Series 7 Unit 17 Quiz 2
Your customer has purchased $40,000 of stock in a new margin account and deposits the required Regulation T amount into the account. At the end of the month, the broker-dealer charges the client interest on the monies borrowed in the amount of $133. At the end of the month, the value of the stock drops to $36,000. The month-end statement for this client will show a debit balance of
$20,133
Due to a distribution of stock, the contract size in the JGH Oct 50 call options is 108. A customer purchasing one of these contracts for a premium of 2.5 would expect to pay
$270
If an investor opens a new margin account and buys 200 shares of DWQ at 50, with Regulation T at 50%, what is the investor's initial margin requirement?
$5000
A DMF convertible bond (convertible into 25 shares) has increased 20% above par in market value. Which of the following would you expect the price of the DMF's common stock to be? -$42 -$40 -$32 -$48
-$48
Which of the following bonds is MOST affected by interest rate risk? -7.5s of '39 -7.8s of '42 -7.3s of '37 -7.6s of '45
-7.6s of '45
A municipal bond subject to a refunding call must be quoted at YTC in which of the following instances? -A bond at a discount callable at par -A bond at par callable at a premium -A bond at a premium callable at par -A bond at par callable at par
-A bond at a premium callable at par
Which of the following securities is NOT exempt from the registration provisions of the Securities Act of 1933? -A US government bond -A new stock being offered in three states -A high-quality corporate promissory note maturing in 180 days -An equity security issued in only one state, solely to residents of that state
-A new stock being offered in three states
A company has filed for an IPO at $20 par value. The IPO is priced at $30 per share. Where on the balance sheet is the extra $10 recorded?
-Capital surplus
Which of the following corporate bonds is backed by other securities? -Collateral trust bond -Mortgage bond -Debenture -Equipment trust certificate
-Collateral trust bond
All of the following ratios are measures of the liquidity of a corporation EXCEPT -Current ratio -Acid test ratio -Debt/equity ratio -Quick ratio
-Debt/equity ratio
Which of the following plans requires an actuary's services? -Profit-sharing -Defined contribution -Defined benefit -401(k)
-Defined benefit
Securities issued by which of the following agencies are considered to have the strongest backing? -FNMA -GNMA -FHLMC -FAMC
-GNMA
A firm must provide a risk disclosure document to a customer before opening which of the following accounts? -Transfer on death -Partnership -Custodial -Margin
-Margin
Which of the following statements is true regarding IRA rollovers?
-One rollover may be conducted every 12 months but it must be completed within 60 days
The certificate of limited partnership contains which of the following? -The market-out clause -The amount of time the partnership expects to exist -Each investor's net worth -All conditions of dissolution
-The amount of time the partnership expects to exist -All conditions of dissolution
Which of the following statements regarding T-bills are TRUE? -The government auctions T-bills at a discount -The difference between the cost of a T-bill and its value at maturity is treated as a capital gain -T-bills have longer maturities than T-notes -The minimum denomination of a T-bill is $100 face amount
-The government auctions T-bills at a discount -The minimum denomination of a T-bill is $100 face amount
Each of the following are generally used to service state GO bond issues EXCEPT -motor vehicle license fees -real estate taxes -sales taxes -income taxes
-real estate taxes
All of the following would be considered a proper way for a client to file a complaint with a FINRA member firm EXCEPT -instant message -telegram -text -telephone
-telephone
All of the following are true of REITs EXCEPT -shares are publicly traded -they must, under Subchapter M, distribute at least 90% of their net investment income -they must invest at least 75% of their assets in real estate-related activities -they must pass along losses to shareholders
-they must pass along losses to shareholders
Marcus owns 5,000 shares of KYZ stock. He recently receives proxies in the mail. Marcus would be able to use the proxies for all of the following EXCEPT -to vote for three members of the BOD -to buy additional shares of KYZ common stock after the stock splits -to vote on the proposed issuance of 100,000 shares of convertible preferred stock -to vote on a proposed 2:1 stock split
-to buy additional shares of KYZ common stock after the stock splits
Under SEC Rules, all of the following information must be on a customer confirmation EXCEPT -whether the trade was solicited or unsolicited -whether the member is a market maker in the security bought or sold -whether the member has a control relationship with the issuer -whether the member acted as agent or principal
-whether the trade was solicited or unsolicited
A broker-dealer can rehypothecate (repledge) up to
140% of the debit balance in a customer's margin account
FINRA Rule 2310 defines a direct participation program as "a program which provides for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution including, but not limited to, oil and gas programs, real estate programs, agricultural programs, cattle programs, condominium securities, Subchapter S corporate offerings and all other programs of a similar nature, regardless of the industry represented by the program, or any combination thereof." The rule places limits on the overall expenses and amount of broker-dealer compensation considered fair and reasonable. That limit is
15% of the gross proceeds
A customer in the 28% tax bracket owns a 9% ABC Corporation 20-year bond that is currently yielding 8.7% to maturity. She is considering buying tax-exempt securities. What is the comparable yield for a municipal bond?
