II 11:59 PM EST III on the second Friday of the month IV on the third Friday of the month A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Special tax bonds are: I backed by ad valorem taxes II backed by sales or excise taxes III a self supporting debt when analyzing the Debt Statement of a town IV a non-self supporting debt when analyzing the Debt Statement of a town A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Stabilization of new issues is: I a provision of the Securities Act of 1933 II a provision of the Securities Exchange Act of 1934 III permitted at, or above, the Public Offering Price IV permitted at, or below, the Public Offering Price A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Straight line amortization is mandatory for which of the following municipal bonds? I Primary market municipal bonds purchased at a discount II Primary market municipal bonds purchased at a premium III Secondary market municipal bonds purchased at a discount IV Secondary market municipal bonds purchased at a premium A. II only B. IV only C. I and III D. II and IV

D. II and IV

To determine the Net Interest Cost on a bid for a new municipal issuer, any premium paid by the bidder to the issuer: I increases the Net Interest Cost II reduces the Net Interest Cost III is added when determining Net Interest Cost IV is deducted when determining Net Interest Cost A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

U.S. Government Agency securities are: I Quoted in 1/8ths II Quoted in 1/32nds III Traded with accrued interest computed on an actual day month / actual day year basis IV Traded with accrued interest computed on a 30 day month / 360 day year basis A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Under Regulation SHO, a "threshold" security is one that: I is easy to borrow II is hard to borrow III cannot be sold short under any circumstances, but can be sold long IV if sold short and not delivered within 13 consecutive settlement days, it must be bought-in A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Under SEC Rule 606 of Regulation NMS, the required quarterly report on order routing methods includes information on which of the following? I Directed orders for listed equity securities II Non-directed orders for listed equity securities III Directed orders for NASDAQ securities IV Non-directed orders for NASDAQ securities A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

When does an investor receive payment of interest and principal on a Capital Appreciation Bond (CAB)? I Interest is paid semi-annually II Interest is paid at maturity III Principal is paid semi-annually IV Principal is paid at maturity A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

When the price of a bond increases, which of the following statements regarding yields are TRUE? I Current yield increases II Current yield decreases III Yield to maturity increases IV Yield to maturity decreases A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which are permitted under FINRA rules? I A registered representative accepts a $300 gift from a customer II A registered representative pays for a $300 meal with a customer III A registered representative gives a customer $200 tickets to a show IV A registered representative accompanies a customer to a show, for which the representative paid $200 for the tickets A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following BEST describes municipal bonds that are trading flat? I The bonds are trading with accrued interest II The bonds are trading without accrued interest III Interest payments are currently being made IV Interest payment are not currently being made A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following actions by the Federal Reserve will increase interest rates? I Purchases of securities as directed by the FOMC II Sales of securities as directed by the FOMC III Repurchase agreements with U.S. Government dealers and banks IV Reverse repurchase agreements with U.S. Government dealers and banks A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE about Eurodollar bonds? I The bonds are issued in the U.S. II The bonds are issued outside the U.S. III The purchasers are U.S. residents IV The purchasers are foreign residents A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE regarding Eurodollar deposits? I Eurodollar deposits are foreign currencies held in banks in foreign countries II Eurodollar deposits are U.S. currency held in banks in foreign countries III The interest rate paid on Eurodollar deposits is based on the Federal Funds Rate IV The interest rate paid on Eurodollar deposits is based on the London Interbank Offered Rate A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE regarding fixed unit investment trusts (UITs)? I Fixed UITs are managed II Fixed UITs are unmanaged III The composition of the portfolio can be changed IV The composition of the portfolio cannot be changed A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE regarding rights? I Rights give the holder the long term option to buy stock II Rights give the holder a very short term option to buy stock III The exercise price of a right is set at a premium to the stock's current market price IV The exercise price of a right is set at a discount to the stock's current market price A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which orders, if executed do NOT guarantee a specific price or better? I Buy Limits II Buy Stops III Sell Limits IV Sell Stops A. I and II B. III and IV C. I and III D. II and IV

D. II and IV

Which statements are TRUE about defensive stocks that are included in a portfolio allocation model? Defensive stocks have: I higher expected returns than other equities included in the portfolio II lower expected returns than other equities included in the portfolio III higher standard deviations (risk) than other equities included in the portfolio IV lower standard deviations (risk) than other equities included in the portfolio A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which statements are TRUE if a customer's account is frozen? I No trading can occur during the freeze period II Trading is permitted during the freeze period III The freeze period lasts for 30 days IV The freeze period lasts for 90 days A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which statements are TRUE regarding Individual Retirement Accounts for an individual earning more than $74,000 in year 2019? I Contributions to an IRA prohibited II Contributions to an IRA are allowed III If the individual is covered by another plan, tax deductible contributions are allowed IV If the individual is covered by another plan, tax deductible contributions are not allowed A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which statements are TRUE regarding Treasury Bills? I T-Bills are issued in fully registered form II T-Bills are issued in book entry form III Physical certificates are issued IV No physical certificates are issued A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which statements are TRUE regarding spread orders? I Two tickets are used, one for each side of the spread II One ticket is used for both sides of the spread III Only one side of the order has to be filled to execute the trade IV Both sides of the order must be filled to execute the trade A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which statements are TRUE regarding the weekly Treasury Bill auction? I The minimum non-competitive bid has no dollar limit II The minimum non-competitive bid amount is $100 III The maximum non-competitive bid has no dollar limit IV The maximum non-competitive bid amount is $5,000,000 A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which statements are TRUE when comparing UTMA Custodian Accounts to Coverdell Education Savings Accounts? I Contributions to UTMA accounts are deductible for Federal income tax purposes II Contributions to UTMA accounts are not deductible for Federal income tax purposes III Contributions to Coverdell Education Savings Accounts are deductible for Federal income tax purposes IV Contributions to Coverdell Education Savings Accounts are not deductible for Federal income tax purposes A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following are prohibited from buying an IPO directly from an underwriter? I A registered investment company II An officer of a registered investment company III An insurance company IV An officer of an insurance company A. I and II only B. III and IV only C. I and III only D. II and IV only

D. II and IV only

Accrued interest is computed on a 30 day month/360 day year for: I U.S. Government Bonds II General Obligation Bonds III Revenue Bonds IV Corporate Debentures A. IV only B. II and III only C. I, II, III D. II, III, IV

D. II, III, IV

Which of the following are exchange traded? I Foreign currencies II Foreign currency options III Stocks IV Stock options A. I and II only B. III and IV only C. I and III only D. II, III, IV

D. II, III, IV

A corporation declares and pays a 20% stock dividend. Which statements are TRUE about margin accounts holding this stock position? I Market value will increase II Debit balance will decrease III Market value stays the same IV Debit balance stays the same A. I and II B. I and IV C. II and III D. III and IV

D. III and IV

A customer buys 1 ABC Jan 50 Call @ $3 and buys 1 ABC Jan 50 Put @ $6 when the market price of ABC is $48. At which market prices is the position profitable? I $44 II $41 III $40 IV $36 A. I and IV only B. II and III only C. II and IV only D. III and IV only

D. III and IV only

An older female customer, in the lowest tax bracket, wants an investment that will provide asset growth for retirement. The best recommendation would be: A. Emerging markets fund B. Single stock C. Municipal bond D. Index fund

D. Index fund

Which of the following is a "QIB" under Rule 144A? A. Individual with at least $1 million of assets to invest B. Individual with at least $100 million of assets to invest C. Institution with at least $1 million of assets to invest D. Institution with at least $100 million of assets to invest

D. Institution with at least $100 million of assets to invest

The minimum price at which a closed end fund share can be purchased is: A. Net Asset Value B. Net Asset Value plus a commission C. Market Price D. Market Price plus a commission

D. Market Price plus a commission

All of the following are needed to determine the annual accretion amount on an original issue municipal discount bond EXCEPT: A. Dated date B. Maturity date C. Acquisition cost D. Market value

