Series 7 - Damage Control
D.
All of the following are advantages to call buyers EXCEPT: [A]Leverage[B]Hedging[C]Limiting Risk[D]Premium
C. The rating must be current the most recently completed calendar QUARTER, not year. All of the other answers are requirements. (Finra Rule 2210)
All of the following are requirements for using bond mutual fund volatility ratings except: [A]Such ratings may only be used in supplemental sales literature that accompanies or is preceded by a prospectus of the fund [B]All such ratings shall be described in narrative form within the text of a required Disclosure Statement [C]The rating is current to the most recently completed calendar year [D]The rating must have been issued by an independent third party
D.
All of the following are typical characteristics of a DVP/RVP brokerage account EXCEPT [A]The settlement of the trade is done electronically in book entry form [B]The exchange of cash for securities happens simultaneously [C]Delivery of securities sold is made to the buying customer's bank in exchange for payment [D]The account is typically in the name of a retail client
C.
All of the following correctly define a type of market EXCEPT: [A]the fourth market is where financial institutions trade securities directly with each other. [B]the third market is where listed securities are traded over-the-counter. [C]the money market deals in short-term debt and equity instruments. [D]the capital market deals in long-term debt and equity instruments.
D. Remember "CALL" covered by lower Long
All of the following cover a call writer EXCEPT [A]a long position in the underlying security. [B]the deposit of an escrow receipt for the underlying security. [C]long a call on the same security with an equal or lower exercise price than the short call. [D]long a call on the same security with an equal or greater exercise price than the short call.
B.
All of the following determine the offering price of a new issue EXCEPT the [A]earnings per share estimate for the new issue for the year ahead.[B]selling group's determination of the fair value of the new issue.[C]dividends per share the new issue will probably pay. [D]current appeal and outlook for the new issue's industry.
D.
All of the following securities are issued at a discount and mature at par EXCEPT: [A]Face-Amount Certificates [B]Zero-coupon bonds [C]Treasury Bills [D]Unit Investment Trusts
D.
All of the following statements about communications with the public about variable life insurance and variable annuities are false EXCEPT: [A]It is appropriate to compare a variable life insurance product with another type of life insurance product. [B]Personalized hypothetical illustrations of rates of return are not permitted. [C]The maximum assumed rate of return for a hypothetical illustration is 10%. [D]Hypothetical illustrations must use the maximum guaranteed mortality and expense charges.
A.
All of the following terms are associated with an order EXCEPT: [A]Late[B]Designated[C]Limit[D]Market
A.
Over the course of a normal trading day, a municipal bond dealer performs a secondary market transaction in a municipal bond that carries insurance. What do MSRB rules dictate must occur in this scenario? [A]The customer must be made aware of the insurance and disclosure of the insurance must be made on the confirmation. [B]The customer must be sent an official statement for the bond issue prior to completion of the transaction in the bond. [C]The customer must receive a full copy of all literature pertaining to the insurance provider as well as the specific policy in place on the bond issue. [D]The customer must be instructed to contact the insurance provider directly to ensure that coverage is changed from the previous owner to the current owner of the bonds.
D.
Which of the following are required regarding disclosure to customers affecting penny stock trades? A risk disclosure document must be provided. The current bid and ask quotation must be disclosed. Disclosure of all compensation received by the broker-dealer must be made to the customer on such transactions. Monthly statements reflecting the market value of each penny stock must be provided. [A]I, II, IV[B]II, IV[C]I, II, III[D]I, II, III, IV
A. Since the minor may be in a lower tax bracket there is the potential for lower tax on earnings.
Which of the following is a benefit of a UGMA Account? [A]lower tax potential on earnings [B]tax deferral on contributions [C]tax deductions for the donor [D]elimination of tax liability
A.
