SIE Mastery Exam 1 Review Questions

Which of the following is NOT defined as an "investment company" under the Investment Company Act of 1940? A. Face Amount Certificate Company B. Real Estate Investment Trust C. Management Company D. Unit Investment Trust

B. Real Estate Investment Trust

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

B. TIPS

The essential difference between a sponsored and unsponsored ADR is:

Issuer sponsorship

If a corporation wishes to sell additional shares, which of the following persons can subscribe using pre-emptive rights?

Common Stockholders

A securities firm does a trade for a customer and charges a mark-up. In what capacity did the firm act?

Dealer

Which statement regarding mortgage bonds is FALSE?

Default of mortgage bonds is common during recessionary periods

Municipal variable rate demand notes have an:

Interest rate that is reset periodically and are considered long term municipal notes

Interest income from which of the following bond issues is SUBJECT to State and Local tax?

Issues of states purchased by non- residents of that state

The following order is entered: Sell 100 ABC @ 45 Stop Which statement is TRUE?

The order may be elected at 45 or lower

XYZ company has issued 10%, $100 par non-cumulative preferred stock. Two years ago, XYZ omitted its preferred dividend. last year it paid a preferred dividend of $5 per share. This year, XYZ wishes to pay a common dividend. In order to make the distribution to common shareholders, each preferred share must be paid a dividend of:

$10

A customer buys 5M of 6 1/4% Treasury Bonds at 100. How much interest income will the customer receive at each interest payment?

$156.25

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:

$2,700

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:

$400

A 5-year 2 1/4% Treasury Note is quoted at 100-12 - 100-16. The note pays interest on Jan 1st and Jul 1st. A customer buys 5M of the notes. Approximately how much will the customer pay, disregarding commissions and accrued interest?

$5,025

XYZZ ADR represents 10% of the value of an XYZZ ordinary share. The ordinary shares trade on the London Stock Exchange, where the current price is 400 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 XYZZ 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?

$8,400

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?

$80

The ex date for stock splits and stock dividends is set at:

1 business day after the payable date

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:

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

An ADR has been issued where each ADR equals 600 ordinary shares of the foreign issuer. If a client wished to buy enough ADRs to cover 6,000 ordinary shares, how many ADRs must be purchased?

10

Which investment gives the LEAST protection against purchasing power risk?

10 year Treasury STRIPS

An ADR has been issued where each ADR equals 10 ordinary shares of the foreign issuer. If a client wished to buy enough ADRs to cover 1,000 ordinary shares, how many ADRs must be purchased?

100

An outstanding bond issue which is currently trading at 103 1/4 is callable starting next year at 102 1/2. The call premium on the bond issue is:

2 1/2 points

A corporation is offering a new issue consisting of 100,000 units at $200 each. Each unit consists of 2 shares of preferred stock and a warrant to buy one half additional common share. A full warrant allows the purchase of an additional common share at $5. If all the warrants are exercised, the corporation will have outstanding:

200,000 preferred shares and 50,000 common shares

ABC company has outstanding 6% cumulative preferred stock. Two years ago, ABC paid 6% preferred dividend. Last year, ABC paid 4% preferred stock dividend. This year, ABC wishes to pay a common dividend. The preferred shareholders must receive:

8%

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:

8.8%

An ADR has been issued where each ADR equals .1111 ordinary shares of the foreign issuer. If a client wished to buy enough ADRs to cover 100 ordinary shares, how many ADRs must be purchased?

900

All of the following statements about warrants are true EXCEPT: A. At issuance, warrants have intrinsic value B. Warrant valuation is directly influenced by the valuation of the company's common stock C. Warrant valuation reflects the life of the instrument D. Warrant valuation reflects market expectations for future earnings of the company

A. At issuance, warrants have intrinsic value

All of the following will affect the marketability of corporate bonds EXCEPT: A. Bond denominations B. Block size C. Maturity D. Bond rating

A. Bond denominations

All of the following may initiate repurchase agreements with government and agency securities as collateral EXCEPT: A. Federal Home Loan Banks B. Commercial banks D. Government securities dealers

A. Federal Home Loan Banks

All of the following are considered to be a good delivery for a 500 share trade of stock EXCEPT: A. Two 250 share certificates B. Twenty 25 share certificates C. Ten 50 share certificates D. Fifty 10 share certificates

A. Two 250 share certificates

All of the following statements are true about commercial paper EXCEPT commercial paper: A. is a funded debt of the issuer B. matures on a pre-set date and at a pre-set price C. is quoted on a yield basis D. is an unsecured promissory note

A. is a funded debt of the issuer

A securities firm does a trade for a customer and charges a commission. In what capacity did the firm act?