D. Market value

All of the following are requirements for a company to move its listing from another market to the NYSE EXCEPT: A. 2,200 shareholders B. Average monthly trading volume of 100,000 shares C. $100,000,000 aggregate market value of outstanding shares D. Minimum dividend payout of $5 per share

D. Minimum dividend payout of $5 per share

An IRA is allocated in large cap stocks, TIPS, foreign stocks and municipal bonds. When reviewing this portfolio, you should be MOST concerned about the: A. Large cap stock holding B. TIPS holding C. Foreign stock holding D. Municipal bond holding

D. Municipal bond holding

All of the following are actively traded in the secondary market EXCEPT: A. Real estate investment trusts B. Closed end funds C. Corporate stock D. Mutual funds

D. Mutual funds

The Network A Consolidated Tape reports all trades of: A. AMEX (NYSE American) Securities B. U.S. Government Securities C. NASDAQ Securities D. NYSE Securities

D. NYSE Securities

A corporation has previously declared a cash dividend. When the dividend is actually paid, all of the following choices are affected EXCEPT: A. Cash B. Current Assets C. Current Liabilities D. Net Working Capital

D. Net Working Capital

All of the following securities are marginable EXCEPT: A. Listed stocks B. NASDAQ-listed Global Market stocks C. U.S. Government Bonds D. New Issues

D. New Issues

The "Trade-Through" rule of Regulation NMS applies to all of the following EXCEPT: A. NYSE issues B. NYSE American (AMEX) issues C. NASDAQ issues D. OTCBB issues

D. OTCBB issues

All of the following technical indicators would be considered to be bearish EXCEPT: A. a breakout through a support level B. a head and shoulders top formation C. an inverted Saucer formation D. Odd lot short sales

D. Odd lot short sales

All of the following enforce MSRB rules for bank dealers EXCEPT: A. Office of the Comptroller of Currency B. Federal Deposit Insurance Corporation C. Federal Reserve Board D. Office of Thrift Supervision

D. Office of Thrift Supervision

A new issue municipal bond investor seeking information about an issuer's financial condition would examine the: A. Prospectus B. Official Notice Of Sale C. Trust Indenture D. Official Statement

D. Official Statement

All of the following are considered to be advertising by the MSRB EXCEPT: A. seminar texts B. market letters C. form letters D. Official Statements

D. Official Statements

Which of the following is defined as options "sales literature"? A. Options movie B. Options prospecting letter sent to 10 clients C. Letters of an "individual" nature sent to customers D. Options research report

D. Options research report

All of the following trade securities on the New York Stock Exchange EXCEPT: A. Two dollar broker B. Floor broker C. Specialist (DMM) D. Order Book Official (OBO)

D. Order Book Official (OBO)

Trades of all of the following will settle in Fed Funds EXCEPT: A. Prime Banker's Acceptances B. Treasury Bills C. Treasury Bonds D. Prime Commercial Paper

D. Prime Commercial Paper

What does a BDC invest in? A. Hedge funds B. Small cap stocks C. Large cap stocks D. Privately-held companies

D. Privately-held companies

All of the following securities can be sold by both an individual holding a Series 7 General Securities License and an individual holding a Series 6 Investment Companies / Variable Annuities registered representative's license EXCEPT: A. Unit Investment Trusts B. Mutual Funds C. Initial Public Offerings of Closed End Funds D. Real Estate Investment Trusts

D. Real Estate Investment Trusts

Which of the following is NOT required to be retained on file by a broker-dealer? A. Account statements B. Written complaints C. Advertising D. Recommendations

D. Recommendations

A customer has an account with a brokerage firm that is in receivership. The account holds $90,000 of securities and has a $50,000 debit. Which statement is TRUE regarding SIPC coverage? A. The account is covered for $90,000 B. The customer must deposit $50,000 to receive the $90,000 of securities C. The account is covered for $50,000 D. The account is covered for $40,000

D. The account is covered for $40,000

A registered representative wishes to appear in a television commercial about options strategies. Which statement is TRUE? A. No approval is required B. The commercial must be approved in advance by the Branch Manager C. The commercial must be approved in advance by the General Principal D. The commercial must be approved in advance by the designated Registered Options Principal

D. The commercial must be approved in advance by the designated Registered Options Principal

Which statement is TRUE regarding variable annuity contracts? A. The principal amount is guaranteed prior to annuitization by the insurance company that issues the contract B. The principal amount is guaranteed after annuitization by the insurance company that issues the contract C. The contract holder loses control of the principal amount prior to annuitization D. The contract holder loses control of the principal amount after annuitization

D. The contract holder loses control of the principal amount after annuitization

Many years ago, a father opened a UGMA account for his young son. The son has just turned 17 and the father believes that the son is now old enough to start handling the account. The father wants to give trading authorization to the son and asks his representative over the phone to do this. What should the registered representative do? A. Since the father is the custodian of the account and makes all decisions in the account, the registered representative must follow the customer's verbal instructions B. The registered representative can only follow the father's instructions if the father completes a written power of attorney naming the son as authorized to trade the account C. The registered representative must get approval from the branch manager to give the son trading authorization D. The registered representative should decline the transaction

D. The registered representative should decline the transaction

A registered representative has prepared a research report about a new issue that is "in registration." Which statement is TRUE? A. The research report may be sent to any customer expressing an "indication of interest" B. The research report may be sent to any customer if it is accompanied by a preliminary prospectus C. The research report may only be sent to customers who have bought new issues within the preceding 12 months D. The research report may not be sent

D. The research report may not be sent

If a registered representative wishes to distribute an options retail communication to her customers, which statement is FALSE? A. The retail communication must be approved in advance of distribution by a Registered Options Principal B. The retail communication must be approved 10 days in advance of use with the SRO if it is distributed to customers who have not received an Options Disclosure Document C. The retail communication can be distributed to any customer who has already received an Options Disclosure Document without requiring prior filing with the SRO D. The retail communication must be approved 10 days in advance of use with the SRO, regardless of whether it is distributed to customers who have already received, or who have not already received, an Options Disclosure Document

D. The retail communication must be approved 10 days in advance of use with the SRO, regardless of whether it is distributed to customers who have already received, or who have not already received, an Options Disclosure Document

A customer owns 256 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 15 rights tendered, a shareholder may purchase one additional share at $24 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE? A. The shareholder can buy a maximum of 15 shares by paying $360 B. The shareholder can buy a maximum of 16 shares by paying $384 C. The shareholder can buy a maximum of 17 shares by paying $408 D. The shareholder can buy a maximum of 18 shares by paying $432

D. The shareholder can buy a maximum of 18 shares by paying $432

A registered representative has taken an order from a customer to buy 100 shares of ABC stock @ $51 per share. The trade is executed at $57 per share and a confirmation is sent to the customer at this price. The lowest price at which the stock traded this day was $55 per share. Which statement is TRUE? A. The customer must be sent a corrected confirmation showing that the customer is only required to pay $51 per share B. The customer must pay the $57 per share actual execution price C. The customer must be sent a corrected confirmation at the lowest trading price for that day of $55 per share D. The transaction will be withdrawn from the customer's account and taken to the member's firm's account

D. The transaction will be withdrawn from the customer's account and taken to the member's firm's account

A 50 1/2 year old self-employed individual has a balance of $200,000 in his HR 10 plan. This balance is composed of $140,000 of contributions and $60,000 of earnings. The individual decides to withdraw $100,000 from the plan. Which statement is TRUE? A. There will be no tax liability B. There will be regular tax liability, but no 10% penalty tax liability C. There will be a 10% penalty tax liability, but no regular tax liability D. There will be both regular tax liability and a 10% penalty tax liability

D. There will be both regular tax liability and a 10% penalty tax liability

A customer, age 51, has a 20 year investment time horizon, a moderate risk tolerance, and is looking for investments that provide both income and growth. The best recommendation would be: A. money market instruments B. mutual funds C. bonds D. large capitalization growth stocks

