02/22 Final Exam Review

A customer buys 100 shares of XYZ at $60 in a margin account regular way settlement. Two days after the trade, XYZ has risen to $70. The customer will receive a margin call for:

$3,000

A customer buys 100 shares of preferred at $80 per share. The par value is $100. The dividend rate is 10%. The customer will receive how much in each dividend payment?

$500

The maximum maturity on a banker's acceptance is:

270 days, because a longer maturity would cause the issue to be non-exempt

Of the choices offered, which security is least subject to purchasing power risk?

3-month Treasury Bill

Which of the following is defined as a "Municipal Finance Professional"?

An associated person who lobbies for underwriting, trading, financial advisory or consultant services business from municipal issuers

Which statement is FALSE regarding the conduct of Treasury Bill auctions?

Bids are awarded based on the lowest discount yield except for 26 week bills which are sold at par

In order to independently verify the identity of a corporation that wishes to open a brokerage account, which documentation is acceptable?

Certified articles of incorporation

When comparing an ETN to an ETF, which statement is TRUE?

ETNs are a debt instrument

Which regulator is responsible for enforcing provisions of the Bank Secrecy Act and the PATRIOT ACT?

FinCEN

All of the following statements are true about Health Savings Accounts EXCEPT:

HSA contributions are subject to phase-out when an individual's income exceeds $250,000

Which of the following are the least likely purchasers of commercial paper?

Individuals

All of the following issues are exempt from registration under the Securities Act of 1933 EXCEPT:

Investment companies

The record date to receive a dividend is set on Tuesday, June 14th. If a stockholder wishes to receive the dividend, he or she must sell the stock in a regular way trade no earlier than:

Monday, June 13th

Which of the following is NOT an ECN?

PENINSULA

What term would apply to Authorized Stock?

Par Value

Which of the following actions must be taken if a municipality wishes to raise its debt limit?

Public referendum

In a period of steep decreases in interest rates, which issuer is most likely to be positively affected?

Public utility

Which statement is TRUE about Coverdell Education Savings Accounts?

Qualifying distributions are not taxable

A self-employed individual makes $95,000 per year. To which type of retirement plan can the maximum contribution be made?

SEP IRA

The custodian bank does NOT perform which of the following functions?

Selecting the investment manager

All of the following information would be found in a new issue "tombstone" announcement EXCEPT:

The net proceeds to the issuer

A 42-year old customer informs you that he is changing jobs and that he has accumulated $172,000 in his retirement account at his old employer that will be distributed to him once he leaves. As the registered representative, you recommend that the customer open an IRA and invest the $172,000 in the Class A shares of the mutual fund shown in the exhibit. Which statement is TRUE?

The registered representative should have informed the customer that if another $3,000 is invested in a contributory IRA under a Letter of Intent, then a lower sales charge would be applied

Which statement is FALSE about the VIX option?

VIX valuation moves in parallel with movements of the Standard and Poor's 500 Index

A municipal revenue bond is backed by:

a specific source of revenue

A customer places an order to buy 1,000 shares of ABC stock at the market in his cash account. The order is executed and, when reporting the trade back to the customer, the registered representative notices that the trade was executed in the customer's margin account. Which statement is TRUE? The registered representative can move the trade to the customer's cash account:

as long as a cancel/rebill record is created that documents the reasons for the account designation change and the manager approves in writing

A customer sells short 100 shares of ABC stock at $60 and sells 1 ABC Oct 60 Put @ $6. The client is a:

bear seeking income

Over a period of 18 months, prices of goods and services decrease by 2%, and market interest rates decrease by 3%. This signals that the economy is in a period of:

deflation

All of the following statements about the conduct of customer accounts are true EXCEPT:

discretionary account trading authorizations must be renewed annually

An officer of a publicly traded company is prohibited from all of the following actions EXCEPT:

exercising call options or pre-emptive rights on that issuer's stock

The money that a bank has in excess of its reserves is called:

federal funds

All of the following statements are true regarding municipal advertising EXCEPT:

form letters are exempted from the advertising rules

A customer buys 100 shares of XYZ stock at $72.25 and buys 1 XYZ Oct 70 Put @ $.50. The customer has a(n):

hedged bull position

Jumbo Certificates of Deposit in amounts above $250,000 are guaranteed by the:

issuing bank

The Self Regulatory Organizations (SROs) are:

membership organizations

Under FINRA rules, when opening a new account for the customer, the:

name of the representative servicing the account must be recorded in the account file

Which term describes common stock?

negotiable

All of the following are advantages of buying a put as compared to selling short stock EXCEPT:

no loss of time premium as the position is held

Municipal bond traders execute transactions in all of the following ways EXCEPT:

on the floor of recognized exchanges

A corporation has an operating margin of profit of 9.50%. This means that for every $9.50 of profit, the company had $100 of:

revenues

A 45-year old man earns $150,000 per year and is covered by his employer's 401(k) Plan. He quits his job and moves to a new company that has no retirement plan, but will also pay him $160,000 per year. He should be advised to:

roll his 401(k) Plan into a Traditional IRA and continue to make annual contributions to the Traditional IRA

The last day that a customer can buy stock and receive a dividend if he or she is willing to settle "for cash" is:

the record date