NURSING MISC784 SIE FINRA Exam Questions and Answers 100%Correct Verified Latest Update 20, Exams of Nursing

Download NURSING MISC784 SIE FINRA Exam Questions and Answers 100%Correct Verified Latest Update 20 and more Exams Nursing in PDF only on Docsity! DO NOT COPY 1[Date] NURSING MISC784 SIE FINRA Exam Questions and Answers 100%Correct Verified Latest Update 2023-2024 The Federal regulatory body that governs the securities industry is: >>>The SEC A fully disclosed BD: >>>is an inducing firm clearing its transactions through a carrying firm An intermediary between the buy and sell sides of a transaction is known as >>>a clearing agent For the Depository Trust and Clearing Corporation (DTCC), all of the following are true EXCEPT: a. it is a member of the Federal Reserve System b. It acts as a retail bank servicing savings and checking accounts c. it serves for the purpose of providing custody of securities d. it is a worldwide clearing agent >>>b. it acts as a retail bank servicing savings and checking accounts Your BD acts as a prime broker for an institutional account. In this arrangement, your BD is likely to be providing which of the following services? >>>clearing and transaction settlement services for executing brokers An individual or institution willing to hold securities positions in its own proprietary account for the purpose of providing liquidity to the marketplace is >>>a market maker An entity such as a corporation wishing to offer securities for sale to the public for the purpose of raising capital is >>>an issuer A nonprofit organization requiring members to pay assessments into a general insurance fund used to meet customer claims in the event of a BD bankruptcy is >>>the Securities Investors Protection Corporation (SIPC) 2[Date] The FDIC provides insurance guaranteeing the safety of a depositor's accounts in FDIC member banks for each deposit up to: >>>$250,000 Determining monetary policy and taking actions to implement those policies is the responsibility of >>>the Federal Reserve Board (FRB) The Magnolia Steel Corporation needs to build a refinery plant. It is estimated to cost $750 million to complete. What market can be used to raise the money needed to build the new plant? >>>Secondary Market 5[Date] Economic data shows that the GDP has been declining steadily over the past two quarters. This would suggest >>>a recession All of the following would be considered a defensive industry security EXCEPT: A. Tobacco stock B. Food chain stock C. Steel company stock D. Utility company stock >>>steel company stock Which of the following would be a leading economic indicator? a. S&P 500 Index b. Industrial production c. Duration of unemployment d. GDP >>>S&P 500 Index When a government actively manipulates the economy through tax and spending policies, this is referred to as >>>Keynesian Economics A major distinction of secondary offering is >>>proceeds are not received by the issuer of the securities How many primary offerings can a corporation issue? >>>Unlimited A corporation can only have one initial public offering (IPO), but there is no limit on the number of subsequent public offerings (SPOs) or additional public offerings (APOs) issued. 6[Date] What federal law regulates the initial sale of securities to the public >>>The Securities Act of 1933 A tombstone advertisement includes all of the following information EXCEPT a. the offering price b. the name of the issuer c. the risks associated with the offering d. the number of shares to be sold >>>the risks associated with the offering Mark the following as true or false: A The final prospectus may be delivered via the internet before a sale B. A shelf registration is good for 5 years 7[Date] C. The access equals delivery rule is not applicable to the preliminary prospectus D. Additional public offerings (APOs) of listed securities do not require delivery of a prospectus E. Once the SEC approves a registration, the cooling-off period ends and an effective date is established >>>A: T B: F C: T D: T E: F The Uniform Securities Act (USA) is the template from which state securities laws are derived. Under the USA, a BD would have to register with the state under all of the following conditions EXCEPT: a. There was an office in the state b. Calls were directed to prospects in the state c. The BD made a market in municipal bonds issued by the state D. Calls were received from clients in the state >>>c. The BD made a market in municipal bonds issued by the state An issuer wishing to raise additional capital engages the services of an under-writer who proposes limiting the sale to the 6 New England states. In doing so, it is most likely that the registration method to be used will be >>>Coordination Under the Securities Act of 1933, a corporation may qualify for an exemption from the registration statement and prospectus requirements