D. large capitalization growth stocks

John is a registered representative who has discretionary options accounts for 25 of his largest customers. John likes the news coming out of ABCD Corporation and decides to buy ABCD calls for some of his clients. He buys 30,000 ABCD call contracts each for 10 out of the 25 discretionary accounts that he manages. The position limit for ABCD is 250,000 contracts on each side of the market. Which statement is TRUE? A. This is not a violation of position limits because the positions were taken in different accounts B. This is not a violation of position limits because of the exemption from position limit violations given to positions taken in 10 or fewer accounts C. This is not a violation of position limits because position limit violations only apply to the down-side of the market D. This is a violation of position limits

D. This is a violation of position limits

A middle-aged widowed customer has an investment objective of stable income and wants minimal market and liquidity risk. What type of preferred stock would be the best recommendation? A. Participating preferred B. Convertible preferred C. Straight preferred D. Variable rate preferred

D. Variable rate preferred

A customer redeems 1,000 shares of ABC Fund on Wednesday, June 14th. Under the provisions of the Investment Company Act of 1940, the customer must be paid the money no later than: A. Thursday, June 15 B. Friday, June 16 C. Monday, June 19th D. Wednesday, June 21st

D. Wednesday, June 21st

A customer buys 1 ABC Jan 50 Call @ $3 when the market price is $51. The customer exercises the call when the market rises to $53. The tax consequence is: A. no gain or loss B. a $300 capital gain C. a cost basis in the stock of $5,000 D. a cost basis in the stock of $5,300

D. a cost basis in the stock of $5,300

Under FINRA rules, if a member suspects that a senior citizen is being financially exploited: A. a freeze can be placed on all disbursements from the account for up to 10 business days B. a freeze can be placed for up to 10 business days on suspicious disbursements from the account, but not on other non-suspicious disbursements C. a freeze can be placed on all disbursements from the account for up to 15 business days D. a freeze can be placed for up to 15 business days on suspicious disbursements from the account, but not on other non-suspicious disbursements

D. a freeze can be placed for up to 15 business days on suspicious disbursements from the account, but not on other non-suspicious disbursements

All of the following activities are prohibited during the "cooling off" period EXCEPT: A. accepting an order for the issue in registration B. confirming a certain amount of the issue to a customer C. accepting a check from a customer for the part of the issue D. accepting an indication of interest from the customer for part of the issue

D. accepting an indication of interest from the customer for part of the issue

The revenue fund consists of: A. monies to pay for extraordinary maintenance or replacement costs B. monies to pay for regularly scheduled major repairs and replacement costs C. monies to meet debt service requirements D. all gross revenues from the facility

D. all gross revenues from the facility

The Consolidated Tape reports trades of NYSE listed issues that occur: A. on the NYSE Floor B. on Regional Exchanges C. in the Third Market D. all of the above

D. all of the above

How much can a Municipal Finance Professional (MFP) contribute to the "clean up" campaign to pay off campaign debt of an ex-issuer official that is now out of office because she lost the general election? A. 0 B. $100 C. $250 D. an unlimited amount

D. an unlimited amount

Under FINRA rules, fixed fee accounts should be reviewed for appropriateness for customers at a minimum: A. monthly B. quarterly C. semi-annually D. annually

D. annually

All of the statements are true about municipal dollar bonds EXCEPT dollar bonds A. are usually term issues B. can be a component of a large combination serial and term municipal offering C. are actively traded in the secondary market D. are quoted on a yield to maturity basis

D. are quoted on a yield to maturity basis

Index straddles would be purchased by a customer who: A. is bullish on the direction of the market B. is bearish on the direction of the market C. is neutral on the market D. believes that the market will be volatile

D. believes that the market will be volatile

A municipal syndicate manager wishes to bid on a $100,000,000 municipal offering, even though his syndicate normally bids on issues of up to $50,000,000. The manager may do all of the following EXCEPT: A. join with another syndicate to bid on the issue, with both syndicate managers acting as co-managers B. allow additional participants into the syndicate account C. ask the syndicate members to increase their participation D. bid on 1/2 the issue

D. bid on 1/2 the issue

All of the following statements are true regarding a customer account with a "full power" third party trading authorization EXCEPT: A. upon the death of the customer, the power of attorney is revoked B. the customer can designate that confirmations be sent only to the third party C. the third party can enter orders in the account D. checks drawn on the account can be made out to the customer or to the third party

D. checks drawn on the account can be made out to the customer or to the third party

All of the following statements are true about the NYSE Super Display Book System EXCEPT: A. orders placed in the system are subject to size limitations B. orders are routed directly to the Specialist/DMM for execution C. reports of executed orders are routed directly back to the originating broker-dealer D. commissions charged to retail customers for Display Book executions are lower than for manual executions

D. commissions charged to retail customers for Display Book executions are lower than for manual executions

A customer wishes to purchase $100,000 face amount of municipal bonds that the broker-dealer does not have in inventory. Under MSRB rules, the firm should: A. sell short the security to the customer B. refer the customer to a municipal firm that has the bonds in inventory C. contact at least 5 dealers and obtain quotes for the customer D. contact enough dealers so that a reasonable market quote is obtained

D. contact enough dealers so that a reasonable market quote is obtained

When the O.C.C. receives an exercise notice from a brokerage firm, it selects a short contract to be exercised on a: A. method of reasonable fairness B. LIFO basis C. FIFO basis D. random order basis

D. random order basis

All of the following statements are true about non-contributory defined benefit retirement plans EXCEPT: A. contribution amounts vary based upon the age of the person covered under the plan B. larger contributions are made for older plan participants nearing retirement than for younger ones C. once benefit payments start, the amount of the benefit is fixed D. contribution amounts remain fixed based regardless of age

D. contribution amounts remain fixed based regardless of age

All of the following income received by a corporate investor is partially excluded from income tax EXCEPT: A. common dividends received B. preferred dividends received C. convertible preferred dividends received D. convertible bond interest received

D. convertible bond interest received

A customer buys 1 ABC Jan 50 Call @ $4 when the market price of ABC is $51. The stock then moves to $58 and the customer exercises. The tax consequence upon exercise is a: A. capital loss of $400 B. capital gain of $400 C. capital gain of $800 D. cost basis of $5,400

D. cost basis of $5,400

A customer buys $10,000 of Government Bond Fund shares from Acme Investors, a fund sponsor and broker-dealer. Acme is the sponsor for a variety of funds within the Acme "family." The ACME family has an "exchange feature" at NAV. The customer decides to exchange his Government Bond Fund shares for Growth Fund shares within the same family. All of the following statements are true EXCEPT the: A. customer's yield will decrease B. customer will have greater capital appreciation potential C. customer will have a tax event D. customer will pay a sales charge

D. customer will pay a sales charge

Straight line amortization for municipal bonds is the annual: A. increase in the cost basis of a discount bond performed according to IRS rules B. decrease of the cost basis of a discount bond performed according to IRS rules C. increase of the cost basis of a premium bond performed according to IRS rules D. decrease of the cost basis of a premium bond performed according to IRS rules

D. decrease of the cost basis of a premium bond performed according to IRS rules

REITs can invest in all of the following EXCEPT: A. mortgages B. real estate C. government securities D. direct participation programs

D. direct participation programs

A corporate executive holds a meeting with a select group of high-producing registered representatives and gives information about the company's expected revenue and income for the upcoming quarter that is extremely positive. The representatives are permitted to: A. buy the stock for their personal accounts only B. recommend that their customers buy the stock C. recommend that their family members buy the stock D. do nothing with the information and should report the situation to the firm's compliance department

D. do nothing with the information and should report the situation to the firm's compliance department

An officer of a publicly traded company is prohibited from all of the following actions EXCEPT: A. selling short the common stock of that company B. retaining a profit generated from the purchase and sale of the company's stock within a 6 month period C. trading that company's stock based upon material, non-public information D. exercising call options or pre-emptive rights on that issuer's stock

