Simulate Your Exam - Missed Questions

Gross Domestic Product(GDP) is a. a representative sample of selected goods and services produced in the US, computed in real dollars b. The sum of all goods and services produced in the US, computed in real dollars c. value of all net exports from the US, computed in real dollars d. broadest measure of all products manufactures in the US, computed in real dollars

B

Hedge fund fees are a. based on performance only b. calculated based on both annual asset management and performance fees c. comparable to the fees charged by mutual funds d. charged annually based on assets under management only

B

All of the following describe the Municipal Securities Rulemaking Board(MSRB) EXCEPT a. regulates municipal advisors b. principal regulator of the municipal securities market c. regulates state and local government issuers of municipal securities d. writes rules and regulations for municipal firms

C

An income statement a. shows a financial position at a specific point in time b. lists assets and liabilities of a company c. quantifies the value of property, plant, and equipment d. covers financial activity over a period of time

D

Regulation T of the Securities and Exchange Act of 1934 gave the power to establish margin requirements to a. issuing corporation b. broker/dealers c. SEC d. Federal Reserve Board

D.

An advisor uses a compensation plan that incorporates both advisory fees and commissions on the securities that he markets. Which of the following is TRUE concerning this arrangement? a. must disclose how the fees and commissions are charged and calculated prior to giving any investment advice b. must only market Class C shares of the investments he is brokering c. must have his fee structure approved by the state prior to assessing any fee to a client and the fee cant exceed 8.5% of investment account

A

An order for a security trade that directs the broker to buy or sell "at the market" but only when a certain price level has been reached is known as a. stop order b. market order c. limit order d. selling short or "shorting"

A

Realized Appreciation is a. the net appreciated value in a security that has been sold b. a decrease in the value of a security that has been sold c. an increase in the value of a security that is held by the investor d. a decrease in the value of a security that is held by the investor

A

A specialist receives an order to buy XYZ 200shares 20 stop 19. This means that a. the order is triggered at or above 20 and filled at 19 or lower b. order will be filled if market moves successively lower from 20 to 19 c. specialist is prevented from buying, unless the market is at or below 19 d. order is stopped at or below 20 and filled at or above 19

A - buy stop limit order: stop at 20 or above, execute at 19 or below

If an associated person was originally registered in 2020, when is the next time the associated person will be required to complete the Firm Element Training? a. 2020 b. 2021 c. 2022 d. 2025

A - complete first training annually , and every year thereafter. At minimum, each member firm must evaluate and prioritize its training needs and develop a written training plan at least annually

A tender offer is a. an offer to buy stock at a price above current market value b. an offer to sell stock at a price below current market value c. an offer extended to convertible securities at a parity exchange rate d. an offer to exchange stock at current market value on a specified date

A - formal offer made by corporation to existing shareholders to purchase their shares at a price above the CMV

ABC stock is trading at $18.30 a share. The ABC June 20 put has a premium of $2.60. It has a time value of a. $0.90 b. $1.30 c. $2.60 d. 0 ; only has intrinsic value

A - it is in the money (premium) ; Time value: how much of the premium is intrinsic --> strike price - market price = 1.70 intrinsic premium - intrinsic value = time value

A redeemable security is a. security with no secondary trading b. negotiable security c. marketable security d. traded on an exchange or OTC market

A - non-negotiable (nonmarketable) and must be redeemed by the issuer -UITs, FACs, and open end mutual funds are all examples of redeemable securities

Which of the following facts concerning UGMA accounts is incorrect? a. securities are registered in the name of the minor b. only one custodian per minor permitted c. margin transactions are not allowed d. gifts made to minor are irrevocable

A - registered in the name of the custodian for the benefit of the minor

On a discount bond, which of the following correctly states highest to lowest yield? a. Yield to maturity , current yield, nominal yield b. nominal, yield to maturity, current c. current, nominal, yield to maturity d. nominal, current, yield to maturity

A - the triangles (review)

A registered rep with verbal authority from a customer can decide which of the following? a. time and price b. quantity and time c. price and quantity d. security and price

A - time and price are nondiscretionary elements of an order - quantity, security, and action require discretionary authority

