Unit 5, 6, 7 Bank Questions

Yusef would like to save money for his 10-year-old daughter's college tuition costs. She has her heart set on a small liberal arts school with a growing reputation in the arts. His biggest concern is the potential increase in cost over the next several years. The program best suited to hedge against the increasing cost of college tuition at the school is a A) 529 prepaid tuition program. B) 529 college savings program. C) Coverdell ESA account. D) custodial account in the child's name.

A) 529 prepaid tuition program.

Regarding primary and secondary offerings, which of the following are true? An offering can only be either a primary or secondary. An offering can be a combination of primary and secondary. An initial public offering (IPO) is a secondary offering. An additional primary offerings (APO) is a primary offering. A) II and IV B) II and III C) I and IV D) I and III

A) II and IV

The risk when investing, where one has the potential to lose all or part of the investment due to circumstances that are unrelated to the issuer's financial strength or well-being, is known as...

A) capital risk

Public offerings of securities are regulated under A) indications of interest before the effective date. B) sales before the effective date. C) indications of interest before the registration filing date. D) sales after the effective date.

A) indications of interest before the effective date.

A fully disclosed broker-dealer A) is one that introduces its business to a carrying firm to clear transactions. B) is like a clearing agent in that it can take custody of funds and securities. C) is also known as a full-service clearing agent able to process and clear transactions. D) clears all of its retail customer transactions and those of other broker-dealers.

A) is one that introduces its business to a carrying firm to clear transactions.

Which of the following prospectus delivery requirements for negotiable securities sold in the secondary markets is not accurate? A) For an additional issue listed on an exchange or Nasdaq there is no delivery requirement. B) For an additional issue if the security is non-Nasdaq there is no delivery requirement. C) For an initial public offering (IPO) if non-Nasdaq the delivery requirement is 90 days. D) For an IPO if listed on an exchange or Nasdaq the delivery requirement is 25 days.

B) For an additional issue if the security is non-Nasdaq there is no delivery requirement.

For a real estate DPP, which of the following is true? A) Capital growth can be derived from rents received. B) Income can be derived from rents received for the properties. C) Neither income nor capital growth would come from rents received. D) Income will come from appreciation of the portfolio properties.

B) Income can be derived from rents received for the properties.

Which of these is not considered an advantage of owning an exchange-traded fund? A) Liquidity B) Pass through of losses C) Intraday pricing D) Tax efficiency

B) Pass through of losses

All of the following are acceptable choices to function as a depository and intermediary for transactions between buyers and sellers of securities except A) the Depository Trust Company (DTC). B) credit unions. C) carrying firms. D) the National Securities Clearing Corporation (NSCC).

B) credit unions.

During the cooling-off period, underwriters may not A) place a tombstone advertisement. B) distribute sales literature or advertising material. C) distribute a preliminary prospectus. D) take indications of interest.

B) distribute sales literature or advertising material.

Assets offered and traded in the securities markets can include all of the following except A) equities. B) life insurance. C) currencies. D) derivative products.

B) life insurance.

Six days into the cooling-off period, an issuer receives a deficiency letter from the Securities and Exchange Commission (SEC) requesting clarification and corrections. Once the issuer submits these, and assuming that they satisfy the deficiency, the cooling-off period will resume. With no other deficiencies arising, the issue should become effective in A) 8 days. B) 20 days. C) 14 days. D) 15 days.

C) 14 days.

Last year Brownstone Properties, LP distributed $200 per unit to investors and reported a $500 business loss per unit on the K-1. For tax purposes the investors received A) a net $300 loss. B) a $500 reduction in ordinary income. C) a $500 per unit passive loss. D) $200 per unit of passive income.

C) a $500 per unit passive loss.

A broker-dealer that accepts the risk of holding a particular security in its account to facilitate trading and provide liquidity in that security is best described as A) a direct participation program. B) a clearing corporation. C) a market maker. D) a holding company.

C) a market maker.

A broker-dealer that accepts the risk of holding a particular security in its account to facilitate trading and provide liquidity in that security is best described as A) a holding company. B) a direct participation program. C) a market maker. D) a clearing corporation.

C) a market maker.

When choosing to issue additional bonds to the general public in order to raise more capital, a corporate issuer is engaging in A) an initial public offering. B) a secondary offering. C) a primary offering. D) a private securities offering.

C) a primary offering.

Your customer, Amelia, is excited about an investment she recently purchased from another firm. At maturity, in five years, she will receive her principal back plus an interest payment based upon the returns of five well-known technology companies. It pays no interest during the five years. She has likely invested in A) a mutual fund. B) a VA. C) an ETN. D) an ETF.

C) an ETN

The risk that all or a significant portion of the sum invested might be lost is known as...

C) capital risk.

All the following are exempt from the Securities Act of 1933 except A) U.S. Treasury securities. B) fixed annuity contracts. C) limited partnership. D) debt securities issued by religious organization.

C) limited partnership.

A broker-dealer that accepts funds and securities from customers and its correspondent member firms would most likely be which of the following? A) An investment company B) A depository trust C) A fully disclosed introducing firm D) A carrying firm

D) A carrying firm

Which of the following choices would best describe a follow-on offering? A) The common stock that is issued attached to a rights offering B) An initial public offering (IPO) that has additional shares added by the issuer on the effective date C) An offering to the employees of the issuing company D) An issue of shares by a public company that is already listed on an exchange

D) An issue of shares by a public company that is already listed on an exchange

A firm that functions for the purpose of receiving and delivering payments and securities on behalf of both buyer and seller in a securities transaction is A) a broker-dealer. B) a transfer agent. C) a depository. D) a clearing agent.

D) a clearing agent.

All of these are risks associated with limited partnerships except A) business risk. B) liquidity risk. C) audit and recapture risk. D) limited liability risk.

D) limited liability risk.

A REIT can avoid being taxed as a corporation would by A) receiving less than 50% of its income from real estate and distributing 50% or more of its net investment income to its shareholders. B) receiving 100% of its income from real estate and distributing 90% or more of its net investment income to its shareholders. C) receiving less than 75% of its income from real estate and distributing 100% of its net investment income to its shareholders. D) receiving 75% or more of its income from real estate and distributing 90% or more of its net investment income to its shareholders.

D) receiving 75% or more of its income from real estate and distributing 90% or more of its net investment income to its shareholders.

All of the following are benefits of using a prime broker except A) multiple executing brokers. B) cost savings. C) consolidation of records. D) research.

D) research.

Investors in hedge funds should know that the funds are

D) unregulated but must abide by laws that investors be accredited.

Which of these statements regarding a 529 plan is correct? A) Contributions are limited to $2,000 annually B) The beneficiary must be below age 18 C) The assets in the plan belong to the beneficiary D) One person can be both the beneficiary and owner

One person can be both the beneficiary and owner

Under the Investment Company Act of 1940, which of the following is not considered and investment company?

hedge funds

red herring is also known as a...

preliminary prospectus