EXAM FX TEST QUESTIONS # 1
Most stock options are settle in which way?
PHYSICALLY - MOST STOCK OPTIONS ARE PHYSICALLY SETTLED. PHYSICAL SETTLEMENT ON OPTIONS INVOLVES THE ACTUAL DELIVERY OF THE UNDERLYING SECURITY.
IRS rules require that a limited partnership should be established with:
PROFIT MOTIVE AND ECONOMIC SUBSTANCE
BUSINESS CONTINUTIY PLANS ARE REQUIRED TO ALL OF THE FOLLOWING EXCEPT
PROTECTING MEMBER PROFITABILITY
The function of a prospectus in association with a variable contract is to:
PROVIDE THE CONSUMER WITH COMPLETE INFORMATION
The date the board of directors authorizes a dividend is the:
Declaration Date
An Investor wants to purchase $100,000 of a stock listed on the NYSE on margin. How much must he deposit in the margin account?
$50,000
A defensive investor is likely to buy what kind of sock?
Non-cyclical stock
Where can retail investors find information on municipal bond issues?
EMMA
The current ratio :
EQUALS CURRENT ASSETS DIVIDED BY CURRENT LIABILITES
The current ratio is measured as:
EQUALS CURRENT ASSETS DIVIDED BY CURRENT LIABILITIES
AN U.S. GOVERNMENT BOND QUOTED AT 108.06-109.09 HAS AN ASKING PRICE OF:
$1,092.81 THE ASK PRICE ( THE LAST PRICE QUOTED WOULD BE $1,090 + ( 9/32 TIMES $10 ) FOR A PRICE OF $1,092.81
Under the Bank Secrecy Act, a broker/dealer firms are required to file a currency transaction report for each cash transactions that exceeds:
$10,000
What is the maximum fine under FINRA's Summary Complaint Procedure?
$2,500
The limit of a political contribution that a municipal finance professional (MFP) can make?
$250 per election cycle
The FDIC maintains stability and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least what amount per customer?
$250,000
Maximum civil and criminal penalties for an individual for insider trading violations are:
$5,000,000 AND/OR 20 YEARS IMPRINSONMENT
An issuer who has at least $100,000 in average daily trading volume is planning to bring additional shares to the market. What would the restriction period be from the effective date?
1 day
Normally a stock starts trading ex-dividend on the:
. One business day prior to the record
To satisfy industry suitability requirements, an RR should attempt to discover which of the following facts about a customer? 1. Investment objectives 2. Investment experience 3. Financial situations 4. Financial needs
1 , 2 , 3, and 4.
Which of the following are characteristics of a warrant? 1. It generally has a specific life span 2. It's price has a direct relationship to the price of the underlying security 3. The premium has a direct relationship to the expiration date 4. The outlook for the underlying company will have an impact on the current value of the warrant.
1 , 2 , 3, ans 4.
When opening a new account a registered representative should acquire 1. Personal identification data 2. Invest experience 3. Objectives and time horizons 4. Risk tolerance
1 , 2, 3, 4.
Which of the following may register as an investment company and variable contracts limited partnership after passing the series 26 exam? 1. Brokers whose activities are expressly limited to dealings of shares of open-end investment companies. 2. Brokers of closed-end investment companies during the period of original issuance only. 3. Brokers of variable contract and insurance premiums funding programs. 4. Brokers whose activities are limited to dealings only in direct participation programs.
1 , 2, and 3 ONLY.
A customer opens a margin account and completes the hypothecation and loan consent agreements. Which of the following are true of the shares in the account? 1. They will be held in street name 2. They may not be used to cover short options 3. They can be loaned out for short sales 4. They can be used as collateral for margin loans
1 , 3, and 4
Which TWO of the following positions are bullish: 1. Long Calls 2. Short Calls 3. Long puts 4. Short puts
1 AND 4 ONLY - LONG CALLS AND SHORT PUT ARE BOTH BULLISH POSITIONS. IF THE UNDERLYING SECURITY GOES HIGHER, CALLS WILL INCREASE IN VALUE AND PUTS WILL GO DOWN IN VALUE. IF CALL HOLDER'S EXERCISE THEIR CALLS, THEY WILL BE LONG STOCL. IF PUT WRITERS ARE ASSIGNED, THEY WILL BE LONG STOCK.
A hybrid REIT invest in 1. Mortgages 2. Real Property 3. Collateral trust certificates 4. Leverage ETF's
1 and 2 only.
A preliminary prospectus is generally used for which of the following? 1. Solicit indications of interest 2. Disclose public offering price 3. Disclose essential facts about the issuer
1 and 3
Stock rights 1. Are short term 2. Are long term 3. Have a subscription price below current market value 4. Have a subscription price above the current market value
1 and 3
A corporation can pay a dividend to its stockholders in which of the following ways? 1. In its own stock 2. In stock owned in another corporation 3. In cash
1 and 3 ONLY.
Which of the following statements is true about municipal dealer who has an outfirm quote from another municipal dealer? 1. The dealer has the right to buy the bonds at a fixed price for a certain period of time. 2. The dealer must buy the bonds before the stated time period expires. 3. The dealer can sell the bonds before buying them. 4. The dealer may renegotiate the price prior to the sale.
1 and 3 only
Which of the following statements best describes a market manipulation practice of "pumping and dumping" ?
ARTIFICALLY INCREASING THE PRICE OF A STOCK BY MAKING POSITIVE STATEMENTS THAT ARE FALSE AND MISLEADING IN ORDER TO SELL THE STOCK AT A HIGHER PRICE.
The options disclosure document of the Options Clearing Corporation (OCC) must be sent to the customer:
AT OR PRIOR TO THE FIRST TRADE APPROVAL
Which of the following are true of REIT's? 1. They must distribute at least 90% of their earnings to qualify for special tax treatments 2. If they are publicly owned, they must be registered with the SEC 3. At least 75% of their gross income must be from real-estate-related activities 4. They are generally known as a limited partnership
1, 2, and 3 ONLY
WHICH OF THE FOLLOWING WOULD MEET THE MSRB'S DEFINITION OF A CUSTOMER? 1. A BANK TRUST OFFICER PURCHASING FOR TRUST ACCOUNT 2. A BANK DEALING IN MUNICIPAL BONDS 3. AN INVESTMENT ADVISOR HANDLING ACCOUNTS FOR CLIENTS 4. AN ISSUER BUYING A SECURITY IN THE SECONDARY MARKET.
1, 3, AND 4 ONLY. A CUSTOMER IS AN ENTITY NOT ENGAGED IN THE SALE OF SECURITIES IN A PROFESSIONAL CAPACITY. S0, ANSWER 2, IS A MUNICIPAL SECURITIES DEALER, THEREFORE A SALES PROFESSIONAL.
Companies are required to notify FINRA of the corporate actions, such as dividends, stock splits or rights offerings and rights offerings within what time period?