An investor has some bonds that are callable. She is wondering what the yield on her bonds will be if they are in fact called by the issuer. Which of the following is true regarding this investors bonds? a. investor would have a yield on the bond based on the call premium at the time the bond is called b. she wouldn't be affected by the call unless she opts to redeem the bonds at the CMV c. investor would recieve the face value of the bond once its called d. she would receive all future interest in one lump sum when the bond is called

A - yield-to-call - based on the call premium paid by the issuer

An investor owns 100 shares of a mutual fund listed at 20.50-21.90. She has Class "B" shares that have a 3% CDSC. At what share price will her funds be redeemed if she sells them in the first year? a. $19.89 b. $20.23 c. $21.23 d. $21.90

A -mutual funds redeem at net asset value(NAV) less any contingent deferred charges and/or redemption fees -Her funds will be redeemed at $20.50 minus the 3% CDSC for a share price of $19.89 -CDSC(Contingent Deferred Sales Charge : declining scale of back-end sales charges for class B shares

A well-known seasoned issuer is issuing securities in an APO. To meet Act of '33 disclosure requirements, the issuer may use a/an a. offering memorandum b. free-writing prospectus c. S-1 d. offering circular

B

ABC Corp has issued a tender offer to the shareholders of XYZ corp. Which of the following is a permissible way for a shareholder to sell into the offer? a. deliver 1 warrant, representing one round lot of the stock b. deliver one round lot of the stock c., deliver an option on 100 shares of the stock d. deliver 2 warrants, each representing one round lot of the stock

B

The North American Securities Administrators Association (NASAA) is an a. associated mandated by the federal government b. organization of securities regulators whose goal is to protect customers form fraud c. association with mandatory participation d. organization that doesn't have authority to file enforcement actions

B

The investment company concept allows the individual investor to a. defer taxes by reinvesting distributions in additional shares b. achieve wide diversification with a relatively small investment c. have greater claim than other shareholders d. realize a greater return on an investment

B

The options disclosure document of the Options Clearning Corporation(OCC) must be sent to customer a. within 15 days of trade confirmation b. at or prior to account approval c. within 30 days after account opening d. within 15 days of the first trade

B

Which of the following is true about Treasury bills? a. they are callable b. they are issued in book entry form c. they are in bearer form d. they have coupons attached

B

What is the total premium for the following index option: OEX OCt 750 call @ $9.50? a. $750 b. $950 c. $7,125 d. $75000

B - calculated by multiplying strike price by the contract multiplier. Index options have contract multiplier of 100. So $9.50(strike price) x 100 = $950

If a mutual fund with an offering price of $30 does not offer breakpoints, rights of accumulation, and dividend reinvestment at NAV to investors, what is the allowable max sales charge? a. $1.50 b. $1.88 c. $1.96 c. $2.55

B - if they dont offer all three, max sales charge is 6.25%

Which of the following best fits the definition of an investment advisor? a. lawyer b. publisher of reports used to promote particular securities c. bank d. broker/dealer whose advise is incidental to their business

B - promoting specific securities

Which of the following best defines treasury stock? a. nondividend paying shares, issued and outstanding b. issued shares minus outstanding shares c. authorized shares minus outstanding shares d. nonvoting shares, authorized and issued

B - treasury stock was previously outstanding; has been bought back by corp and placed in corporate treasury. Total shares issued minus shares currently outstanding equals the number of shares bought back

John owns a contract that entitles him to buy 100 shares of ABC at a specified price prior to a fixed expiration date. John owns a a. warrant b. call option c. preemptive right d. put option

B -call option contract gives the buyer the right to purchase 100 shares of the underlying security at the strike price

ABC corp originally authorized 1 million shares and has issued 600000 shares. ABC Corp has decided to buy 50000 of their shares back and place them in treasury. How many shares are currently outstanding? a. 400000 b. 550000 c. 600000 d. 1 million

B -outstanding shares = total issued shares - treasury stock

An account under the Uniform Gift to Minors Act earned $8500 in interest income from bonds. How is this interest income taxed? a. 8500 taxed at custodian's rate b. 8500 taxed at parent's rate c. portion is taxed at minor's rate and portion is taxed at rate applied to trusts d. 8500 taxed at minor's rate

