SIE Incorrect Answers
If an investor is more than ______ there will not be a 10% penalty for surrendering an annuity contract.
59.5
What is the formula to find the Public Offering Price?
NAV / (100% - Sales Load %) = Offering Price
Can Mutual Funds be purchased on margin?
NO.
Which of the following options positions would give the maximum protection when hedging by using options? Long Calls Short Calls Long Puts Short Puts [A]I and III[B]I and IV[C]II and III[D]II and IV
[A]I and III
Which of the following may NOT be purchased on margin? [A]IPOs [B]U.S. T-Bills [C]Stocks listed on a national exchange [D]Equity securities quoted on the National Market System
[A]IPOs
One of your friends works for a company that has established a profit-sharing plan that is company-sponsored. Which of the following statements on this type of plan is FALSE? [A]In this type of plan, deductions allowed to employers from one year can be carried to the following year. [B]The level of company profits is generally a deciding factor as to whether contributions are made to the plan and the amount thereof.[C]Contributions and earnings in this type of account are typically tax-deferred. [D]In this type of plan, the employer determines the annual contribution.
[A]In this type of plan, deductions allowed to employers from one year can be carried to the following year.
A corporation increases the dividend payments to common stockholders. Assume that the price of the common remains unchanged. How does this affect the dividend yield of the stock? [A]Increases [B]Decreases [C]Remains constant [D]Cannot be determined with information provided.
[A]Increases Because the dividend has increased and the market value of the stock has stayed the same, the yield would increase.
When disciplinary action is taken against a broker-dealer, final authority is in the hands of the [A]SEC - Securities Exchange Commission [B]FINRA- Financial Industry Regulatory Association [C]State Administrator in the state where the violation occurred [D]Broker-dealers supervisory committee
[A]SEC - Securities Exchange Commission
Index options settle in ...
cash
"Not-Held" orders are handled by....
floor brokers
A ½ point on a stock equals ....
$ .50
1 point on a stock equals...
$1
In an election where the covered associate is NOT permitted to vote, the limitation for political contributions is _____ or less. In an election where the covered associate IS permitted to vote, the limitation for political contributions is _____ or less.
$150 ; $350
_____ is an accounting procedure such as the depreciation of the value of an asset over its useful life.
Amortization
The formula for current yield is...
Annual Dividend / Market price = Current Yield
____ is the increase in value of an asset.
Appreciation
____ ______ writing would provide the customer with income and some downside protection
Covered Call
Are UITs fixed or variable?
FIXED
A sales charge breakpoint is the dollar investment required to qualify for a lower sales charge. A fund family is a mutual fund sponsor offering many funds with different investment objectives. Sales charge breakpoints are typically given for investments within a....
FUND FAMILY
Recession is measured by changes in the...
GDP - Gross Domestic Product.
____ is the market value (bid price) of mutual fund shares.
Net asset value
Do variable annuity contracts have guaranteed cash values?
No
What is the formula to convert a bond into common stock?
Par or face value of the bond / Conversion price
All disciplinary actions taken by SRO's are subject to _____ review
SEC
The SEC Regulation A offering is used for _____ issues
SMALL. Less than 50 million.
Why is GDP a more accurate measure of the US Economy than GNP?
The GDP is a more accurate measure of the U.S. economy than the GNP (Gross National Product) since the GNP measures goods and services within and outside the U.S.
____ is the NAV of a fund plus its sales charge.
The offering price
What is cost basis?
The original value of the investment
Common stockholders could take which of the following actions with regard to the corporation's business activities? I: Vote on a stock split II: Inspect the minutes from the Board of Directors meetings III: Attend the annual shareholders meeting IV: Vote on a cash dividend [A]I and III[B]II and III[C]I, II and III[D]I, II, III and IV
[A]I and III
An underwriting syndicate is formed using a western agreement. Firm A has 25% participation of the $100 million issue. Firm A sells $25 million. At the end of the offering, $10 million remains unsold. Firm A's liability for the unsold portion will be: [A]0[B]$2.5 million[C]$10 million[D]$100 million
[A]0
An RR performs a transaction via wire order in a customer's account. What is TRUE of such situations under FINRA rules? [A]A principal of the firm is required to review and approve such transactions. [B]This type of order is acceptable for discretionary accounts only.[C]Prior to execution, such transactions require a written request by the customer. [D]Wire orders under $10,000 do not require review and approval.
[A]A principal of the firm is required to review and approve such transactions.
Which of the following is NOT a characteristic of Notes issued by the U.S. Treasury? [A]All U.S. Treasury Notes have call features. [B]Maturities on these securities are typically intermediate. [C]Quotes on these securities are listed as a percentage of the note's par value. [D]Interest is paid on these securities semi-annually.
[A]All U.S. Treasury Notes have call features.
S & P 100 index options when exercised are settled by the use of which of the following? [A]Cash [B]stocks from the S & P 500 index [C]Treasury Securities [D]ETF shares on the index
[A]Cash
As inflation increases over time, the best hedge against it has historically been provided by which of the following types of securities? [A]Common stocks [B]Preferred stocks [C]Government Securities (T-Bonds, etc.) [D]Convertible bonds
[A]Common stocks
Which of the following would cause the net assets of a mutual fund to decrease? [A]Dividends distributed to shareholders [B]The securities in the portfolio have paid dividends and/or interest.[C]The value of the securities in the portfolio is appreciating.[D]Increased fund purchases
[A]Dividends distributed to shareholders
When an RR is opening an account for a new mutual fund customer which of the following is NOT necessary? [A]Estate value and overall net worth [B]Social security number [C]Whether the customer is employed by another FINRA member firm [D]The name and address of the customer's employer
[A]Estate value and overall net worth
When a client opens an options account at a firm, regulations dictate that the firm must receive an account agreement signed by the customer in what time frame? [A]Following approval of the account, the firm must receive the signed account agreement within 15 days. [B]The firm must receive the signed account agreement prior to approval of the account. [C]Following approval of the account, the firm must receive the signed account agreement within one month. [D]The firm must receive the signed account agreement no fewer than 10 business days before approval of the account.
[A]Following approval of the account, the firm must receive the signed account agreement within 15 days.
Preferred stock has which of the following characteristics? One can typically expect a dividend at a specific rate. Voting rights typically do not accompany preferred stock. Historically, preferred stock exhibits more appreciation potential than common stock. Dividends are paid only after dividends have already been paid on common stock from the same issuer. [A]I and II[B]II and III[C]I and IV[D]III and IV
[A]I and II
The TWO orders an investor would generally use to protect a profit or limit a loss are: Buy stop Sell stop Buy limit Sell limit [A]I and II[B]I and IV[C]II and III[D]II and IV
[A]I and II
FINRA, the Financial Industry Regulatory Authority, is responsible for all of the following, EXCEPT [A]Setting the amount of commissions, mark-up/mark-downs, and other transaction costs on securities-related transactions [B]Establishing and enforcing standardized regulations for the securities industry. [C]Requiring members to adhere to principles of high standards of commercial honor and just and equitable principles of trade.[D]Protection of the investing public via rule enforcement.