10 DAYS PRIOR TO THE RECORD DATE. - COMPANIES MUST NOTIFY FINRA OF CORPORATE ACTIONS AT LEAST 10 DAYS PRIOR TO THE RECORD DATE.
The maximum fee a broker/dealer can charge for structuring a roll up is:
2 %. - WHEN A BROKER/DEALER IS INVOLVED IN A ROLL UP OF A LIMITED PARTNERSHIP, THE MAXIMUM FEE THE BROKER/DEALER CAN CHARGE IS 2%.
Mutual fund sales breakpoints are allowable only if the following conditions are met. 1. The fund's NAV per share is at least $10. 2. Information concerning scheduled breakpoints is given to the shareholders and prospective investors. 3. Breakpoints apply uniformly to all offers 4. All shares classes assess a 12b-1 fee.
2 AND 3 ONLY - THE FUND'S NAV PRICE IS NOT A CONSIDERATION FOR THE SALES CHARGE REDUCTION SCHEDULE. 12B-1 FESS ARE NEVER REQUIRED.
The custodian of a fund is responsible for: 1. Dispersal of dividend and capital gaind distributions 2. Recording the funds physical assets 3. Distributing periodic reports 4. Participating in the selling and distribution of the funds
2 and 3 only
Which two of the following should be done immediately after receiving notice of the death of a client? 1. Obtain a letter of instruction from the attorney representing the estate 2. Cancel all open order for the client's account 3. Obtain the names and addresses of the beneficiaries of the estate 5. Mark the account deceased
2 and 5 ONLY.
TIPS ARE NOT ISSUED IN WHAT MATURITIES?
20 YEAR
If an associated person was originally registered in 2018, when is the next time they will be required to do their firm element training? .
2018. - AT A MINIMUM, EACH MEMBER MUST EVALUATE AND PRIORITIZE IT'S TRAINING NEEDS AND DEVELOP A WRITTEN TRAINING PLAN AT LEAST ANNUALLY. ASSOCIATED PERSONS MUST COMPLETE THEIR FIRM ELEMENT TRAINING ANNUALLY.
An ASSOCIATED PERSON WHO ORIGINALLY REGISTERED IN 2012 AND IT'S NOW 2018. WHEN IS THE NEXT TIME THE INDIVIDUAL WOULD BE REQUIRED TO TAKE REGULATORY ELEMENT TRAINING
2020. REGULATORY TRAINING IS DUE ON THE SECOND ANNIVERSARY OF ORIGINAL REGISTRATION AND THEN EVERY 3 YEARS THEREAFTER. (2012 + 2 +3 +3)
Sell ABC short 20 stop 20.50. The ticker tape shows 19, 20, 21, 20.50, 20.25. At what price as the trade executed?
21 SELL SHORT 20 STOP 20.50 (LIMIT) IS TRIGGERED OR ELECTED AT 20 OR BELOW, AND EXECUTED AT OR ABOVE 20.50. THE ORDER IS TRIGGERED AT 19 (20 OR BELOW) AND EXECUTION OCCURS AT 21 (20.50 OR ABOVE).
In the event of a corporate bankruptcy, in what order will the following receive payment 1. Preferred stockholder 2. Senior lien holder 3. The tax collector 4. Debentures
3 , 2 , 4 , 1
Institutional communications, as well as correspondence and retail communications, must be kept on file for:
3 years
A BACKGROUND CHECK MUST BE PERFORMED WITH HOW MANY DAYS AFTER THE FORM U-4 IS FILED WITH FINRA?
30 DAYS
LUMP-SUM DISTRIBUTIONS WITHOUT PENALTY FROM QUALIFIED RETIREMENT PLANS MAY NOT BE MADE TO AN INDIVIDUAL FOR:
30 YEARS OF SERVICE WITH THE COMPANY. MUST BE 59 1/2 YEARS OF AGE
Regulation T requires mutual fund purchases to be paid no later than:
4 BUSINESS DAYS
With regard to investment companies, which of the following statements are true concerning dividend payments and capital gains distributions? 1. These payments are not taxable to the shareholder in the year they are paid if they are reinvested in the fund's shares 2. For tax purposes, these payments are considered to be long-term gains regardless of how long the shares have been held by the investor. 3. The true yield of a mutual fund can be obtained by combining these payments and dividing by the correct net asset bale of the fund. 4. These payments may be automatically reinvested in additional fund shares.
4 ONLY.
The statute of limitations for using misleading or fraudulent tactics to induce the purchase or sale of securities is:
5 years from violation or within 2 years of discovery
ABC EQUITY FUND CHARGES A 12-1 FEE. THE FUNDS BOARD OF DIRECTORS MUST BE MADE UP OF AT LEAST:
51% UNAFFILIDATED DIRECTORS
ABC Equity Fund charges a 12B-1 FEE. The funds board of directors must be made up of at least:
51% unaffiliated directors
A corporate investor in the 34% tax bracket buys a tax exempt municipal bond yield 9%. What is the correct method for determing the tax equivalent yield?
9% DIVIDED BY 66%. TAKE 9% DIVIDED BY (100%- THE 34% TAX BRACKET) OR 9% DIVIDED BY 66%. THE ANSWER IS 13.6%
A Series 6 registered representative may take a customer order for all of the following investments EXCEPT: A. A closed-end fund in the primary market B. A no-load mutual fund C. A sector mutual fund D. A closed-ened bond fund in the secondary market.
A CLOSED-ENED BOND FUND IN THE SECONDARY MARKET. - A SERIES 6 REPRESENTATIVE IS NOT LICENSED TO TAKE ORDERS FOR SECONDARY MARKET SECURITIES.
As identified by the Office of Foreign Assets Control (OFAC) who is a Specially Designated National (SDN)?
A PERSON WHO HAS BEEN INDETIFIED AS A TERRORIST OR NARCOTICS TRAFFICKER.
A PORTFOLIO MANAGER PURCHASES A BOND ON A YIELD-TO-CALL BASIS. THE BOND WAS TRADING AT
A PREMIUM
An order for a security trade that directs the broker to buy or sell "at the market" but only when a certain price level has been reached is known as:
A Stop Order
Which f the following is an acceptable gift for a member of another firm according to FINRA rules?
A cash gift of $100
Which of the following statement is INCORRECT in regard to broker/dealers?
A dealer makes a profit by charging a commission on the securities transaction. THIS IS A FALSE STATEMENT.
A preliminary prospectus is also known as:
A red herring
Who must review institutional communication?