C

The best definition of a local government investment pool (LGIP) is an investment pool established to provide a. long-term funding for federal gov entities b. short term funding for federal government entities c. short term funding for state and local government entities d. long term funding for state and local government entities

C

The date the board of directors authorizes a dividend is the a. ex dividend date b. record date c. declaration date d. payable date

C

The time frame between the date on which an annuity becomes effective and the date the payout period begins is called the a. settlement period b. cooling off period c. accumulation period d. annuitization period

C

What is the timeframe for filing relevant Suspicious Activity Reports? a. within 90 days of initial discovery b. within 90 days of suspicious transaction c. within 30 days of initial discovery d. within 30 days of suspicious transaction

C

Which entity enforces MSRB rules that pertain to NYSE member firms? a. SIPC b. NYSE c. FINRA d. MSRB

C

Which one of the following statements describes the market manipulation practice of "pumping and dumping" a. buying and selling a security among traders to create a high level of activity to influence the price of stock b. purchasing a large enough number of shares of a security to be able to control the supply of stock c. artificially increasing the price of a stock by making positive statements that are false and misleading in order to sell the stock at a higher price d. trading ahead of customer orders

C

Mrs. Johnson bought 200 shares of Intec at 18 in March. When she passed away in June the market price of Intec was 21. What is the taxation to her daughter, who inhertited the shares? a. cost basis is 18 and holding period is long term b. cost basis is 18 and holding period is short term c. cost basis is 21 and holding period is long term d. cost basis is 21 and holding period is short term

C - cost basis on inherited securities is the market value at the time of death and the holding period is always long term, no matter how long the securities were actually owned

An investment advisor rep has a friend who is affiliated with a broker/dealer and who makes commissions based on each transaction made. The friend told the rep that she would split any commissions that result from the rep's clients' transactions. What is the reps duty regarding disclosures to her client? a. must only disclose her affiliation with the broker/dealer friend b. doesn't have any additional required disclosure based on the situation c. must disclose to client the affiliation and the commission being paid d. must only disclose commissions being charged

C - must disclose any material fact that is in the client's best interest to know

Which of the following activities may a nonregistered person perform? a. qualify potential customer b. solicit business c. provide quotes d. charge commissions

C - permitted to provide quotes and account opening forms

After the first annuity payment is calculated in a variable annuity, future payments are calculated by a. liquidating a certain number of annuity units based on performance of the separate account b. multiplying the total value of the account by the Assumed Interest Rate c. multiplying the number of annuity units by the current redemption value of a unit d. multiplying the current value of an accumulation unit by the total number of units

C - redemption value of a unit changes with performance of the separate account compared to the Assumed Interest Rate

Under FINRA by-laws, which of the following relates to trade practice violations and enforcement? a. Uniform Practice Code b. Rules of Conduct c. Code of Procedure d. Code of Arbitration

C - deals with trade practice violations - "COP" - FINRA will conduct investigations and hearings, if member is found guilty, FINRA can fine, suspend, bar, expel, or impose any other penalty deemed appropriate

ABC Corp announces that it will be acquiring XYZ Corp. XYZ shareholders will recieve one share of ABC stock for every two shares of XYZ they own. This corporate action is a(n) a. stock dividend b. merger c. acquisition d. stock split

C - occurs when one corporation becomes owner of another

Which of the following is synonymous with market risk? a. inflation risk b. capital risk c. systematic risk d. timing risk

C - represents risk that the overall market can be uncertain - this risk cant be reduced through portfolio diversification

Authorized stock that has not been sold or distributed is referred to as a. issued shares b. outstanding shares c. unissued shares d. treasury shares

C - unissued shares are authorized but have not been sold or distributed -treasury stock hsa been issued and repurchased by the corporation

A customer deposits $7,500 in currency in his account at a financial institution. The financial institution a. must file a CTR b. cant accept the deposit c. must file a SAR d. is not required to do anything

C -Sar = $5,00 or more in 24 hour period ; file within 30 days CTR = more than $10,000 within 24 hours; must file within 15 days