A BD is participating in a public offering of the shares of an American company in England. To qualify for the SEC Regulation S exemption from filing a registration statement with the SEC, the offering must: [A]have no directed selling efforts in the U.S. [B]be by foreign issuers and sold only to foreign investors overseas [C]be by U.S. issuers and sold to foreign investors living in the U.S [D]have no directed selling efforts overseas
D.
A U.S. taxpayer receives dividends from a company domiciled in a foreign country. Foreign country taxes are withheld from the dividends. All of the following are TRUE regarding the foreign dividends received by the U.S taxpayer EXCEPT: [A]Such dividends paid to customers are fully taxable. [B]The customer can utilize a tax credit against U.S. taxes due. [C]An itemized deduction can be used by the customer. [D]The taxes withheld are added to the gross income of the customer.
D. Broker-dealers must trade with customers based on the current bid and ask. 10.50 Bid for customers selling 11.25 Ask for customers buying
A broker-dealer bought ABC stock at 8 for its inventory position. A month later when the inter-dealer market for ABC was 10.50 -- 11.25, the broker-dealer sold the stock to a customer. The dealer's markup will be based on: [A]8.00 [B]8.75 [C]10.50 [D]11.25
B. All fully paid customer securities held by a broker-dealer must be segregated and not used by the broker-dealer.
A broker-dealer may hold customer's fully paid securities [A]if requested by the customer in writing. [B]if segregated by the broker-dealer. [C]only if the securities are in a cash account. [D]under no circumstances may fully paid securities be held.
A. The cost basis for the stock would remain at $22,500 because the options were NOT exercised. The question is asking "cost basis for the 200 shares of ABC stock." The $1,500 is the premium amount for the option contract.
A client purchased 200 shares of ABC for $22,500 two years ago. Over the next few years the client sold ABC call options for a total of $1,500. All the calls expired worthless. For tax purposes, the cost basis for the 200 shares of ABC is [A]$22,500.[B]$21,000.[C]$23,250.[D]$24,000.
D.
A current copy of the Options Disclosure Document (ODD) must be delivered to a customer: [A]At or prior to the time a customer's first option trade is executed.[B]At or prior to the time a customer's confirmation of his first option transaction is mailed. [C]At the time the registered representative first discussed options with the customer. [D]At or prior to the time the customer's option account is approved.
A.
A customer buys 1 ABC June 60 call @ 1.50 when the market price of ABC is at $57.50. Ignoring commissions and other transaction costs, the customer would breakeven if the market price of the stock were: [A]$61.50[B]$59[C]$45[D]$58.50
D.
A customer wants to open an account for his niece, who is a minor. The customer will make a gift of money and securities under the statutes of the Gifts to Minors Act. Which of the following can a custodian do if stock subscription rights are in the niece's account? Sell the rights and use the proceeds to buy another security. Donate the money to the account to exercise the rights. Sell a different security in the account to get funds to exercise the rights. Sell the rights and hold the money in the account for a reasonable period of time awaiting reinvestment. [A]I and I I[B]III and IV [C]I, II and III [D]ALL
C.
A customer's only account at a broker-dealer is an established margin account. The customer wishes to participate in the distribution of a new issue of common stock coming to market in the next few days. Which of the following is true regarding this situation? The customer must be told that [A]he will be required to open a cash account in order to participate in the new issue. [B]new issue purchases are not allowed in a margin account. [C]he can purchase the new issue shares in his margin account but would be required to pay for the purchase in full since it is an IPO.[D]new issues require a margin deposit of 75%.
B. II is correct where I is not because of the difference between market value and loan value. When a deposit of securities is being used to satisfy a call, the securities must have a "loan value" equal to the call. Cash equal to the call must be deposited to meet the call.
A maintenance call can be satisfied by a deposit of which of the following? Listed stocks having a market value equal to the call. Marginable unlisted stocks having a loan value equal to the call. An amount of cash equal to the call. An amount of cash equal to 50% of the call. [A]I and IV[B]II and III[C]I, II and III[D]I, II and IV
C.