D. exercising call options or pre-emptive rights on that issuer's stock

The owner of a variable annuity has all of the following rights EXCEPT the right to vote: A. for the Board of Trustees B. for dissolution of the trust C. to change the separate account's investment objective D. for the sales charge imposed by the trust

D. for the sales charge imposed by the trust

Corporate debentures are backed by: A. real estate B. equipment C. portfolio of marketable securities D. full faith and credit

D. full faith and credit

A parent opens a custodian account for a 10-year old child. The grandparents then donate into the account. If the total investment income in the account exceeds $2,100 in 2019, the income is taxed at the: A. minor's tax rate B. parent's tax rate C. grandparent's tax rate D. gift and estate tax rate

D. gift and estate tax rate

A client has a portfolio of $2,000,000 that consists of $600,000 of an Energy ETF; $600,000 of a Gold/Precious Metals ETF; $600,000 of a Uranium/Oil ETF and $200,000 of short term Treasury securities. This customer's investment objective is: A. preservation of capital B. income C. safety of principal D. growth

D. growth

The "cover" in a municipal bid is best described as the: A. highest interest rate bid B. lowest interest rate bid C. spread between the bid interest cost and the ask interest cost D. increment by which the next highest interest cost bid exceeds the winning bid

D. increment by which the next highest interest cost bid exceeds the winning bid

An equity REIT would most likely invest in all of the following EXCEPT: A. apartments B. office buildings C. shopping malls D. industrial parks

D. industrial parks

The value of both the Dow Jones and Standard and Poor's Averages would be most affected by a change in the: A. transportation stocks B. financial stocks C. utility stocks D. industrial stocks

D. industrial stocks

A corporation can redeem its debt securities prior to their maturity date by all of the following methods EXCEPT: A. purchasing outstanding debt securities in the open market B. tendering for outstanding debt securities at a price determined by the issuer C. calling outstanding securities at pre-established dates and prices D. issuing new bonds and using the proceeds to prepay the bondholders

D. issuing new bonds and using the proceeds to prepay the bondholders

A syndicate member wishes to place an order with the manager for a new issue of a municipal bond underwriting. The bonds are to be purchased for the member's own portfolio. Under MSRB rules, the order is filled: A. first B. after Pre-Sale orders, but before Designated orders C. after Group Net orders, but before Member orders D. last

D. last

All of the following are defined as options "advertising" EXCEPT: A. options website B. magazine inserts on options investments C. television commercials on options investments D. lectures to the public on options investments

D. lectures to the public on options investments

Active portfolio management is: A. buying and holding the investments chosen by the Registered Representative B. determining the securities to be bought or sold based on investment research performed by the Registered Representative C. managing a portfolio to meet the performance of a benchmark portfolio D. managing a portfolio to exceed the performance of a benchmark portfolio

D. managing a portfolio to exceed the performance of a benchmark portfolio

Under FINRA rules, a registered representative: A. may borrow money from a customer only with the permission of FINRA B. may borrow money from a customer only with the permission of the branch manager C. may borrow money from a customer only with the permission of the customer D. may not borrow money from a customer

D. may not borrow money from a customer

If a registered representative fails to complete the Regulatory Element of the Continuing Education requirement within the stated time period, that person: A. can continue to perform all of the functions of a registered representative B. can only accept unsolicited orders from customers C. can only be compensated on a salary basis; commission compensation is prohibited D. must cease performing all of the functions of a registered representative

D. must cease performing all of the functions of a registered representative

The term "negotiable" describes all of the following EXCEPT: A. common stock B. preferred stock C. rights D. mutual funds

D. mutual funds

Which security of the same issuer is likely to give the highest current yield? A. warrant B. common stock C. convertible preferred stock D. non-convertible preferred stock

D. non-convertible preferred stock

Section 529 plans generally permit: A. tax deductible contributions by the donor B. tax free withdrawals for first time home buyers C. taxable distributions to the recipient to pay for higher education D. non-taxable distributions to the recipient to pay for higher education

D. non-taxable distributions to the recipient to pay for higher education

All of the following orders can be placed in the NASDAQ System (Single Book) EXCEPT: A. market order B. marketable limit order C. limit order D. not held order

D. not held order

To satisfy MSRB disclosure requirements for new municipal issues, a customer would be provided with a copy of the: A. indenture B. official notice of sale C. feasibility study D. official statement

D. official statement

A PHLX Jan 80 Swiss Franc Call contract is quoted at 2 when the Swiss Franc closes at 77. The contract is: A. at parity B. at the money C. in the money D. out the money

D. out the money

When a non-qualified variable annuity is annuitized prior to age 59 1/2 under the provisions of IRS Rule 72t, the initial payment is: A. 100% taxable as ordinary income and the 10% penalty tax will be applied B. 100% taxable as ordinary income but the 10% penalty tax is not applied C. partially taxable as ordinary income with the 10% penalty tax applied and partially a non-taxable return of investment D. partially taxable as ordinary income without the 10% penalty tax applied and partially a non-taxable return of investment

D. partially taxable as ordinary income without the 10% penalty tax applied and partially a non-taxable return of investment

The Specialist (DMM) performs all the following functions EXCEPT: A. trades for his own account B. executes orders for other brokers C. executes odd lot orders D. participates in new issue syndicates

D. participates in new issue syndicates

A variable annuity is a(n): A. open end management company B. closed end management company C. fixed unit investment trust D. participating unit investment trust

D. participating unit investment trust

A variable annuity is a: A. face amount certificate company B. management company C. fixed unit investment trust D. participating unit investment trust

D. participating unit investment trust

An order for a New York Stock Exchange listed issue is routed by the member firm to a Third Market Maker rather than to the exchange floor. This practice is: A. prohibited B. permitted only if the customer consents C. permitted only if an attempt to fill the order on the NYSE fails D. permitted if the price offered by the Third Market Maker is better

D. permitted if the price offered by the Third Market Maker is better

When the investment performance of each asset class varies from the anticipated rate of return, the: A. selection of the type and number of asset classes used for the portfolio must be changed B. target allocation percentages assigned to each asset class must be changed C. tactical limits on target allocation percentages for each asset class must be changed D. portfolio must be rebalanced by liquidating portions of overperforming classes and investing the proceeds in underperforming classes

D. portfolio must be rebalanced by liquidating portions of overperforming classes and investing the proceeds in underperforming classes

Listed REITs offer all of the following benefits to purchasers EXCEPT: A. diversification of investments B. ready marketability of shares C. capital gains potential D. preferential taxation of dividends received

D. preferential taxation of dividends received

Under MSRB rules, a registered representative is prohibited from sharing in the gains and losses of a customer's account unless the: A. registered representative has made a written guarantee of performance to the customer B. registered representative agrees to reduce the commission rate to be charged C. customer agrees to the arrangement in writing D. registered representative contributes capital proportionate to his sharing percentage and receives written approval of the principal

D. registered representative contributes capital proportionate to his sharing percentage and receives written approval of the principal

A "saucer" formation is a(n): A. uptrend B. downtrend C. reverse upward trend D. reverse downward trend

D. reverse downward trend

The purpose of an ABLE account is to: A. save funds on a tax-deferred basis to pay for medical expenses B. save funds on a tax-deferred basis to pay for education expenses below the college level C. save funds on a tax-deferred basis to pay for education expenses and the college level or higher D. save funds on a tax-deferred basis to pay for the ongoing care of disabled individuals

D. save funds on a tax-deferred basis to pay for the ongoing care of disabled individuals

All of the following must be sent to broker-dealer customers semi-annually EXCEPT a broker-dealer's: A. balance sheet B. subordinated loan amounts C. net capital computation D. securities inventory amounts

D. securities inventory amounts

A pass through certificate is best described as a: A. corporation or trust through which investors pool their money in order to obtain diversification and professional management B. security which is backed by the full faith, credit, and taxing power of the U.S. Government C. security which is backed by real property and/or a lien on real estate D. security which gives the holder an undivided interest in a pool of mortgages