A registered principal
A listed stock closed at 52. The following day, it went ex-dividend 72 cents per share. At what price will the stock open on the ex-dividend date? A. 51.28 B. 52.00 C. 52.72 D. 53.00
A. 51.28
For rights of accumulation, which of the following is NOT eligible form combining of accounts? A. Charter members of an investment co-op B. Spouses C. Dependents other than immediate family members D. Immediate family members
A. Charter members of an investment co-op
Which of the following is NOT a risk factor to a limited partnership? a. Economic viability b. Very illiquid c. Risk of audit d. Conflicts of interest with sponsor
A. Economic Viability
A large corporation offers to exchange $20 billion of outstanding debt for new notes with shorter maturities. This is an example of: A. Exchange offer B. Buyback C. Acquisition D. Tender offer
A. Exchange offer
A customer wishes to purchase securities in a margin account. In order for the borker/dealer ti borrow money with the margined securities, the customer must sign which of the following? A. Hypothecation agreement B. Discretionary account agreement C. Maintenance agreement D. Power of Attorney
A. Hypothecation agreemen
A customer buys a 8 ½ % T-bond maturing in 5 years. He also buys a T-bond put. Interest rates appreciated to 10%. Which of the following will occur upon sale of the bond and exercise the put? A. Positions will be closed for a loss B. Position will be close without gain or loss C. Bond yields ill rise for a gain D. Put will be exercised for a gain
A. Positions will be closed for a loss
A customer has $50,000 in three income funds, each having different investment management firms. Which of the following is more important for the customer to thoroughly understand? A. Sales Charge breakpoints B. Exchange privelage C. Automatic reinvestment of dividends and distributiions D. Avaliability of withtdrawl programs
A. Sales Charge breakpoints
A broker/dealer would need to file a Currency Transaction Report for which of the following transactions? A. Single transaction involving $11,000 of currency. B. Multiple transactions on the same business day by the same customer: one of $3,000 and the other of $5,000 C. Multiple transactions by the same customer: one for $5,000 on one business day, and the other of $5,000 two days later D. Single transaction involving $3,000 of currency.
A. Single transaction involving $11,000 of currency.
An investment based on a security that is closely tied to a current fashion or trend may primarily carry: A. Social and Political risk B. Liquidity Risk C. Business/credit risk D. Timing risk
A. Social and Political risk
All of the following are functions of the secondary market EXCEPT: A. The purchase f new issue bonds B. The purchase and sale of bonds by broker/dealers for dealer bankers C. The maintenance of markets for corporate bonds D. The maintenance of markets for bonds in default .
A. THE PURCHASE OF NEW ISSUE BONDS. THIS IS INCORRECT BECAUSE NEW BOND ISSUES TRADE ON THE PRIMARY MARKET.
When U.S. interest rates are higher than foreign rates: A. U.S. goods are more expensive than foreign goods B. Foreign goods are more expensive than U.S. goods C. Foreign imports fall D. The dollar is weak.
A. U.S. GOODS ARE MORE EXPENSIVE THAN FOREIGN GOODS. - HIGHER INTEREST RATES IN THE U.S. ATTRACT FOREIGN INVESTORS TO THE U.S. DOLLAR. WHEN THE U.S. DOLLAR IS STRONG, U.S. GOODS ARE MORE EXPENSIVE THAN FOREIGN GOODS.
A customer has a portfolio of Treasury securities. In order to increase investment income: A. Write Calls B. Buy Calls C. Write Puts D. Buy Puts
A. Write Calls
A background check on a registered rep may include a search for all of the following except: a. Current and previous marital status b. Civil litigations c. Criminal history d. Bankruptcies
A. current and previous marital status
Tax-advantaged savings plans for individuals with disabilities are called:
ABLE accounts.
A firm is acting in the capacity of a broker and receiving commission. The firm is performing as:
AGENT. THE FIRM THAT BROKERS AND CHARGES A COMISSION IS ACTING AS AN AGENT.
CORRESPONDANCE INCLUDES:
ANY WRITTEN (INCLUDING ELECTORNICALLY) COMMUNICATION THAT IS DISTRIBUTED OR MADE AVALIBLE TO 25 OR FEWER RETAIL INVESTORS WITHIN ANY 30 DAY CALANDAR-DAY PERIOD.
WHAT ACTIVITY CAN AN INVESTMENT COMPANY PERFORM WITHOUT SHAREHOLDER VOTE
APPOINTMENT OF OFFICERS OF THE INVESTMENT COMPANY
Actuarial science considers a person to be statistically dead at:
Age 100
The insider Trading Act of 1988 has set guideline for imposing penalties including civil actions in federal court. The maximum penalty a court can impose for insider trading violations is:
An amount up to 3 times the profit gained or loss avoided
What would be a violation of the Private Transaction code 3040:
An associated person offering securities that are not registered with the commission
Which of the following is true about insider trading?
An insider is someone who has confidential, nonpublic information about a company.
Unless instructed to the contrary, the Options Clearing Corporation (OCC) will automatically exercise all options that are:
At least $0.01 In-the-money
The insurance product that can guarantee payments for the life of an individual is a:
Annuity
American style options can be exercised:
Any time until the expiration date
A registered rep may do all of the following EXCEPT: A. Call prospective clients as long as they are not on the Do-not-call list B. Take part in a 24 hours telephone solicitation hot line C. Call clients whenever new information becomes available D. Cold call investors between the hours of 7. p.m. and 9 p.m.
B.
An investor who buys municipal bonds on margin may deduct a maximum investment interest of: A. Unlimited amount B. 0 C. $10,000 D. $10,000 plus net investment income
B. 0
Which will received dividends? A. Preemptive rights B. ADR C. Warrant D. Treasury Stock
B. ADR
All of the following are oil and gas DPP's, EXCEPT: A. Income B. Appreciation C. Wildcatting D. Exploratory drilling
B. APPRECIATION. APPRECIATION IS NOT A FORM OF OIL AND GAS PROGRAM.
If a b/d firm requires a customer to sign a predispute arbitration agreenment when opening a new account the agreement must state all of the following EXCEPT: A, Arbitration procedures are more limiting than court proceedings B. Arbitrators never have to explain the reasons for their awards C. Arbitration is final and binding upon the parties D. The parties waive their right to go to court
B. Arbitrators never have to explain the reasons for their awards
Necessary new account forms for a corporate customer ( margin agreement) would include all of the following EXCEPT: A. Hypohtetican agreement B. Copy of court order C. Loan consent agreement D. Copy of corporate charter and corporate resolution
B. Copy of court order.
The organization that provides custody services for securities certificates safekeeping is known as: A. Financial Industry Regulatory Authority B. Depository Trust and Clearing Corporation C. Securities and Exchange Commission D. Federal Reserve Bank
B. Depository Trust and Clearing Corporation
A registered representative must obtain written verification of an investors net worth for which of the following investments? A. A variable contract B. Direct participating program C. A real estate investment trust D. A unit Investment trust
B. Direct participating program
What is the security for senior subordinated debentures? A. Equipment B. General assets C. Real estate D. Mortgages
B. GENERAL ASSETS. - A DEBENTURE IS FULL FAITH + CREDIT OF GENERAL, NOT PARTICULAR ASSETS. BECAUSE DEBENTURES ARE NOT BACKED BY SPECIFIC COLLATERAL, THEY CARRY MORE RISK THAN SECURED BONDS.
