Random Q's

A secured debt security can be backed by a corporation's A)credit rating. B)manufacturing facilities. C)financial stability. D)business reputation.

B

A statutory debt limitation imposed on a municipality restricts its authority regarding A)selling municipal revenue bonds. B)issuing general obligation (GO) bonds. C)raising tax rates. D)insuring municipal bond issues.

B

All of the following is true about local government investment pools (LGIPs) except A)the pool maintains a fixed $1 net asset value. B)investors must be provided a prospectus at or before they purchase shares in the investment portfolio. C)pools are not required to register with the Securities and Exchange Commission (SEC). D)LGIPs operate similarly to a money market instrument.

B

An investor anticipates that a fall in interest rates is imminent. This investor, now wanting to purchase bonds in order to lock in interest income, would likely buy A)either callable or noncallable bonds. B)noncallable bonds. C)neither callable nor noncallable bonds. D)callable bonds

B

An investor bought a put option and, in time, the underlying security declined below the strike price of the put. The put would probably A)decline in value. B)be exercised. C)be worthless. D)not be exercised.

B

Distinguishing between a sell stop order and a sell stop limit order, which of the following are true? i. The sell stop limit order becomes a sell limit once triggered. ii. The sell stop order becomes a sell limit order once triggered. iii. The sell stop limit order becomes an order to sell at the market triggered. iv. The sell stop order becomes an order to sell at the market triggered. A)I and III B)I and IV C)II and III D)II and IV

B

Exchange-traded funds are priced A)by supply and demand insuring transaction prices equal to the fund's NAV. B)by supply and demand where transaction prices may be higher or lower than the fund's NAV. C)using forward pricing so that all transaction prices equal the fund's NAV. D)using forward pricing where transaction prices may be higher or lower than the fund's NAV.

B

Which of the following are true of nonqualified plans but not true of qualified plans? A)The plan cannot discriminate. B)The plan may discriminate. C)All withdrawals are tax free. D)All withdrawals are taxable.

B

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 IPO if listed on an exchange or Nasdaq the delivery requirement is 25 days. D)For an initial public offering (IPO) if non-Nasdaq the delivery requirement is 90 days.

B

A mutual fund can offer all of the following to investors except A)physical custody of the fund's portfolio cash and securities. B)the ability to do transfers by telephone or online. C)check-writing privileges for redemptions. D)acting as custodian for retirement accounts.

A

All of the following are issuer transactions where the proceeds of the offering go to the issuing company except A)a repurchase agreement (REPO). B)an initial public offering (IPO). C)a subsequent public offering (SPO). D)an additional public offering (APO).

A

Records of original entry must be recorded no later than the next business day and must be kept readily available for A)two years. B)six years. C)four years. D)three years.

A

Regarding the registration statement filed with the Securities and Exchange Commission (SEC) when new securities are to be issued, all of the following are true except A)the accuracy and adequacy of the registration documents is the responsibility of the underwriters. B)a description of how the proceeds raised from the sale will be used must be disclosed. C)underwriters may assist the issuer in preparing and filing the registration statement. D)the names and addresses of company officers and directors, their salaries, and a five-year business history of each must be shown.

A

Rule 144 stipulates that after holding restricted stock fully paid for six months, an affiliate may begin selling shares A)subject to volume restrictions within any 90-day period. B)completely unrestricted. C)at the discretion of the issuer's board of directors (BOD). D)subject to the volume restrictions on any single day.

A

Which of the following are methods of registering securities within a state? Registration by coordination Registration by qualification Registration by notification Registration by application A)I and II B)III and IV C)I and IV D)II and III

A

A company has just conducted a stock offering, by prospectus, through an investment banker. The proceeds of the offering are used to purchase a portfolio of securities. The stock, now in the hands of the public, is freely traded in the secondary market, and the portfolio is managed to generate maximum profit according to a specific investment objective. The company must be A)a nonfixed UIT. B)a fixed UIT. C)a closed-end company. D)a mutual fund.

C

A weak U.S. dollar leads to more A)U.S. imports and a balance of payments deficit. B)U.S. exports and a balance of payments deficit. C)U.S. exports and a balance of payments surplus. D)U.S. imports and a balance of payments surplus.

C

All of the following regarding a trust set up for the purpose of holding commercial property, or mortgages on commercial property, are true except A)ownership of these shares may provide for the receipt of dividends. B)these investments could not be considered open- or closed-end funds. C)investors may never purchase shares in these trusts on an exchange or over-the-counter (OTC). D)gains can pass through to the owners of these shares.