A market maker may: Take a long or short position at any time. Sell from his own inventory, which may be either long or short. Act as both agent and principal in the same transaction. Quote a work out market, a range within which the dealer feels he can obtain the security within a reasonable time period. [A]I and II[B]I, II, and III[C]I, II, and IV[D]II, III, and IV
C.
A municipal bond indenture is usually a contract between: [A]The members of the underwriting syndicate. [B]The issuer and the law firm providing the legal opinion [C]The issuer and the trustee on behalf of the lenders [D]The issuer and the underwriter
D. When an investor buys options, they must pay the full amount of the premium.
A mutual fund manager decides to hedge a long position in ABC common stock. In a margin account, he buys 100 ABC June 20 Puts @ 5. What is the required deposit on these options? [A]3,750 [B]37,500 [C]500 [D]50,000
B.
A numerical measure of how much the return on a mutual fund has varied regardless of cause, from the historical average return of the fund is known as: [A]current yield. [B]standard deviation. [C]beta or alpha. [D]dividend payout ratio.
A.
A particular mutual fund focuses its investments in one state, and even more specifically, within a specific county of that state. Such a fund would primarily be exposed to which type of risk? [A]Marketability[B]Interest rate[C]Capital[D]Systematic
C.
A registered representative in your office accidently entered an order for a client using the wrong account number and the order was executed. When are you, the branch manager, required to approve the adjustment or cancellation? [A]before the trade settles [B]before the end of the trading day [C]before the correction is actually made [D]before the confirmation is sent
A.
A sales load is best defined as the [A]difference between the selling price and the net asset value.[B]commissions paid on the purchase or sale of securities. [C]fee paid to the investment advisor. [D]difference between the expense ratio and the total return of the fund.
[D]Shares in a brewery
A securities analyst reports that a cyclical change in non-durable goods has occurred on the downside over the last quarter. Which of the following has probably been a poor investment over the last three months? [A]Shares in a steel company B]Industrial revenue bonds [C]Shares in a home appliance manufacturer [D]Shares in a brewery
D.
A short position may result from which of the following? Sales against-the-box as a hedge on a long position. The sale of borrowed stock by a customer who hopes to buy the same security later at a lower price. Arbitrage trades related to mergers and acquisitions. [A]I and II [B]I and III [C]II and III [D]All
C. Buy stops are used to take advantage of breaks in the resistance level of a security - not the support level
A stop order to buy may be used for all of the following EXCEPT [A]to attempt to limit the potential loss on a short sale. [B]to protect the gain on a short sale. [C]to take advantage of a break in the support level. [D]to take advantage of a break in the resistance level.
A. Global Funds include stocks and bonds issued by U.S. and foreign companies whereas an International Fund would not include the U.S.
A. Global Funds include stocks and bonds issued by U.S. and foreign companies whereas an International Fund would not include the U.S. Which of the following best describes a mutual fund that invests in stocks and bonds issued by the U.S. and foreign companies? [A]Global Fund [B]G-8 Fund [C]International Fund [D]Any open-end fund
A.
All of the following would cover a put writer in a margin account except: [A]the underlying stock [B]short the underlying stock [C]long a put with the same or higher strike price [D]cash equal to the aggregate value of the contract
3 years from last use
All records of advertisements, reprints, sales lit must be kept for
B. The total trades and commissions are excessive for this account. The RR's supervisor must require that the RR execute fewer trades.
An elderly person has an account with a member firm. The account has $50,000 average net equity. The RR has generated $15,000 in commissions so far from 45 trades. Which of the following should the RR's supervisor do? [A]Send the client an active trading letter and allow trading to continue. [B]Require that the trading activity be reduced immediately. [C]Review the account performance and contact the customer if the total account value has fallen. [D]No action is required as the customer has not filed a complaint.