Agent

Which orders guarantee execution but not price?

All stop orders and market orders

What is required to calculate the yield to maturity of a bond?

Annual Interest Annual Capital Gain/Loss Bond Cost Redemption Price

An investor buys a bond at a discount. Later in the year, the bond is trading at a premium. This is termed:

Appreciation

Which of the following would be a quote for a railroad bond? A. 101.25 B. 101-8 C. 101 1/4 D. 101 4/16

C. 101 1/4

Which of the following would be a quote for a U.S. Government bond? A. 105.625 B. 105-20 C. 105 5/8 D. 105 10/16

B. 105-20

Which of the following are due interest from the corporation? A. Common Shareholders B. Convertible Bondholders C. Preferred Shareholders D. Warrant Holders

B. Convertible Bondholders

The manager of a pension plan would invest in all of the following debt securities EXCEPT: A. Corporate bonds B. Municipal bonds C. U.S. government bonds D. Foreign government bonds

B. Municipal bonds

All of the following are true regarding a bond that is "registered to principal only" EXECPT: A. the bond is negotiable B. interest coupons are detached from the corpus of the bond C. interest payments can be redeemed by anyone D. at maturity, the registered owner receives the face amount of the bond

B. interest coupons are detached from the corpus of the bond

Municipalities would issue tax exempt commercial paper for all of the following reasons EXCEPT to: A. meet a temporary cash shortage due to unforeseen extraordinary expenses B. refund an outstanding bond issue C. provide construction period financing that will be permanently financed by a future bond sale D. smooth out collections of funds that are normally subject to seasonal fluctuations

B. refund an outstanding bond issue

Which statement is TRUE regarding BDCs?

BDCs are publicly traded and make direct investments in privately-held companies

The rating level at which a bond is first considered to be speculative is:

Ba

The LEAST liquid money market instrument is:

Banker's Acceptances

New issues of short term municipal notes and bonds are available in which form?

Book Entry

Which statement is TRUE when comparing bonds and preferred stock?

Both bonds and preferred stock have a fixed payout rate and some may be convertible into common stock

The Federal Reserve would permit all of the following to be "primary" U.S. Government securities dealers EXCEPT? A. A domestic commercial bank B. A foreign broker-dealer C. A domestic thrift institution D. A domestic broker-dealer

C. A domestic thrift institution

All of the following are evaluated in the feasibility study prepared prior to the issuance of revenue bonds EXCEPT: A. Expected demand for the facility B. Effect of competing facilities C. Bond trust indenture D. Expected operating costs of the facility

C. Bond trust indenture

Which statement is FALSE about CMBs? A. CMBs are used to smooth out cash flow B. CMBs are sold at a discount to par C. CMBs are sold at a slightly lower yield than T-Bills D. CMBs are direct obligations of the U.S. government

C. CMBs are sold at a slightly lower yield than T-Bills

All of the following are sources of income can be used for debt service on municipal revenue bonds EXCEPT: A. User Fees B. Special Taxes C. Capitalized Interest D. Lease Rentals

C. Capitalized Interest

All of the following are sources of income that can be used for debt service on municipal revenue bonds EXCEPT: A. User Fees B. Special Taxes C. Capitalized Interest D. Lease Rentals

C. Capitalized Interest

All of the following securities are eligible for Fed trading EXCEPT: A. Treasury Bonds B. Prime Banker's Acceptances C. Commercial Paper D. Treasury Bills

C. Commercial Paper

Which of the following is NOT a revenue bond? A. Water and Sewer bond B. Tunnel Construction Bond C. Construction bond for a new local library D. Lease rental bond

C. Construction bond for a new local library

An investor is seeking a bond issue offering call protection. An issue having which features would NOT be an appropriate investment? A. Low stated interest rates and low stated call premiums B. Low stated interest rates and high stated call premiums C. High stated interest rates and low stated call premiums D. High stated interest rates and high stated call premiums

C. High stated interest rates and low stated call premiums

Which of the following can be purchased on margin?