C

During times when interest rates are rising, which of the following preferred are likely to pay a higher annual dividend? A)Convertible B)Callable C)Adjustable rate D)Participating

C

The holder of an in-the-money option contract gives a do not exercise instruction (notice) to your broker-dealer. This notice A)is standard, and given for all in-the-money contracts at expiration. B)can only be given at the time the contract is purchased. C)is used to avoid automatic exercise at expiration. D)is used to notify the writer that the contract will not be assigned to them.

C

Which of the following best fits the description of a growth stock? A)Common or preferred shares in companies, which experience growth in unusual, nonrecurring profitable circumstances B)Preferred shares in companies that back stated dividends with investments in pharmaceutical companies C)Common shares in companies that retain earnings and pays little or no dividends D)Common shares in companies that pay a high dividend on rapid growth experience

C

Which of the following investment companies do not redeem their shares? A)Face amount certificates B)Unit investment trusts C)Closed end funds D)Open end funds

C

Which of the following is considered to be the order of the stages in a business cycle? A)Trough, contraction, expansion, peak B)Contraction, trough, peak, expansion C)Expansion, peak, contraction, trough D)Peak, expansion, contraction, trough

C

Which of the following statements is most accurate about feature benefits? A)The call feature benefits both the issuer and investor. B)The put feature benefits the issuer; the call feature benefits the investor. C)The call feature benefits the issuer; the put feature benefits the investor. D)The put feature benefits both the issuer and investor.

C

Which type of underwriting is characterized by the broker-dealer buying the entire issue from the issuer and then reoffering it to the public? A)Mini max B)Best efforts C)Firm commitment D)All-or-none

C

Your client, Alice Tate, with no other positions in her margin account, is bearish on ABC stock. Which of the following transactions would you recommend? A)Buy ABC to open B)Sell ABC to close C)Sell ABC to open D)Buy ABC to close

C

A mutual fund has been in existence for 25 years. The prospectus must disclose the fund's performance A)for each year over the last 10 years. B)over the last 1, 5, 10, 15, 20, and 25 years. C)broken out as an average over the last 10 years. D)over the last 1, 5, and 10 years.

D

An equity option call buyer has the right to A)sell the stock and therefore is bearish. B)purchase stock and therefore is bearish. C)sell the stock and therefore is bullish. D)purchase stock and therefore is bullish.

D

An investor buys 1 DWQ May 70 call at 2, giving the investor the right to buy 100 shares of DWQ at $70 per share. All the specifications of the transaction are set or standardized by the Options Clearing Corporation (OCC) except A)expiration date in May. B)exercise price of 70. C)contract size of 100 shares. D)premium of 2.

D

A company very concerned about liquidity would want A)high price-to-earnings ratio. B)low price-to-earnings ratio. C)low current ratio. D)high current ratio.

D

An issuer that is already a publically traded company wants to register new securities without selling any of the shares until later when it anticipates it will be retooling all of its existing manufacturing plants. Which of the following applies? A)This can be accomplished by utilizing an additional issue offering, which is specifically for publically traded companies wanting to register new shares to be issued later. B)This can be accomplished by utilizing a new initial public offering, which is necessary for registration of all new shares. C)This cannot be done because newly registered securities must be made available for sale immediately. D)This can be accomplished by utilizing a shelf registration specifically designed to register shares presently to be sold later.

D

For ETFs, the phrase "tax efficiency" can best be described by which of the following concepts? A)These exchange-traded products can be purchased on margin, allowing for a smaller initial investment. B)ETFs generally have reportable tax gains passed on annually. C)All transactions in ETFs are commissionable, and sales charges do not apply. D)Usually, for ETFs, there are no tax consequences for investors until the shares are sold.

D

If par value of the bond is $1,000, what is the value of 1 bond point? A)$1 B)$100 C)Cannot be calculated without knowing the current price of the bond D)$10

D

The federal government could use which of the following to slow the economy? A)Increase government spending B)Raise the federal funds rate C)Buy Treasury securities from banks D)Raise taxes

D

Which of the following option positions would offer a full hedge to a short stock position? A)Short call B)Long put C)Short put D)Long call

D

With CDT stock at 42, a September 40 call trading at 3 is A)in the money by 3 points. B)at the money. C)out of the money by 2 points. D)in the money by 2 points.

D

Your customer establishes the following position: Long 1 XYZ January 50 put at 2. You can correctly inform the customer that the maximum potential gain on the position is A)unlimited. B)$5,200. C)$200. D)$4,800.

D

If a customer sold puts to open, which of the following transactions would be allowed if the options agreement was not returned signed within 15 days? A)Sell puts to open B)Buy calls to close C)Buy puts to close D)Sell calls to open

c