under all of the following exclusionary provisions EXCEPT: 10[Date] IV. Preferred stockholders voting rights exceed those of common stockholders >>>Preferred dividends must be paid before paying common dividends Preferred stockholders are paid before common stockholders in the event of liquidation Define Callable >>>Often redeemed by the issuer when interest rates fall Define Convertible >>>May be exchanged for shares of the corporation's common stock Define Cumulative >>>Is entitled to dividend in arrears Define Straight >>>No special privileges; dividends not paid are not recovered Define Participating >>>May receive a higher-than-stated dividend in profitable years 11[Date] Define Adjustable Rate >>>Dividend is tied to industry benchmarks such as the yield of Treasury Bills Under Rule 144, how long must a restricted security be held before it can be sold? >>>6 months An investor is long 1 XYZ May 40 call and XYZ stock has a current market value of 44. Which of the following is TRUE? a. The May 40 call is at the money b. The May 40 call is in the money c. The May 40 call is out of the money d. The May 40 call has no intrinsic value >>>b. The May 40 call is in the money An investor is long 1 August XYZ 30 put and XYZ is has a current market value of 25. Which of the following is true? a. The August 30 put is in the money by 5 points b. The August 30 put is at the money c. The August 30 put is out of the money by 30 points d. The August 30 put has no intrinsic value >>>a. The August 30 put is in the money by 5 points An investor writes (sells) a July 25 ABC call. Which of the following is true? a. The investor has the right to purchase ABC stock at 25 b. The investor has the right to sell ABC stock at 25 c. The investor will be obligated to purchase ABC stock at 25 if the call is executed by the owner (buyer) d. The investor will be obligated to sell the ABC stock at 25 if the call is exercised by the owner (buyer) >>>d. The investor will be obligated to sell the ABC stock at 25 if the call is exercised by the owner (buyer) 12[Date] An investor writes a September 65 ABC put. Which of the following is TRUE? A. The investor will be obligated to sell ABC stock at 65 if the put is exercised by the owner (buyer) B. The investor will be obligated to purchase ABC stock at 65 if the put is exercised by the owner (buyer) C. The investor has the right to sell ABC stock at 65 D. The investor has the right to purchase ABC stock at 65 >>>B. The investor will be obligated to purchase ABC stock at 65 if the put is exercised by the owner (buyer) 15[Date] buyer. Remember that the market attitude of a put buyer is bearish, and the farthest the stock could fall is zero. Therefore, the put buyer's MG is limited to amount from BE point to zero. Listed options transactions settle regular way a. on the third Friday of the expiration month b. on the next business day after trade date (t + 1) c. on the third business day after trade date (t + 3) d. when the option finally expires >>>b. on the next business day after trade date (T + 1) Regarding assignment of exercises notices, which of the following are TRUE? I. The Options Clearing Corporation (OCC) assigns short BD's randomly II. The OCC assigns short BD's using the first in, first out (FIFO) accounting method III. Short BD's can assign their short customers randomly only IV. Short BD's can assign their short customers randomly, using the FIFO accounting method or by any other fair method. >>>The OCC assigns short BDs randomly Short BDs can assign their short customers randomly. using the FIFO accounting method or by any other fair method A customer of a BD is opening a new options account. The customer must return the 16[Date] options agreement >>>Signed and not later than 15 days after the account approval An investor purchases 100 shares of XYZ stock at 67 and writes 1 covered call for a premium of $2.25 each. What is the investor's breakeven point? >>>$64.75 BE: 67 - 2.25 = 64.75 All of the following could be found in the money market EXCEPT: a. T-bonds maturing in 12 months b. T-bills c. Commercial paper d. Equities such as common and preferred shares >>>d. Equities such as common and preferred shares 17[Date] The most common type of direct participation program (DPP) in the securities industry is: >>>a limited partnership (LP) All of the following are benefits for the limited partners in a direct participation program (DPP) EXCEPT: a. Passive losses b. Flow-through of income c. Unlimited liability D. An investment managed by the general partner (GP) >>>c. unlimited liability A pooled investment which is organized as a trust in which investors buy shares or certificates of beneficial interest, either on stock exchanges or in the over-the- counter market, is >>>a real estate investment trust (REIT) An open-end management company may charge what amount annually and still