[A]Setting the amount of commissions, mark-up/mark-downs, and other transaction costs on securities-related transactions
Susan Smith has a large portfolio of blue chip common stocks and is expecting the market value of her stocks to remain about the same or decline modestly in price and would like to improve the rate of return on her portfolio. Which of the following option positions would be best for her? [A]Short Calls[B]Long Calls[C]Short Puts[D]Long Puts
[A]Short Calls
Which is TRUE of the spreads in OTC stock quotations? [A]Stocks with a narrow spread are more active than stocks with the wider spread. [B]Stocks with a wider spread are more active than stocks with the narrower spread. [C]Stocks with a wider spread are lower priced. [D]Stocks with the narrow spread are higher priced.
[A]Stocks with a narrow spread are more active than stocks with the wider spread.
An investor who trades a closed-end fund would receive which of the following prices? [A]The current market price [B]The price is based on the closing market price of the day [C]The current NAV of the shares [D]The value of the NAV from the previous trading day
[A]The current market price
Changes to the investment objectives of a mutual fund must be approved by the [A]The fund's shareholders [B]The fund's board of directors [C]The fund's transfer agent [D]Any changes to investment objectives must be approved by FINRA.
[A]The fund's shareholders
The following are all characteristics of variable annuities EXCEPT: [A]The investment portfolio contains insurance protections against losses. [B]The holders may vote to change investment objectives. [C]The portfolio is professionally managed. [D]The portfolio may contain mutual fund shares.
[A]The investment portfolio contains insurance protections against losses.
When a regulated investment company is set up using the pipe-line theory, which of the following pays the taxes on interest payments and dividends received by investors? [A]The shareholders [B]The investment company [C]The transfer agent [D]The Investment Advisor
[A]The shareholders
What is the obligation of a put writer upon exercise of the put? [A]The writer must purchase the underlying security at the strike price. [B]The writer must purchase the underlying security at the current market value. [C]The writer must sell the underlying security at the strike price.[D]The writer must sell the underlying security at the current market price.
[A]The writer must purchase the underlying security at the strike price.
Which of the following is NOT a requirement of Reg S-P of the SEC, which regulates the privacy of financial information? [A]Under Reg S-P, customers may prohibit broker/dealers from sharing information with their affiliates. [B]Under Reg S-P, broker/dealers are required to have procedures in place addressing the privacy and protection of the financial information and records of customers. [C]Under Reg S-P, customers may prohibit broker/dealers from sharing information with non-affiliates by "opting out" of such sharing.[D]Under Reg S-P, broker/dealers must establish privacy policies for customer information and deliver details of such policies to customers.
[A]Under Reg S-P, customers may prohibit broker/dealers from sharing information with their affiliates.
In order to free up time for the registered representatives, a member firm has several non-registered persons telemarket prospective clients with a script. The script states the following: "Good morning, my name is _____ and I'm calling you from Make Money Securities. Our firm expects market increases in ABC Fund, which is offered for sale by our registered representatives. May I connect you with one of our representatives or send you further information?" Which of the following is CORRECT about this situation? [A]Under no circumstances may an unregistered person perform such activities. [B]All actions are permissible except projecting the future return of the ABC Fund. [C]The non-registered persons can perform such actions provided they obtain the appropriate registration within 30 calendar days.[D]As long as registered persons are standing by to take phone calls and the non-registered persons are closely supervised, the situation is acceptable.
[A]Under no circumstances may an unregistered person perform such activities.
When could one expect changes in the net asset value of a mutual fund? [A]When there are changes in the value of securities within the fund's portfolio [B]When customers redeem fund shares [C]When customers exchange fund shares for another fund's shares within the same family [D]When shares of the fund are split
[A]When there are changes in the value of securities within the fund's portfolio
Under the regulations of the security industry, can unlisted securities be sold short by an OTC trader? [A]Yes, there is no restriction on such transactions. [B]No, because they are not marginable. [C]No, because it is against Federal Regulations. [D]Yes, but only on an uptick or zero plus tick.
[A]Yes, there is no restriction on such transactions.
A mutual fund's per-share redemption price is calculated [A]after the transfer agent receives a redemption request, using the next computation of NAV per share [B]at the time the transfer agent receives a redemption request, using the last computation of NAV per share prior to the customer's order [C]at the time the transfer agent receives a redemption request, using the NAV per share at the time of the order [D]at the time the transfer agent receives a redemption request, using the highest available offering price for the fund, then subtracting the highest current sales load
[A]after the transfer agent receives a redemption request, using the next computation of NAV per share
The record date of mutual fund distributions [A]is decided by the mutual fund itself [B]always falls on the third Friday of each month [C]is determined by the Investment Company Institute [D]is the business day after the ex-date
[A]is decided by the mutual fund itself
Which of the following statements regarding "inflation" and "interest rates" would be true? [A]Interest rates will remain unchanged during periods of inflation.[B]Interest rates will decline in periods of inflation. [C]Interest rates will increase in periods of inflation. [D]Interest rates and inflation have no correlation.
[C]Interest rates will increase in periods of inflation.
A registered representative charges a separate fee for investment advice. This is acceptable only if the [A]registered rep is also an investment adviser representative [B]separate fees are only charged to institutional accounts [C]Series 7 examination has been passed by the RR [D]the fee must be set in accordance with the SEC Investment Adviser fee schedule
[A]registered rep is also an investment adviser representative
When helping your customer select a mutual fund all of the following would be primary considerations EXCEPT [A]the NAV (Net Asset Value) of the fund [B]the fund's historical performance [C]sale charges [D]the fund's risk and volatility profile
[A]the NAV (Net Asset Value) of the fund The Net Asset Value is a factor but investors generally base investment decisions on objectives/risks, performance, and charges, and the NAV is not an overriding concern during the selection process.
A basis point equals: [A]1/1000 of 1% [B]1/100 of 1% [C]1/10 of 1% [D]1%
[B]1/100 of 1%
A broker-dealer has fired a registered representative (RR) for cause related to a violation of securities regulations. This RR will continue to be subject to FINRA jurisdiction for what period of time following the filing of the Form U-5? [A]1 year[B]2 years[C]3 years[D]4 years
[B]2 years
Which of the following most accurately describes the figure that results from subtracting a mutual fund portfolio's cost from its current market value? [A]NAV[B]Appreciation[C]Amortization[D]Offering price
[B]Appreciation
Of the statements below, which is TRUE regarding taxation of variable life insurance policies? [A]A 10 % surcharge is added to all loans made against the policy (policy loans). [B]Estate taxes may apply to the death benefit of such a policy.[C]The beneficiary is responsible for taxes on death benefits of such a policy. [D]Income tax will apply to any accumulated cash value in such a plan.
[B]Estate taxes may apply to the death benefit of such a policy.
