SIE/Series 6
ABC stock is trading at $18.30 a share. The ABC June 20 put has a premium of $2.60. it has a time value of?
$0.90; 20-18.30 =1.70; 2.60-1.70=.90
An investor puts $10,000 into a real estate DPP. The program put $100,000 down for the purchase of an asset valued at $1m with recourse financing for the remainder of the purchase from a qualified lender. What is the investor's basis?
$100,000. $10,00 is 105 of $100,000, so we assume the LP is a 10% owner. $90,000 is 10% of the $900,000 recourse debt. 90k + 10k =100k
a natural person may be considered an accredited investor if, in each of the past 2 years his income exceeded
$200,000
John, age 45 earns 35,000 per year and wants to start an IRA for himself and his wife, age 43 who does not work what legally gives them the largest deduction?
$6000 each in two single accounts
what is the cost of a march 120 Bond call with a premium of .20
$625. T notes/bonds are quoted in 32nds. therefore, .20= 20/32
a school teacher is retiring. she invested 10k in a 403b through payroll deduction. her account is worth 16k what is cost basis
0
The cash value of the separate account of a variable life policy is $1000 how many votes may the policy owner cast on matters requiring policy owner approval?
10
What is an underwriter's maximum sales compensation, including wholesaling costs, in a DPP offering?
10%
Edward has been participating in a non qualified variable annuity for the past 10 years. His contributions to the plan total $20,000. He received a lump-sum distribution for $35,000. What is the cost basis and the taxable portion for this plan?
15,000 is taxed as OI. $20,000 tax free as basis.
in order for a corporation to qualify for the 50% corporate dividend exclusion when they own stock of another corporation, they must own less than what percentage of that corporation's outstanding stock?
20%
what is the max allowable annual contribution into a non corporate hr 10 for self employed
20% of pre tax earnings up to a specified limit
Sell ABC short 20 stop 20.50. The ticker tape shows: 19,20,21,20.50,20.25. at what price was the trade executed at?
21; Sell short 20 stop 20.50 limit is triggered or elected at 20 or below, and executed at or above 20.50. Order is triggered at 19 and executed at 21.
After the beneficiary of a cover dell reaches 30 years of age, within how many days must the funds be withdrawn?
30 days
If an investor owns 150 shares and the stock splits 3 for 2 how many additional shares will he own after the split?
75 multiply 150 by 3/2
All of the following are considered conflicts of interest for the GP in a limited partnership, except.
Accepting $20,000 for a covenant not to compete with the lp
Which of the following does NOT describe the OTC market?
An auction market
Mary Parker has a very large annual salary and is two years from retirement. She has an immediate need to shelter her income from taxes. which of the following would best suit her objectives?
An oil and gas income program
An investor invests 20k in an lp. The investors share do recourse debt is 80k.
Basis =100k max risk =100k
which of the following discloses the assets available to common stock?
Book value per share
Which of the following is an appropriate investment for a LGIP?
Commercia Paper
The CAPM considers all of the following except
Considers: Beta, Risk free rate, TVM Doesn't consider: CPI
Which of the following components reconcile cash flow to net income
Depreciation and amortization
All of the following are features and requirements of the Living Needs Rider EXCEPT
Diagnosis must indicate that death is expected within 3 years.
An american corporation receiving which of the following is entitled to a 50% exclusion?
Dividends from a common and preferred stock of another domestic corporation.
Which of the following are characteristics of an exchange traded fund?
ETFs aren't sold directly to investors, ETFs provide intraday liquidity, and ETFs allow small dollar amounts of investment.
Triple witching involves the expiration of which of the following 4 times a year?
Equity options and equity option indexes
What is the major difference between an oil and gas limited partnership and a real estate limited partnership?
IDCs
Under Rule 144, when does an affiliate need to file a notice of proposed sale with the SEC?