B. A sale under Rule 144A may only take place if the purchaser is a Qualified Institutional investor, which includes banks, insurance companies, and trust companies but does not include individual qualified investors.
An investor currently owns a restricted common stock and is in the 6-month restricted period. The investor needs to sell the stock now, during the restricted period. Using SEC Rule 144A, the stock could be sold to any of the following investors listed below, EXCEPT: [A]ABC Bank [B]A Qualified Investor [C]XYZ Insurance Company [D]A Qualified Institutional Investor
C. Step 1: If you have a 50% stock dividend, the total number of shares will increase by 50%. In an option contract, you have 100 shares of stock, we take 100 X .50 = 50 additional shares of stock. So, you will have 100 + 50 = 150 shares of stockStep 2: Now, like a normal stock split, the price of the shares will be reduced. So, we take the total value of the stock / new number of shares = $6000 / 150 = $40 After the split, the investor would be long 10 XYZ October 40 calls covering 150 shares each.
An investor purchases 10 XYZ October 60 calls for 6. XYZ declares a 50% stock dividend. On the ex-dividend date, the investor would be long which of the following? [A]15 XYZ October 80 calls covering 100 shares each [B]15 XYZ October 60 calls covering 100 shares each [C]10 XYZ October 40 calls covering 150 shares each [D]10 XYZ October 30 calls covering 200 shares each Step 1: If you have a 50% stock dividend, the total number of shares will increase by 50%. In an option contract, you have 100 shares of stock, we take 100 X .50 = 50 additional shares of stock. So, you will have 100 + 50 = 150 shares of stockStep 2: Now, like a normal stock split, the price of the shares will be reduced. So, we take the total value of the stock / new number of shares = $6000 / 150 = $40 After the split, the investor would be long 10 XYZ October 40 calls covering 150 shares each.
C.
An offering of a new issue of securities purchased from the issuer and offered to the public is a: [A]Refunding [B]Secondary distribution [C]Primary distribution [D]Auction
C.
Athens Fund has an ask price of $19.25, while the ask price of the Troy Fund is $18.50. The net asset value per share of the Athens Fund is $20.25, while the Troy Fund has a net asset value per share of $17.02. Which of the following is probably TRUE? [A]Both funds are closed-end. [B]Both funds are open-end. [C]Athens is a closed-end fund, while Troy is an open-end fund.[D]Troy is a closed-end fund, while Athens is an open-end fund.
C (50% penalty since her 1st distribution is at 74 not 72)
Bafia is a participant in a 403(b) plan. She receives her first distribution today of $1,800. She is retired, 74 years old and is in a 25% federal tax bracket. What will be her tax penalty on this distribution? [A]$0 [B]$900 [C]$180 [D]$1,350
B.
Bids from a secondary market joint account could not be placed on which of the following? [A]A block of municipal bonds which are being offered via the wire of a municipal broker [B]An issue that is being advertised for sale by a municipal issuer [C]A block of municipal bonds which are being put up for sale by a trust department [D]A list of securities that currently appear on the bid-wanted list of an insurance company
NAV of mutual fund shares is best defined as ...
Closing market value of all the securities in the fund portfolio portfolio plus any interest or dividends received on securities in portfolio
C. Whenever there is an error made in the entering or execution of an order, the RR must seek approval of a supervisory person to have the account number or error corrected.
During a busy trading day with an up market, a registered representative enters a customer's order to buy 200 shares of ABC at the market. After entering the order, the RR realizes that he mixed up two orders and entered the wrong account number for the purchased shares of ABC. What should the registered representative do in this situation? [A]The RR should cancel the first order and re-enter the order using the correct account number. [B]The RR should sell the stock that was purchased in the wrong account and then enter a new order in the correct account. [C]The RR should get approval of a supervisory person to correct the error. [D]The RR should wait for the trade to settle and then transfer the trade to the correct account.
