Unit 2

I and IV

A bond with a 4.5% stated yield might make annual interest payments of $45 annual interest payments of $450 semiannual interest payments of $2.50 semiannual interest payments of $22.50

American-style option

A call or put that can be exercised before expiration is a(n)

Accrued taxes first, subordinated bondholders last

A corporate bankruptcy liquidation took place. Of the following—general creditors, secured bondholders, subordinated debenture holders, accrued taxes—who was paid first and who was paid last?

manufacturing facilities

A secured debt security can be backed by a corporation's

income or net worth criteria with substantial investment experience

An accredited investor is one who meets

a limited partnership

An investment that allows for a share in the income, gains, losses, deductions, and tax credits of the business entity to pass through to investors is known as

I. and III.

An investor and his mother own 20% and 10%, respectively, of a corporation's outstanding shares, and the mother wants to sell all of her holdings. According to Rule 144, which of the following statements are TRUE? I. She must file Form 144 to sell the shares II. She does not have to file Form 144 to sell the shares. III. She is considered an affiliated person. IV. She is not considered an affiliated person.

can sell the shares unrestricted at any time

An investor having no affiliation with CDS Company has just purchased shares that were sold subject to Rule 144. This investor

the 3rd Friday of November

An investor holds a November 35 call that was purchased on March 3. The investor, if wanting to exercise the contract, would need to do so no later than

the premium paid decreases the return

An investor pays 102 ($1,020) for a $1,000 par value bond. At maturity,

$8,850

An investor purchases 1 KLP October 95 put at 6.50. What is the investor's maximum potential gain with this position?

equal to its current yield

An investor purchases a bond offered at par. The bond has a coupon rate

bullish on LMN stock

An investor who is long LMN equity call options is

1 day or 270 days

Commercial paper issued by corporations can have maturities as short or as long as

all have preference over the issuer's common shares

Different categories of preferred shares offered by an issuer

C) Revenue bonds are self-supporting, while GO bonds are backed by the municipality's good faith and credit.

For municipal debt issues, which of the following is TRUE? A) Both revenue bonds and GO bonds are backed by the municipality's good faith and credit. B) GO bonds are self-supporting, while revenue bonds are backed by the municipality's good faith and credit. C) Revenue bonds are self-supporting, while GO bonds are backed by the municipality's good faith and credit. D) Neither GO nor revenue municipal issues are backed by the municipality's good faith credit.

agree to be paid back last of all debtholders

In the event that a liquidation needs to occur, subordinated debtholders

2%

MAS Corporation has enjoyed an extremely profitable year. It has been determined that those owning the MAS 4% preferred, participating to 6% preferred shares, will receive the full participating dividend. The participating shareholders will receive an additional dividend of

banker's acceptances

Money market instruments guaranteed by a bank that are used to provide capital for international trade are called (provide short-term financing for importers and exporters)

Being highly liquid

Money market securities can be associated with which of the following characteristics?

is not a restricted account and will be allowed to purchase equity shares of an IPO

Mrs. Jones is an employee of a member firm and as such is a restricted person regarding the purchase of new issues. She belongs to an investment club and has a 1% interest in the club's brokerage account. The investment club

depletion

Partners in direct participation leasing programs can receive write-offs for all the following EXCEPT A) depreciation B) operating expenses C) depletion D) interest expenses

cumulative preferred stock

Preferred shareholders who expect missed dividend payments to be eventually paid are most likely to own

II. and III.

Priority at dissolution for preferred shareholders means that they are paid: I. before all creditors II. after all creditors III. before common shareholders IV. after common shareholders

Debt securities claims are satisfied before equity securities claims

Regarding a corporate bankruptcy and the liquidation priority, which of the following is accurate?

limiting the number of shares of an IPO that may be purchased by the issuing company's employees

Rules to protect the investing public during the public offering process include all of the following EXCEPT: A) members must offer the securities at the public offering price B) member firms may not withhold securities in a public offering for their own benefit C) securities industry insiders may not take advantage of their insider status to gain access to new issues for their own benefit D) limiting the number of shares of an IPO that may be purchased by the issuing company's employees

Semiannually

T-notes pay interest

at parity

The XYZ May 45 puts are trading 2.50. The current market value (CMV) for XYZ stock is $42.50. The May 45 put is.... When the premium equals intrinsic value. The premium of 2.50 equals the contract's 2.50 IV; therefore, the option is....

the stated or nominal yield

The coupon payable on a bond may also be referred to

are solicited

Transactions where the penny stock rules are applicable would be those that

10 years or more

Treasury bonds mature in

The issuing Broker-Dealer

Treasury receipts are backed by

Increased diversification

What is one of the advantages for the investor who invests in mutual funds that include foreign securities in the fund's portfolio?

Random-selection basis

What method is used to assign exercise notices to broker-dealers with short positions by Options Clearing Corporation (OCC)?

The partner might jeopardize the limited liability status held as an LP

What might happen if a limited partner begins making day-to-day business decisions for the partnership?

Tax deductions and credits

Which of the following are potential benefits associated with a real estate direct participation program?

Fixed Annuity and Variable Annuity

Which of the following are the most likely to make monthly or quarterly payments for the life the investor? Fixed annuity UIT Mutual fund Variable annuity

Preferred shares

Which of the following is an example of an equity security?

GNMA

Which of the following obligations is backed by the full faith and credit of the United States Government?

Par value for a bond is also known as

face value or the amount a bond will be redeemed for at maturity