Closed End Funds trading on the NASDAQ

Which statement is FALSE regarding Treasury Inflation Protection securities? A. In periods of deflation, the amount of each interest payment will decline B. In periods of deflation, the interest rate is unchanged C. In periods of deflation, the principal amount received at maturity will decline below par D. In periods of deflation, the principal amount received at maturity is unchanged at par

C. In periods of deflation, the principal amount received at maturity will decline below par

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 statement is FALSE regarding repurchase agreements? A. Repurchase agreements typically mature in 1 to 90 days B. Repurchase agreements are used by the Federal Reserve to influence money supply levels C. Investors in repurchase agreements have no interest rate risk D. Investors in repurchase agreements have no price risk

C. Investors in repurchase agreements have no interest rate risk

Which statement is FALSE about Jumbo Certificates of Deposit? A. Jumbo CDs are traded in the secondary market B. Jumbo CDs are backed by the issuing financial institution C. Jumbo CDs are fully insured by the Federal Deposit Insurance Corporation D. Jumbo CDs are considered to be negotiable instruments

C. Jumbo CDs are fully insured by the Federal Deposit Insurance Corporation

Which characteristic is NOT common to both Treasury STRIPS and Treasury Notes? A. Minimum $100 denominations B. Quoted as a percent of par in 32nds C. Pay interest at maturity D. Guaranteed by the U.S. Government

C. Pay interest at maturity

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

Which risk is NOT applicable to Ginnie Mae Pass Through Certificates? A. Purchasing power risk B. Risk of early prepayment of mortgages if interest rates fall C. Risk of default if homeowners do not make their mortgage payments D. Risk of loss of principal if interest rates rise

C. Risk of default if homeowners do not make their mortgage payments

All of the following can create a short position EXCEPT: A. Buying a stock on one exchange and simultaneously selling it on another exchange B. Selling stock for a customer that is owned by that customer C. Selling 100 shares after the client has exercised a call option D. Selling stock for the firm's account that is not owned by the firm

C. Selling 100 shares after the client has exercised a call option

All of the following statements are true regarding the Federal Funds rate EXCEPT: A. The rate is computed every business day B. The rate is lower than the discount rate C. The rate is set by the Federal Reserve D. The rate is charged from one Federal Reserve member bank to another member bank

C. The rate is set by the Federal Reserve

ADRs would NOT trade on which of the following exchanges? A. New York Stock Exchange B. American Stock Exchange C. Tokyo Stock Exchange D. NASDAQ Stock Market

C. Tokyo Stock Exchange

All of the following trade "and interest" EXCEPT: A. Treasury Bonds B. Treasury Notes C. Treasury Bills D. Municipal Bonds

C. Treasury Bills

All of the following are true statements about U.S. Government Agency securities EXCEPT: A. U.S. Government Agency Securities are quoted in 1/32nds B. U.S. Government Agency Securities have an implicit backing by the U.S. Government C. U.S. Government Agency Securities trade flat D. U.S. Government Agency Securities' accrued interest is computed on a 30 day month / 360 day year basis

C. U.S. Government Agency Securities trade flat

All of the following statements are true for both limited partnerships and corporations EXCEPT both limited partnerships and corporations: A. limit liability for the business owners B. have centralized management C. allow for "flow-through" of gain and loss D. are formed with business intent

C. allow for "flow-through" of gain and loss

All of the following terms apply to publicly traded fund shares EXCEPT: A. one-time issuance B. managed C. redeemable D. negotiable

C. redeemable

All of the following statements are true regarding stop orders EXCEPT: A. stop orders can protect a profit on a long stock position B. stop orders can limit a loss on a long stock position C. stop orders allow a specific execution price to be "locked-in" D. stop orders are placed "away" from the current market

C. stop orders allow a specific execution price to be "locked-in"

Regarding bonds with put options, all of the following statements are true EXCEPT: A. exercise of the put is at the option of the bondholder B. once the option is exercisable, the bond's price will not fall below the option price if interest rates rise C. yields on bonds with put options are higher than similar bonds without this feature D. the put option represents a floor on the market price of the bond

C. yields on bonds with put options are higher than similar bonds without this feature

Stock options trade on the:

CBOE

Which statement is TRUE about a Certificate of Participation (COP)

COPs are backed by a pledge of lease revenues

ABC gold mining company has issued a preferred stock. Dividends on the issue may be paid as:

Cash only

A customer who lives in the state of New York buys GNMA Pass-Through Certificate:

must include the interest income received on both his federal tax return and his state tax return

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 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

All of the following statements about investment company securities are correct EXCEPT: A. Open end fund shares are redeemable B. Closed end fund shares are negotiable C. Fixed unit investment trusts are redeemable D. Participating unit investment trusts are negotiable

