Exam 13
gross profit =
Revenue - COGS
Which of the following is responsible for administration of the Bank Secrecy Act?
The Financial Crimes Enforcement Network
variable annuity characteristics?
The number of annuity units is fixed when payout begins. The monthly annuity payment is a variable amount.
Among the responsibilities of the Federal Reserve (the Fed) is influencing the supply of money and credit in the economy. When performing this function, adjusting which of the following is NOT a tool at its disposal? The prime rate The discount rate The activities of the Federal Open Market Committee The reserve requirements
The prime rate
soft dollar compensation is?
also known as brokerage, include any dollars retained on a trade to be used for services for the client's benefit
One of your clients has told you that his employer has just instituted a Roth 401(k) plan. If the employer wishes to make matching contributions the employer can?
contribute a specified percentage of the employee's pay to a regular 401(k)
An investor concerned about preservation of capital would be most apt to purchase? investment-grade corporate bonds call options warrants common stock
investment-grade corporate bonds
The Uniform Securities Act defines a guaranteed security as?
where the interest and principal (bond) or dividend (stock) is guaranteed
If you overheard an analyst referring to an investment's indicative value, the discussion would most likely be about? ETFs. TIPSs. ETNs. REITs.
ETNs.
ABC Corporation has a 10% noncumulative preferred stock outstanding at $100 par value. Two years ago, ABC omitted its preferred dividend, and last year, it paid a dividend of $5 per share. To pay a dividend to common shareholders this year, each preferred share must be paid a dividend of? $25.00 $10.00 $5.00 $15.00
$10.00
The Zxion Corporation has just distributed a 7½ to 1 split of its common stock. Prior to the split, Zxion had EPS of $15, the market price of Zxion common stock was $225 per share, and the price of its $75 par preferred stock was $82.50. As a result of the split, the price-to-earnings (P/E) ratio is now? 6 x 1. 7.5 x 1. 15 x 1. 2 x 1.
15 x 1.
Which of the following assets will have the greatest effect on minimizing financial assistance when an individual is applying to college and using the FAFSA application? A prepaid tuition plan A UTMA account A Roth IRA A Coverdell ESA
A UTMA account
Under the Uniform Securities Act, the Administrator is required to provide the following in a disciplinary proceeding?
Appropriate prior notice Opportunity for a hearing Written findings of fact and conclusions of law
If a retiree is paid an annual amount equal to 30% of the average of his last 3 years' salary, which of the following retirement plans offers this type of payment? Deferred compensation Profit-sharing Defined benefit pension Money purchase pension
Defined benefit pension
If Somerville Discount Securities has its principal office in New Jersey and recently registered a branch office in Minnesota, what must the agents do?
Each agent must be registered in the appropriate state before soliciting or taking orders.
Which of the following is considered an advantage of annuitization?
It guarantees income that will last for the client's lifetime.
preferred stock incurred risks are?
Loss of principal Price volatility of preferred stock is closely related to interest rates If the stock is callable, the client's income can be suddenly lowered
JTWROS requires both parties to trade?
NO
the discounted cash flow (DCF) techniques are?
NPV IRR
James Stillman is an investment adviser representative with Rock, Feller, and Standard (RFS), a covered adviser with its principal office in State O. Stillman works out of an office in State P and has 4 retail clients there. In addition, Stillman has 25 retail clients in State D, 6 retail clients in State M, and 1 retail client in State O. Stillman would be required to register as an investment adviser representative in?
ONLY P YOU STUPID BITCH (Fed IARs only need to reg where there is a place of bus)
Which 2 are most associated with a U. S. Treasury bond? Credit risk Liquidity risk Reinvestment risk Interest rate risk
Reinvestment risk Interest rate risk
Jim Thomas contracts with XYZ Advisory Services for the design of a financial plan and investment advice. He pays an up-front fee when the contract is signed and receives XYZ's disclosure brochure at that time. After 3 days, Jim decides to cancel the investment advisory service with XYZ. According to the Uniform Securities Act, what can happen?
The advisory firm must cancel the contract but can keep a proportionate amount of the fee as compensation for services performed
delivery requirements of the Investment Advisers Act of 1940 are?
The brochure must be updated each time Part 1A of Form ADV is updated. does not apply to investment companies or clients who are serviced on an impersonal basis, such as with a newsletter, with an annual cost of less than $500. A brochure, or summary of material changes must be delivered to all clients within 120 days of the end of the adviser's fiscal year.