D. security which gives the holder an undivided interest in a pool of mortgages

A wealthy, sophisticated investor with a high risk tolerance has just turned extremely bullish on the market. To profit from this, the BEST recommendation to the client would be to: A. sell index calls B. sell index puts C. sell inverse floaters D. sell leveraged inverse ETFs

D. sell leveraged inverse ETFs

All of the following will affect the counting of the holding period of ABC stock, a position that has been held for 6 months, EXCEPT: A. selling ABC "short against the box" B. buying an "in the money" ABC put contract C. buying an "out the money" ABC put contract D. selling an "out the money" ABC put contract

D. selling an "out the money" ABC put contract

A customer sells 5 ABC Jan 60 Calls @ $4 and sells 5 ABC Jan 60 Puts @ $1 on the same day when the market price of ABC stock is $62. The customer has created a: A. long call spread B. long straddle C. short call spread D. short straddle

D. short straddle

A municipal bond which funds an improvement that benefits only a small portion of the community is a: A. general obligation bond B. double barreled bond C. moral obligation bond D. special assessment bond

D. special assessment bond

When an exchange stops trading in a stock, the options exchange: A. keeps trading in the option B. exercises all outstanding option contracts C. lets all outstanding option contracts expire D. stops trading in the option

D. stops trading in the option

A reversionary oil and gas sharing arrangement where the general partner agrees to defer taking a percentage of revenues is also known as a(n): A. overriding royalty interest B. net profits interest C. disproportionate sharing arrangement D. subordinated royalty interest

D. subordinated royalty interest

All of the following statements are true regarding new issue offerings EXCEPT the: A. underwriting agreement includes a clause that releases the syndicate if a calamity occurs affecting the financial markets B. manager is allowed to repurchase shares in the secondary market to correct price imbalances that can occur C. manager may penalize syndicate members by taking away their concession if shares are resold to the manager D. syndicate agreement includes a clause that releases the syndicate member from liability if all of the securities are not sold

D. syndicate agreement includes a clause that releases the syndicate member from liability if all of the securities are not sold

An order placed to buy or redeem mutual fund shares is filled at: A. yesterday's opening Net Asset Value B. yesterday's closing Net Asset Value C. that day's opening Net Asset Value D. that day's closing Net Asset Value

D. that day's closing Net Asset Value

Under Rule 606 of Regulation NMS, all of the following must be disclosed to customers by member firms upon request EXCEPT: A. which market received the customer order B. whether the order was directed or non-directed C. the time of execution of the order D. the best market for the security at the time of execution

D. the best market for the security at the time of execution

All of the following statements are true regarding municipal bonds that have been called EXCEPT: A. interest ceases to accrue on the bonds B. the call price sets a ceiling on the market price of the bonds C. the holder may redeem the bonds at anytime D. the bonds will continue to trade "and interest"

D. the bonds will continue to trade "and interest"

All of the following statements are true about SEP IRAs EXCEPT: A. the plan is established by the employer B. the plan allows for flexible contribution amounts C. the amount that can be contributed is significantly greater than for a Traditional IRA D. the contributions made are not deductible

D. the contributions made are not deductible

All of the following statements are true about the CBOE Order Support System (OSS) EXCEPT: A. the order is routed directly to the market maker or order book official for execution B. execution notices are sent directly from the trading post to the brokerage firm C. the system is faster and cheaper to use than manual trading D. the customer must request the use of the system when placing an options order

D. the customer must request the use of the system when placing an options order

All of the following statements are true if the SEC sends a deficiency letter to the issuer regarding an issue in registration EXCEPT: A. disclosure in the registration documents is not complete B. the issuer must file an amendment with the SEC to cure the deficiency C. the 20-day cooling off period starts again once the amendment is filed D. the effective date of the issue is unaffected by the deficiency notice

D. the effective date of the issue is unaffected by the deficiency notice

Under MSRB rules, confirmation disclosure for bonds sold at a discount or premium must include all of the following EXCEPT: A. the yield at which the transaction was effected and the resulting dollar price B. whether the securities are callable C. capacity in which the broker-dealer acted D. the rating assigned to the bond by a national ratings agency

D. the rating assigned to the bond by a national ratings agency

Foreign currency options expire on the: A. Friday before the third Wednesday of the month B. Friday after the third Wednesday of the month C. second Friday of the month D. third Friday of the month

D. third Friday of the month

A registered representative explains to each of his customers that "Day trading of stock index options to profit from intra-day market swings is a safe and highly profitable strategy." This statement is: A. truthful B. only permitted for those customers who have previously signed an options agreement C. only permitted for those customers who effected at least 10 options trades in the past year D. unethical

D. unethical

Under FINRA rules, an alteration to an order ticket for an order submitted to the NYSE trading floor is prohibited: A. under all circumstances B. unless the alteration is approved in writing by a Floor Governor of the exchange C. unless the alteration is approved in writing by the Specialist (DMM) on the floor of the exchange D. unless the alteration is approved in writing by Branch Office Manager

D. unless the alteration is approved in writing by Branch Office Manager

A customer owns 100 shares of ABC stock in a margin account, valued at $40 per share. The customer sells 3 ABC Jul 40 Calls @ $4. The maximum potential loss is: A. $800 B. $3,200 C. $4,000 D. unlimited

D. unlimited

A customer sells 1 ABC Jul 35 Call @ $4 and sells 1 ABC Jul 35 Put @ $3 when the market price of ABC is $37. The maximum potential loss is: A. $400 B. $700 C. $3,700 D. unlimited

D. unlimited

Passive asset management is: A. buying securities positions and holding them to the liquidation date of the portfolio B. buying securities positions and holding them until pre-established prices are reached C. selecting securities to be purchased for each asset class based upon fundamental analysis D. using index funds as the investments for each asset class

D. using index funds as the investments for each asset class

Which statement is TRUE regarding a portfolio that has a "Beta" of +1? A. Changes in the value of the portfolio should be both in the same direction and velocity as price movements in the market B. Changes in the value of the portfolio should be at the same velocity, but opposite direction to price movements in the market C. Changes in the value of the portfolio should be in the same direction, but greater velocity than market price movements D. Changes in the value of the portfolio should be in the same direction, but lower velocity than market price movements

A. Changes in the value of the portfolio should be both in the same direction and velocity as price movements in the market

An OTC trader receives an order from a customer to "Buy 1,000 XYZ at the Market" and simultaneously receives an order from another customer to "Sell 1,000 XYZ at the Market." The trader crosses the orders at the current market price. Which statements are TRUE? I The firm must act as an agent in the transaction, charging a commission on each side II The firm must act as a principal in the trade, charging a mark-up on the buy side and a mark-down on the sell side III When determining a price charged to the customer, the firm must comply with the FINRA 5% Policy IV When determining a price charged to the customer, the firm must consider the customer's financial condition A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding a municipal bond purchased at a premium? I The bond's cost basis is reduced by equal amounts each year II The bond's cost basis is reduced by decreasing amounts each year III Straight line amortization is required for all municipal bonds purchased at a premium IV Straight line amortization is only required for secondary municipal bonds purchased at a premium A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following securities transactions would result in a short term capital gain? I Purchase 100 shares of ABC stock at $50 on January 2, 2019; Sell 100 shares of ABC stock at $60 on July 2, 2019 II Purchase 100 shares of ABC stock at $50 on January 2, 2019; Sell 100 shares of XYZ stock at $60 on July 2, 2019 III Purchase 100 shares of ABC stock at $50 on January 2, 2019; Sell 100 shares of ABC stock at $60 on January 3, 2020 IV Purchase 100 shares of ABC stock at $50 on January 2, 2019; Sell 100 shares of XYZ stock at $60 on January 2, 2020 A. I only B. III only C. I and II only D. III and IV only

A. I only

Which bond portfolio where all investment is made up front would be LEAST negatively affected by a sharp rise in interest rates? A. Ladder B. Bullet C. Barbell D. Balloon