Upon filing a registration statement with the SEC, at which point would the issuer be required to provided additional information? A. In the event of material changes in the underwriters circumstances B. In response to an SEC deficiency letter C. When accounting for offering ammendments following commencement of sales D. When accepting indications of interest
B. In response to an SEC deficiency letter
An investor who buys collateralized mortgage obligations (CMOs) would be subject to prepayment risk under which scenario? A. Inflation increases B. Interest rates fall C. Interest rates rise D. Mortgage rates move higher
B. Interest rates fall - IF INTEREST RATES RISE, THE HOLDER OF A CMO WOULD BE EXPOSED TO WHAT RISK? EXTENSION RISK.
Open market operations of the Federal Reserve Board cause direct changes in: A. Dollar exchange rates B. M1 C. Interest rates D. Velocity of money
B. M1 - M1 IS PART OF THE MONEY SUPPLY THAT THE FED REGULATES THROUGH BUYING OR SELLING GOVERNMENTS AND GOVERNMENTS AGENECIES.
Business Continuity Plans are required to address all of the following EXCEPT: A. Regulatory reporting B. Protecting member profitability C. Customer communication's D. Data backup and recovery
B. Protecting member profitability
TANs, RANs and BANs are: A. Long-term municipal obligations B. Short-term municipal obligations C. U.S government obligations D. Commercial paper
B. Short-term municipal obligations
Systematic risk is the risk associated with which of the following? A. Oil stocks B. Stock market C. Technology sector D. Auto industry
B. Stock Market
Which of the following best describes a variable annuity? A. The method of payment can change, but the amount of payments is fixed B. The method of payment is fixed, but the ammount of payment changes C. Both the method and amount of payments are fixed. D. The method of payment and amount of payout fluctuate
B. The method of payment is fixed, but the ammount of payment changes
Which of the following falls under the category of an exempt security A. Mutual fund B. U.S. Government bond C. Common stock D. Corporate Bond
B. U.S. Government bond
According to the Investment Company Act of 1940, the term "management company" applies to all of the following EXCEPT: A. Closed-end companies B. Unit Investment trusts C. Diversified companies D. Open-end companies
B. UNIT INVESTMENT TRUSTS. - ACCORDING THE THE INVESTMENT COMPANY ACT OF 1940, MANAGEMENT COMPANIES MAY BE ORGANIZED AS EITHER OPEN-END OR CLOSE-END COMPANIES, AND CAN BE CLASSIFIED AS EITHER DIVERSIFIED OT NONDIVERSIFIED.
Limited partnership interests are distributed:
BOTH THROUGH BOTH PUBLIC AND PRIVATE OFFERINGS
Of the following, which is the best way to protect profits in an existing long equity position?
BUY PUTS
When a company reacquires its own stock it is called:
BUYBACK
Which of the following statements about benchmarks are true?
Benchmarks are typically one index or a blend of several indexes
If a company were liquidated, what is the residual value left for the common stockholders?
Book Value
REIT's are traded:
Both in OTC market and on Exchanges
The ex-dividend date for XYZ is Monday, March 23. Under which of the following conditions would an investor purchasing XYZ receive the dividend?
Buys XYZ Friday March 20 in a regular way trade.
You buy 100 shares of XYZ at $30 a share for a new account. What is the industry's minimum requirements? A. $1,200 B. $1,500 C. $2,000 D. $3,000
C. $2,000
A broker/dealer with a sales agreement with a mutual funder underwriter must 1. Use only retail communication provided by the mutual fund 2. Offer no discounts from the pulic offering price 3. Not sell any securities to the fund from invesntory but may perform as a broker for the funds portfolios transactionsa. a. 2 and 3 b. 1 only c. 2 only d. 1 and 2 only
C. 2 ONLY
The current yield on a $10,000 October 9 and 3/4% 2020 T-Note selling at 110 is: A. 7.54% B. 8.52% C. 8.86% D. 9.75%
C. 8.86% - CURRENT YIELD IS EQUAL TO ANNUAL INTEREST DIVIDED BY CURRENT MARKET PRICE. IN THIS QUESTION, THE ANNUAL INTEREST IS EQUAL TO $975 ( $10,000 TIMES 0.0975) AND THE CURRENT MARLET PRICE IS $11,000 (110% OF PAR) ; THEREFORE $975 DIVIDED BY $11,000 = .0886 OR 8.86%
ABC Corporation announces that it will be acquiring XYZ Corporation. XYZ Corporation will receive one share of ABC stock for every two shares of XYZ they own. This corporate action is a: A. Stock dividend B. Merger C. Acquisition D. Stock Split
C. Acquisition
For the purposes of options trading on foreign currencies, all exchange rates are quoted in: A. Both foreign currency and American dollars B. The foreign currency only C. American dollars only D. European currency units
C. American dollars only
An Emerging Markets Currencies ETF may be an appropriate investment for which of the following?: A. An experienced investor who is building a long term portfolio of debt securities B. A sophisticated investor seeking current income C. An experienced investor looking for a simple way to gain exposure to a portfolio od emerging market currencies D. A sophisticated investor seeking to invest in portfolio of emerging market equities
C. An experienced investor looking for a simple way to gain exposure to a portfolio od emerging market currencies
Which of the following statements is correct regarding jurisdiction and authority of SRO's and broker/deairs? A. SRO's must conduct an inspection of a member under its jurisdiction within 9 months of the members registration B. A broker/dealer may execute a securities transaction if their associated person hve passed the appropriate qualifying exam and are registered. Even if they have not yet paid the fees that are due C. Broker/dealers must join an SRO in order to charge commissions and markups D. SROs can sanction member firms for noncompliance, but not their registerd reps
C. Broker/dealers must join an SRO in order to charge commissions and markups
Which of the following factors will most likely create reinvestment risk? A. Decreasing asset values B. Opportunity cost C. Falling interest rates D. Short-term investment
C. Falling interest rates
Which of the following industries is most cyclical: A. Tobacco B. Natural Gas C. Home appliance D. Retailing
C. Home appliance
Which of the following is/are TRUE regarding a private securities transactions? A. Associated person are allowed to participate in private securities transactions at any time B. It is also known as "controlled business" C. It is a violation of Conduct Rules D. It is a transaction within normal business of the member firm
C. It is a violation of Conduct Rules
Taxing and spending policies are: A. Open market B. Monetarism C. Keynesianism D. Supply side
C. KEYNESIANISM. - BOTH TAXES AND SPENDING ARE KEYNESIANISM, EMBRACING THE IDEA THAT GOVERNMENT SHOULD ACTIVELY INTERVENE IN THE ECONOMY TO PRODUCE DESIRED OUTCOMES.