advertise itself as a no-load fund? >>>.25% All of the following are true for exchange-traded funds (ETFs) EXCEPT A. ETFs can be bought or sold throughout the trading day B. ETFs are not marginal securities C. ETF share prices are subject to market forces like supply and demand D. ETF transactions are commissionable trades >>>B. ETFs are not marginal securities An investment established by states to provide other government entities such as cities or counties a place to invest funds short term is: >>>Local government 20[Date] the risk that occurs when an investor is unable to reinvest the proceeds from the redemption of a security at the same rate previously earned. When the interest rate paid on a debt security is less than the current inflation rate, the investor suffers from which of the following risks? >>>Purchasing power risk also known as inflation risk, is the risk faced by investors in almost all debt securities. it is most prevalent in a time of rising inflation where the interest payments on the security are below the rate of inflation. This will have the effect of reducing the purchasing power of the interest payments received. A company operating in State A has just been notified that the state legislature has passed a new law on permitted emissions, and several of the company's plants in that 21[Date] state do not comply. As a result, operations at those facilities must cease. This is an example of >>>Legislative risk results from a change in the law. Also referred to as political risk. Which of the following are risks that are most likely to be faced by investors in domestic debt securities? I. Liquidity risk II. Currency risk III. Political risk IV. Inflation risk >>>Liquidity risk & Inflation risk because debt securities are rarely listed on an exchange, they tend to have greater liquidity risk than equity securities. one of the least avoidable risks encountered by investors in debt securities is inflation or purchasing power risk. With domestic issues, there is no currency risk, and although possible, political risk is less of a factor than the others. ABC stock is currently trading at $63. Julia Miller would like to purchase ABC stock, but not at $63. If the price of ABC stock were to fall to $58 or less, then Miller wants to buy the stock. Which type of order should Miller place considering her objective. >>>Buy Limit The current quote for DEF stock is 49.50 big - ask 49.75. If an investor wanted to buy or sell DEF stock, we can conclude which of the following? I. The best price anyone in the secondary market is willing to sell at is 49.50 II. The best price anyone in the secondary market is willing to sell at is 49.75 22[Date] III. The best price anyone in the secondary market is willing to buy at is 49.50 IV. The best price anyone in the secondary market is willing to buy is at 49.75 >>>The best price anyone in the secondary market is willing to sell is at 49.75 The best price anyone in the secondary market is willing to buy is at 49.50 When an investor is long a stock: >>>the investor is bullish All of the following is true about an investor who sells a stock short EXCEPT: a. the investor will close his position by purchasing the stock b. the price of the stock must go down in order to profit 25[Date] B. as a joint account with tenants in common C. as an individual transfer on death (TOD) account D. under a discretionary power >>>C. as an individual transfer on death (TOD) account If 3 individuals have a tenants in common (TIC) account with your firm and one individual dies, then >>>the 2 survivors continue as co-tenants with the decedent's estate A wealthy individual has established a trust and wishes to establish an account with your BD that permits the trust to engage in margin transactions. Which of the following statements regarding margin trading in trust accounts is TRUE? a. it is not permitted b. it is permitted if the trustee observes the prudent investor rule c. it is permitted with the written approval of the beneficiary of the trust d. it is permitted if provided for in the trust's documentation >>>d. it is permitted if provided for in the trust's documentation (margin trading is not a common practice, however, margin trading in a trust account is permitted if it is specifically provided for in the trust agreement) A client of a brokerage firm opened an UTMA account for her granddaughter 5 years ago, naming the child's father as the custodian. Through appreciation as well as additional contributions, the account value has grown to $50,000 and generates interest and dividend income in excess of $3,000. Who bears the liability for the taxes on his income? 