Which regulator determines which securities can be purchased on margin when the securities are non-exempt securities trading on the OTC market? [A]FINRA - Financial Industry Regulatory Authority [B]FRB - Federal Reserve Board [C]SEC - Securities Exchange Commission [D]SIA - Securities Industry Association
[B]FRB - Federal Reserve Board
An investor expects the market value of ABC to remain neutral over the next few months. He is long ABC. How could this investor utilize the expectation that ABC will remain neutral? [A]He could put on a long straddle. [B]He could sell a call. [C]He could buy a put. [D]He could go short against the box.
[B]He could sell a call.
In which of the following circumstances would it be acceptable for a registered representative to participate in the private sale of real estate limited partnerships outside of the scope of his employment at a member firm? I: The RR makes it clear to buyers of the limited partnership interests that the member firm is not participating or endorsing the offering of the interests. II: All private offerings must comply with rules and regulations of the SEC and each state where the product will be offered. III: The RR gives clear notification to the member firm of his participation in such activities and, upon request, all pertinent information about the RR's participation is made readily available to the member firm. IV: Regulations at the state and federal level which apply to the firm are not violated by the RR's participation. [A]I and II[B]I and III[C]I, II, and IV[D]I, II, III, and IV
[B]I and III
The Fed would use which of the following tactics to attempt to LOWER inflation? I: The discount rate would be increased. II: The requirements on margin accounts would be lowered. III: Open operations would take place where the Fed sells government securities. IV: The reserve requirements on banks would be reduced. [A]I and II[B]I and III[C]II and III[D]III and IV
[B]I and III
Which of the following would be correct statements by a registered representative to a customer when recommending the purchase of a mutual fund? I: Making purchases of funds under the same management may result in a lower overall sales load. II: Capital gains distributions should be viewed as income yield on the fund shares. III: Upon redemption of mutual funds shares, investors do not know the exact amount of the redemption. IV: Purchasing shares just prior to the ex-dividend date is advantageous to the purchaser of the shares. [A]I and II[B]I and III[C]II and III[D]I, II, III and IV
[B]I and III
Regarding the lending and borrowing of money between customers and registered representatives, which of the following would NOT require written pre-approval? I: The customer is the registered representative's brother. II: An outside business activity, aside from broker-customer activities, has been established and the lending arrangement is solely related to this outside business activity. III: The customer has been a friend of the registered representative since high school, prior to the broker-customer relationship. IV: The customer lending to the registered representative is a financial institution that makes a business of lending money for personal and business reasons. [A]I and II[B]I and IV[C]II and III[D]II and IV
[B]I and IV
Which two of the following options strategies would be considered "bullish"? Selling uncovered put options Selling uncovered call options Buying put options Buying call options [A]I and III[B]I and IV[C]II and III[D]III and IV
[B]I and IV
ABC Company declared a fifty cent ($0.50) per share dividend on August 15th to shareholders of record Friday, September 15th. On which two of the following days can an ABC Company stockholder sell his shares and still receive his fifty cent ($0.50) per share dividend? Monday, September 11th for regular way settlement. Thursday, September 14th for regular way settlement. Friday, September 15th for cash settlement. Monday, September 18th for cash settlement. [A]I and III[B]II and IV[C]I and IV[D]II and III
[B]II and IV
Of the following client transactions, which is acceptable under FINRA rules? [A]A couple who are expecting their first child purchase a growth fund in the child's name. [B]In a joint account, a wife places a buy order for a sector fund without her husband's knowledge. [C]In an attempt to maximize return, a client frequently buys and sells mutual fund shares. [D]In a phone conversation, a client tells his RR to "buy the best mutual fund available" since the client cannot decide on a particular fund..
[B]In a joint account, a wife places a buy order for a sector fund without her husband's knowledge.
An investor buys a bond issue that has an option to convert to common stock. How is the conversion value determined on this type of bond? [A]It is based on the market value of the bond. [B]It is based on the par value or face value of the bond. [C]It is based on the market value of the common stock. [D]It is based on the price at which the common stock was issued.
[B]It is based on the par value or face value of the bond.
Which of the following is NOT commonly associated with UITs (Unit Investment Trusts)? [A]Unit redeemability [B]Management company structure [C]Portfolio diversification [D]Investment income
[B]Management company structure
Real-time pricing is normally available on all of the following products during trading hours, EXCEPT: [A]Common Stock [B]Mutual Fund Shares [C]Preferred Stock [D]Corporate and Municipal Bonds
[B]Mutual Fund Shares
A client recently purchased a sizeable number of mutual fund shares and knows that the Net Asset Value will change daily. The customer asks the RR how the NAV number is computed. Which of the following best describes the computation to arrive at NAV per share? [A]NAV per share is calculated by finding the average value on a per share basis over the previous quarter. [B]NAV per share is calculated by subtracting the liabilities of the fund from the total assets of the fund, then dividing this number by the total number of shares currently outstanding. [C]NAV per share is calculated by taking the total value of the portfolio of the fund, adding sales charges received, and then dividing this figure by the total number of shares currently outstanding. [D]NAV per share is calculated by finding the total appreciation of the portfolio and dividing this figure by the total number of shares outstanding.
[B]NAV per share is calculated by subtracting the liabilities of the fund from the total assets of the fund, then dividing this number by the total number of shares currently outstanding.
All of the following statements on the secondary market of Brokered CDs are INCORRECT EXCEPT: [A]An interest penalty is added to the par value of the Brokered CD when it is returned to the investor. [B]On settlement date, accrued interest is added to the market value of the Brokered CD and the seller receives both. [C]No interest is added to the par value when the Brokered CD is returned to the seller. [D]On settlement date, the accrued interest penalty is subtracted from the market value of the Brokered CD and then paid to the seller.
[B]On settlement date, accrued interest is added to the market value of the Brokered CD and the seller receives both.
Under SEC rules, advertisements for mutual funds based on total return must be based on which of the following? [A]10 day and 1 year current yield [B]One, five and ten year period for funds in existence for at least ten years. [C]30 day current and total returns for the life of the fund [D]1 year current yield and 10 year total return
[B]One, five and ten year period for funds in existence for at least ten years.
What is the tax treatment on payments received by an annuitant during the annuity period on a non-qualified annuity? [A]Payments are subject to tax only on the annuitant's cost basis.[B]Payments are taxed as ordinary income on the portion that is not attributable to the annuitant's cost basis. [C]Payments are taxed entirely as ordinary income. [D]Payments are tax-exempt.
[B]Payments are taxed as ordinary income on the portion that is not attributable to the annuitant's cost basis.
Certain charges to buyers of variable life contracts are removed directly from payments when purchased. Which of the following is an example of such a charge that is directly removed from a premium? [A]Optional riders on the contract [B]Sales and premium taxes [C]Investment Advisor fee [D]Transfer agent fees
[B]Sales and premium taxes
Mr. Smith advises his registered representative to sell 300 shares of his ABC common stock whenever the price is right. Later that day ABC starts to move up and the RR enters a market order to sell the stock. Which of the following statements is true? [A]The RR was in violation because he did not have written discretionary authority for this customer. [B]The RR handled the order appropriately since the only decisions required were related to time and price. [C]The RR should have sought the approval of a supervisory person prior to entering the order. [D]The RR should have refused to take the order and asked the customer to call him back later in the day to see where the stock was trading.