A customer's account would be frozen for 90 days if the customer a. bought and sold the same stock in different accounts b. failed to deliver stock within 10 business days following sale c. failed to deliver payment within 4 business days of purchase d. bought and sold the same stock in the same account

C -reg t violation

One of your clients bought 100 shares of TBS at 20. The stock has now risen to 55, and the client would like to protect her profit. Which of the following orders should be entered? a. sell limit at 55.50 b. sell limit at 55 c. sell stop at 54.88 d. sell stop at 55.13

C -when investor is long stock and wishes to protect against loss or to lock in a profit on the position, the investor enters a sell stop order BELOW the CMV -if investor has a short position in the stock and wishes to protect or lock-in a profit, a buy stop order would be entered ABOVE the market

A mutual fund family offers investors the privilege of a. exchanging shares of one mutual fund for shares of another mutual fund without paying any taxes b. buying mutual fund shares back after redeeming them from the same fund without paying an additional sales charge as long as the transaction is completed within 30 days c. exchanging shares of mutual funds for shares of the company's stock owned in the mutual fund portfolio d. exchanging shares of one mutual fund for those of another mutual fund within the same family of funds with no additional sales charge

D

A prospective customer tells the registered rep to add her name to the broker/dealers do not call list. Which of the following is true? a. broker/dealer may continue to send faxes to the number b. compliance officer may call individual to verify her request c. rep's supervising principal may call to verify account info d. no one from the broker/dealer may call the individual again

D

Face amount certificates issue debt certificates that offer predetermined interest rates. The certificates may be purchased by either periodic installments or with a lump-sum payment. These certificates have a maturity of at least a. 6 months b. 12 months c. 18 months d. 24 months

D

If a municipal financial professional(MFP) gives $300 to the campaign of the mayor in the city where the MFP lives, for what period of time is the MFP's employing municipal firm prohibited from doing a negotiated underwriting with the municipal issuer? a. 6 months b. 1 year c. 18 months d. 2 years

D

The highest price a dealer is willing to pay for a security is known as the a. net asset value b. offering price c. ask price d. bid price

D

Which of the following accurately describes an ETN? a. ETNs are senior secured debt instruments b. ETNs have principal protection c. interest payments fluctuate based on the underlying index d. principal at maturity is based on an index

D

Which of the following best describes GNP? a. total value of all exports, minus total value of all imports in the US b. total money supply divided by number of transactions in the US c. current cost of rep goods and services in the US, as compared to a base year d. GDP, plus income earned by residents from overseas, minus income earned within the domestic economy by overseas residents

D

Which of the following would ensure that the numbers of shares printed on the stock certificates are equal to the number of shares that are outstanding for the corporation? a. investment banker b. underwriter c. transfer agent d. registrar

D

The form of risk that affects one's purchasing power directly is called a. consumption risk b. supply and demand risk c. regulatory risk d. inflation risk

D -risk that purchasing power will decline over time

When making mutual fund recommendations, a registered rep should NOT a. compare standardized yields of similar funds b. explain the fund's expense ratio c. consider the total return of the fund after sales charges and expenses d. concentrate on short-term trends to highlight investment opportunities

D - mutual funds are approriate for long-term investment objectives

If an option contract is covered, this means that a. option writer is short the underlying security b. option holder is long the underlying security c. option holder is short the underlying security d. option writer is long the underlying security

D - the option writer is long or owns the underlying shares - naked and covered apply to options writer

The cyclical and constantly fluctuating nature of interest rates has the most direct impact on a. corporate stock prices b. no one type of stock more than another c. value of growth mutual funds d. market values of fixed income securities

D - threat of suffering a loss due to change in interest rate is called interest rate risk - all fixed income securities are subject to interest rate risk

Which of the following distributions is a registered secondary offering? a. corporation giving stock to shareholders in lieu of a cash dividend b. corporation separates one of its divisions into its own entity c. corporation issuing additional authorized stock to expand operations d. family member selling founder's stock along with an add-on offering

D -Registered Secondary offering: when officer of corporation sells unregistered stock