C. FINRA Markup Policy applies only to OTC agency and OTC principal transactions - not to transactions on the exchanges and not to transactions where an offering circular or prospectus is distributed
FINRA 5% Markup Policy would apply to which of the following transactions? Transactions in exempted securities. Transactions executed in OTC Securities in the Secondary market as agent. Transactions executed in OTC Securities in the secondary market as principal. Transactions requiring a prospectus. [A]I and III [B]II and IV [C]II and III [D]I and IV
A.
For which of the following markets do listed security transactions that have occurred appear on the consolidated tape? Fourth market. Third market. Foreign market. Primary market. [A]I and II[B]I and III[C]II and III[D]II and IV
B.
How are dividends handled in a money market fund? [A]Dividends are credited to customers daily and paid to them annually. [B]Dividends are credited to customers daily and paid to them monthly. [C]Dividends are credited to customers daily and paid to them daily.[D]Dividends are credited to customers daily and paid to them quarterly.
A. In an all-or-none underwriting, the managing underwriter agrees to act as an agent of the issuer and does not actually buy the securities from the issuer. It simply acts as an agent in trying to distribute the securities. When the underwriter performs an offering on a firm commitment basis (whether for bonds or stock) it buys the entire issue and then sells it to the public.
In which instance is the managing underwriter for a syndicate acting in an agency capacity? [A]When facilitating an offering on an all-or-none basis [B]In a stock offering via a firm commitment basis [C]When facilitating a stand-by agreement offering [D]When offering convertible bonds via a firm commitment
In forming a selling group, members are chosen based upon:
Marketing ability
A. All securities are subject to the anti-fraud provisions of the '34 Act, but while municipals do not provide a prospectus, they do provide an Official Statement, and municipals are exempt from the SEC reporting requirements. Anti-Fraud is a Federal Act, so it will be referenced in both Federal Acts - 1933 and 1934. Both Acts protect the public from fraud. You could see it either way on the exam.
Municipal security issuers and market participants are subject to which of the following? 1. Anti-Fraud Provisions of the Securities and Exchange Act of 1934. 2. Prospectus delivery requirements to purchasers of new issues (the Securities Act of 1933). 3. Issuer reporting requirements to the SEC under the Securities Exchange Act of 1934. [A]I only [B]II, III [C]I, II [D]All of the above
D. According to FINRA rules, RRs may share in the profits (and losses) in the account in direct proportion to their financial contribution. In this question, Natasha contributed 40% of the total contribution ($40,000/$100,000). Therefore, she can only retain 40% of the profits, which is $4,000 ($10,000 x 40%).
Natasha, an RR, and Mike, her customer, have an approved account sharing arrangement. They purchase $100,000 in stock, with the customer contributing $60,000 and the RR contributing $40,000. They sell the shares for a $10,000 profit. How much of the profits can Natasha retain for herself? [A]$10,000[B]$6,000[C]$5,000[D]$4,000
B.
New Issue sales generally include all of the following EXCEPT: [A]Market-out clause [B]Sending preliminary prospectuses which include the offering price [C]Stabilization clause [D]Penalty clauses
C. EXPLANATION Put spread done at a debit. This would be the most bearish. We know it is bearish because we have more money invested in the BUY put, money going out of our pocket "debit." A buy put is bearish.Covered call. This would be a sell call (bearish) and we also own the stock because we are covered (bullish)Put spread done at a credit. This would be bullish. We know it is bullish because we have more money invested in the sell put, because more money is coming into our pocket "credit." A sell put is bullish.Call spread done at a debit. This would be bullish. We know it is bullish because we have more money invested in the buy call, money going out of our pocket "debit". A buy call is bullish.The only option which is all bearish is the put spread done at a debit. The other option are either all bullish, or part bullish.
Of the option positions listed, which would be the most bearish? [A]Covered call [B]Put spread done at a credit [C]Put spread done at a debit [D]Call spread done at a debit
[D]vertical spread at a net debit.