[B]The RR handled the order appropriately since the only decisions required were related to time and price.
Harvey had his registration revoked last year. If he wants to re-join the securities industry as a licensed person, who can approve it? [A]FINRA [B]The SEC [C]The member firm's executive committee by unanimous vote only [D]The U.S. Justice Department
[B]The SEC
One of your clients placed a trade in their cash account without the funds to pay for the securities. No additional funds were added to the account and no extension was obtained for additional time to deposit funds. The firm liquidates the purchased position. In order to comply with Reg T guidelines, the customer's account must be frozen for what amount of time? [A]The account must be frozen for 180 days. [B]The account must be frozen for 90 days. [C]The account must be frozen for 30 days. [D]The account need not be frozen.
[B]The account must be frozen for 90 days.
One of your clients has a variable annuity. She is currently 60 years old and wishes to purchase a second property for vacation purposes using the surrender value of the annuity. For tax purposes, how are gains in the variable annuity treated when she surrenders the policy? [A]The investor will pay ordinary income taxes on the surrender value of the annuity and will also pay an additional 10% penalty tax. [B]The investor will pay ordinary income taxes on the surrender value of the annuity. [C]The investor will pay capital gains taxes of 20% on the surrender value of the annuity and will also pay an additional 10% penalty tax.[D]The investor will pay capital gains taxes of 20% on the surrender value of the annuity.
[B]The investor will pay ordinary income taxes on the surrender value of the annuity.
Which of the following statements is TRUE regarding an SEC Regulation A Offering? [A]A prospectus must be delivered [B]The offering may not exceed $50 million [C]A registration statement must be filed with the SEC [D]A maximum of 35 accredited investors may purchase the securities
[B]The offering may not exceed $50 million
When determining position limits an investor that is short XYZ calls would be affected by which of the following? [A]Short XYZ puts [B]Long XYZ calls [C]Long XYZ puts [D]Long XYZ shares
[C]Long XYZ puts
A rep at the firm has been working on determining appropriate investments for a client. The rep comes to the conclusion that a deferred variable annuity will be the best choice for this particular client. What determination must be documented by the rep in relation to the investment in the deferred variable annuity under FINRA Regulations? [A]The rep and the member firm must confirm the age and identity of all beneficiaries to the account and ensure that account assets can be transferred freely. [B]The rep must document the client's need or benefit of growth that is tax-deferred in the annuity. [C]The rep and the member firm must determine whether or not the customer has exchanged variable annuities within the past year.[D]The rep must document any arrangements between the firm and the rep in relation to sharing agreements at the firm.
[B]The rep must document the client's need or benefit of growth that is tax-deferred in the annuity.
A new client uses the services of an Investment Advisor and has requested that duplicate copies of statements and confirmations from his account be forwarded to the IA. Which of the following is true with regard to this request? [A]Such a request must be confirmed with each trade and the order ticket must specify that a duplicate copy is being sent. [B]The request and the name and address of the IA should be noted on the new account form. [C]The sales department of the firm should be informed since they will handle all paperwork. [D]The IA must have a power of attorney to receive duplicate copies.
[B]The request and the name and address of the IA should be noted on the new account form.
IRAs (Individual Retirement Accounts) and variable annuities have many similarities. Which of the following is one of them? [A]Taxable income is received by those investing in either type of plan. [B]There are many alternative investments for those participating in either type of plan. [C]Life insurance benefits are included in both plans. [D]Withdrawals must begin at age 59 1/2 if the investor wishes to avoid tax penalties.
[B]There are many alternative investments for those participating in either type of plan.
Which of the following is a characteristic of an unregistered equity-indexed annuity? [A]Throughout the trading day, the annuity's value is updated to reflect movements in the related index. [B]There is a cap on the percentage of returns that may be collected by owners of such contracts. [C]This type of annuity is generally taxed a more favorable rate compared with more conventional annuities. [D]Throughout the lifetime of such contracts, interest returns are fixed.
[B]There is a cap on the percentage of returns that may be collected by owners of such contracts.
Which of the following provides a long-term opportunity to purchase a certain number of common shares at a specific price? [A]Standard equity options [B]Warrants [C]Rights [D]ETFs
[B]Warrants
The custodian of a mutual fund is generally a [A]stock exchange. [B]bank. [C]broker/dealer. [D]market maker.
[B]bank.
When a bond is trading at a discount, the current yield on the bond is: [A]unrelated to its yield to maturity [B]less than its yield to maturity [C]equal to its yield to maturity [D]more than its yield to maturity
[B]less than its yield to maturity
Predictions about the future performance of mutual funds and variable annuities are [A]permitted if the basis of the prediction is provided. [B]not permitted, regardless of the situation. [C]permitted if prepared by an outside and unbiased analyst. [D]not permitted unless reviewed by FINRA 10 days before first use.
[B]not permitted, regardless of the situation.
If an investor spreads his mutual fund investments over several different fund families, his/her registered representative should disclose to the investor that the investor will probably forfeit which of the following privileges? [A]exchange privileges [B]sales charge breakpoint [C]systematic withdrawal program [D]automatic reinvestments of dividends and distributions
[B]sales charge breakpoint
A floor broker executing an order for a public customer asks the designated market maker to guarantee a price while giving the floor broker an opportunity to obtain a better price for the customer. This is known as [A]a stop order [B]stopping stock [C]best efforts order [D]a limit order
[B]stopping stock
A variable annuity's assumed interest rate is [A]chosen by the investor at the time the annuity is purchased. [B]the anticipated rate of return in the payout of a variable product.[C]based on the T-bill rate plus 3%. [D]based on a variable subaccount's performance history.
[B]the anticipated rate of return in the payout of a variable product.
All of the following would be considered to be a plan fiduciary under ERISA except: [A]the custodian in charge of plan assets [B]the tax preparer for the plan [C]the individual selecting the plan's IA [D]the plan's IA
[B]the tax preparer for the plan
A day trader of blue chip common stocks would be most concerned with which of the following risks? [A]purchasing power risk [B]timing risk [C]default risk [D]interest rate risk
[B]timing risk
Advertising and sales literature concerning registered investment companies and variable annuities must be filed with the FINRA [A]10 days prior to use [B]within 10 days of first use [C]15 days prior to use [D]within 15 days of first use
[B]within 10 days of first use
Which of the following statements by an RR is TRUE regarding dividends? [A]"It is possible for a long-term equity anticipation security to pay dividends." [B]"An investor can expect to receive dividends on the underlying security in the event that they own a call option." [C]"An investor who owns an American Depositary Receipt can expect to receive dividends from their investment when declared and paid." [D]"When an investor owns a warrant or right, they are entitled to receive dividends in accordance with these securities."