Which items change when a company pays a cash dividend? Working capital Total assets Total liabilities Shareholders' equity
Total assets Total liabilities
Which of the following securities are the most interest rate sensitive? (2) Utility stocks Growth stocks Preferred stocks Common stocks
Utility stocks Preferred stocks
Mary teaches physics at the local high school and makes about $70,000 per year. She could maximize her annual retirement savings by participating in what two plans?
a 403(b) and a 457 plan
The Securities Exchange Act of 1934 defines a market maker as
a dealer who, with respect to a security, holds himself out as being willing to buy and sell that security for his own account on a regular or continuous basis
Current liabilities on a company's balance sheet would include prepaid rent. mortgage payable. accounts payable. accounts receivable.
accounts payable (prepaid rent is a current asset)
convertible bonds characteristics?
holders have a fixed interest rate the issuer pays a lower interest rate
A private foundation is required by statute to pay out a minimum percentage of its asset value each year as qualifying distributions. This investment constraint is best classified as time horizon. unique circumstances. liquidity. legal and regulatory.
legal and regulatory.
The term used to describe a broker-dealer contacting a margin account client with a demand for additional funds is? Reg. T call maintenance margin market call margin call
maintenance margin (The original call for funds is the Reg. T then margin call when the account is open. But, when the call is for additional money, it is known as maintenance margin. This generally occurs when the value of the collateral in the account has fallen sharply)
Your client maintains a small cash account at the firm. One typical broker-dealer fee that would not be charged to this client is? the fee for transferring certificates margin interest on the debit balance a charge if the client asks to have funds wired an account maintenance charge
margin interest on the debit balance
Registration statements for securities
may be amended after their effective dates as to the amount of securities issued, provided that underwriting fees and the initial offering price have not changed
A loss derived from a limited partnership may be offset against income from? other limited partnerships bonuses received in addition to regular salary capital gains from municipal bonds dividends received from common stocks
other limited partnerships
new security issue is in registration what is distributed?
red herring prospectus indication of interest forms
One of your clients has recently turned 70½ and has questions about RMDs. The client has a traditional IRA, a rollover IRA, and 401(k) plans from 2 previous employers. When computing the RMDs do what?
the RMD from each IRA is computed and may be made from one or both of them the RMD from each 401(k) is computed and must be paid from that 401(k)
What is the appropriate procedure to follow when an advisory client delivers a stock certificate to the office of a broker-dealer?
Accept the certificate and give the customer a receipt (no time frame)
An investment adviser sends a notice offering a research report she has recently prepared to a group of 25 new members of the local Lions Club. Under the NASAA Model Rule on recordkeeping for investment advisers, the firm must keep?
a copy of the notice a memorandum describing the list and its source
A client owns an investment-grade bond with a coupon of 5% that is priced to yield 6.7%. If similarly rated bonds are being issued today with coupons of 7%, it would be expected that the client's bond? has a zero net present value has a negative net present value will be selling at a premium over par has a positive net present value
has a negative net present value
employers like using deferred compensation plans cus?
they can be structured so that the employee's benefits are forfeited upon termination with cause
In a trust account, the person who makes the account management decisions is the?
trustee
Mark's company, which is located in Oregon, makes unfinished wood furniture. His company sells this furniture directly to the public from a large warehouse. Theresa's company, which is located in southern Georgia, grows cotton for t-shirts manufacturers. Which of the following statements correctly identifies hedging strategies for Mark and Theresa? (in terms of buying or selling futures)
Mark should buy lumber futures. Theresa should sell cotton futures.
One of your clients just inherited some money and wishes to invest $250,000 into the GEMCO International Equity Fund. The client is attracted to the Class B shares because there is no up-front sales charge on them while the Class A shares have a 3% front-end load. The appropriate response would be?
because of the higher 12b-1 charges levied against the Class B shares as well as the CDSC (contingent deferred sales charge), Class A shares are recommended for a purchase of this size
If your 39-year-old customer is the sole owner of a business, earns $260,000 a year, and makes the maximum contribution to a Keogh plan, how much money may he contribute to his IRA in 2019? $6,000.00 $0.00 $64,000.00 $56,000.00
$6,000.00 (keogh plan irrelevant in this case)