A. Ladder

Which ratio is a measure of credit risk? A. Total Debt / Net Tangible Assets B. Total Debt / Total Assets C. Net Income After Tax / Net Tangible Assets D. Net Income After Tax / Total Assets

A. Total Debt / Net Tangible Assets

An investor has $50,000 that she wishes to invest for her child's college expenses, which the child starts next year. The most suitable recommendation to the client is to invest the funds in: A. Treasury bills B. Intermediate-term bonds maturing in 5 years C. Long-term bonds of blue chip companies maturing in 10-30 years D. a mutual fund based on the S&P 500 Index

A. Treasury bills

A client, age 67, owns his own home free and clear. The customer has an annual income of $25,000, mainly from social security and interest on funds held in a bank savings account. The customer has never invested and is told by his nephew that the technology company that he works for is coming out with a hot new product that will really increase the company's stock price. The BEST recommendation to be made to this client is to: A. do nothing B. only invest enough of his savings account in the technology company's stock so that his reduced income still covers his bills as they come due C. take out a mortgage on his fully paid house and use the proceeds to make the investment in the technology company and then pay off the mortgage from the profits on the investment D. liquidate the entire savings account and use the proceeds to make the technology company investment because the customer can still live on this social security

A. do nothing

The FINRA 5% Policy requires that consideration be given to all of the following when determining mark-ups and commissions EXCEPT: A. financial condition of customer B. dollar amount of the transaction C. level of service provided by the firm D. type of security involved in the transaction

A. financial condition of customer

Management companies are subclassified as either: A. open-end or closed-end B. managed or unmanaged C. registered or unregistered D. fixed or participating

A. open-end or closed-end

A new issue corporate bond has a dated date of September 1st. The bond is assigned by the issuer to the underwriter on August 31st. Accrued interest on the bond will be calculated based on how many days in a year? A. 359 B. 360 C. 364 D. 365

B. 360

A high P/E stock would be a suitable investment for which of the following investors? A. A recent college graduate who is currently renting an apartment and who wishes to buy a house in 5 to 10 years B. A recently retired client who has a comfortable level of income from her pension, does not need additional income and is looking for aggressive investing C. A young married couple with 3 children ages 10, 12, and 14, who have minimal savings but wish to start putting away money to pay for their kids' college education D. A middle-aged single man who was just diagnosed with a disabling medical condition that will likely require him to need nursing care for his remaining lifespan that is not covered by his medical insurance

B. A recently retired client who has a comfortable level of income from her pension, does not need additional income and is looking for aggressive investing

Broker-dealers are permitted to execute all of the following over-the-counter transactions EXCEPT: A. Agency trades where the customer is charged a fair and reasonable commission B. Agency trades where the customer is charged a fair and reasonable mark-up or mark-down C. Principal trades where the customer is charged a fair and reasonable mark-up or mark-down D. Simultaneous transactions where both buyer and seller are charged a fair and reasonable commission

B. Agency trades where the customer is charged a fair and reasonable mark-up or mark-down

The Major Market Index Option contract is traded on the: A. New York Stock Exchange B. American Stock Exchange C. Chicago Board Options Exchange D. Chicago Mercantile Exchange

B. American Stock Exchange

Which statement is TRUE about the tax deductibility of 529 Plan contributions? A. Contributions are generally deductible at the federal level B. Contributions are generally deductible at the state level C. Contributions are generally deductible at the state level regardless of the state in which the plan was established D. Contributions are generally not deductible at either the federal or state level

B. Contributions are generally deductible at the state level

Which statements are TRUE regarding closed end investment companies? I The initial offering of shares is made under a prospectus II Shares are redeemable with the issuer at Net Asset Value III Shares trade in the secondary market at prevailing market prices IV The portfolio of investments is not managed A. I and II only B. I and III only C. III and IV only D. I, III, IV

B. I and III only

A customer buys 100 shares of a stock and sells a call against the stock position. If the call contract expires unexercised, which of the following statements are TRUE regarding the tax consequence of the stock and option positions for the customer? I The expired call results in a short term capital gain to the customer II The expired call results in no gain or loss until the stock position is sold III The cost basis of the stock decreases by the amount of the call premium received IV The cost basis of the stock is unaffected by the call premium received A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A customer places a market order to sell shares of ABC stock and the trade is executed at $56 per share. The trade confirmation sent to the customer states that the shares were sold for $59. Which statements are TRUE? I The customer gets the actual trade price II The customer gets the confirmation price III The firm absorbs any error IV The firm sends the customer a corrected confirmation A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

A market maker that compensates a retail member firm for sending its customer orders to that market maker is: I paying for order flow II interpositioning III engaging in a prohibited practice under SEC rules IV permitted to do so, subject to best execution requirements A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Municipal variable rate demand notes: I have a minimum value which will never go below par II have a maximum value which will never go above par III are subject to market risk IV are not subject to market risk A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

The Trust Indenture Act of 1939 applies to which of the following offerings? I $100,000,000 of Sewer Revenue Bonds sold interstate II $100,000,000 of Corporate Debentures sold interstate III $10,000,000 of Corporate Debentures sold interstate IV $100,000,000 of 30 day commercial paper sold interstate A. I and IV B. II only C. II and III D. II, III, IV

B. II only

Which statement is TRUE about a registered "fund of hedge funds?" A. Registered funds of hedge funds are redeemable shares of mutual funds available to the general public B. Registered funds of hedge funds are closed-end funds under the Investment Company Act of 1940, but they are not listed on an exchange C. Registered funds of hedge funds hold portfolios of registered securities that are hedged using listed or unlisted derivatives D. Registered funds of hedge funds use a manager to make investments in unregistered hedge funds, so that lower fees can be negotiated with the hedge fund managers

B. Registered funds of hedge funds are closed-end funds under the Investment Company Act of 1940, but they are not listed on an exchange

A company's common stock is selling in the market at a "multiple of 10". If the market price of the common stock is currently $10, which statement is TRUE? A. The company has paid dividends of $1 per share this year B. The company has earnings per share of $1 this year C. The company has paid dividends of $100 per share this year D. The company has earnings per share of $100 this year

B. The company has earnings per share of $1 this year

A registered representative takes an order from a customer to buy 100 shares of PSSS stock at $40 and writes the order ticket for processing. The registered representative fails to include the number of shares to be purchased on the ticket. Which statement is TRUE? A. The order will be processed for a round lot of 100 shares by default B. The order will be returned to the representative for entry of the order amount C. The order will be referred to the member firm's compliance department for resolution D. The order will be canceled without any further action taken

B. The order will be returned to the representative for entry of the order amount

A registered representative has a client who is an exceptionally intelligent doctor of medicine. The doctor does most of his own investment research and makes many of his own investment decisions. The doctor is married, but his wife is not involved in the investment planning or decision-making process. When constructing a portfolio for this client, the registered representative should: A. choose the investments in the portfolio based solely on the research conducted by the doctor B. balance the portfolio in a manner that addresses the doctor's investment strategy and that customizes the strategy to meet the needs of the spouse C. charge fees on the assets held in the portfolio that were chosen by the representative without using the doctor's research D. disregard the doctor's research because the doctor is not properly licensed to act as a representative

B. balance the portfolio in a manner that addresses the doctor's investment strategy and that customizes the strategy to meet the needs of the spouse

A customer sells 1 ABC Jan 50 Call and buys 1 ABC Dec 50 Call This is a: A. calendar debit spread B. calendar credit spread C. vertical debit spread D. vertical credit spread

B. calendar credit spread

A customer buys 1 ABC Jan 35 Call @ $5 and exercises the contract. The tax consequence is a: A. cost basis of $30 per share B. cost basis of $40 per share C. sale proceeds of $30 per share D. sale proceeds of $40 per share

B. cost basis of $40 per share

Under the flow of funds in a revenue bond trust indenture, the first use of NET revenues is to pay: A. operation and maintenance B. debt service C. debt service reserve D. reserve maintenance fund

