Missed SIE 4
A person is NOT subject to a statutory disqualification if he: AHas been suspended from membership in any SRO BStands accused of stock manipulation CIs subject to an order of the SEC which precludes his industry activities DWas expelled from a foreign securities exchange
B Statutory disqualification is based on a person being convicted for any felony or securities-related misdemeanor, not based on being accused of an offense.
Keystone Chocolate Co. plans to sell, only in the state of Pennsylvania, shares of a new issue. In order to qualify for a registration exemption under Rule 147, what percentage of the corporation's assets must be located in Pennsylvania, and what percentage of its revenues must be derived from Pennsylvania sources, at the time of the offering? A70% B80% C90% D100%
B
Which of the following limited partnerships is the least likely to generate income? AAn existing property limited partnership BA raw land limited partnership CA government-assisted housing limited partnership DA currently producing oil and gas drilling limited partnership
B
In placing a stop-limit order, a customer should understand: AThe activating round-lot sale is also the execution price BThe order will become a market order as soon as it is activated CThe order can be activated but may or may not be executed DThe customer is guaranteed an execution at the limit price after the order is activated
C Unlike a stop order, a stop-limit order does not become a market order. Once it is activated, it must satisfy the limit price, which may never occur.
All of the following are likely to be found in the portfolio of a money-market fund, EXCEPT: ABank certificates of deposit BTreasury bills CTreasury bonds that have a short time to maturity DCommon stock
D For a money-market fund, the underlying securities are short-term debt securities
Which of the following Moody's ratings is the most speculative? A Aa B A C Baa D Ba
D Of the choices given, Ba is the most speculative. The highest Moody's rating is Aaa.
A corporate bond that's not backed by any specific asset is referred to as a: ADebenture BCollateral trust bond CRevenue bond DConvertible bond
A
A person spreads a rumor in an effort to drive the price of a stock higher. This practice is: AA violation that's referred to as pump-and-dump BAcceptable if the stock is traded on an exchange CA violation that's referred to as front-running DAcceptable if the person notifies the firm's compliance department EXPLANATION:
A
A registered representative's broker-dealer is an underwriter of an initial public offering of stock. The RR's father-in-law may purchase: AThe IPO from a different broker-dealer BThe IPO from the RR's broker-dealer COnly a limited quantity of the IPO from any broker-dealer DThe IPO but only from a member of the selling group
A
A stock index call option is exercised. The writer must: ADeliver cash BDeliver the underlying index CPurchase the underlying index DClose out his position
A
If a registered representative does not meet the Regulatory Element requirements of continuing education: AShe cannot perform the duties of a registered person BThere is an automatic 30-day suspension CShe may continue to work as a registered person, but under heightened supervision DShe is not permitted to be employed by the member firm
A
Which of the following bonds results in the highest real interest rate? AA bond yields 8% when inflation is at 3% BA bond yields 12% when inflation is at 8% CA bond yields 10% when inflation is at 7% DA bond yields 6% when inflation is at 4%
A
Which of the following is TRUE regarding the tax treatment of municipal bonds? AInterest and capital gains are taxable. BInterest and capital gains are tax-free. CInterest is taxable, but capital gains are tax-free. DInterest is tax-free, but capital gains are taxable.
A
Which one the following statements concerning money-market funds is TRUE? AThese funds will maintain a stable NAV of one dollar. BThese funds are typically invested in Treasury bonds. CThese funds are FDIC insured. DThese investments are liquid.
A
A 72-year-old grandfather wants to buy an annuity for his son (age 45) and his grandchild (age 15). Which payout option BEST satisfies the grandfather's intentions? AStraight life annuity with 10-year period certain BJoint and last survivor life annuity CUnit refund life annuity DStraight life annuity
A A joint and last life survivor annuity will best satisfy the grandfather's intentions. In this payment option, benefit payments are made to the persons in the joint account, then to the survivor, as long as the survivor lives.