If the sale involves more than 5,000 shares
Benefits of Local Government Investment Pools (LGIPs) include all of the following EXCEPT
Includes: protection of capital, cash management, Liquidity doesn't include: High investment returns
Responsibility of the SEC
Interpret and enforce federal securities laws/ issue new rules and amend existing rules/ oversee the inspection of securities firms, brokers, investment advisers, and ratings agencies/ Oversee private regulatory organizations in the securities, accounting, and auditing fields/ Coordinate U.S. securities regulation with federal, state, and foreign authorities.
which of the following is of least consequence in determining the tax benefits available in a farming syndication?
Land
Which of the following is subject to higher maintenance requirements when purchased on margin?
Leveraged ETFs
Open market operations of the Federal Reserve Board cause direct changes in
M1
Which of the following trades freely on an exchange or OTC?
Master limited partnership
which of the following is not descriptive of economic indicators
Peak
Which of the following represents the order in which market orders are filled?
Priority, precedence and parity
1933 securities registration act or "Paper Act"
Required prospectus and full disclosure filings for all new issues of securities considered nonexempt, such as corporate stock and bond offerings.
A mutual fund portfolio manager expects interest rates to increase. he wishes to protect his portfolio but also wishes to generate income.
Sell bond calls
hat is regular-way settlement of treasury bonds?
T+1
an investor anticipates interest rates will rise sharply over the next 2 years. In this scenario, which investment below would allow the investor to profit with the least amount of risk?
T-Bills. T bills are a good hedge against interest rate.
In a DPP a limited partner's participation in the partnership does not take effect until
The GP signs the subscription agreement
Which of the following best describes cash settlement?
The customer pays for the securities on trade date.
which of the following statements is true about a municipal dealer who has an out firm note from another municipal dealer?
The dealer has the right to buy the bonds at a fixed price for a certain period of time AND The dealer can sell the bonds before buying them.
A customer purchased 15k worth of stock. which of the following is true about his subsequent sale of $5000 of stock?
The investor is allowed to specify which shares are being sod to minimize his capital gain
an investor has some bonds that are callable. she is wondering what the yield on her bonds will be if they are in fact called by the issuer. Which of the following is true regarding this investors bonds?
The investor would have a yield on the bond based on the call premium at the time that the bond is called.
A client wants to discuss the assignment of his short call option on XYZ. The market price is $1 out of the money but the market price has been increasing steadily. He asks when he is required to deliver the stock.which of the following is the correct means of option assignment for his call?
The options clearing corporation decides which broker/dealer will deliver the securities. Then the broker/dealer will assign one of their clients by random selection. The client might not be assigned.
A couple established a cover dell educations savings account for their son, who never attended college. The son will be 30 soon. What options do they have?
The parents can roll the money over to another qualified family member for education.
who obtains the cusp for a municipal bond issue?
The underwriter
If you anticipate interest rates to decline, you would recommend
Treasury bond yield put and Treasury bond call.
The quick ratio is
a more stringent measure than the current ratio
All of the following statements regard 1035 are true except
a whole life policy can be exchanged for term
Insider trading laws set guidelines for imposing penalties including civil actions in a federal court. The maximum penalty a court can impose for insider trading is
an amount up to 3 times the profit gained or loss avoided.
Which of the following employees is eligible for a sep
an employee with an annual salary above a specific limit and an employee who worked for the company for 3 of the last 5 years.
Which of the following is NOT an exempt transaction?
an issue of 5-year treasury notes.
Which of the following is not true of 1035 exchanges
any exchange made under section1035 must be completed within 30 days
Employer contributions made to a qualified plan
are subject to vesting requirements
How to make a bond more marketable/reduce interest rate
attach warrants to the bond
an investor is very bullish on a stock. what provides the greatest potential short term gain
buy one call on the stock
your client has a portfolio of treasury bonds. you are concerned with a rise in interest rates. what would you recommend?