26[Date] a. the donor b. the custodian c. the granddaughter d. no one, because there are no taxes on an UTMA account until the beneficiary takes possession of the account. >>>c. the granddaughter the tax liability is that of the beneficiary of the account, the minor. In reality, the parents are responsible for making sure their child files the proper tax return; the legal obligation is that of the minor. All of the following would be legal investments in an IRA EXCEPT: a. annuities issued by the ABC Life Insurance Company 27[Date] b. whole life insurance issued by the ABC Life Insurance Company c. mutual funds d. gold coins made by the U.S. Treasury >>>b. whole life insurance issued by the ABC Life Insurance Company (any form of life insurance is a prohibited investment in an IRA, however, another insurance company product, an annuity, is permitted) Which of the following is NOT true for trade confirmations? a. Commissions are added to the sales proceeds to arrive at the amount the seller is to receive b. Commissions are not shown when a markup or markdown is charged c. The firms acting capacity as agent or principal is shown d. They are received by both parties at or before the settlement date >>>a. Commissions are added to the sales proceeds to arrive at the amount the seller is to receive One of the concerns of a registered representative (RR) is complying with the anti- money laundering (AML) rules promulgated under the Bank Secrecy Act. There are several stages to money laundering, and it is generally agreed that the one where money laundering is most easily detected is: >>>Placement the first stage of laundering is when funds or assets are moved into the laundering system. This stage is recognized as the time when illegal funds are the most susceptible to detection. 30[Date] BD send out certificates for 200 of those shares in the mail, then >>>a non-trade confirmation would have to be generated not every confirmation is trade related. When there is non-trade-related or third- party activity in a client's account, that activity will require a confirmation. The following statements regarding electronic delivery of customer confirmations and statements are true EXCEPT a. the firm must have procedures in place to show that the information sent has been delivered as intended b. once customers agreed to electronic delivery, they can no longer receive paper copies 31[Date] c. customers must provide written consent to electronic delivery d. the firm must have procedures in place to show that the confidentiality and security of personal information are protected >>>b. once customers agreed to electronic delivery, they can no longer receive paper copies customers are always permitted to ask for paper copies of their account activity, even when they have a signed agreement to have confirmations and statements delivered electronically. Define Marking the Close >>>Falsely reporting trades that never occurred or entering orders to influence the closing price of a stock Define Matched Orders >>>Transactions designed to give the illusion of increased activity or volume in a stock Define Front Running >>>Placing orders to buy or sell stock ahead of orders that could move the market Define Capping >>>Entering orders designed to keep a stock from rising Define Pump and Dump >>>Perpetrating rumors to push up the price of stock owned so as to profit later when selling Define Pegging >>>Any activity intended to keep a stock price stable An investor sells put options and, just before their expiration, buys the underlying stock. The intent is to keep the price from falling below the strike price of the options. Such an action is called >>>supporting An investor sells ABC stock at a loss to offset a capital gain. However, the following week, the investor buys call options on ABC stock. This activity can be defined as 32[Date] >>>a wash sale Regarding a member firm's continuing payment of commissions to a retired registered representative, each of the following statements are true EXCEPT: a. an agreement to pay continuing commissions to retired RRs must be in writing b. commissions may be paid to a representative's beneficiary or estate after death c. a member firm may pay continuing commissions to its retired RRs that are derived from accounts held for continuing customers, regardless of whether customer funds or securities are added to the accounts during retirement 35[Date] If a registered representative (RR) has been barred from the securities industry while working for the ABC broker-dealer (BD), which of the following is TRUE? a. the RR must refrain from engaging with the public on any securities-related activity for one year b. the RR may apply for and obtain a principal's registration, but may not engage any direct sales of securities until the bar has expired c. the RR can be an adviser to a BD but may not be registered with a BD d. the RR may not associate with any BD >>>d. the RR may not associate with any BD The receptionist at a BD opens all incoming mail and forwards to various departments and people of the firm. Which of the following statements is true? I. the receptionist must be fingerprinted II. the receptionist need not be fingerprinted III. the receptionist must be registered with FINRA IV. the receptionist need not be registered with FINRA >>>the receptionist must be fingerprinted the receptionist need not be registered with FINRA Which of the following is CORRECT regarding the continuing education regulatory element requirements? 