D. Participating unit investment trusts are negotiable

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

All of the following are types of preferred stock EXECPT: A. Performance B. Participating C. Cumulative D. Refundable

D. Refundable

All of the following statements are true regarding Government National Mortgage Association pass-through certificates EXCEPT: A. GNMA securities are guaranteed by the U.S. Government B. Dealers typically quote GNMA securities on a basis point differential to equivalent maturity U.S. Government Bonds C. Credit risk for GNMAs is the same as for equivalent maturity U.S. Government Bonds D. Reinvestment risk for GNMAs is the same as for equivalent maturity U.S. Government Bonds

D. Reinvestment risk for GNMAs is the same as for equivalent maturity U.S. Government Bonds

Which of the following pay quarterly dividends? A. ADRs B. Bonds C. Preferred stock D. Rights

D. Rights

ABC Corporation has recently completed a $20,000,000 offering of 10% debentures due in 2035. Each bond was sold with a warrant attached that allows the holder to buy 10 shares of ABC common stock at $50 per share. The market price of ABC is currently $42. All of the following statements are true EXCEPT: A. The warrants help to increase the issue's marketability B. The warrants help to lower the interest cost on the issue C. The warrants are "under water" D. The company will raise an additional $5,000,000 if the warrants are exercised

D. The company will raise an additional $5,000,000 if the warrants are exercised

All of the following statements regarding warrants are true EXCEPT? A. Warrants generally have a life of 5 years or less B. At issuance, the exercise price of the warrant is set higher than the current market price of the underlying common stock C. The price of the warrant will vary with the price movements of the underlying stock D. The warrant is not a tradable security

D. The warrant is not a tradable security

All of the following are true statements about Treasury STRIPS EXCEPT: A. the investor's interest rate is locked in at purchase, eliminating any reinvestment risk B. at maturity, there is no capital gain C. the income is accreted and taxed annually D. these are suitable investments for individuals seeking current income and a high level of safety

D. these are suitable investments for individuals seeking current income and a high level of safety

The market price of common stock will be influenced by what?

Expectations for future dividend payouts by the company

"The average daily rate charged by member banks for overnight loans of reserves" best describes the:

Federal Funds Rate

The type of municipal bond issue that would be used to finance the construction of public schools would be a:

General Obligation Bond

A municipality is at its debt limit and wishes to sell additional bonds. Voter approval is required for the municipality to sell:

General Obligation Bonds

Which of the following settle in "clearing house" funds?

General Obligation Bonds

Which of the following revenue bond issues would likely pledge the earnings from invested endowment funds to the bondholders?

Hospital bond

Which of the following are characteristics of ECNs? I ECNs trade listed stocks II ECNs trade OTC stocks III ECNs trade "away" from exchanges IV ECN trades are not reported

I and III

In a developmental oil and gas program which of the following statements are TRUE? I There is lower risk than an exploratory program II There is higher risk than an exploratory program III The cost of drilling is not deductible IV The cost of drilling is 100% deductible

I and IV

Political risk is generally associated with:

International bond investments

A broker-dealer holds a limit order to buy 100 shares of ABC stock at $20.00 for a customer. Which of the following trades are acceptable? I The purchase of 100 shares of ABC for the firm's trading account at $19.50 prior to executing the customer's order II The purchase of 100 shares of ABC for the firm's trading account at $20.50 prior to executing the customer's order III The long sale of 100 shares of ABC out of the firm's trading account to the customer at $20.00 IV The short sale of 100 shares of ABC out of the firm's trading account to the customer at $20.00

II, III, IV

Common dividends can be paid in which of the following forms? I Rights II Product III Stock IV Cash

II, III, IV

Which of the following do NOT pay dividends? I Preferred Stock II ADRs III Warrants IV Real Estate Investment Trust Shares

III only

What is the main objective of investing in Equity REITs?

Income and growth

What is considered to be the most positive factor when evaluating the credit of general obligation bond of a city?

Increasing tax base

Municipal bonds would NOT be an appropriate investment for which of the following?

Individual Retirement Accounts

When does an investor receive payment payment of interest and principal on a Capital Appreciation Bond (CAB)

Interest and principal is paid at maturity

A client owns a municipal bond fund. What is the tax status of distributions from the fund?

Interest distributions are exempt from federal tax, but capital gains distributions are subject to federal tax

Which of the following will increase the marketability risk of a bond?