If a mutual fund publishes investment performance charts, the information [resented must include: A. minimum sale charges B. Average sales charges C. Maximum sales charges D. All of the above
C. Maximum sales charges
An indication of interest on a new issue of corporate securities is binding on: A. The customer B. Both the customer and the dealer C. Neither the customer nor the dealer D. The dealer
C. Neither the customer nor the dealer
NASSA members do all of the following EXCEPT: A. Educate the public B. Investigate violations C. Participate in enforcement actions only in their state D. License firms and their agents
C. PARTICIPATE IN ENFORCEMENT ACTIONS ONLY IN THEIR STATE. - NASAA MEMBERS PARTICIPATE IN MULTISTATE ENFORCEMENT ACTIONS AND IFORMATION SHARING. ALL OTHER ANSWERS ARE CORRECT.
Return on investment takes in account which of the following? A. Does not include dividends B. Includes dividends, but not interest C. Realized gains (or loses) plus dividends and interest D. Only the difference between the price paid for the security and price at which the security is sold
C. Realized gains (or loses) plus dividends and interest
When two corporations agree to merge, what would be the outcome? a. The stock of only one of the corporation survives b. Shareholder approval is never required c. The stocks of both corporations are surrendered d. Shareholders receive only stock
C. THE STOCKS OF BOTH CORPORATIONS ARE SURRENDERED. - IN A MERGER, THE STOCKS OF BOTH COMPANIES ARE SURRENDERED AND A NEW CORPORATION IS FORMED WITH ALL SHAREHOLDERS RECEIVING NEW STOCK IN PROPORTION TO THEIR PRIOR HOLDINGS.
All of the following statement about zero-coupon corporate bonds are true EXCEPT: A. The return is accreted over the life of the bond B. The holder will receive full face value at maturity C. They are issued in bearer form D. They are sold at a deep discount with no current yield
C. THEY ARE ISSUED IN BEARER FORM. - THE REST ARE TURE STATEMENTS ABOUT ZERO-COUPON CORPORATE BONDS
Which of the following describes the balance sheet of a corporation? A. Assets = Fixed Liabilities - Current liabilities B. Total Assets = Value of Bonds + Value of Stock C. Total Assets - Total Liabilities = shareholder's equity D. Assets = Capitalization - Liabilities
C. TOTAL ASSETS-TOTAL LIABILITIES = SHAREHOLDER'S EQUITY - THE BALANCE SHEET EQUATION IS: TOTAL ASSETS = TOTAL LIABILITIES + SHAREHOLDER'S EQUITY (NET WORTH).
Payment of interest and principal on debentures is secured by: A. Securities owned by the parent company B. Equipment trusts C. The general assets of the company D. Mortgages or real property
C. The general assets of the company
What of the following statements is true regarding nake option contract?
C. The investor does not own the underlying security
When comparing two similar bonds: A. The income bond's yield will be lower than the secured bond's yield B. The secured bond's yield will be higher than the unsecured bond yield C. The unsecured bond's yield will be higher than the secured bond D. The secured bond's yield will be comparable to the unsecured bond yield.
C. The unsecured bond's yield will be higher than the secured bond
Investors in a direct participation program are interested in all of the following EXCEPT: A. Depreciation B. Tax Defferal C. Unlimited liability D. Long-term capital gains
C. Unlimited liability
The manager of a bond fund has used the strategy of writing covered T-bond calls as a means of increasing the fund's yield. Distributions to shareholders from this source of income will be treated, for tax purposes as:
CAPITAL GAINS - ANY INCOME DERIVED FROM WRITING OPTIONS IS CONSIDERED TO BE CAPITAL GAIN
Internal procedures which limit and control the passing of sensitive, potentially nonpublic information between the departments of a corporation firm to aid in protecting investors against violations of insider trading laws are known as:
CHINESE WALLS
XYZ corporation wants to open a margin account. Documentation would include which of the following?
CORPORATE CHARTER
The options positions limit on XYZ stock is 200,000 contracts. Bob (a high roller) is short 150,000 XYZ Dec 50 puts. wWhich of the following trades would put Bob in violation of position limits? A. Buy 60,00 XYZ Mar 60 Calls B. Write 100,000 XYZ Dec 60 Calls C. Buy 100,000 XYZ Mar 60 puts D. Buy 60,000 XYZ Dec 50 puts
CORRECT ANSWER: A. BUY 60,000 XYZ MAR 60 CALLS BOB IS SHORT PUTS, A BULLISH POSITION. IF HE BUYS 60,000 CALLS, HE WILL HAVE 210,000 CONTRACTS ON THE SAME SIDE OF THE MARKET. BUYING 60,000 XYZ DEC 50 PUTS WILL REDUCE HIS POSITION. WRITING CALLS AND BUYING PUTS ARE BEARISH POSITIONS.
GDP is a __________ indicator.
Coincident
Under the anti-money laundering regulations, when a broker/dealer knows that a client makes several wire transfers in one business day for a total of $10,000 in foreign currency, the broker dealer must:
Complete a Currency Transaction Report (CTR)
The premium of an option is:
Cost
Options sales literature mailed to customers must be preceeded or accompanied by a:
Current OCC disclosure agreement
Which of the following practices is permissible in accordance with FINRA conduct rules? A. Lending client securities without written approval B. Borrowing money from a client C. Indicating to a client that his investment is guaranteed against lass D. An account executive sharing in profits in a discretionary account
D. An account executive sharing in profits in a discretionary account
The maximum value of a gift allowed by FINRA Rules is A. $25 per gift B. $50 per person per year C. $100 per gift D. $100 per person per year
D. $100 per person per year
Assume Regulation T is 70%. A small client sells 100 shares of ABC stock short at $15 per share on an initial transaction. How much cash must he deposit to meet the initial margin? A. $450 B. $1,050 C. $1,500 D. $2,000
D. $2,000
If a complaint is deemed to be of a minor nature by the District Business Conduct Comittie, it may offer the respondent which of the following? A. A simplified arbitration B. A fine not to exceeed $500 C. A fine not to exceed $500 and/ or a letter of reprimand D. A summary complaint procedure
D. A summary complaint procedure
According to FINRA Rules on Private Securities Transactions, an associated person entering into a series of private transactions without compensation must provide to the member firm all of the following EXCEPT: A. A statement of possible compensation B. A description of each proposed transaction C. The person's proposed role in the transactions D. A written notice on each transaction
D. A written notice on each transaction
An investor could achieve diversification in his portfolio by holding: A. Stocks and/ or bonds of companies in different industries B. Stocks and/or bonds of companies in different geographic regions C. A variety of investments instruments D. All of the above
D. All of the above
Which of the following would most likely benefit from a sustained decline in interest rates?: A. Federal Savings Banks B. Broker/Dealers C. Utilities and airlines D. All of the above
D. All of the above
A municipal securities representative transacts buy and sell order on behalf of a customer that are excessive in size and/or frequency. This may be condidered: A. Swapping B. Adjusted trading C. Short-selling D. Churning
D. CHURNING. - EXCESSIVE TRADING IN SIZE AND/OR FREQUENCY IS CALLED CHURNING
An open-ended investment company fund that charges a 8 ½% sales load for a single payment plans must offer all of the following EXCEPT: A. Dividend reinvestments B. Quantity discounts C. Conversion privileges D. Conversion privileges
D. Conversion privileges
In accordance with the Uniform Gifts to Minors Act, a donor may: A. Include the value of collectible in the account B. Only revoke gifts of cash C. Give cash gifts up to $15,000 annually D. Give an unlimited amount of cash.