6.480%
How may a retail customer of a FINRA member firm gain access to the FINRA manual?
By visiting the firm's office or viewing it through a hyperlink on the firm's website
A customer of a FINRA member firm submits an order to sell 100 shares of a stock at a price of $43 per share. The customer receives a trade report indicating that all 100 shares were sold at $42.95 per share. What should the registered representative handling the account do?
Report the error immediately to the designated principal
At 2:15 pm ET, a customer gives his registered rep a market order to buy 100 shares of ABC at the close. What should the registered rep do with the order?
Send the order to the floor immediately
A new client indicates the desire to invest in a highly speculative venture suitable only for those with significant net worth. The client assures you that he has the financial ability to sustain the loss of the entire investment. You believe that it is necessary to verify that is the case. What documentation would help you?
The client's tax returns for the past three years
If you were reading sales literature about a mutual fund that claimed its objective is to be a single source investment for most equity investors, it would most likely be describing
a blend/core fund
When analyzing a convertible debt security, it is MOST likely the issue is
a debenture
Demode Classic Investments (DCI) is planning a direct mail campaign to several thousand potential investors. The topic of the campaign deals with owning real estate through direct participation program limited partnerships. Under FINRA Rule 2210 on communications with the public, this is considered...
a retail communication and must be filed with FINRA within 10 business days of first use or publication
A father opens four custodial accounts, one for each of his children, with the same mutual fund company. He invests $15,000 in each account. The fund company has breakpoints at $50,000, $100,000 and $200,000. The sales charge is
based on the total $60,000 investment and qualifies for the $50,000 breakpoint
Your client with a short call position in the S&P 100 index (OEX) is assigned an exercise notice. The obligation is fulfilled by delivering
cash equal to the difference between the closing value of the index and exercise price
The main purpose of dividend reinvestment in a mutual fund accumulation plan is to
compound the growth of a mutual fund investment
The interest that municipal securities pay is
federally tax exempt
For a member firm and its representatives to be able to sell a particular investment company security, the firm must
have a written sales agreement with the investment company
A 30-year corporate bond is quoted as QRS Zr 39. This quote tells an investor that the bond
pays no interest until maturity
If a registered rep is suspended by FINRA's Department of Enforcement, his first appeal would be to
the National Adjudicatory Council
Index options contracts that are commonly referred to as the fear gauge, and are based on the expected or implied volatility of the S&P 500 index, are known as
the VIX or volatility market index options
An underwriter should consider all of the following factors when determining the spread on a new issue EXCEPT
the amount of the good faith check
Municipal bonds are not normally sold short because...
the municipal bond market is illiquid
A registered primary offering of common stock differs from a registered secondary offering of common stock in that
the proceeds of the primary offering are received by the issuing company, while the issuer receives none of the funds from a secondary offering