[C]"An investor who owns an American Depositary Receipt can expect to receive dividends from their investment when declared and paid."
Which of the following is NOT a function performed by the designated market maker of a stock? [A]Each day, the designated market maker opens the market in their respective security. [B]The designated market maker ensures that a fair and orderly market exists and is maintained in their respective security. [C]"Not-Held" orders are taken and processed by the designated market maker. [D]The "designated market maker's book" is updated and maintained by the designated market maker.
[C]"Not-Held" orders are taken and processed by the designated market maker.
A customer calls their RR. Which of the following statements by the customer would allow the RR to take action in effecting a transaction for the customer? [A]"I'm in the market for some of that new IPO that we discussed, so if you ever see it under $50 per share, buy 150 shares for me." [B]"I think a mutual fund of some kind would be a good addition to my portfolio. Go ahead and find one and buy it for me." [C]"When you think that the price is right today, buy 200 shares of ABC for me." [D]"I've got some shares of MNO that I'd like to get rid of some time later this month. Sell 50 shares of MNO later this month, but for nothing less than $25 per share."
[C]"When you think that the price is right today, buy 200 shares of ABC for me."
In 2020, an attorney who is not an active participant in a retirement plan earns $110,000 annually and the attorney's spouse is unemployed. The maximum tax deduction allowed under IRS tax rules for IRAs for this couple is [A]$6,000.[B]$2,000.[C]$12,000.[D]$10,000.
[C]$12,000 6,000 each
Under telephone solicitation guidelines, when is it permissible to make unsolicited calls to residences? [A]8am-8pm, local time of the party called [B]7am-9pm, local time of the party called [C]8am-9pm, local time of the party called [D]9am-8pm, local time of the telemarketer
[C]8am-9pm, local time of the party called
When can hypothetical illustrations on a variable annuity be made? [A]Never [B]Only when the rate of return is guaranteed [C]As long as past performance is not projected into the future [D]Only if they reflect actual investment results
[C]As long as past performance is not projected into the future
One of your customers has a single premium variable life insurance policy. The customer needs some funds for an emergency and would like to take a loan out against his policy. How will this affect the policy? [A]A 10% tax penalty may be levied against the policyholder if no repayment of the loan takes place. [B]The minimum death benefit of the policy will be negatively affected, even if the loan is repaid in full. [C]As long as the loan is repaid in full, the minimum death benefit will not be affected. [D]The amount borrowed still participates in relevant portfolio fluctuations.
[C]As long as the loan is repaid in full, the minimum death benefit will not be affected.
An Open-end Mortgage Bond issued by a corporation is one in which the property used to secure the bonds: [A]Cannot be used to secure a later loan unless the later loan is lesser in claim. [B]Can be used to secure additional debt as long as the additional bonds are subordinated. [C]Can be used to secure additional bonds and all bonds rank equally. [D]Can be used to secure additional debt and in the event of bankruptcy bonds would be repaid by earliest maturities first.
[C]Can be used to secure additional bonds and all bonds rank equally.
Which of the following is TRUE of an open-end investment company? [A]The transfer agent selects the fund's Investment Advisor.[B]Shareholders of a given fund can vote to list on an exchange.[C]Capital gains must be distributed to shareholders on an annual basis. [D]Undistributed capital gains are taxable to the investment company.
[C]Capital gains must be distributed to shareholders on an annual basis.
According to anti-money laundering regulations, which of the following must be reported to federal authorities? [A]All personal checks [B]Wire transfers of $5000 or more [C]Cash deposits of more than $10,000 [D]Cash and wire transfer combined that total $7000
[C]Cash deposits of more than $10,000
Under the JOBS Act, an issuer that is an emerging growth company or a broker-dealer representing the issuer may engage in the following communications before a registration statement is filed with the SEC EXCEPT [A]Contact potential investors that are Qualified Institutional Buyers (QIBs) to ascertain investor interest [B]Contact potential investors that are Accredited Investors (AIs) to ascertain investor interest. [C]Contact potential investors that are Retail Investors to ascertain investor interest [D]Engage in oral or written communications with potential investors.
[C]Contact potential investors that are Retail Investors to ascertain investor interest
Under the SEC's "Pay-to-Play" rules, which of the following contributions by a covered associate is permitted to an elected official's campaign in which the covered associate may NOT vote? [A]Contributions of $350 or less per election, per covered associate.[B]Contributions of $350 or more per election, per covered associate. [C]Contributions of $150 or less per election, per covered associate.[D]Contributions of $150 or more per election, per covered associate.
[C]Contributions of $150 or less per election, per covered associate.
Minor declines over at least two consecutive quarters in which of the options below would be considered a recession? [A]DJIA - Dow Jones Industrial Average [B]NASDAQ 100 [C]Gross Domestic Product [D]Cost of Living Index
[C]Gross Domestic Product
Which of the following is FALSE regarding a variable annuity? [A]The investment objectives may be changed after a vote by those holding the variable annuity. [B]Management of such portfolios is performed by a professional in the industry. [C]Holders are protected against losses to their initial investment.[D]Mutual fund shares can be a part of the investments of the annuity.
[C]Holders are protected against losses to their initial investment.
What are the purposes of the Securities Exchange Act of 1934? I: Created the SEC II: Provided for the regulation of credit III: Provided for the regulation of exchanges IV: Provided for the regulation of new issues [A]II, III and IV[B]I and IV[C]I, II and III[D]I and III
[C]I, II and III
Which of the following gifts would EXCEED the gift and gratuity limitations established by FINRA? [A]A registered representative, who services his mother-in-law's account, pays for an 3-day cruise for her and her husband at a cost of $2,500. [B]A branch manager of a firm who is a long-time friend of a principal at another firm pays for dinner and a concert for the two couples, where dinner totals $400 and the concert totals $250 per ticket. [C]In celebration of a clearing firm reaching 20 years in business, an introducing firm who uses the clearing firm buys Rolex watches (each valued over $2,000) for 20 executives and principals at the clearing firm. [D]To congratulate a customer on the birth of her first child, a registered representative buys the customer a $500 crib set.
[C]In celebration of a clearing firm reaching 20 years in business, an introducing firm who uses the clearing firm buys Rolex watches (each valued over $2,000) for 20 executives and principals at the clearing firm.
Without giving notice to her member firm, a registered representative is allowed to receive income from which of the following? [A]Making a presentation about kayaking as he is an avid kayaker [B]An RR speaks about investing at his neighborhood investment club [C]Passive investment income [D]A part-time job at a local community college, which is unrelated to the financial industry
[C]Passive investment income
When is payment typically due on the regular-way purchase of a round lot of T-Notes? [A]Payment is typically due on the 4th business day. [B]Payment is typically due on the 3rd business day. [C]Payment is typically due on the following business day.[D]Payment is typically due on the day of the trade.
[C]Payment is typically due on the following business day.
