FIN 450 Test 2
A Canadian broker-dealer, properly registered with the Administrator of the province in which he is headquartered and with no office in the state, may do business with his customers who are on a skiing vacation in Vail without registering with the Colorado Administrator
False
A broker-dealer registered with the SEC and several states must meet the net capital standard of the state with the most stringent requirements
False
A consent to service of process must be submitted with each renewal application
False
A depression is defined as a decrease in the GDP for 6 or more consecutive months
False
If an Administrator determines that a registration statement for a security is incomplete, he may issue a cease and desist order
False
Market risk (systematic risk) is the risk associated with the specific business decisions of a company's manager
False
Monetarists believe that the government should take an active role in managing the economy through fiscal policy
False
Rising inventories are characteristic of an economic expansion
False
The GEMCO Employees Retirement Plan currently has assets of $750,000. Under the Uniform Securities Act, the plan would be considered an institutional investor
False
Which of the following statements best describes what will happen when the value of the American dollar rises in relationship to foreign currencies?
Foreign goods and services will become less expensive for Americans
The CPI is a measurement of inflation
True
Under the Uniform Securities Act, an out-of-state firm that transacts business with an established customer who is on vacation is not considered a broker-dealer in the state in which the customer is on vacation
True
Under the Uniform Securities Act, the city of Atlanta would be included in the definition of the term person
True
When a securities professional registers in a state, he must provide the state Administrator with a list of all the states where he intends to register
True
Which of the following is NOT a factor when a communication to be distributed to the public is either being reviewed or approved by the broker-dealer?
Whether the piece will be distributed in written form or on the firm's website
As current interest rates go up, the market price of existing corporate bonds bearing lower interest rates will
decrease
In general, a person who effects transactions in securities for itself or for the account of others in the course of business must register in the state as a broker-dealer
True
RMBN common stock is currently selling for $60, which gives the stock a P/E ratio of 20:1. Based in that information, the earnings per share are
$3.00
Over a specified time period, the S&P 500 has returned 18%. The manager of a conservative growth portfolio with a beta of .8 reports a return of 16% for the same time period. Assuming a risk-free rate of 4%, The managed portfolio's alpha was
+0.8
One of your clients has a portfolio that has a correlation of .91 with the overall market. A stock with which correlation coefficient would most likely offer the greatest diversification to this client?
-.51
High consumer debt is characteristic of a downturn in the business cycle
True
What is the official designation of the person or agency that enforces the USA in each state?
Administrator
An agent's salaried secretary who takes orders
Agent
An individual who represents her nonexempt employer in the sale of its securities to existing employees for a commission
Agent
Person who effects transactions in municipal securities on behalf of a broker-dealer
Agent
According to the Uniform Securities Act, a consent to service of process must accompany which of the following?
Agent's initial registration application, and Broker-dealer's initial registration application
Current Liabilities
Balance Sheet
Which list of instruments below is NOT composed of securities?
Commodity futures contracts and fixed payment life insurance contracts
XYZ Corp has been in business for over 20 years. They need additional capital for expansion, and determine that a public offering in their home state and neighboring states is appropriate. Which method of securities registration would most likely be used to register this initial public offering?
Coordination
A publicly traded corporation keeps its books on a calendar year basis. An investor wanting the most up-to-date financial information in late August would view the company's
June 30 Form 10-Q
Manufacturing inventories
Lagging indicator
The regulatory bodies consider which of the following social media sites to be predominately used for business rather than personal communications?
With regard to the registration requirements of the Uniform Securities Act, which of the following is NOT a correct statement?
Only the issuer itself can file a registration statement with the Administrator
Rate charged by banks to corporate customers
Prime rate
Which of the following is NOT affected by the issuance of a bond?
Shareholders' equity
As a result of corporate transactions, a company's assets remain the same and its equity decreases. Which of the following statements is TRUE?