Which of the following entities is considered an eligible purchaser for a Rule 147 offering? AA corporation that has its principal office located in the state of the offering BA partnership in which 90% of the partners are located in the state of the offering CA trust that is organized for the specific purpose of purchasing the securities and is located in the state of the offering DA qualified institutional buyer that has one of its offices located in the state of the offering
A SEC Rule 147 covers an exemption from registration for the sale of securities on an intrastate basis
A broker-dealer's privacy notice must include all the following information, EXCEPT the: AType of personal information that the firm collects BNames of any other financial institutions with which the firm is affiliated CFact that clients may opt out of having their information shared with non-affiliates DTypes of third parties to which the firm may disclose information
B
A registered representative is NOT permitted to exercise discretion as it relates to which of the following investments? AMutual funds BDPPs CREITs DLeveraged ETFs
B
An increase in which of the following will likely result in the Federal Reserve Board implementing an easy money policy? AInflation BUnemployment CConsumer Price Index DPersonal income
B
Which of the following requires a limited partner to deposit additional funds? AA tax credit BAn assessment CDepreciation DA passive loss
B
A registered representative (RR) has a customer who is a senior officer of a corporation. The customer wants to open an account in the name of the corporation. Which of the following statements is TRUE? AThe RR may open an account in the normal fashion since this is an existing customer. BThe RR may open an account in the normal fashion since the customer is a senior officer of the corporation. CThe RR may not open the account unless the customer provides a corporate resolution authorizing her to open the account. DThe RR may not open an account in the name of a corporation since the account must be opened only in the name of an individual.
C
Money received by a corporation when it sells its stock above its par value is called: AExcess capital BEarned surplus CPaid-in capital DStockholders' capital
C
Prior felony convictions must be disclosed on Form U4 if the conviction occurred: AWithin the last 2 years BWithin the last 5 years CWithin the last 10 years DAt any time
D
When opening an account for a person who is age 65 or older, which of the following is TRUE? AThe account owner must provide information on a qualified guardian. BThe account owner must provide information on a trusted contact person. CThe RR is required to request information concerning the executor of the person's estate. DThe RR must request the trusted contact person's name and contact information.
D
Which of the following statements are TRUE regarding a margin account? AA customer cannot lose more than the amount deposited. BA customer can choose which securities will be sold in the event of a margin call. CThe firm must contact the customer when it sells securities from the account. DAn extension of time cannot be granted to meet a maintenance call.
D
A security with a low beta: AOutperforms the market when it is gaining and losing BUnderperforms the market when it is gaining and losing COutperforms the market when its gaining and underperforms the market when its losing DUnderperforms the market when its gaining and outperforms the market when its losing
D Beta measures a security's volatility in relation to the market
Which of the following choices is a violation of federal laws with regard to tender offers? AThe tender of stock from a cash account BThe tender of stock from a long margin account CThe tender of a minor's stock from a custodian account DThe tender of stock in a short margin account that has been borrowed by a customer
D It is a violation of federal law for anyone to tender the stock that a customer borrowed in a short margin account. The stock has been temporarily borrowed and does not belong to the customer and may not be tendered.
The 5% markup policy applies to: AMutual funds BNew issues CMunicipal bonds DNonexempt securities
D The 5% markup policy does not apply to transactions requiring a prospectus (new issues, mutual funds, and registered secondaries) or transactions in certain exempt securities (such as municipal securities).
Which of the following statements is NOT TRUE about selling stock short? AIt must be done in a margin account. BThe broker-dealer loans the stock to the customer. CThere is no set time by which the shares must be repurchased. DThe short seller will receive any dividends that are paid while she is short the stock.
D the short seller is required to pay the dividend to the lender of the stock
What is the market outlook for the sellers of put options? ABullish BBearish CNeutral DVolatility
A They want the market to rise
An investor has annuitized a variable annuity and has realized that the payments he's receiving are falling below market return. If the investor wants to reallocate a portion of the investment portfolio within the separate account, which of the following statements is TRUE regarding this situation? AThe investor is permitted to change the allocation of the investments within the separate account. BThe investor is not permitted to change the allocation of the investments within the separate account. CThe investor can only change the allocation to a fixed-income portfolio. DThe investor can only change the allocation to an equity growth portfolio.
A
If a customer purchases shares of one stock and sells short shares of another stock, how can she settle these transactions? ABy executing both transactions in a margin account and depositing the required cash for both transactions. BBy depositing the required cash for both transactions in a cash account. CBy executing the purchase in a cash account and the short sale in a margin account, and using the proceeds of the short sale to pay for the purchase of the stock. DBy executing both trades in a margin account and using the proceeds of the short sale to pay for the purchase of the stock.
A The purchase could be made in either a cash or margin account, but the short sale must be executed in a margin account. The proceeds of the short sale cannot be used to pay for the purchase of the stock.
If the FRB engages in repurchase agreements, which of the following statements is TRUE? AThe money supply has been decreased. BThe money supply has been increased. CShort-term yields will likely increase. DThe FRB is initially selling securities.