D. GIVE AN UNLIMITED AMOUNT OF CASH. - THERE ARE NO RESTRICTIONS ON THE AMOUNT OF CASH THAT MAY BE GIVEN TO A MINOR UNDER THE ACT, HOWEVER, GIFT TAXES MAY APP
Which of the following best describes a double-barreled bonds? A. Contingent liability B. Moral obligation C. Section 8-assisted D. General obligation
D. General obligation
All of the following are true of the voting rights of variable life policyowners EXCEPT they: A. Have one vote for every $100 of cash value B. Have the same rights as investment company shareholders C. Are entitled to vote on investment objectives of the separate account D. Have one vote for every share
D. HAVE ONE VOTE FOR EVERY SHARE. - VOTING IS BASED ON THE CASH VALUE OF THE SEPARATE ACCOUNT, NOT SHARES. POLICYOWNERS HAVE ONE VOTE PER $100 OF CASH VALUE.
What oil and gas program has the least capital risk? A. Developmental B. Exploratory C. Drilling D. Income
D. Income
Limited partnerships' rights toward a general partner include all of the folliwng EXCEPT: A. LP's has the right to inspect GP books B. LP's may sue for breach of contract by GP C. LP's may split tax benefits with the GP D. LP's may sue if GP discloses compensation prospectus
D. LP'S MAY SUE IF GP DISCLOSES COMPENSATION PROSPECTUS. - LIMITED PARTNERS ONLY HAVE THE RIGHT TO INSPECT THE BOOKS AND TO SUE FOR BREACH OF CONTRACT OR FIDUCIARY DUTY BY THE GENERAL PARTNER.
The ABC European Bond Fund invests in the debt of European corporations and other companies doing business in Europe. Investors in this fund are subject to all of the following risks EXCEPT A. Currency exchange risk B. Interest rate risk C. Inflation risk D. Liquidity Risk
D. Liquidity Risk
Which of the following is NOT established by the Options Clearing Corporation? A. Contract size B. Strike price C. Expiration Date D. Premium
D. PREMIUM - REMEMBER, THE OCC IS THE ISSUER OF ALL LISTED OPTIONS CONTRACTS.
The Securities and Exchange Comission (SEC) is in charge of enforcement of securities laws. All of the following are correct about SEC board members EXCEPT: A. They are appointed by the president B. They must engage in the full-time bissiness of the Comission C. Appointment is accompanied by advice and consent of the Senate D. They are appointed to lifetime terms
D. THEY ARE APPOINTED LIFETIME TERMS. - THAT IS A FALSE STATEMENT, SEC MEMBERS ARE APPOINTED TO FIVE-YEAR TERMS.
Which of the following describes a principal trade? A. The broker charges a commission B. The agent acts as broker C. The broker acts on behalf of the client D. The broker/dealer sells out of the firm's inventory for a profit
D. The broker/dealer sells out of the firm's inventory for a profit
Money to pay off general obligation debt can be derived from all of the following EXCEPT: A. Collection of delinquent taxes B. Property taxes C. Fines D. User Fees
D. USER FEES. - MUNICIPAL GENERAL OBLIGATION ( GO ) BONDS, ALSO KNOWN AS FULL FAITH AND CREDIT BONDS, ARE BACKED BY PROPERTY TAXES, FINES, AND DELIQUENT TAXES. REVENUE BONDS ARE BACKED BY USER FEES, GO BONDS ARE NOT BACKED BY USER FEES.
What is the function of the Internal Revenue Service (IRS)
DETERMINE, ASSESS AND COLLECT PERSONAL AND CORPORATE TAXES
Your client owns stock in a company that has announced a stock rights offering. If the client does not subscribe to the offer, this percentage of ownership in the company will:
Decrease
Which technique would an investor use to reduce risk in a portfolio?
Diversify holdings
A variable life policy's nonforfeiture provision:
Entitles the policyowner to the cash value less any outstanding loan amount if the policy is terminated
The normal business cycle starts with:
Expansion
The strike price and premium of Treasury bond options are stated as a percentage of the:
Face mount f the underlying security
Uniform Termination Notice of Securities Industry Registration is also known as: A. Form S-1 B. Form U4 C. Form U5 D. Form 10K
Form U5
A registered representative must determine an investor's invest objective to:
Give the registered representative a frame of reference for making investment recommendations.
An investor who wants to purchase mortgage-back securities full guaranteed by the U.S. Government should purchase:
Government National Mortgage Association (Ginnie Mae)
A private securities transaction exists when a representative:
IS SELLING AWAY - A PRIVATE SECURITIES TRANSACTION, OR SELLING AWAY, EXISTS WHEN A REPRESENTATIVE IS INVOLVED IN THE SALE OF SECURITIES THAT ARE NOT SPONSORED BY THE FIRM.
SHARES OF STOCK THAT HAVE ACTUALLY BEEN SOLD TO THE PUBLIC ARE:
ISSUED STOCK
The partnership agreement is obtained when a broker/dealer opens an account for a partnership because:
IT NAMES THE INDIVIDUAL AUTHORIZED TO TRADE FOR THE PARTNERSHIP
An annuity owner chooses the straight life annuitization option because:
IT PROVIDES THE MAXIMUM CASH FLOW OF ALL OF HIS OPTIONS.
A registered rep may borrow money from a client:
If the client is a member of the RR immediate family
In a UGMA account income and capital gains realized in the account are taxable to:
MINOR ONLY
Suitability judgements should be made based on
Information obtained from the client.
What us a measure of a companys ability to pay interest expenses?
Interest Coverage Ratio
Asset allocation involves what?
Investing in asset classes that are not correlated in terms of performance
The agreement among underwriters, also known as the syndicate letter, is a document that:
Is an agreement between participating broker/dealers who assume liability for any unsold shares and specifies the underwriters responsibilities and participation percentages.
In connection with an oil and gas limited partnership, an exploratory well can best be described as on that:
Is drilled in an unproven area away from any producing fields
What describes the balance of payments?