Large block size transaction amount

Which characteristics make a security MOST subject to liquidity risk?

Long term maturity and low credit rating

The minimum price at which a closed end fund share can be purchased is:

Market Price plus a commission

A customer buys a US Gov bond on Friday, Jun 14th in a regular way trade. The trade settles on:

Monday, June 17th

A customer has heard about the explosive growth in China and wants to make investments in Chinese companies. Which risk is NOT associated with this potential investment?

Mortality risk

What securities are traded in the secondary market? (4)

Municipal bonds REITS Preferred Stocks ADRs

Which first market does NOT trade futures contracts?

NYSE

Which securities will trade with accrued interest?

Negotiable Certificates of Deposit

Which of the following terms apply to publicly traded fund shares?

Negotiable with a one-time stock issuance

An investor expects that interest rates will decline over the next 5 years. Which of the following are appropriate investments?

Non-callable 10 year bonds

Which of the following terms describe a special tax bond issue?

Non-self supporting

The NYSE Specialist (DMM) and Floor Trader system is the model for trading used by which of the following markets?

PHLX

What term would apply to Authorized Stock?

Par Value

During a period of stable interest rates, which type of preferred stock would show the greatest price volatility

Participating

Which item is taxable to a limited partnership?

Partnerships are not taxable entities

Which of the following is the most likely purchases of STRIPS?

Pension fund

For municipal transactions effected on a yield basis, how are these bonds generally priced?

Premium bonds are priced to the near-term call date

A securities firm buys stock from a customer and charges a mark-down. In what capacity did the firm act?

Principal

US Government Agency Securities are:

Quoted in 1/32nds and traded with accrued

Which of the following is an acronym used to describe real estate direct participation programs?

RELPS

Which statement is TRUE about tax shelters that invest in raw land?

Raw land is not depreciable and does not qualify for the depletion deduction

If an NYSE stock is dual listed, it would typically trade as well on the:

Regional Exchange

Which statement is TRUE about adjustment (income) bonds?

Semi-annual payment of interest is not assured and repayment of principal at maturity is not assured

Which statement is TRUE about bond price changes that result from interest rate movements?

Short term bond prices move more slowly than long term bond prices

Which characteristics make a security LEAST subject to liquidity risk?

Short term maturity and high credit rating

A customer has made the following purchases of XYZ stock: Year 1: 300 shares @ $62 Year 2: 400 shares @ $66 Year 3: 100 shares @ $63 Year 4: 500 shares @ $69 Year 5: 200 shares @ $68 It is now Year 6 and the stock is trading at $70. The customer wishes to sell 1,000 shares. To minimize tax liability, the customer should use which tax valuation method for the shares that are sold?

Specific Identification

A municipality has issued a general obligation bond. Which of the following are sources of income are NOT available for debt service?

State income taxes

A. is a funded debt of the issuer

The CD has a secondary trading market

Which statement is TRUE regarding Treasury Inflation Protection securities in periods of deflation?

The amount of each interest payment will decline and the principal amount received at maturity is unchanged at par

A corporation has issued 8% AA rated sinking fund debentures at par. Three years later, similar issues are being offered in the primary market at 7%. Which statement is TRUE about the outstanding 8% issue?

The dollar price of the bond will be at a premium to par and the current yield will be lower than the nominal yield

Two 20-year corporate bonds are issued at par, with stated interest rates of 10%. One issue is callable at par in 5 years, while the other is callable at par in 10 years. If interest rates drop by 200 basis points shortly after issuance, which statement is TRUE?

The bond callable in 10 years will appreciate more than the bond callable in 5 years

A company that has issued first mortgage bonds is declared in default by the trustee. Which statement is TRUE?

The bondholders have legal claim to the property backing the bond and may sell that property to satisfy the unpaid obligation

Which statement is TRUE regarding Ginnie Mae Pass Through Certificates?

The certificates are self-amortizing

Which statement is BEST regarding participating preferred stock?

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

Which of the following are risks that should be disclosed to customers when recommending the purchase of a CD sold through a brokerage firm?

The secondary market is limited, so that sale prior to maturity can incur higher than normal transaction costs

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?

The shareholder can buy a maximum of 18 shares by paying $432

A 5-year 3 1/2% Treasury Note is quoted at 101-4 - 101-8. The note pays interest on Jan 1st. and Jul. 1st. Which statement is TRUE regarding these T-Notes?