B. debt service

The collateral backing private CMOs consists of: A. private placements offered under Regulation D B. mortgage backed securities created by a bank-issuer C. mortgage backed securities issued by a "privatized" government agency D. mortgages on privately owned homes and apartments

B. mortgage backed securities created by a bank-issuer

If a municipal securities firm is subject to a 2-year ban under MSRB Rule G-37, it would be permitted to: A. act as a financial advisor to that municipality during the period of the ban B. place a bid for a competitive offer of general obligation bonds being sold at auction by that issuer C. negotiate with the issuer to be the underwriter on a revenue bond offering D. do none of the above

B. place a bid for a competitive offer of general obligation bonds being sold at auction by that issuer

Rule 144A applies to trading of: A. restricted stock in the open market B. private placements by qualified institutional buyers C. restricted stock in a private securities transaction D. private placements by individuals

B. private placements by qualified institutional buyers

The symbol "s/s" comes across the following tape. This means that a(n): A. odd lot of 10 shares was traded B. round lot of 10 shares was traded C. round lot of 100 shares was traded D. round lot of 100 shares was sold short

B. round lot of 10 shares was traded

Issuers of securities are prohibited from: A. buying calls on their own stock B. selling calls on their own stock C. buying puts on their own stock D. selling puts on their own stock

B. selling calls on their own stock

A basis quote for a $5,000 municipal bond with one year left to maturity has just been dropped by 20 basis points. The bond's change in price will be: A. $1 increase B. $1 decrease C. $10 increase D. $10 decrease

C. $10 increase

An investor contributes $50,000 to a limited partnership and signs a $50,000 recourse note. In the first year, the investor's distributive share of income is $25,000 and loss is $125,000. The partnership also distributed $10,000 of cash during the year. How much loss can be deducted for this year? A. $0 B. $10,000 C. $115,000 D. $125,000

C. $115,000

A customer has an existing margin account that shows the following: Long Market Value: $200,000 Debit Balance: $120,000 If the market value declines to $120,000, the customer will receive a maintenance call for: A. $10,000 B. $20,000 C. $30,000 D. $60,000

C. $30,000

A corporation has issued $100 par, 8% cumulative convertible preferred stock, callable at par. The preferred is convertible into 1.4 shares of common stock. Currently, the preferred stock is trading at $102 while the common stock is trading at $75.50. The corporation calls the preferred stock at par plus accrued dividends of $2 per share. If a customer buys 100 preferred shares, converts, and then sells the common stock in the market, the profit is (ignoring commissions): A. $200 B. $320 C. $370 D. $570

C. $370

An exporter is shipping goods to Japan and Britain. The exporter expects to receive payment of 1,000,000 Japanese Yen and 1,000,000 British Pounds. To hedge these positions, the exporter should buy: A. 1 Japanese Yen Put contract and 1 British Pound Put contract B. 100 Japanese Yen Put contracts and 100 British Pound Put contracts C. 1 Japanese Yen Put contract and 100 British Pound Put contracts D. 100 Japanese Yen Put contracts and 1 British Pound Put contract

C. 1 Japanese Yen Put contract and 100 British Pound Put contracts

Which of the following statements is TRUE regarding a customer who wishes to write a put in a cash account? A. A customer cannot write a put in a cash account B. 50% of the strike price must be deposited C. 100% of the strike price must be deposited D. 100% of the strike price plus 100% of the premium must be deposited

C. 100% of the strike price must be deposited

Municipal brokers' brokers deal with which of the following? I Institutions II Bank dealers III Municipal bond dealers IV Individuals A. I and IV only B. II and III only C. I, II, III D. I, II, III, IV

C. I, II, III

The O.C.C. is responsible for which of the following? I Standardization of listed options contracts II Trading of listed options contracts III Issuance of listed options contracts IV Assignment of exercises of listed options contracts A. I and II only B. III and IV only C. I, III, IV D. I, II, III, IV

C. I, III, IV

Portfolio margining: I is based on the rules of Regulation T II is based on probable loss potential III generally results in lower margin requirements and greater leverage than standard margin calculations IV generally results in higher margin requirements and lower leverage than standard margin calculations A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Ten basis points are equal to: I $ .10 per $1,000 II $1.00 per $1,000 III .10% IV 1.0% A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE about non-contributory defined benefit retirement plans? I Contribution amounts are fixed II Contribution amounts vary III Annual benefit payments are fixed IV Annual benefit payments vary A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE regarding trading of that company's stock by an officer of a publicly traded company? I Officers are allowed to sell their own company's stock short II Officers are not allowed to sell their own company's stock short III Officers are allowed to retain any profits obtained from gains on stock positions which have been held for 1 year IV Officers must disgorge any profits obtained from gains on stock positions which have been held for 1 year A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following statements are TRUE when describing a variable annuity separate account? I The separate account is part of the insurance company's general account holdings II The separate account is legally segregated from the insurance company's general account holdings III The separate account invests in shares of a designated mutual fund IV The separate account makes direct investments in shares of stock A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE regarding structured products? I Structured products are standardized II Structured products are not standardized III Structured products have a fixed maturity date (similar to a debt security) IV Structured products do not have a maturity date (similar to an equity security) A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which of the following securities are redeemable with the sponsor? A. Real estate investment trusts B. Closed end funds C. Mutual funds D. Corporate preferred stock

C. Mutual funds

A 68-year old new customer has investment objectives of preservation of capital and income in retirement. The customer has a low risk tolerance and is in the 35% marginal federal tax bracket and is in the 10% state tax bracket. Which investment recommendation would be most suitable for this client? A. Investment grade corporate bonds with long maturities B. Preferred stocks of blue chip companies C. Pre-refunded general obligation bonds D. General obligation bonds that have been escrowed to maturity

C. Pre-refunded general obligation bonds

A young couple in a low tax bracket wishes to invest long term for their infant child's college education. They are looking for a safe investment that requires little involvement on their part until the child reaches college age. The BEST recommendation would be: A. T-Bills B. T-Notes C. T-Strips D. T-Bonds

C. T-Strips

Which of the following investments gives a rate of return that cannot be affected by "reinvestment risk"? A. Treasury Notes B. Treasury Bonds C. Treasury Receipts D. Ginnie Mae Pass Through Certificate

C. Treasury Receipts

All of the following statements are true if a customer places an order for an NYSE listed issue EXCEPT the order: A. must be directed by the member firm to the NYSE trading floor for execution if the customer so requests B. can be directed by the member firm to any trading venue if the customer does not direct the order to a specific market C. can be matched internally by the member firm and is not required to be sent to a public trading venue D. can be directed by the member firm to a trading venue that "pays for order flow" as long as this is disclosed to the customer

C. can be matched internally by the member firm and is not required to be sent to a public trading venue

Comparisons and "Don't Know" notices are sent from: A. dealer to customer B. customer to dealer C. dealer to dealer D. dealer to regulatory authority

C. dealer to dealer

Customer Jane Jennings' suitability information is presented below: Age: 39 Marital Status: Single Dependents: 1 Child - Age 10 Annual Income: $80,000 Tax Bracket: 28% Net Worth: $510,000 excluding home Home: $350,000 fully paid Investment Portfolio: $422,000 (60% equities; 20% long bonds; 20% money market) The customer wants to start a college fund for her child. The anticipated tuition, starting 8 years from now, is $50,000 per year ($200,000 total tuition). Which of the following recommendations is most appropriate for this customer? A. liquidate $200,000 of common stock in the client's portfolio and invest the entire proceeds in 8-year Treasury Notes B. take out a second mortgage on the customer's residence in the amount of $200,000 and invest the proceeds in a tax-deferred annuity funded by an income separate account C. liquidate $160,000 of the common stock and invest the proceeds in laddered Treasury Notes and Bonds of $40,000 amounts maturing 8, 9, 10 and 11 years from now D. liquidate $100,000 of the bonds in the customer's portfolio and $100,000 of common stock in the customer's portfolio and invest the entire proceeds in 8-year Adjustment Bonds