One of your clients is an options trader. He puts on the following positions: Sells 1 June 70 call for 4 Buys 1 June 60 call for 9 This would be considered a [A]horizontal spread at a net credit. [B]horizontal spread at a net debit. [C]vertical spread at a net credit. [D]vertical spread at a net debit.
C.
Operating expenses from mutual funds are paid from which of the following? [A]gross profits earned in the most current quarter [B]capital gains distributions [C]investment income or dividends [D]a percentage of the net assets of the fund
C.
Orders entered or noted in the designated market maker's book include: Market Limit Stop Not held [A]I only[B]II only[C]II, III only[D]I, II, III, IV
PAC CMOs
PAC bonds have a sinking fund and principal payments are not subordinated to other tranches. Thus, they offer certainty of cash flow except in extreme prepayment situations. Because they're safer than other tranches, they have lower yields.
C.
Reg T governs the extension of credit for all of the following EXCEPT [A]listed common stock. [B]NASDAQ national market system OTC securities. [C]government securities. [D]listed corporate bonds.
C.
Regulation S governs offers and sales made outside the US and defines all of the following as "US Persons" except? [A]the estate of a foreigner when the executor is a US citizen [B]a corporation organized under the law of the US [C]a discretionary account for a non-US citizen held by a US Dealer [D]a trust in which the trustee is a US citizen
B.
SEC Regulation SHO applies to short sales in which of the following? [A]municipal bonds [B]equity securities [C]non-convertible corporate bonds [D]money market instruments
A.
Several ratios are available to measure a company's short-term liquidity. They include all of the following, except [A]Inventory / Current Liabilities [B]Current Assets less Inventory / Current Liabilities [C]Current Assets / Current Liabilities [D]Cash plus Marketable Securities / Current Liabilities
C.
Technical analysis would be used by a fundamental analyst when the analyst is trying to determine which of the following? [A]Capital structure [B]Current ratio [C]Pricing and timing [D]Earnings trends
D. Forward pricing is required for all purchases and redemptions of mutual fund shares. However, investors who purchase ETFs in the secondary market pay the market price at the time of the purchase. Forward pricing is not used.
The Investment Company Act of 1940 requires that certain transactions use "forward pricing" (the valuation of mutual fund share prices as of the next computation). Which of the following transactions does NOT require "forward pricing"? [A]Shares are purchased directly from the principal underwriter by individual investors. [B]Shares are sold on behalf of an investor by the investor's broker-dealer through a wire order. [C]Shares are redeemed directly to the fund by a customer. [D]ETF shares are purchased by a customer in the secondary market.
A.
The SEC "quiet periods" for an IPO of an emerging growth company as applied to the underwriters are: [A]eliminated [B]shortened [C]lenghtened [D]remain unchanged
C.
The effect of the FIFO accounting method on inventory valuations during a period of sharply rising prices is: [A]reduce profits [B]reduce tax liability [C]increase the value of the inventory account [D]increase the cost of goods sold
[D]Trading in the options is also halted.
Trading in a stock has been suspended. Which of the following is true regarding trading in options on that stock: [A]Opening transactions are permitted. [B]Closing transactions are permitted. [C]Investors may only write new contracts. [D]Trading in the options is also halted.
B.
Two market makers complete a transaction in a security reported on the Consolidated Tape. Which of the following best describes their reporting responsibilities? [A]The buyer must report the trade within 10 seconds. [B]The seller must report the trade within 10 seconds. [C]The buyer must report the trade as soon as it is completed.[D]Both the buyer and seller must report their trades at the end of the day.
Dividends are not paid to ______
UITs
B.
Under SEC Rule 15c3-3, if a customer sells a security it must be received by the broker-dealer no later than [A]ten business days after trade date. [B]ten business days after settlement date. [C]seven business days after trade date. [D]seven business days after settlement date.
A.