36[Date] a. training must be completed within 120 days of the person's second registration anniversary and every 5 years thereafter b. training must be completed within 120 days of the person's first registration anniversary and then annually thereafter c. training must be completed within 120 days of the person's second registration anniversary and every 3 years thereafter d. training must be completed annually >>>c. training must be completed within 120 days of the person's second registration anniversary and every 3 years thereafter The continuing education firm element requires member firms to prepare in- house training for all registered persons: >>>annually 37[Date] FINRA describes 4 sets of rules and codes in its manual. Which of the following is NOT one of them? a. Code of Arbitration Procedure b. Uniform Practice Code c. Code of Procedure d. Code of Business >>>d. Code of Business 4 sets include: Conduct Rules Code of Procedure Uniform Practice Code Code of Arbitration FINRA's Conduct Rules dealing with outside business activity (OBA) of an associated person of a member firm require: >>>written notification to the employer You overhear a discussion about a registered representative (RR) being disciplined because of SELLING AWAY. Which of FINRA's Conduct Rules was violated? >>>Private securities transaction the Conduct Rules define a private securities transaction as any sale outside an associated person's regular business and her employing member. Private securities transactions are also known as selling away. A BD may give other firms' employees gratuities without violating the rules, provided 40[Date] income c. raw land d. income >>>a. exploratory exploratory programs are those that look for resources near existing producing wells in the hopes of finding more deposits. They are riskiest of the oil and gas programs. A call feature attached to a bond allows >>>an issuer to call in a bond before maturity at times that will benefit the insurer an investor is long a January 30 call at 2. Maximum gain for this position is: >>>unlimited for a long-call option, the max gain potential is unlimited Automatic exercise will occur at expiration for any equity option contract that is in the money by at least: >>>0.01 41[Date] An investor is long a January 30 call at 2. Breakeven is: >>>32 Premium (2) + Strike Price (30) 2 + 30 = 32 An amended Form U-5 must be filed and a copy sent to the former employee within how many days of discovery of the inaccuracy? >>>30 days Limited partnership programs are categorized as direct participation programs. The term direct participation refers to the >>>flow-through of profits and losses of the partnership to the individual limited partners As long as it is not restricted in any documentation, margin trading is permissible in which of the following accounts? I. Corporate II. IRA III. Partnership IV. Fiduciary >>>Corporate & Partnership Regarding primary offerings, which of the following is TRUE? a. there is no limit to the number of primary offerings a corporation can issue b. after its IPO, a corporation can have only one more primary offering - its subsequent primary offering (SPO) c. a corporation can have only one primary offering - the IPO 42[Date] d. a corporation can have two primary offerings - the IPO and an additional public offering (APO) >>>a. there is no limit to the number of primary offerings a corporation can issue A diversified fund charging 0.4% of net assets per year as a 12b-1 fee may NOT make which of the following statements? a. the fund will pay its investment adviser a specified percentage of funds under management b. the fund will have a calculated fully disclosed expense ratio c. the fund will have a diversified portfolio with a stated investment objective 45[Date] Long calls are bullish positions A corporate stock is purchased on Friday, April 2, regular way. When will the trade settle? >>>Tuesday, April 6 Regular way settlement is the trade date (Fri, April 2) plus two business days (T+2); therefore, the trade will settle on Tuesday, April 6 Someone responsible only for training associated persons at a FINRA member firm >>>must be registered as a principal of the firm A company is already public with several major stockholders. Sale proceeds for shares being sold to the investing public will go to some of the existing stockholders who want to divest of their shares. This is: I. a secondary offering II. a primary