C. liquidate $160,000 of the common stock and invest the proceeds in laddered Treasury Notes and Bonds of $40,000 amounts maturing 8, 9, 10 and 11 years from now

A 45-year old man earns $150,000 per year and is covered by his employer's 401(k) Plan. He quits his job and moves to a new company that has no retirement plan, but will also pay him $150,000 per year. He should be advised to: A. continue to make maximum annual contributions to his 401(k) Plan B. roll his 401(k) Plan into a Roth IRA and continue to make annual contributions to the Roth IRA C. roll his 401(k) Plan into a Traditional IRA and continue to make annual contributions to the Traditional IRA D. request a distribution of the 401(k) and use the proceeds to buy a variable annuity

C. roll his 401(k) Plan into a Traditional IRA and continue to make annual contributions to the Traditional IRA

A company declares a cash dividend that is 8% higher than the previous dividend rate. Prior to the announcement, the annual dividend yield was 6% and the stock was trading at $25 per share. What is the new dividend payment amount per share? A. $.375 B. $.380 C. $.400 D. $.405

D. $.405

Which of the following is a fair comparison of two mutual funds? A. Income funds and growth funds should be compared based on yield per share after tax B. A comparison of two income funds should use a ten-year period for one and a five-year period for the other C. A comparison of two growth funds should use total initial investment, disregarding sales charges D. A comparison of a municipal bond fund and an income fund should use after-tax return for both

D. A comparison of a municipal bond fund and an income fund should use after-tax return for both

Which of the following best describes a stock that moves with the market? A. Income stock B. Special situations stock C. Defensive stock D. Blue Chip stock

D. Blue Chip stock

A customer holds a large portfolio of corporate bonds. The customer is worried about capital risk. Which diversification strategy would be least effective to minimize capital risk for this customer? A. Diversification among differing issuers in differing states B. Diversification among differing industries C. Diversification among differing maturities D. Diversification among differing coupon rates

D. Diversification among differing coupon rates

The Firm Element component of the "Continuing Education" requirement: I is administered by the compliance department II must be completed by all registered persons III must be completed annually IV must communicate information that is understood by the participants A. I only B. I and II only C. III and IV only D. I, II, III, IV

D. I, II, III, IV

A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Any surrender fee imposed: I increases sale proceeds II reduces sales proceeds III is deductible IV is not deductible A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

U.S. Corporations issuing Eurodollar bonds are: I subject to foreign currency exchange risk II not subject to foreign currency exchange risk III subject to filing with the SEC IV not subject to filing with the SEC A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: I 5% II 8 1/2% III of Net Asset Value IV of the Public Offering Price A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Under the Uniform Gifts To Minors Act, which of the following statements are TRUE? I Only adults related to the minor may open a custodian account II Any adult can open a custodian account for a minor III Any gift donated into the account is revocable IV Any gift donated into the account is irrevocable A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE regarding fiduciary accounts? I Trading authorization can be given to a third party other than the fiduciary II Trading authorization cannot be given to a third party other than the fiduciary III Margin accounts can be opened without restriction IV No margin accounts are allowed unless the account documentation authorizes the opening of a margin account A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following statements are TRUE about the acceptance of an "indication of interest" for a registered offering during the 20 day cooling off period? I The indication cannot be canceled by the customer II The indication cannot be canceled by the brokerage firm III The indication can be canceled by the customer IV The indication can be canceled by the brokerage firm A. I and III B. I and IV C. II and III D. III and IV

D. III and IV

A 67-year old woman has heavily invested her portfolio in growth securities. She realizes that as she approaches retirement, she needs to reallocate her portfolio for more income. However, she does not want to give up the growth objective. What would be the best investment recommendation for the funds that she will reallocate away from growth securities in her portfolio? A. Income stocks and emerging markets stocks B. Income stocks and cyclical stocks C. Cyclical stocks and emerging markets stocks D. Income stocks and blue-chip stocks

D. Income stocks and blue-chip stocks

Which of the following is defined as options "sales literature"? A. Options Disclosure Document B. Options billboard C. Telephone recording on options investing D. Lecture on options investing

D. Lecture on options investing

A corporation is preparing a registration statement for a new issue offering consisting of 300,000 new shares and 200,000 existing shares held by officers. Which of the following statements is TRUE? A. Only the 300,000 new shares can be purchased on margin B. Only the 200,000 shares previously held by officers can be purchased on margin C. All 500,000 shares can be purchased on margin D. None of the shares can be purchased on margin

D. None of the shares can be purchased on margin

A self-employed client has an annual income of $200,000 and is in a high tax bracket. He is not covered by a retirement plan and would like to make the maximum contribution to one to reduce his taxable income. He believes that he will be in a lower tax bracket once he retires. The BEST recommendation is to contribute to a: A. Traditional IRA B. Roth IRA C. 401(k) D. SEP IRA

D. SEP IRA

When the market price of ABC stock is $54 per share, which of the following choices would create a "strangle"? A. Short 1 ABC Jan 50 Call; Short 1 ABC Jan 50 Put B. Long 1 ABC Jan 50 Call; Long 1 ABC Jan 60 Put C. Long 1 ABC Jan 50 Call; Long 1 ABC Jan 50 Put D. Short 1 ABC Jan 60 Call; Short 1 ABC Jan 50 Put

D. Short 1 ABC Jan 60 Call; Short 1 ABC Jan 50 Put

An investor becomes a limited partner when the general partner accepts the limited partner by signing the: A. Syndication Agreement B. Partnership Agreement C. Certificate of Limited Partnership D. Subscription Agreement

D. Subscription Agreement

An investor has 1 ABC Jan 50 Call contract. ABC declares a 25% stock dividend. Which statement is TRUE regarding the option contract after adjustment for the dividend? A. The contract becomes 1 ABC Jan 60 Call covering 125 shares B. The contract becomes 1 ABC Jan 40 Call covering 100 shares C. The contract becomes 1 ABC Jan 40 Call covering 125 shares D. The contract stays as 1 ABC Jan 50 Call covering 100 shares

D. The contract stays as 1 ABC Jan 50 Call covering 100 shares

All of the following sources of REIT income are counted towards the 75% test required by Subchapter M EXCEPT: A. net rental income B. interest income from mortgages C. real estate tax refunds D. dividend income from investments

D. dividend income from investments

Decreasing inventory levels are an indication of all of the following EXCEPT: A. consumer demand is increasing B. economic expansion is occurring C. consumer demand is high D. economic conditions are deteriorating

D. economic conditions are deteriorating

The purchase of index puts against a portfolio of listed securities is a: A. covered writing strategy B. naked writing strategy C. horizontal spread strategy D. hedging strategy

D. hedging strategy

The discount on market discount corporate and government bonds: A. must be amortized annually B. may be amortized annually C. must be accreted annually D. may be accreted annually

D. may be accreted annually

A customer tells his broker "Sell my position in ABCD (a NASDAQ stock) and use the proceeds to buy EFGH (another NASDAQ stock)." Under the 5% Policy, the customer will be charged a commission or mark-up based on the: A. purchase of EFGH only B. sale of ABCD only C. purchase of EFGH separately; and the sale of ABCD separately D. purchase of EFGH and the sale of ABCD combined

D. purchase of EFGH and the sale of ABCD combined

A customer is long 100 shares of ABC stock purchased at $30. The stock is now trading at $42. The customer believes that the stock has the potential to move up to $55 a share, but no further. The customer would like to generate extra income and also enjoy the limited upside gain potential in the stock. To do this, the customer should: A. buy 1 ABC Jan 40 Call B. sell 1 ABC Jan 40 Call C. buy 1 ABC Jan 55 Call D. sell 1 ABC Jan 55 Call

D. sell 1 ABC Jan 55 Call

Treasury Bills cannot be used as the underlying collateral for Treasury Receipts because: A. Treasury Bills are not Agency securities B. Treasury Bills are a direct obligation of the U.S. Government C. the maturity of a Treasury Bill is too long D. the maturity of a Treasury Bill is too short

D. the maturity of a Treasury Bill is too short