Which of the following statements about REPOs (Repurchase Agreements) is FALSE? [A]Typically REPOs denominations start at a minimum of $1,000,000.[B]REPOs are considered money market instruments. [C]REPOs are often thought of as risk-free investments. [D]REPOs typically have maturities of less than three months.
[C]REPOs are often thought of as risk-free investments.
Form letters, telemarketing scripts, and seminar texts are examples of: [A]Correspondence [B]Advertisements [C]Sales literature [D]Educational material
[C]Sales literature
One of your clients has large holdings of a few blue-chip corporations. The investor wishes to hold onto the stock for multiple reasons, but she is uncertain about price fluctuations in the short-term future. How can she use options to provide the MOST downside protection? [A]She can purchase call options on the securities in her portfolio.[B]She can sell call options on the securities in her portfolio. [C]She can purchase put options on the securities in her portfolio.[D]She can sell put options on the securities in her portfolio.
[C]She can purchase put options on the securities in her portfolio.
All of the following are TRUE regarding the conduct of customer accounts EXCEPT: [A]Stock held in a custodian account may not be held in street name.[B]A customer may open a numbered account provided a statement attesting to the ownership of the account is signed. [C]Stock held in joint tenancy with rights of survivorship (JTWROS) escapes federal estate tax liability in the estate of the first to die.[D]Margin trading in a fiduciary account requires documentation stating that such trading is permitted.
[C]Stock held in joint tenancy with rights of survivorship (JTWROS) escapes federal estate tax liability in the estate of the first to die.
A client is currently filling out the paperwork for a new margin account with your firm. The client calls you and asks you about the purpose of the Loan Consent Agreement. What is the MOST appropriate description of this document? [A]The agreement provides the RR with the authority to make trades in the account which fall in line with the account's investment objectives without first consulting the client. [B]The agreement provides the firm with the authority to sell a customer out of a position and liquidate the necessary amount of securities needed to meet margin and maintenance calls when the customer fails to meet such calls. [C]The agreement provides the firm with the authority to lend margined securities from the customer's account to other firms and customers for purposes such as short sales. [D]The agreement provides the RR with the authority to put the margined securities in the customer's account up as collateral for loans from banks.
[C]The agreement provides the firm with the authority to lend margined securities from the customer's account to other firms and customers for purposes such as short sales.
If an investor buys a call option contract on the S&P 500 Index, what will the investor receive when exercising the call? [A]100 shares of the S&P 500 ETF at the strike price listed on the contract [B]The market price of the index at the close of trading on the day of exercise, in cash [C]The difference between the strike price on the contract and the market price of the index at the close of trading on the day of exercise, in cash [D]Proportionate shares of S&P 500 stocks to the value of the contract
[C]The difference between the strike price on the contract and the market price of the index at the close of trading on the day of exercise, in cash
All of the following could be applied to fixed UITs EXCEPT: [A]The term "diversified" [B]The fact that they are registered [C]The fact that they are managed [D]The fact that they are regulated
[C]The fact that they are managed
Mr. Smith has been considering the purchase of a mutual fund and has decided he wants to buy $8,000 of the fund but only has $4,000 to invest now. He asks you, his registered representative, to lend him the other $4,000 which he will repay in 2 months. Which of the following is correct about this situation? [A]The rep may lend the customer the funds as long as the agreement is in writing. [B]The rep should establish a margin account for the customer and buy the fund shares on margin. [C]The rep must deny the customer's request for a loan. [D]The rep may lend the customer funds with the firm's prior approval.
[C]The rep must deny the customer's request for a loan.
All of the following are functions of a mutual fund's transfer agent EXCEPT: [A]The transfer agent handles issues regarding lost, destroyed or stolen certificates. [B]The transfer agent assists in the distribution of capital gains and dividends of the investment company. [C]The transfer agent provides safekeeping of investment company assets. [D]The transfer agent cancels shares after the shares have been redeemed by investors.
[C]The transfer agent provides safekeeping of investment company assets.
Gross Domestic Product (GDP) differs from the Gross National Product (GNP) in that the GDP measures: [A]The value of goods and services produced inside and outside the U.S. by Americans. [B]The value of goods and services imported into the U.S. [C]The value of goods and services produced within the boundaries of the United States. [D]The value of goods and services produced exported by the United States.
[C]The value of goods and services produced within the boundaries of the United States.
A client has held a long position in BCD Common for several years and has seen a sizeable increase in price since initially buying the stock. The client fears that BCD is headed for a slight downturn in price and wishes to protect the profits that he holds from the previous increase. Which option strategy provides the MAXIMUM protection for this client? [A]This client would be best suited by buying calls on BCD. [B]This client would be best suited by selling calls on BCD. [C]This client would be best suited by buying puts on BCD. [D]This client would be best suited by selling puts on BCD.
[C]This client would be best suited by buying puts on BCD.
A pharmaceutical company plans to release a new drug next month. Prior to the release, one of your clients buys 1,000 shares. Two weeks prior to the release, the FDA publicly announces a delay in the approval of the drug. Your customer's shares drop approximately 20% in value. Which of the following types of risk is BEST represented by this scenario? [A]This is an example of re-investment risk. [B]This is an example of market or systematic risk. [C]This is an example of legislative or regulatory risk. [D]This is an example of unsystematic or business risk.
[C]This is an example of legislative or regulatory risk.
Justin has invested in regular stocks and bonds and is familiar with commissions, mark-ups, and mark-downs on those products. He has been considering buying some shares of a growth fund because he likes the mix of fund assets and the diversification that the fund provides. He reads that the sales load on the fund is 6.5% for the amount he'd like to invest and the fund has a NAV per share of $100. With these numbers in mind, Justin is assuming that his sales load will be $6.50 per share. As his agent, what should you tell Justin? [A]You should inform Justin that his calculation was correct and that his overall price per share would be $106.50. [B]You should inform Justin that his calculation was correct, but that commissions are added above the sales load, driving the price higher than $106.50. [C]You should inform Justin that his calculation was incorrect, because sales load is not a percentage of NAV, but rather a percentage of offering price, leaving the price per share at $106.95.[D]You should inform Justin that his calculation was incorrect, because sales load is not a percentage of NAV, but rather a percentage of offering price, leaving the price per share at $106.95 plus commissions.
[C]You should inform Justin that his calculation was incorrect, because sales load is not a percentage of NAV, but rather a percentage of offering price, leaving the price per share at $106.95. 100 / (100% - 6.5%) = 100 / 0.935 = 106.9518, or $106.95 as the offering price
Investment bankers are broker-dealers who provide all of the following services, except: [A]handle the distribution of new issues [B]form syndicates and selling groups [C]are market makers [D]help issuers prepare registration statements for new issues
[C]are market makers An investment banker or investment banker department of a broker-dealer would not provide market making functions. Market making is a function of the secondary market not the primary market.