buy treasury bond puts
A financial institution has a large portfolio of us T-notes and is concerned that interest rates are about to increase. rather than selling off the notes, there creating portfolio volatility, the institution could attempt to offset the portfolio'z unrealized losses by
buying t-note puts
after the first annuity payment is calculated in a variable annuity, future payments are calculated
by multiplying the number of annuity units by the current redemption value of a unit
If a customer purchases securities and does not settle the account in 4 business days, the brokerage firm's first order of business is to
cancel the trade and sell the purchased securities
Which one of the following statements regarding cover dell education savings accounts is correct?
contributions are made with after-tax dollars and grow tax deferred
1934 Securities Exchange Act or "people act"
created the securities and exchange commission for the purpose of establishing a fair and orderly market.
an announcement in the newspaper states that m1 money supply has decreased
demand deposits, NOW accounts, and money in circulation have decreased
When a variable annuity is sold with a level load, the sales charge is deducted from
each deposit made into the annuity contract
EPS measures
earnings available to common stockholders
The details that state which employees are allowed to participate in a qualified retirement plan are called
eligibility requirements
When the insured of a variable life insurance policy dies, the proceeds payable to a beneficiary are
free from federal taxation
which of the following industries is most cyclical
home appliances
If the gross domestic product of one year is compared to the GDP of another would be most valid if it were made
in constant dollars
Which of the following is a coincident indicator
industrial production
What ratio would an analyst consider when evaluation a corporation's ability to service its debt?
interest coverage ratio
in which annuity settlement option will the insurance company retain the proceeds and pay the beneficiary interest income
interest option
which of the following securities acts governs the variable annuity separate account
investment company act of 1940
MSRB rules require a registered rep to obtain all of the following info regarding a new client except
investment experience
Fully diluted eps
is a smaller number than eps
upon termination of employment, an employees funds from a 457b plan
may be transferred into an IRA. Once transferred, the funds become subject to a 10% penalty for early withdrawal
Which of the following is a primary difference between IRAs and SEPs?
more money can be contributed to a SEP
A corporation with a low common stock ratio is
more vulnerable to interest rate changes
which annuity provision guarantees payments as long as the annuitant lives?
mortality guarantee
According to SRB rules, if a control relationship exists between an issuer and a municipal securities dealer, the nature of that relationship must be disclosed under all of the following circumstances except
not required to be disclosed on the confirmation
most stock options are settled which way
physically
If the contract owner of a variable annuity dies during the accumulation period, what is the proper tax consequences
proceeds in excess of the cost basis are taxable as OI to beneficiary
Mission of the SEC
protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation
Municipal Securities Rulemaking Board (MSRB)
provided for industry nonprofit insurance for customer accounts through the Securities Investor Protection Corporation SIPC, and mandated a national market system of consolidated quotations.
Maloney Act of 1938
provided for the Over the Counter self-regulation by the national association of Securities Dealers NASD.
which of the following applies to put option contracts
put holder has the right to sell at strike price
If an insured commits suicide within the first 2 years of a variable life policy issue, the insurance company
returns the premiums paid into the policy
a mutual fund's custodian
safeguards fund cash and securities.
Under regulation T, the 90 day restriction applies to a customer who purchases and subsequently sells
same stock in a cash account without having first fully paid for the purchase
a fundamental analyst uses technical analysis when determining which of the following?
security price
A gp who puts together the administrative organization of the lp and handles the registration of the securities with the states is known as the
syndicator
If the federal reserve board through the FOMC lowers the discount rate, which of the following will decline
t bill rate
the bond ratio measures
the amount of corporate capitalization that comes from long-term debt
Bob smith owns a fully paid up variable life insurance policy. he wishes to take a partial surrender by lowering the death benefit and taking the max cash available. What is the tax consequence?
the money received will not be taxable up to the amount of net premiums because of premium first rules.
With a variable annuity, which of the following factors are NOT involved in determining the amount of an annuitant's first annuity payment
the number of annuity units
A specialist receives an order to buy xyz 20 stop 19. This means that
the order is triggered at or above 20 and filled at 19 or lower.
which of the following is not a characteristic of simple plans
there are liberal loan provisions for hardships
The holder of a call option on a bond will profit if
yields on bonds increase or prices of bonds decrease