Under the Securities Act of 1933, which of the following securities issued by an investment company would NOT be subject to the prospectus delivery requirements? [A]Fund shares purchased in a secondary market transaction [B]Variable annuities [C]Mutual fund shares [D]Face-amount certificates
The Credit Agreeement describes the terms and conditions of the financing extended in the margin account by the broker-dealer.
What function does the "Credit Agreement" at a broker-dealer firm accomplish?
B.
When a custodian account is opened under the Uniform Gifts to Minors Act, how many custodians and minors may there be per account? [A]One custodian and unlimited minors [B]One custodian and one minor [C]Two custodians and two minors [D]Two custodians and three minors
A. Under FINRA rules customer account statements will include all items listed except year-to-date income collected on the account. Year-to-date income would be provided to the customer at year-end.
When a customer of a broker-dealer receives their account statement, that statement will contain all of the following information except [A]income from the account year to date [B]dividend payments received on stocks in the account [C]buy and sell transactions that were executed [D]receipts and deliveries of securities for the account.
A.
When a customer transfers his/her account from one registered representative to another registered representative within the same firm, the document that must be reviewed and updated is: [A]The New Account Report Form [B]The Customer Agreement [C]The Letters of Authorization [D]The Hypothecation Agreement
C.
When an institution systematically buys and sells stocks, options, and/or futures on selected stocks or an index, it is known as [A]fundamental analysis. [B]asset allocation. [C]program trading. [D]portfolio diversification.
A.
When could one expect changes in the net asset value of a mutual fund? [A]When there are changes in the value of securities within the fund's portfolio [B]When customers redeem fund shares [C]When customers exchange fund shares for another fund's shares within the same family [D]When shares of the fund are split
A. Transfer on death registration of an account is where the account is in one party's name but on death the securities in the account go directly to a beneficiary named in a TOD Agreement, thus avoiding probate. The securities do not avoid inheritance taxes or creditors' claims. The beneficiary designation is revocable.
When reviewing a transfer-on-death registration of an account which one of the following is true? [A]The securities avoid probate [B]The securities avoid inheritance taxes [C]The securities are sheltered from creditors' claims [D]The named beneficiary is irrevocably entitled to the securities
C. Choices I and III are correct. II is incorrect because the SEC does not directly regulate OTC transactions. The SRO, FINRA, regulates OTC market transactions. The SEC oversees the entire brokerage industry.
Which of the following are true about the over-the-counter market? FINRA regulates trading practices in the OTC market. The SEC directly regulates OTC transactions. The Federal Reserve Board regulates which OTC securities are marginable. [A]I only[B]II only[C]I and III[D]I, II, and III
C. A firm's electronic bulletin board would be considered advertising, as would a firm's website and various pages of a website.Each of the other answers would NOT be considered Retail Communications subject to communication rules on advertising. An offering circular and prospectus are not considered to be advertising because they are disclosure documents. A letter sent to 10 targeted clients would be considered correspondence, and would therefore avoid the rules on advertising.
Which of the following communications to the general public would be considered Retail Communications subject to the communication rules on advertising? [A]An issuer's prospectus offered by member firm that is part of a syndicate [B]A letter sent to 10 targeted clients by an agent who manages all 10 client portfolios [C]A firm's electronic bulletin board [D]An offering circular
D.
Which of the following is incorrect regarding trading for CBOE index options? [A]Market makers trade for their own account at their own risk.[B]The public limit order book is handled by the Order Book Official.[C]Floor brokers execute orders for other brokers on a commission basis.[D]Market maker orders always have priority over public orders.
A.
Which of the following orders have priority during the opening rotation on the floor of the CBOE? [A]public market orders [B]all market orders [C]spread orders [D]limit orders
A. Private securities transactions require that the RR provide the member firm with prior written notice describing the proposed transaction(s) and whether the RR will receive compensation. If the RR will receive compensation, the RR must receive written notice from the member firm granting approval or disapproval of the outside activities. The rule does not address or reference state or federal regulations.