If investors do not provide their tax identification information to their funds, the investors will be subject to [A]the Alternative Minimum Tax [B]penalties imposed by the fund until the tax information is received [C]back-up withholding taxes on their holdings [D]a liquidation of their holdings within 5 business days after the fund requests the information
[C]back-up withholding taxes on their holdings
All of the following information is required in a prospectus EXCEPT: [A]date of the prospectus [B]statement as to possible stabilizing transactions [C]copies of underwriting agreement and opinions of counsel [D]statement that the SEC neither approves nor disapproves of the securities
[C]copies of underwriting agreement and opinions of counsel
An RR recommends to a client that she invest in a mutual fund just prior to the fund's ex-dividend date. This recommendation [A]is suitable because it ensures an immediate return on the client's investment [B]is not suitable because the client would only be eligible to receive the dividend if shares are bought three days after ex-dividend date [C]is not suitable because the client may be subject to additional income tax liabilities and could have bought the shares at a reduced price [D]is suitable because fund prices usually rise shortly after the ex-dividend date
[C]is not suitable because the client may be subject to additional income tax liabilities and could have bought the shares at a reduced price
An investor who is "bullish" should invest in all of the following EXCEPT: [A]buy calls [B]buy stock [C]sell naked calls [D]sell naked puts
[C]sell naked calls
The "spread" in an over-the-counter trade is [A]the difference between today's closing bid and yesterday's closing bid. [B]the difference between today's closing ask and yesterday's closing ask. [C]the difference between the current bid and ask prices. [D]the difference between the amount paid for the security by the dealer and the amount for which the security is sold by the dealer.
[C]the difference between the current bid and ask prices.
The underwriter of a mutual fund is also known as: [A]the custodian[B]the dealer[C]the sponsor[D]the trustee
[C]the sponsor
An annuitant receives payment under a variable annuity for a number of years. At his death, his widow receives a lump-sum payment. The annuity is a [A]variable life annuity. [B]variable joint and last survivor annuity. [C]variable unit refund annuity. [D]20-year endowment annuity.
[C]variable unit refund annuity.
An investor's portfolio includes 10 corporate bonds and 200 shares of common stock. If both securities decline in value by ½ point the dollar loss is [A]$110.00[B]$50.00[C]$105.00[D]$150.00
[D]$150.00 A ½ point on a bond equals $5.00 Therefore, 200 shares x $ .50 per share = $ 100 decline 10 bonds x $5.00 per bond = $ 50 decline $150 Total decline in value
A mutual fund investor has all of the following advantages over investing in individual stocks EXCEPT: [A]The costs of the account, including brokerage fees, will be lower.[B]The fund will provide more investment diversification. [C]The ability to redeem shares directly to the fund. [D]An increase in the timing of when distribution of capital gains are taken.
[D]An increase in the timing of when distribution of capital gains are taken.
Information pertaining to the suitability of various investments and investment strategies is required by an RR at what point in time? [A]Before beginning a telemarketing campaign [B]Within 10 calendar days of the account opening [C]After providing the prospect with sales literature [D]At the time the prospective client becomes a customer
[D]At the time the prospective client becomes a customer
A quote for a security trading in the secondary market typically contains all of the following, EXCEPT: [A]A bid price [B]An ask price [C]The size of the market [D]Average daily trading volume
[D]Average daily trading volume
All of the following securities may be purchased on margin in a customer's margin account EXCEPT? [A]Municipal bonds [B]U.S. Treasury Bonds [C]Corporate bonds [D]Call options on equities
[D]Call options on equities
Factors that affect the amount of an underwriting spread include which of the following? The size of the issue The type of security involved The business history of the issuer [A]I only[B]II only[C]III only[D]I, II and III
[D]I, II and III
Which of the following are required in order to open an options account? I: The RR must inquire about the investment objectives of the customer. II: The RR must gather and keep record of customer financial background information. III: The RR must provide an Options Disclosure Document IV: The customer must sign a document agreeing not to violate position limit and exercise limit rules. [A]II only[B]II and IV only[C]III and IV only[D]I, II, III, and IV
[D]I, II, III, and IV
Which two of the following would be classified as acceptable practices under the Securities Act of 1933? Selling shares of a new issue to established clients on the day prior to the day that the registration statement for the securities becomes effective. Providing a current prospectus to a prospective client. Providing a Statement of Additional Information to an investor who has requested such information. Providing potential investors with a mutual fund prospectus which includes the current NAV. [A]I and III[B]II and IV[C]I and IV[D]II and III
[D]II and III
Of the following statements, which are CORRECT regarding the distributions of a mutual fund? I: On the tax return of a mutual fund shareholder, any payment of distributions must be reported as interest income by the shareholder. II: On the tax return of a mutual fund shareholder, any payment of distributions must be reported as a dividend by the shareholder. III: The dividends and interest of a mutual fund, prior to the subtraction of expenses, typically comprise mutual fund distributions. IV: The dividends and interest of a mutual fund, less the expenses of the mutual fund, typically comprise mutual fund distributions. [A]I and III[B]I and IV[C]II and III[D]II and IV
[D]II and IV
When an investor buys either a corporate or municipal bond, how frequently is interest paid? [A]Interest is paid every week. [B]Interest is paid every month. [C]Interest is paid on a quarterly basis. [D]Interest is paid on a semi-annual basis.
[D]Interest is paid on a semi-annual basis.
According to FINRA good delivery rules, a mutilated corporate bond must be authenticated by: [A]The buyer's broker/dealer [B]The seller's broker/dealer [C]The market maker [D]Issuer or transfer agent
[D]Issuer or transfer agent
Which of the following is true concerning the over-the-counter market? [A]It is where customers buy and sell securities publicly with each other on an exchange floor. [B]It is an auction market. [C]Listed securities are never traded in this market. [D]It is where prices are negotiated between broker/dealers
[D]It is where prices are negotiated between broker/dealers
When is it permissible for a non-registered individual to receive commissions? [A]Only if the individual's supervising principal approves of the payment [B]Commissions paid to the non-registered person must represent no more than 10% of the total commissions paid. [C]The non-registered person can receive commissions only for accounts that he or she introduced to the RR. [D]Only if there is an employment contract in place which allows for commission payments to be made to the non-registered spouse of a registered representative
[D]Only if there is an employment contract in place which allows for commission payments to be made to the non-registered spouse of a registered representative
Which of the following activities by a RR would require registration as a Investment Adviser Representative? [A]Advising a customer about various financial planning tools [B]Advising a customer about tax and insurance matters [C]Printing Certified Financial Planner (CFP) on the RRs business cards [D]Recommending a stock to a customer based on an asset allocation model
[D]Recommending a stock to a customer based on an asset allocation model
An RR is explaining a Section 529 Education Savings Plan to clients who are the parents of a college bound child. They are interested in making provisions for the college costs. The RR should disclose all of the following characteristics of a 529 Plan EXCEPT: [A]Although contributions to these plans are not tax deductible for federal income tax purposes, any annual earnings and qualified withdrawals are tax free. [B]Although these plans are not mutual funds, many offer mutual funds as investment options. [C]These plans typically charge enrollment fees, annual maintenance fees, asset management fees and sales charges for broker sold plans.[D]The maximum contribution limit can be set at more than $300,000, depending on the state and the contribution is exempt from federal gift taxes.