It is the sum of all transactions between a country and the rest of the world over a specified period of time
Liability to contemporaneous traders of insider trading means:
LIABILITY FROM LAWSUITS THAT THOSE GUILTY OR ILLEGAL INSIDER TRADING MAY BE SUBJECT TO FROM TRADERS WHO LOST MONEY BECAUSE OF THEIR INSIDER TRADING VIOLATIONS. - INSIDERS ARE SUBJECT TO LAWSUITS BY OTHER TRADERS WHO SUFFERED LOSSES DUE TO INSIDER TRADING VIOLATIONS.
The average prime rate is a:
Lagging indicator
The owner of a variable annuity is guaranteed to receive payments for a minimum of 15 years, This annuity is a:
Life annuity with period certain
All of the following are true regarding private securities transactions for compensations EXCEPT:
Member firm does not have the authority to disapprove transactions
Which statement about "best execution" is true?
Member firms must use reasonable diligence to determine the best market price for the executing customer order to ensure the best price possible.
In a custodian account, the responsibility for tax liabilities from dividends, interest income and capital gains belongs to:
Minor
Active trading accounts must receive an account statement
Monthly
A customer placed a market order. This means:
No price is set and the order is to be filled at the best available market price.
A registered rep uses discretion if he chooses which of the following
Number of shares
A BROKER/DEALER WITH A SALES AGREEMENT WITH A MUTUAL FUND UNDERWRITER MUST:
OFFER NO DISCOUNT FROM THE POP.
If a member firm suspects that a senior customer (age 65 or older) is being financially exploited it may: I
Place a temporary hold on disbursements from the customer's account.
All of the following are true concerning preferred stock EXCEPT:
Preferred stock dividends must be paid annually regardless of corporate profitability.
portfolio manager purchases a bond on a yield-to-call basis. This bond was trading at a:
Premium
If a limited partnership interests are distributed in a public offering, what is the name of the disclosure document?
Prospectus
An options contract that gives the holder of the contract the right to sell the underlying securities at the strike price:
Put Option
An Equity REIT invest in:
Real Estate
The Bank Secracy Act requires financial instituions to file a Currency Transaction Reports with the financial Crimes Enforement Netowkr, which is a division of what federal Department?
TREASURY
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
If a company offers a new issue of $5 million or less during a 12 month period, files an offering statement with the SEC and gives an offering circular to prospective buyers, the company can take advantage of: A. Blue sky laws B. Regulation A C. Regulation D D. Rule 144
Regulation A
Which of the following transactions uses an offering circular? A. Reg A B. Rule 144A C. Reg D D. Rule 147
Regulation A
The expense limitation clause of a life insurance policy
Requires the insurance company to pay administrative expenses above the maximum charges stated in the policy
The Act that requires financial institutions to develop, implement and monitor procedures that prevent its agents and associate form misusing nonpublic information is the:
SECURITIES AND EXCHANGE ACT OF 1934.
IN AN UGMA ACCOUNT:
SECURITIES MUST BE REGISTERED IN THE NAME OF THE CUSTODIAN. ONLY ONE CUSTODIAN AND ONE MINOR CAN BE NAMED PER ACCOUNT. GIFTS MADE TO THE MINOR ARE IRREVOCABLE. AND MARGIN ACCOUNTS ARE NOT ALLOWED.
An asset-backed security is back by:
SHORT-TERM LOANS ON CREDIT CARDS OR AUTOMOBILES. - ASSET-BACKED SECURITIES ARE BACKED BY SHORT-TERM LOANS ON ASSETS OTHER THAN REAL ESTATE, SUCH AS AUTOS OR CREDIT CARDS.
The interest income for U.S. government securities is:
SUBJECT TO FEDERAL TAX INCOME TAX, BUT EXEMPT FROM STATE INCOME TAX
THE THEORY THAT REDUCING TAXES AND LIMITING GOVERNMENT INVOLVEMENT IN BUSINESS ACTIVITIES WILL STIMULATES ECONOMIC GROWTH IS CALLED:
SUPPLY SIDE
In a public offering, officers of the corporation are selling their personal shares along with the IPO of the corporation itself. The sale of the shares by corporate officers is called:
Secondary
When a registered rep engages in outside securities transactions without the knowledge of the firm is know as:
Selling away.
What describes a tender offer?
Shareholders selling into the tender must deliver shares net long.
Shares of stock represent ownership of a corporation. An investors percentage of ownership of equal to the investor's:
Shares owned compared to number of shares outstanding
WHAT JOING ACCOUNT IS DESIGNED SPECIFICALLY FOR MARRIED COUPLES?
TENANCY BY ENTIRETY
WHEN A CUSTOMER BUYS A SECURITY IN THE SECONDARY MARKET, THE CUSTOMER WILL PAY:
THE ASK PRICE.
WHAT CANDIDATE QUALIFICATIONS WOULD FINRA TAKES INTO CONSIDERATION WHEN WAIVING A QUALIFICATION EXAM REQUIREMENT?
THE CANDIDATE HAS RELATED EXPERIENCE IN THE SECURITIES INDUSTRY OR INVESTMENT BANKING INDUSTRY.
IN WHICH OF THE FOLLOWING CIRCUMSTANCES IS A BROKER/DEALER ALLOWED TO SHARE NONPUBLIC INFORMATION OF CONSUMERS WITH NONAFFILIATED THIRD PARTIES?
THE CUSTOMER HAS NOT ELECTED TO OPT OUT OF THE DISCLOSURE.
AN ASSOCIATED PERSON MAY BORROW MONEY FROM A CUSTOMER IF:
THE CUSTOMER IS THE ASSOCIATED PERSON'S SISTER
A MUNICIPAL FIRM MAKES A CONTRIBUTION THE THE COUNTY ASSESSOR IN THE COMMUNITY WHERE THEIR OFFICE WAS LOCATED, WHAT WILL OCCUR?
THE FIRM WOULD BE UNABLE TO ENTER INTO A NEGOTIATED UNDERWRITING WITH THE MUNICIPALITY FOR 2 YEARS.
WHAT IS CONSIDERED A CONFLICT OF INTEREST IN A LIMITED PARTNERSHIP?
THE GENERAL PARTNER SELF-DEALING TO INSURE PROFITS WITHOUT REGARD TO THE LIMITED PARTNERS THE GENERAL PARTNER HAS A FIDUCIARY RESPONSIBILITY TO THE LIMITED PARTNERS NAD CAN NOT ACT WITHOUT CONSIDERING THE LIMITED PARTNERS BEST INTEREST.
A GRANDFATHER FITS $1,000,000 TO HIS GRANDSON 'S UNIFROM GIFT TO MINORS ACT (UGMA) ACCOUNT . THE GRANDFATHER IS IN THE 33% TAX BRACKET, THE WIDOWED MOTHER IS IN 28% TAX BRACKET, AND THE SON IS LESS THAN 19 YEARS OLD. ANY UNEARNED INCOME IS TAXED TO
THE MOTHER AT 28%. IF THE MINOR IS YOUNGER THAN 19 OR IS A FULL-TIME STUDENT THAT IS YOUNGER THAN 24 YEARS OLD, THE INCOME EXCEEDING $2,100 IS TAXED AT THE PARENTS RATE.