offering III. an additional public offering IV. an initial primary offering >>>a secondary offering & an additional public offering Mary Alice McVey, a RR with a FINRA member broker-dealer, has recently remodeled her home and now has an area with a private entrance that she would like to use instead of commuting each day to her office 20 miles away. Under FINRA rules: >>>this would be permitted with FINRA's approval The repayment or maturity date of a banker's acceptance is normally which of the 46[Date] following? >>>As short as 1 day or as long as 270 days a banker's acceptance is a money market instrument used to finance international and domestic trade. A banker's acceptance is a check drawn on a bank by an importer or exporter of goods and represents the bank's conditional promise to pay the face amount of the note at maturity (normally less than three months). An investor purchased and then sold a security 8 months later for a gain. This gain: >>>is considered to be a short-term gain, and it will be taxed at the same rate as the taxpayer's other ordinary income Which of the following would be the interest rate charged for overnight, uncollateralized loans negotiated between two money center banks? 47[Date] a. Prime rate b. Repo rate c. Discount rate d. Federal funds rate >>>d. Federal funds rate federal funds rate is the interest rate charged by one institution lending federal funds to another. Which of the following would constitute improper use of a customer's securities or funds? I. Agreeing to a stock purchase the representative thinks is beyond the client's means II. Selling a bond at the client's insistence during a period of high interest rates III. Lending securities for a short sale when the client has agreed to it on the phone IV. Borrowing a client's funds without permission, though it will be repaid the same day >>>Lending securities for a short sale when the client has agreed to it on the phone & Borrowing a client's funds without permission, though it will be repaid the same day All of the following are nonsystematic risks EXCEPT a. call risk b. purchasing power risk c. business risk d. capital risk >>>b. purchasing power risk it is a systematic risk 50[Date] applies. It is applicable to the amount that should have been withdrawn on the basis of IRS life expectancy tables. The coupon rate on a debt security represents >>>the interest rate the issuer has agreed to pay the investor An associated person of a FINRA member firm would not be considered a municipal finance professional (MFP) if involved solely in which of the following? a. municipal securities sales to customers b. underwriting municipal securities for the firm c. research involving municipal securities for the firm d. municipal securities communications with customers >>>c. research involving municipal securities for the firm 51[Date] During the cooling-off period, underwriters may NOT >>>distribute sales literature or advertising material Which of the following choices would BEST describe a "follow-on" offering? a. the common stock that is issued attached to a 'rights' offering b. an issue of shares by a public company that is already listed on an exchange c. an offering to the employees of the issuing company d. an IPO that has additional shares added by the issuer on the effective date >>>b. an issue of shares by a public company that is already listed on an exchange Which of the following would be defined as a penny stock? I. Nasdaq listed stock trading at $4 per share II. Bulletin Board stock trading at $4 per share III. Exchange Listed stock trading at $4 per share IV. OTC Pink stock trading at $4 per share >>>Bulletin Board & OTC Pink A penny-stock is a NON-NASDAQ stock trading under $5 per share. Which of the following choices would BEST describe a "follow-on" offering? a. The common stock that is issued attached to a "rights" offering 52[Date] b. An issue of shares by a public company that is already listed on an exchange c. An offering to the employees of the issuing company d. An IPO that has additional shares added by the issuer on the effective date >>>b. An issue of shares by a public company that is already listed on an exchange An investor needs to decide whether or not they would like to maintain their percentage of ownership in a company that has decided to increase the number of outstanding shares. Which of the following is the best description of what is taking place? >>>Rights will be distributed to existing stockholders with an exercise price lower than the current market value A broker-dealer is confronted with margin deposit due but not yet received. The BD can choose to take no action, neither selling out the securities nor requesting an extension, if the amount due is: >>>Less than $1,000 55[Date] Which of the following would be unlawful regarding use of a mutual fund prospectus? a. Failing