[D]The maximum contribution limit can be set at more than $300,000, depending on the state and the contribution is exempt from federal gift taxes. 15,000 individual or 30,000 couple
When a mutual fund is inherited, what is the cost basis used by the individual who inherits the fund? [A]When the owner dies, the cost basis is the average value of the fund over the past six months. [B]The new owner uses the cost basis of the deceased owner and pays capital gains on previous distributions of capital gains. [C]The new owner uses the cost basis of the deceased owner. [D]The new owner uses the NAV of the fund upon the previous owner's date of death.
[D]The new owner uses the NAV of the fund upon the previous owner's date of death.
Which of the following statements pertaining to fiduciary accounts is FALSE? [A]Generally, "Prudent Investor" rules apply to such accounts.[B]Speculation is typically prohibited in such accounts. [C]Unless the documents which establish the account specifically permit it, purchasing securities on margin in such accounts is prohibited. [D]The profits of such an account may be shared with the fiduciary in charge of managing the account.
[D]The profits of such an account may be shared with the fiduciary in charge of managing the account.
Which of the following about the prospectus of open-end investment companies is CORRECT? [A]The prospectus is subject to SEC approval. [B]The RR may highlight the risks listed in the prospectus for the customer to read. [C]The prospectus is identical to the registration statement the fund submitted to the SEC. [D]The prospectus is only a portion of the registration statement that is submitted to the SEC.
[D]The prospectus is only a portion of the registration statement that is submitted to the SEC.
Which of the following statements about Roth IRA plans is TRUE? [A]Roth IRA plans are not permitted to invest in individual stocks.[B]Maximum contributions for a single year for an individual with a Roth IRA plan would be $5,000. [C]The original owner of the plan must receive minimum distributions by the age of 70 1/2. [D]The qualified distributions of a Roth IRA plan are not taxable.
[D]The qualified distributions of a Roth IRA plan are not taxable.
An investor wants to exchange shares of one fund with shares of another fund that is within the same family of funds. Which of the following is NOT an important consideration when making such an exchange? [A]The fund's investment objectives [B]The investment risk profile of the fund [C]Tax consequences [D]The sales load of the new fund
[D]The sales load of the new fund
Repurchase Agreements are characterized by all of the following EXCEPT: [A]Repo rates are negotiated by the parties involved. [B]Banks and thrifts use Repos to raise temporary capital funds [C]The FRB uses Repos as instruments of monetary policy [D]Their fixed maturities make them unsuitable for use by corporations
[D]Their fixed maturities make them unsuitable for use by corporations
Good-till cancelled orders have all of the following characteristics EXCEPT: [A]They will be confirmed or renewed periodically [B]They are permitted for round lots and odd lots [C]They are also called open orders [D]They are permitted for common stock only
[D]They are permitted for common stock only
SEC rule 415 allows "Shelf Registration." This permits one registration statement to cover all securities to be issued during the next: [A]Six months.[B]One year.[C]Two years.[D]Three years.
[D]Three years.
A customer wishes to sell a stock just after the stock pays a dividend with a record date of Friday, October 20th. Assuming a regular-way settlement, the earliest that the customer could sell the stock and still receive the dividend is [A]Monday, October 16th. [B]Tuesday, October 17th. [C]Wednesday, October 18th. [D]Thursday, October 19th.
[D]Thursday, October 19th.
A registered principal of a member firm would be required to approve all of the following EXCEPT [A]new accounts. [B]seminar scripts. [C]sales literature containing a recommendation sent to 30 retail clients. [D]a mutual fund prospectus.
[D]a mutual fund prospectus.
A variable annuity contract is similar to a life insurance policy because it may contain all of the following EXCEPT [A]death benefits. [B]beneficiary designation. [C]loan provisions. [D]guaranteed cash values
[D]guaranteed cash values
Mr. & Mrs. Jones have a joint account. Mr. Jones enters an order to sell 300 XYZ which is held in their joint account, and requests that the check be made payable to him. As the registered representative you should [A]follow Mr. Jones' instructions as requested. [B]not take the order. [C]execute a cash transaction. [D]tell Mr. Jones that the check must be issued in joint name.
[D]tell Mr. Jones that the check must be issued in joint name.
All of the following are components of the calculation to find compound accreted value (CAV) on zero-coupon bonds EXCEPT? [A]the maturity date of the bond [B]the dated date of the bond [C]the bond's original yield at offering [D]the bond's current market yield
[D]the bond's current market yield
The following are duties of the transfer agent EXCEPT: [A]to issue new stock certificates [B]to cancel old stock certificates [C]to resolve problems arising from lost certificates [D]to prevent the over-issuing of shares of stock
[D]to prevent the over-issuing of shares of stock This is handled by the Registrar
In a western agreement, the syndicate members are not responsible for selling .....
any other syndicate members' unsold shares.
Generally a recession is signified by declines in GDP over the course of...
at least two consecutive quarters.
Closed-End funds trade like....
common stock
Standard or Traditional options can be purchased __ a margin account but they CANNOT be purchased __ margin - the premiums must be ____
in ; on ; paid in full
Interest rates _____ with inflation and ________ with deflation
increase ; decrease
Covered Calls are ______ the stock and _____ the call.
long ; short
Mutual funds are ___-term investments and should not be traded ______.
long-term ; frequently
Calculation of NAV per share is required by mutual funds no less than
once per trading day
Continuing commissions may be paid to a non-registered individual if ....
provided for in the written employment agreement of the RR.
If an investor is looking for the "most" or "maximum" amount of protection on the downside and currently has holdings in a security, the investor should ________ _______ options on the securities in question.
purchase put
The position limits apply to options which are on the ____
same side of the market
Because mutual funds are not traded OTC or on an exchange, the record date and ex-date would always have to be ...
set by the fund itself.
___ and ___ to the client are the primary concerns in regards to an investment.
suitability and benefit
The securities in a UIT are ____, but they are NOT ____.
supervised ; managed
In order to LOWER inflation, the Fed would attempt to ...
take money out of the system and they would increase rates.
A Registered Principal would not be responsible for approving a prospectus - the prospectus must be filed with ...
the SEC..
Regular-way settlement for Treasury Securities is...
the business day following the trade date.
The "spread" in an over-the-counter trade is .....
the difference between the current bid and ask prices.
Buyers of index options receive cash that is equal to the difference between ...
the market price at the close of trading for the index and the exercise price on the contract.
When Brokered CDs are sold in the secondary market, they trade at ...
the market value of the brokered CD plus accrued interest.
An annuity where the beneficiary receives a lump-sum payment upon the death of the annuitant reflecting the value of the remaining annuity units is called a ...
unit refund annuity.
The GDP (Gross Domestic Product) measures the .....
value of goods and services produced within its own boundaries.
As a rule of thumb regarding stock quotes: the ____ the spread the less active the stock, the _____ the spread the more active the stock.
wider ; narrower