The trade will settle in Fed Funds and interest accrues on an actual day month / actual day year basis

If a callable bond is purchased at a premium, and is then called at par which of the following is TRUE?

The yield to call is lower than the nominal yield

Which statements is TRUE regarding Brokered CDs?

There can be a loss of principal upon an early withdrawal

Which of the following statements are TRUE regarding sponsored ADRs

These ADRs often trade on exchanges

Which of the following is a zero coupon original issue discount obligation?

Treasury STRIPS

Which statement si TRUE when comparing Treasury Bills to Treasury STIPS?

Treasury STRIPS are quoted in 32nds Treasury Bills are quoted on a discount yield basis

A bond counsel would render an unqualified legal opinion in which of the following circumstances?

Underwriters for the issue have not complied with MSRB disclosure requirements in connection with the sale of the issue

Which terms apply to fixed unit investment trusts?

Unmanaged and regulated

Which term applies to common stock? convertible redeemable non-negotiable non-callable

non-callable

Which of the following statements about warrants are TRUE? (3 statements)

Warrant valuation reflects market expectations for future earnings of the company Warrants give the holder the long term option to buy stock Warrants have no intrinsic value but significant time value

If a regular way municipal bond trade takes place on Monday, June 2nd, the trade will settle on:

Wednesday June 4th

How are corporate bonds quoted?

Whole and Fractional

A double barreled municipal bond is one that is backed by:

a pledge of revenues and the backing of that municipality's ad valorem taxing power

At issuance, the exercise of a warrant is set at:

a premium to the current market price of that issuer's common stock

A call premium on a bond is the amount:

above par issuer will pay the bondholder to call in bonds prior to maturity

A call premium on a bond is the:

amount by which the redemption price prior to maturity exceeds par

Sell stop orders:

are used to sell securities at prices that are lower than the current market

A customer places an order to buy bonds. The order reads "Buy 5M ABC 9s M '45 @ 90 Stop Limit GTC." After the order is elected, at which of the following prices may the order be executed?

at 90 or lower

The effective Fed Funds Rate is the:

averaged rate of member banks throughout the United States

All new corporate bonds are issued in:

book entry form

A portfolio that holds the securities of a few different issuers has:

both systematic and nonsystematic risk

The essential difference between an open end management company and a closed end management company is:

capitalization

A sell stop order is executed in:

falling markets at the market price

A customer has bought a fully registered Exxon-Mobil debenture. The customer will receive interest payments:

from the paying agent twice a year.

All of the following are sources of income available for general obligation bond debt service EXCEPT:

highway tolls

Jumbo Certificates of Deposit in amounts above $250,000 are guaranteed by the

issuing bank

Intangible drilling costs consist of:

labor, fuel, rental and materials expenses, with no salvage value

The bondholder of a municipal bond issue is the:

lender of the bond proceeds

A municipal variable rate demand note is considered to be a:

long term issue that gives the holder the right to put the bond to the issuer on pre-set dates

Municipal variable rate demand notes have a:

minimum value which will never go below par and are not subject to market risk

Interest payments on Ginnie Mae pass-through certificates are made:

monthly

The essential difference between an open end fund and closed end fund is that a(n):

open-end fund has a different capital structure than a closed-end fund

A security which gives the holder an undivided interest in a pool of mortgages is known as a:

pass through certificate

A proxy given to a caretaker to vote a stockholder's share is a:

power of attorney

If interest rates fall, issuers most likely will call: (missed twice)

preferred issues with above market interest rates

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:

principal amount is adjusted to $1,050 and the coupon rate remains at 4%

A buy stop order is executed in:

rising markets at the market price

In a corporate liquidation, the first to get paid is:

secured bondholders

The "Effective" Federal Funds Rate is composed of rates offered by:

selected commercial banks across the United States

Bonds quoted on a yield to maturity basis are generally:

serial bonds

A customer is 100% invested in an S&P 500 Index Fund. This portfolio has:

systematic risk

Corporate bonds are usually:

term bonds and quoted on a percentage of par basis

A customer places an order to "Buy 100 ABC @ 90 Stop." The customer wishes to buy the stock at:

the market price, if the market rises to $90 per share or higher

The Federal Funds rate is

the rate charged from one Federal Reserve member bank to another member bank that wishes to borrow reserves and is lower than the discount rate

Banker's Acceptances are:

time drafts used to finance imports and exports

Serial bonds are quoted on a:

yield to maturity basis