Exam 12

A bond selling for $20 above par would be quoted? 1,200.00 102 120 1,020.00

102

A customer who sold a bond at a loss must wait how long before he can buy back a substantially identical bond and not have the sale classified as a wash sale?

31 days

An individual covered under a traditional IRA would not be able to also maintain which of the following? 403(b) and 457 Roth IRA 401(k) and 457 401(k) and 403(b)

401(k) and 403(b)

Which of the following employer-sponsored plans is NOT covered by ERISA? Deferred compensation 401(k) Defined benefit pension 403(b)

Deferred compensation

is a a bona fide pledge considered an offer and sale?

NAH FAM

does an IA with custody need to send monthly account statements to clients?

NO

A nonissuer sale of securities listed on the Nasdaq Stock Market to several individual clients of the agent, exempt or non-exempt?

NON-EXEMPT

An agent sells U.S. treasury bonds to an individual client, exempt or non-exempt?

NON-EXEMPT

A dealer charges commissions for securities it sells from its inventory and discloses the amount of the commission to the customer, allowed or not allowed?

NOT ALLOWED

Which of the following might be used by an analyst to approximate a reasonable price for a common stock?

The dividend discount model

Which of the following factors has a direct relationship to a bond's duration? Coupon rate Rating Time to maturity Yield to maturity

Time to maturity

does a broker-dealer with a place of business in the state that effects transactions exclusively with broker-dealers registered in other states need to reg as BD?

YA BBY

is a purported gift of assessable stock is considered to involve an offer and sale?

YES

is a small unincorporated investment club considered a person?

YES

is the executor of an estate for a deceased individual a person?

YES

Which of the following bonds is most likely to exhibit the greatest volatility due to interest rate changes? A bond with? a low coupon and a short maturity. a high coupon and a short maturity. a low coupon and a long maturity. a high coupon and a long maturity.

a low coupon and a long maturity.

A pooled investment fund buys all the shares of a publicly-traded company. The fund takes the company private, reorganizes the company, and replaces its management team. Three years later, the fund exits the investment through an initial public offering of the company's shares. This pooled investment fund is best described as

a private equity fund

A municipal bond has a coupon of 6.25%, and at the present time, its yield to maturity is 6.75%. From this information, it can be determined that the municipal bond is trading: at a premium at a discount flat at par

at a discount

Universal life characteristics

flexible premiums cash values can fluctuate and may even fall to zero

Final approval of the annual operating budget for the United States is given by? the Conference of Governors the president the Congress the Cabinet

the Congress

An investor bought a parcel of raw land for $50,000 several years ago. A developer has offered to exchange another property, currently valued at $100,000, with this investor. Under Section 1031 of the Internal Revenue Code, the investor's tax consequences would be? $50,000 short-term capital gain. $0.00. $50,000 ordinary income. $50,000 long-term capital gain.

$0.00

Over the past year, the market, with a beta of 1.0, has returned 15%. Under CAPM, which of the following stocks would be considered overvalued? LQR, beta 0.7, return 11% ACR, beta 0.9, return 13.6% BED, beta 1.5, return 23.5% RJP, beta 1.2, return 17.5%

RJP, beta 1.2, return 17.5%

The registration of a representative is effective only as long as the individual is employed by a registered investment adviser, true or false?

TRUE

is Section 529 plans allowing a gift tax exclusion equal to five times the annual limit that may be repeated every 5 years true or false?

TRUE

The term "federal covered investment adviser" would apply to a person who?

is registered as such under the Investment Advisers Act of 1940

All of the following actions will increase the deficit in the U.S. balance of payments EXCEPT? purchase by foreigners of U.S. securities Americans buying Japanese cars investments by U.S. firms abroad U.S. foreign aid

purchase by foreigners of U.S. securities

standard deviation is the measure of? (one word)

volatility

A bond's yield to maturity is?

the annualized return of a bond if it is held to maturity

An investment adviser is approached by an investment company that has 25 investors. The company would like to employ the adviser to manage its account. The IA is willing to do so, but proposes a compensation agreement that provides for a 20% share of the profits if performance exceeds a certain benchmark. In order for this to be acceptable?

the investment company must have net worth in excess of $2.1 million or at least $1 million in assets under management with the IA

Under the Investment Company Act of 1940, an investment company may initially retain the services of an investment adviser only with approval of?

the majority vote of the outstanding shares a majority of that portion of the board of directors that is considered noninterested members

Several years ago, an investor purchased an investment-grade bond with a 6% coupon. Today that bond is priced to yield 4.6% to maturity in 5 years. If the bond is called at par in one year, the bond's yield would be: 4.6%. more than 4.6%. the coupon rate of 6% because it is called at par value. less than 4.6%.

less than 4.6%

Phocine and Ursus, LLC, a covered investment adviser, has a client with a large short position in PQR common stock. Their chief analyst believes that PQR is an attractive target for an acquisition. Based on this information, it might be wise for the firm to suggest this client?

purchase call options on PQR.

The distributable net income (DNI) of a simple trust would NOT include? interest received on corporate bonds. realized capital gains. interest received on municipal bonds. dividends received.

realized capital gains

One of your clients currently holds a long position in DEF common stock. Which of the following types of orders is designed to offer the client protection against loss? Buy stop Sell limit Sell stop Buy limit

sell stop

Under the Uniform Securities Act, the Administrator may designate another officer to? set recordkeeping requirements issue a cease and desist order serve subpoenas grant registration exemptions

serve subpoenas

News reports indicate that the wheat crop scheduled to be harvested in 3 months will be much larger than normal. To hedge, a wheat farmer would most likely: sell wheat stocks short. take a long position in wheat futures. take a short position in wheat futures. grow corn instead.

take a short position in wheat futures.

Specified in an exchange-traded futures contract would be?

time location quantity quality

One of the important roles of an investment adviser representative is assisting clients in analyzing the performance of securities held in their portfolios. Which of the following is the best measurement of a security's performance?

total return

A risk faced by many seniors is longevity risk. What security would be most appropriate to protect against that risk? Common stock Variable annuity REIT Fixed annuity

variable annuity