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Which of the following has a legal obligation to exercise reasonable care, skill and caution in selecting a third party to make investment decisions?

A custodian for a minor.

If all other factors are equal, an investor would expect which type of preferred stock to pay the highest stated dividend rate?

Callable

An investor has unexpectedly received $30,000 from an old debt he had written off. This money will come in handy for a business venture planned for three years from now. Meanwhile, he would like to generate some income on the money with as little risk and as little expense as possible. Which of the following recommendations is likely to be the most suitable for this customer?

Class C shares of the ABC Investment-Grade Bond Fund.

Which of the following securities has a dividend expressed either as a fixed percentage of par or as a fixed dollar amount?

Corporate bonds.

Which of the following would be the least important to have in a customer profile?

Educational degrees earned by the customer.

James and Elizabeth Smith have decided to establish an UTMA account at their brokerage firm, LMN Securities, for their 15-year-old daughter, Sarah. It has become necessary to register some securities in the account. Which of the following would be an acceptable form of registration?

Elizabeth F. Smith as custodian for Sarah N. Smith.

Your customer originally invested $20,000 into the ACE Growth Fund and has reinvested dividends and gains of $8,000. His shares in ACE are now worth $40,000. He exchanges his investment to the ACE Income Fund. Which of the following statements is TRUE?

He must declare $12,000 as a taxable gain upon exchange into the ACE Income Fund.

If a registered representative left her member firm 3 years ago to care for a child and is now ready to return to the securities industry, which of the following statements is NOT true?

Her registration was cancelled.

A registered representative is opening both cash and margin accounts for a corporation. Which of the following documents will he need? The corporation's charter, account resolution, and bylaws. A copy of the corporation's most recent balance sheet. The corporation's last three profit and loss statements. The name(s) of natural persons authorized to trade the account.

I and IV.

To comply with the regulations regarding customer identification programs, the minimum identifying information that must be obtained from each customer before opening an account includes: name. verbal assurance that the customer is of legal age. a street address, unless the primary mailing address is a post office box located in the state of residence. a taxpayer identification number.

I and IV.

A 457 plan could cover which of the following: employees of a corporation. independent contractors providing services to the county. employees of a nonincorporated business. city employees.

II and IV.

Which of the following steps must a representative take when making cold calls? Strike the names of uninterested prospects off of the call list. Inform prospects of the firm's name and telephone number or address. Limit calls to between 8:00 am and 10:00 pm of the time zone in which prospects are located. Not call prospects who have made a Do-Not-Call request.

II and IV.

12b-1 fees may be allocated for payment of which of the following? Commissions to buy securities for a mutual fund's portfolio. Management fee to a mutual fund's portfolio adviser. Printing the annual prospectus. Television advertisement about a mutual fund.

III and IV.

Which of the following mutual funds would be most likely to have the least correlation with the overall market?

Money market fund.

Filing at least 10 business days before first use is required for which of the following?

Mutual fund advertisements placed by a broker-dealer that became a member of FINRA 7 months ago

When a mutual fund does not assess a distribution charge, it is called a:

No-load fund.

At which stage of the money-laundering process are illicit funds most susceptible to detection?

Placement.

What happens to outstanding fixed-income securities when market interest rates drop?

Prices increase.

Which of the following retirement plans would be advantageous for an older employee whose skills are essential to the operation of a corporation's business?

Roth 401(k).

Which of the following is a debt instrument that pays no periodic interest?

STRIPS.

If the owner of a $1 million IRA leaves it to his daughter, which of the following best describes the income tax treatment to the daughter?

She will pay income taxes on the full amount she withdraws each year.

Your customer is a retired widower aged 71. He is seeking a mutual fund to provide a moderate level of income in addition to his Social Security and pension. He is extremely conservative when investing and wishes to preserve capital. Which of the following funds is most suitable?

Short-term U.S. government bond fund.

Under what circumstances may a member firm use a fictional name or DBA (doing business as) in its communications?

The name is filed with the Securities Information Center.

When the value of the U.S. dollar appreciates, which of the following is TRUE?

Travel abroad is less expensive for U.S. citizens.

Your customer, age 32, makes $48,000 annually and has $15,000 to invest. Although he has never invested before, he wants to invest in something exciting, with investment returns in the 20%+ range. Which of the following should you suggest?

Your customer should provide more information before you can make a suitable recommendation.

An employee who is involved in the management of a FINRA member's business, particularly in the supervision of business solicitation or in training, must be registered as:

a dealer.

A registered representative fails to promptly amend her Form U-4 and is fined $2,000. More than likely, FINRA treated this case as:

a minor rule violation.

Written recommendations prepared by a research department for dissemination to the public need prior approval of:

a principal of the firm.

Client coverage under SIPC is $500,000 for:

cash and securities, with cash coverage not to exceed $250,000.

All of the following are terms for different types of underwritings EXCEPT:

closed end.

ACE Fund, a diversified management investment company, has net assets of $500 million. Currently, $25 million of ACE's portfolio is invested in the common stock of DEF Corporation. Due to favorable news, DEF stock increases to the point where it now represents over 15% of ACE's assets. To remain a diversified company, ACE would have to:

do nothing.

The phrase selling dividends refers to

encouraging customers to buy mutual fund shares just before the ex-date solely for the purpose of receiving a dividend

Your new client is interested in purchasing corporate bonds. When speaking about the different risks associated with this investment, you explain that reinvestment risk is the risk that, between now and when the bond matures or is called, interest rates will:

fall.

A securities firm that holds stock rather than sells the stock is:

pegging.

A deferred compensation plan needs the prior approval of the:

plan trustee.

One characteristic of a closed-end fund that differs from an open-end fund is that with closed-end funds, the number of shares outstanding:

remains constant.

Liquefying home equity to generate funds for investment purposes

requires communication of the unique risks associated with this investment strategy by the broker-dealer

A securities firm that holds stock rather than sells the stock is:

taking a position.

The system that handles complaints forwarded to FINRA regarding violations of the Conduct Rules is called:

the Code of Procedure.

A customer of yours owns a corporate bond fund with a long duration. Mortgage rates are going up. What impact will this have on the investment?

the current yield will increase since the price of the shares can be expected to fall.