to highlight a small section the customer has specifically asked about b. Sending a prospectus to someone who has shown no interest in the fund c. Calling an investor's attention to a section that may be interesting d. Leaving a typographical error in the text unmarked >>>c. Calling an investor's attention to a section that may be interesting a prospectus may not be marked, highlighted, or altered in any way, nor may steps be taken to call an investor's attention to some passage or section that might be of special interest. On October 8, an investor discovers that a security purchase that took place on August 5 of the same year was prompted by fraudulent information provided by the broker- dealer on the day of the purchase. How long does the investor have to bring action? >>>Until October 7 of the following year The statute of limitations on fraudulent practices, under the Securities Exchange Act of 1934, is 3 years from the event itself, or one year from its discovery, whichever comes sooner SKRAM corporation is appealing directly to the shareholders of IDNIC corporation to acquire shares of IDNIC stock. This appeal is best described as >>>a hostile takeover with IDNIC the target company Which of the following may NOT be purchased on margin but can be used as collateral for a margin loan after being held for 30 days? >>>Mutual funds 56[Date] Neither mutual funds nor new issues can be purchased on margin. However, both may be used as collateral for a margin loan after being eld for 30 days. Options are not marginal securities, but equities, bonds, and warrants are. For revenue bonds issued by a state or municipality, which of the following is TRUE? a. Interest and principal payment is guaranteed b. Interest and principal payment is backed by the full faith and credit of the issuer c. Interest will be paid only if the enterprise owned and operated by the state or municipality has sufficient earnings to cover the interest payments or the debt service revenue 57[Date] d. The bonds carry an unqualified promise to pay interest and principal backed by the power of the issuer to levy taxes >>>c. Interest will be paid only if the enterprise owned and operated by the state or municipality has sufficient earnings to cover the interest payments or the debt service reserve. Treasury bills pay >>>all interest at maturity Yield to call (YTC) calculations reflect the early redemption date and: I. acceleration of the discount gain if the bond was originally purchased at a premium II. acceleration of the discount gain if the bond was originally purchased at a discount III. accelerated premium loss if the bond was originally purchased at a premium IV. accelerated premium loss if the bond was originally purchased at a discount >>>Accelerated of the discount gain if the bond was originally purchased at a discount & Accelerated premium loss if the bond was originally purchased at a discount List the order of payment from first to last in the event of a corporate liquidation: >>>1. Taxes and wages 2. Secured and then unsecured debt 3. Preferred shareholders 4. Common shareholders 60[Date] c. classic automobiles d. works of art >>>b. common stock A convertible feature for a corporate bond allows >>>a bondholder to convert a debt instrument into securities that give the investor ownership rights If large money center commercial banks begin to lower their prime rates, which of the following is most likely to occur? a. smaller banks will follow by lowering the discount rate b. smaller banks will need to increase their lending rates for creditworthy corporate customers c. smaller banks will need to offset the lower prime rate by increasing the broker call loan rate 61[Date] d. smaller banks >>>d. smaller banks will lower lending rates for creditworthy corporate customers as well. Which of the following orders need NOT be immediately filled in their entirety? I. Immediate or cancel (IOC) II. Fill of kill (FOK) III. Market at open IV. All or none (AON) >>>Immediate or Cancel & All or none Which of the following regarding income is TRUE? a. salary or bonuses are portfolio income; interest and dividends are investment income b. salary or bonuses are earned income; interest and dividends are investment income c. salary, bonuses, interest, and dividends are all investment income d. salary, bonuses, interest, and dividends are all portfolio income >>>b. salary or bonuses are earned income; interest and dividends are investment income A broker-dealer has engaged in a reverse repurchase (repo) agreement. How was this done? >>>an initial purchase is followed by a sale later, at a higher price 62[Date] If an associated person is disciplined for violating SEC rules and regulations, and if ultimately suspended by the SEC, the member firm where the person is affiliated must report the suspension to: >>>the exchanges where the firm is a