B When the FRB conducts a repo, it is initially purchasing securities and the immediate result is an increase in money supply
The market price of XYZ Corporation common stock is $55 and its quarterly dividend is $0.60. What is the stock's current yield? A1.1% B4.36% C2.2% D5.3%
B the stock's annual dividend is found by multiplying the $0.60 quarterly dividend by 4, which is $2.40. Therefore, the current yield is 4.36% ($2.40 ÷ $55).
A registered representative has been indicted for theft, which was unrelated to his employment at the member firm. Which of the following statements is TRUE? ANo action is required by the registered person until a verdict has been reached. BNo action is required since the theft was unrelated to the registered person's employment. CThe registered person is permitted to remain employed by the member firm, but the event must be reported to FINRA. DThe registered person is not permitted to remain employed by the member and the event must be reported to FINRA.
C
All of the following forms of communication with the public that are used by a member firm fall under the industry definition of retail communication, EXCEPT: AAn advertisement for the firm that's published in a magazine BA billboard that describes the range of services offered by the firm CA seminar handout provided to 20 retail investors DA telemarketing script
C
The economic theory stating that government intervention in the marketplace is necessary for controlling economic growth is known as: ASupply-side economics BMonetary theory CKeynesian theory DThe Dow Theory
C
For variable annuities, which of the following payout options provide the highest payout? AJoint and last survivor life annuity BLife annuity with period certain CLife annuity DUnit refund life annuity
C payments for his lifetime. At death, the payments cease the insurance company is relieved of its obligation annuitant assumes the greatest degree of risk with this type of payout.
A company has been struggling and has failed to make the most recent interest payment on the bonds that it has issued. This issuer's bondholders have experienced: ACapital risk BLiquidity risk CCredit risk DReinvestment risk
C Credit risk, also referred to as default risk, is the risk that a bond issuer will not make interest
The following is a listing of breakpoints on a mutual fund. Amount Sales Charge 0 - $ 9,999 8% $10,000 - $24,999 6% $25,000 - $39,999 5% $40,000 and above 4% The current net asset value is $9.20. The current offering price is $10.00. If a customer invests $50,000, how many shares will he be able to purchase? A 4,227 B 5,000 C 5,219 D 6,000
C Since the customer has $50,000 to invest, he will pay a 4% sales charge. First, calculate the offering price by dividing the net asset value ($9.20) by the complement of the sales charge percent (96%) which equals approximately $9.58. Next, divide the amount to be invested ($50,000) by the offering price ($9.58), which equals the number of shares that can be purchased (5,219). (72101)
XYZ Corporation has conducted a private placement to raise additional funds after its IPO. This activity is referred to as which of the following? AA reverse merger BA spin-out CA PIPE offering DA registered secondary
C This is referred to as a private investment in public equity (PIPE) offering
An Operations Professional receives a written complaint from a customer stating that she recently received two statements, the second of which she suspects was artificially created. The first statement shows a significant decline in the value of her portfolio, while the second statement corrects errors to indicate an appreciation in the value of her portfolio. This complaint should be: AReviewed by the Operations Professional to see whether the second statement was artificially created BForwarded only to the appropriate supervisor CForwarded to the appropriate supervisor and reported to FINRA within 10 business days DForwarded to the customer's registered representative for explanation
C Written complaints alleging theft, misappropriation of funds or securities, or forgery are among the events that trigger a requirement to submit a report to FINRA within 10 business days
Which of the following statements is NOT TRUE regarding a private placement? AThere is a limit to the number of nonaccredited investors who may purchase the securities BThe securities are exempt from registration CSolicitation of investors may not be permitted DIt is usually a very liquid investment
D
All of the following statements are TRUE concerning both auction rate securities (ARSs) and variable-rate demand obligations (VRDOs), EXCEPT: AInterest rates are set at specified intervals BThey are often issued by municipalities CThey are long-term securities with short-term trading features DThey have a put feature allowing the holder to redeem the security at par
D Although they are both long-term securities with short-term trading features, only VRDOs have a put feature that permits the holder to sell the securities back to the issuer or third party. Auction rate securities (ARSs) do not have this feature and, if the auction fails, the investor may not have immediate access to her funds. In addition, ARSs use an auction process to reset the interest rate on the securities, whereas the interest rate on a VRDO is reset by the dealer at a rate that allows the securities to be sold at par value.