Which of the following statements would be in accordance with FINRA rules in a situation where an registered representative intends to participate in the private sale of real estate limited partnerships outside of the scope of his employment at a member firm to the RR's clients? [A]The RR must give written notice to their firm and receive written acknowledgement from the firm and make it clear to buyers of the limited partnership interests that the member firm is not participating or endorsing the offering of the interests. [B]All private offerings must comply with rules and regulations of the SEC and each state where the product will be offered. [C]The RR walks into his manager's office to notify her that he intends to participate in this outside activity. [D]Regulations at the state and federal level which apply to the firm are not violated by the RR's participation.
The federal reserve board
Who administers (Regulation T) margin account requirements
A. When a client applies for a new account, necessary information that is to be included on the application usually includes the customer's social security number, their occupation and job title, and their net worth and annual income. All of these facts are necessary in the opening of a new account as well as in determining the customer's investment objectives and suitable transactions. A customer's margin debit balance can be important when purchasing and selling securities in an account, but is not a part of the "know your customer" rule. The customer's margin debit balance can change often daily.
With regards to the "know your customer" rules, which of the following need not be considered? [A]The margin debit balance in the customer's account at any given time. [B]The net worth and annual income of the customer. [C]The social security number of the customer. [D]The occupation and job title of the customer.
C. In this situation, the only acceptable scenario would be the sales seminar conducted for pre-approved customers with accredited investor status. Advertising is NOT allowed on Reg D Private Placements. Make sure to differentiate this from the rule 506c, which does allow general advertising. However, we must answer questions based on the general rule, not on 506c, unless specifically stated.
Your firm has securities available from a SEC Reg D private placement of variable life policies, which are unregistered. One of your fellow RRs would like to place an ad in a financial newspaper regarding the availability of the securities. Reg D allows which of the following in this situation? [A]Because it's a private placement, Reg D advertising is limited to hedge fund sales literature only. [B]As long as accredited investors are the only ones allowed to invest in the products, general advertising is acceptable, even if it reaches non-accredited members of the public. [C]Accredited investors who are pre-qualified for the purchase of the security may be invited to a sales seminar by the RR. [D]As long as the RR focuses advertising toward investors with sizeable net worth, advertising is acceptable.
separately managed accounts
are not registered investment companies
if interest rates may drop you want to ...
extend overall maturity and increase all call protection on bond portfolios
Not held orders
go to floor brokers (NOT Designated market makers or market makers) (DMM only deal with market orders, open orders, day orders)
Inverted Head-and-Shoulders Regular head and shoulders
inverted = reversal of downward trend regular = reversal of upward trend
on a non-qualified variable annuity
monthly payments partially taxable on earnings in the annuity and will be partially tax-free with regards to the principal that was invested in the variable annuity
the narrower the spread the ______ actively traded the stock is The wider the spread the ______ actively traded the stock is
more less
Marking-up relevant factors
per share price of security security type security availability (NOT cost of security to dealer)
during cooling period syndicate members would be allowed to send out ...
preliminary prospectus to clients who have requested one
FINRA's office of the Ombudsman
provides a neutral and confidential forum for member firms and their employees or public investors to voice concerns about operations, enforcement, or other FINRA activities?
Bond issuers effectively force conversion by calling bonds at ...
redemption price below parity
amount of underwriting spread in offer is affected by ...
size of issue, type of security envolved, and business history of the issuer
using an annuity to fund a qualified retirement plan is ...
suitable because annuity provides guaranteed lifetime income during retirement and because of death benefit provided
non-qualified variable annuity surrender is ...
tax liability determined by subtracting amount invested in annuity from net proceeds on surrender
who would benefit from a high coupon muni traded at premium and called at par value
the issuer. the bond holder doesn't benefit at all, obviously.
a "net" transaction means
the mark up or mark down is included in the price of thew transaction