Under what circumstances may a FINRA member send gifts to representatives of another member?
THE VALUE OF ALL GIFTS TO AN INDIVIDUAL DURING A PERIOD OF 1 YEAR MAY NOT EXCEED $100
Of the following examples, which would be exempt from liability under the insider trading laws?
THERE ARE NO EXCEPTIONS FROM LIABILITY UNDER INSIDER TRADING LAWS.
WHAT IS TRUE REGARDING REGISTERED PERSONS ON IN-ACTIVE STATUS SERVING IN ACTIVE DUTY IN THE U.S. MILITARY.
THEY CAN CONTINUE TO EARN COMMISSIONS
A 35-YEAR OLD EMPLOYEE AND FIRST TIME HOMEBUYER WISH TO WITHDRAW $10,00 FROM HER IRA ACCOUNT FOR THE PURCHASE. THS PROVISION IS AVAILABLE FROM:
TRADITIONAL AND ROTH IRA'S. THE HARDSHIP PROVISIONS IS AVAILABLE TO OWNERS BOTH TRADITIONAL AND ROTH IRA'S.
What joint account is designed specifically for married couples?
Tenancy by the Entirety
The highest price a dealer is willing to pay for a security is known as:
The Bid price
When a customer sells a security in the secondary market, he or she will receive
The Bid price
What must be completed prior to the first margin trade?
The Margin account agreement
If an unit investment trust in ineffective, an order to liquidate may be instigated by the:
The SEC
Was established as a result of the stock market crash of 1929. It has two main goals: #1. To ensure more transparency in financial statements so investors can make informed decisions about investment #2. To establish laws against misrepresentation and fraudulent activities in the securities markets.
The Securities Act of 1933
:was created to govern securities transactions on the secondary market, after issue, ensuring greater financial transparency and accuracy and less fraud or manipulation.
The Securities Exchange Act of 1934
A bond's call premium is defined as the amount:
The amount the issuer pays the bondholder to exercise the call
A firm has a joint account for a married couple. Any request for disbursement from the account made by either spouse, would require that
The check must be made joint to both owners.
Which of the following best describes cash settlement:
The customer pays on trade date
In a DPP a limited partner's participation in the partnership does not take effect until:
The general partner approves the subscription agreement
Which of the following is NOT true regarding a cash account?
The investor must sign a statement that he or she understands the risks. - A customer DOES NOT need to do this when opening a cash account.
M has set up a trust account for her money. Upon M's death, what will happen to the money and securities that have been placed into the trust?
The proceeds from the trust will pass to the named beneficiaries based on instructions in the trust document.
What provides the investor with the most detailed information about a mutual fund?
The prospectus
Equity options expire at which of the following times?
The third Friday of the expiration month at 11:59 p.m. (EST
A mutual fund investment company recently ran a retail communication on television and radio that explained how investors could receive a full prospectus for the fund. The company followed up the Tv ad with a full-page advertisement in a local newspaper that also informed investors on hw to receive a full prospectus for the fund. Under the Securities Act of 1933, which of the following is true
These retail communications would NOT be considered a prospectus
Sam was having difficulty selling his investments due to lack of demand in the secondary market. What does that say about his investments?
They will have Liquidity Risk
A realized gain is: a. A capital gain on investment when the security is sold b. Not taxable c. The appreciation in the value of a stock that has nt yet been sold d. A paper gain
a. A capital gain on investment when the security is sold
Which tool would a fundamental analyst use to analyze a company? a. Financial statements b. Trading volume c. Graphs d. Price charts
a. Financial statements
A registered representative with oral authority from the customer can decide which of the following?
Time and Price only
The purpose of breakpoints is:
To give the investor a reduced sales charge.
The purpose of the Bank Secrecy Act is all of the following EXCEPT
To protect the privacy of customers
If a customer mails a written complaint to a registered rep's home address, what should the rep do?
Turn the complaint over to the registered principal at the Office of Sepervisory Jurisdiction
WHICH OF THE FOLLOWING AR ISSUED WITH A SPECIFIED, FIXED RATE OF INTEREST
U.S. GOVERNMENT BONDS AND NOTES
Which of the following are issued with a specified, fixed rate of interest?
U.S. Government Bonds and Notes
All of the following would be considered to be retail communication EXCEPT: A. A website B. A seminar text C. A market letter is sent to 30 retail customers D. 10 different emails sent to 10 different retail customers
UNDER FINRA RULE 2210 A RETAIL COMMUNICATION INCLUDES ANY WRITTEN (INCLUDING ELECTORNIC) COMMUNICATION THAT IS DISTRIBUTED OR MADE AVALAIBLE TO MORE THAN 25 RETAIL INVESTORS WITHIN ANY 30 CALANDAR-DAY PERIOD
An investment company organized under a trust indenture which does not have a Board of directors and issues only redeemable securities which represent an undivided interest in a unit of specified securities defines:
Unit Investment Trust
THE HOLDER OF A CALL-OPTION ON A T-BOND WILL LOSS MONEY IF:
WHEN YIELDS INCREASE AND PRICES DECREASE
The holder of a call option on a T-bond will profit under all of the following circumstances, EXCEPT:
WHEN YIELDS ON T-BONDS INCREASE AND PRICES OF T-BONDS DECREASE
When would a member firm use a Form NRF (Non-Registered Fingerprint)?
When a nonregistered person has access to or handles the books and records.
Registered individuals must satisfy the regulatory element of continuing education:
Within 120 days of their second anniversary and every 3 years thereafter.
Writing a straddle is:
Writing an equal number of puts and calls with the same strike price and expiration date, on the same underlying security.
THE HOLDER OF A CALL-OPTION ON A T-BOND WILL PROFIT IF:
YIELD ON T-BONDS DECREASE AND PRICES INCREASE
When a company reacquires its own stock it is called:
a Buyback
Benefits of Local Government Investment Pools (LGIP's) include all of the following except: a. Liquidity b. High investment returns c. Protections of capital d. Cash management
b. High investment returns
A customer wishes to pay for her son's college tuition using funds from her brokerage account. Her account has a checking account feature. The member firm may withdraw the funds if the customer does which of the following?
requests in writing a wire transfer of the funds to the college
Under what conditions may a FINRA member firm sell initial public offering (IPO) to one of its nonregistered employees? a. The amount of the purchase is small and not disproportionate to the size of the issue b. The employee promises in writing to hold the security got 2 years c. The member firm failed to make a bona fide public offering at the offering price d. Under no circumstances
d. Under no circumstances