Total liabilities increase
An excess of a country's imports over exports
Trade deficit
A final order may be entered only after opportunity for a hearing has been granted
True
A person not defined as a broker-dealer in the state under the USA need not register as such
True
ABC Shoe Company, a new retail shoe store chain, has applied for the registration of its securities with the SEC as required by the Securities Act of 1933 and wants to register its securities in the state of Illinois and several neighboring states. ABC would most likely register by coordination
True
Any company may register by qualification whether or not it files a statement with the SEC
True
The sum of a company's profits, after dividend payments, since the company's inception is called
accumulated earnings, earned surplus, retained earnings
Under the Uniform Securities Act, the term agent would include
an individual who represents a broker-dealer in a transaction in an exempt security
An investor is looking at the past performance of a security over the past three years. In year one, it returned 10%; year two it returned 15%; and year three it returned -4%. This computes to an average rate of return of 7%. This would properly be referred to as the
arithmetic mean
Net worth
balance sheet
Rate changed by banks on loans to broker-dealers with securities as collateral
call money rate
GDP
coincident indicator
A corporation's cash flow will increase as a result of
collecting on past due receivables
Under the Uniform Securities Act, the term agent would include an individual who represents an issuer in effecting non-exempt transactions in
commercial paper with a 19-month maturity
One of the valuation ratios used by fundamental analysts is the price/earnings ratio. The P/E ratio is the current market price of the stock divided by the
earnings per share
Regulatory risk is the risk that the regulatory environment in which a company operates will change as a result of legislation
false
Standard deviation is a measure of inflationary pressures on the performance of a company
false
The term risk refers to the uncertainty that an investment will earn less that its historical return
false
Potential litigation for patent infringement would appear on a corporation's
footnotes
Your 50-year-old client has just inherited $50,000 from a relative and wishes to invest it into a single payment deferred variable annuity. What computation would be use to approximate the value of the account when the client reaches 70?
future value
Present value is computation that is frequently used to determine the amount of a deposit needed new to meet a future need, such as a college education. If an investor uses an expected return of 8% but the actual return over the period is 10%, the future value will be
higher than anticipated
A nonissuer transaction is a transaction
in which the issuer of the security will not receive the proceeds from the transaction
COGS
income statement
Net income
income statement
Revenues
income statement
Retained Earnings
income statement and balance sheet
A company has been experiencing increased earnings but has kept its dividend payments constant. As a result solely of this, the company's balance sheet would reflect
increased shareholders' equity
A bond analyst is plotting a yield curve and notices that short-term maturities have higher yields than intermediate and long-term maturities. This is an example of a(n)
inverted yield curve
Under the Uniform Securities Act, a broker-dealer is defined as any person who
is in the business of effecting securities transactions for its own account or for the accounts of others
New orders for consumer goods
leading indicator
The Conference Board has released information indicating an increase in the Help Wanted Index. Most analysts would take this as a sign of
likely wage inflation in the future
The U.S. Supreme Court defined an investment contract as having four components. Which of the following is NOT part of the four-part test for an investment contract?
management activity by owner
Nonexempt securities
need not be registered if sold in an exempt transaction
XYZ Corp issues 1 million shares of common stock at a price of $6 per share. As a result of this, all of the following will be true EXCEPT
net income will increase by $6 million
A person who represents an issuer in effecting transactions with underwriters
not an agent
An employee of a bank that is issuing shares who receives a commission for selling the bank's securities
not an agent
KAPCO Dividend Yield Fund, a closed-end investment company registered under the investment Company Act of 1940, wishes to commence offering its shares in States A, B, C, and D. IT could be required to
notice file
All of the following risks are considered diversifiable EXCEPT
purchasing power risk
Under the Uniform Securities Act, an individual licensed as an agent by the state may NOT
simultaneously represent two different unrelated broker-dealers in the same transaction
Core inflation is best described as an inflation rate
that excludes certain volatile goods prices
The contraction phase of the business cycle is least likely accompanied by decreasing
unemployment
The difference between current assets and current liabilities is called
working capital
