SIE CH 18 and 19

Which of the following choices is considered a leading economic indicator? A Manufacturing new orders B Industrial production C Average duration of unemployment D Commercial and industrial loans outstanding

Manufacturing new orders is considered a leading economic indicator. Industrial production is considered a coincident indicator, while average duration of employment and commercial and industrial loans outstanding are lagging indicators.

A registered representative (RR) is having dinner with a client to discuss her portfolio and different investment opportunities. What is the maximum amount that the RR could spend on dinner?

No limit

Which of the following bonds results in the highest real interest rate? A A bond yields 8% when inflation is at 3% B A bond yields 12% when inflation is at 8% C A bond yields 10% when inflation is at 7% D A bond yields 6% when inflation is at 4%

The real interest rate, also referred to as the real rate of return, refers to a bond's yield after its been adjusted for inflation (yield minus inflation rate). The highest real interest rate is realized on a bond that yields 8% when the rate of inflation is 3%. This bond provides a real interest rate of 5% (8% - 3%).

Which of the following stocks would most likely be considered a defensive stock? A An aerospace stock B A utility stock C An airline stock D An automobile stock

Utility, food, beer, candy, pharmaceutical, tobacco, and soft drink stocks would be considered defensive stocks. They offer the investor a greater amount of safety because in periods of recession and adverse economic conditions these companies are the last to be affected.

what type of indicator is industrial production

coincident

what happens to bond prices during rising inflation?

decrease

If a country imports more than it exports, its GDP will _____ If a country exports more than it imports, its GDP will ____

decrease, increase

reasons for termination

form U5

disciplinary actions, arbitration rewards

form U6

During an economic slow-down, the FRB will _____ interest rates to stimulate economic activity

lower

limit on business expenses

no limit

Engaging in private securities transactions outside regular scope of employment without firm's permission

selling away

In periods of high inflation, do stocks or bonds perform better

stocks

private transactions: if not being compensated you need...

written notice

private transactions: if being compensated you need....

written permission and must be recorded on books

During periods of easy money when interest rates are declining, yield curves tend to: A Slope upward from the shorter to the longer maturities B Slope downward from the shorter to the longer maturities C Remain flat D Slop downward from shorter to intermediate and then upward to longer maturities

A Slope upward from the shorter to the longer maturities

Which of the following items is considered a coincident economic indicator? A The industrial production index B The S&P index C Housing starts D Expenditures for capital goods

A The industrial production index

If an associated person signs the arbitration clause that's included in Form U4, he is agreeing to: A Using arbitration as the process for resolving disputes B Using arbitration or litigation as the process for resolving disputes C Using arbitration as the process for resolving FINRA rule violations D Using arbitration as the process for resolving issues that relate to SEC rule violations

A Using arbitration as the process for resolving disputes

A country that has a trade surplus will have a currency that: A Is volatile B Is appreciating C Is depreciating D Is unchanged

B Is appreciating When a country exports more than it imports, it has a trade surplus. Running a trade surplus creates demand for a currency, which causes the value to rise or appreciate. The rise is primarily caused by foreign consumers buying a currency in order to pay for the exports.

If the FRB engages in repurchase agreements, which of the following statements is TRUE? A The money supply has been decreased. B The money supply has been increased. C Short-term yields will likely increase. D The FRB is initially selling securities.

B The money supply has been increased. When the FRB conducts a repo, it is initially purchasing securities and the immediate result is an increase in money supply. This action tends to reduce short-term yields.

Which of the following actions by the Federal Reserve Board results in a decrease in the money supply? A The purchase of securities in the open market B The sale of securities in the open market C A decrease in the discount rate D A decrease in the reserve requirements

B The sale of securities in the open market The sale of securities by the Federal Reserve Board in the open market results in the withdrawal of reserves from the banking system, thereby decreasing the money supply. All the other actions by the FRB result in an increase in the money supply.

Final arbitration awards against registered representatives and/or firms are reported on which of the following forms? A Form U5 B Form U4 C Form U6 D Form BD

C Form U6

FINRA's BrokerCheck shows investors: A Registrations for individuals only B Registrations for broker-dealers only C Registrations for individuals and broker-dealers D information for all employees of a broker-dealer

C Registrations for individuals and broker-dealers

Who enacts fiscal policy? A The Federal Reserve Board B The Comptroller of the Currency C The FDIC D Congress

D Congress

Which of the following will occur if U.S. imports are increasing? A The dollar will weaken. B Yields will decrease. C The money supply will increase. D Gross Domestic Product will decrease.

D Gross Domestic Product will decrease. When imports exceed exports, it means that more money is being spent than received. This typically leads to a decrease in the production of U.S. goods (i.e., a decrease in GDP). Monetary policy may then be implemented to use strategies designed to strengthen the dollar, increase yields, and decrease the money supply.

The Federal Reserve Board's Open Market Committee (FOMC) buys and sells which of the following securities most often to accomplish its aims? A Agency bonds B Treasury bonds C Treasury notes D Treasury bills

D Treasury bills

_____determines whether unlisted equity securities are marginable.

FRB