member With interest rates in the marketplace at 7%, it could be expected that in the secondary market, a bond carrying a 5% coupon would trade: >>>downward in price The time to maturity for debt instruments: >>>can be any length of time A broker-dealer firm managing an IPO wishes to give a gift to an associated person of one of the selling group members. Which of the following would be an unacceptable gift under the rules? >>>a $125 designer edtion fountain pen and desk holder The best characterization of how economists view the money supply is: >>>cash, loans, different forms of credit, and other liquid instruments 65[Date] An example of securities that are established by states to provide other government entities such as cities, towns, school districts or state agencies with a short-term investment vehicle to invest funds include: >>>Local Government Investment Pools Identify 2 trading strategies that a hedge fund could employ in its portfolio but a mutual fund cannot >>>1. Trading on margin to purchase portfolio securities 2. Selling short stocks If a margin deposit is late, an extension request made by the BD >>>is not required but can be made, and may or may not be granted A customer buys a 4% Treasury bond, maturing in 10 years, at a price of 96.08. The yield to maturity is >>>greater than nominal yield A bond whose price is below par (priced at a discount) has a higher YTM than current yield An investor has been putting aside funds for retirement in a non-qualified variable annuity for over five years. She is now age 66 and takes a lump-sum distribution. How are the earnings taxed? >>>as ordinary income The regulatory element of training requires that all registered persons complete a computer-based training session how frequently? >>>Within 120 days of hte person's second registration anniversary and then every 3 years thereafter Bonds can typically be issued with >>>term, serial, or balloon maturities The growth potential in the price of preferred shares is generally considered to be >>>less than that of the issuer's common shares 66[Date] An individual would most likely be statutorily disqualified from working the in the securities industry for which of the following reasons? a. Willful failure to disclose personal bankruptcy or unsatisfied liens b.Willful failure to disclose motor vehicle fines in excess of $1,000 c. Conviction for a DUI resulting in personal injury - a felony d. Conviction for felonious assault >>>a. Willful failure to disclose personal bankruptcy or unsatisfied liens A call option reaches its expiration date and goes unexercised. This means >>>the buyer loses the premium paid 67[Date] & the writer gains the premium received A toy company is experience sudden strong demand for a game. Purchasing this company's stock may prove profitable in the short run. This company's stock might BEST be termed as a >>>Special situation Listed options expire on >>>the 3rd Friday of the expiration month The Uniform Securities Act (USA) provides a legal framework for the registration of >>>securities at the state level SKRAM corporation is appealing directly to the shareholders of IDNIC corporation to acquire shares of IDNIC stock. This appeal is best described as: >>>a hostile takeover with IDNIC the target company U.S. government deposits securities with a trustee against which certificates are sold representing principal only with no regular interest payments. These are known as: >>>Treasury STRIPS When a firm engages in proprietary trading, buying into and selling out of its own inventory for profit, it is acting as >>>a market maker Sales for new issues of securities may be solicited >>>after the cooling-off period With money market securities held in one's portfolio, relative to other, longer-term debt securities, an investor should expect >>>a higher degree of safety with lower returns Because of their short-term maturities, money market securities are considered 70[Date] a firm that chooses to 'introduce' its customers' business to another firm to clear and process transactions, as well as handle all back-office tasks such as sending trade confirmations and taking custody of customer funds and securities, is known as an introducing firm. The firm receiving the business is known as the "carrying" or "clearing" firm An investor has some stock held in street name and has just received proxy statements forwarded by the broker-dealer for an upcoming shareholders' meeting. If the investor wishes the shares to be voted as recommended by the issuer's management, which of the following must the investor do? >>>Sign and return the proxy statements by the 10th day before the meeting Which of the following are methods of registering securities within a state? >>>Registration by coordination & Registration by qualification 71[Date] An issuer that is already a publicly traded company wants to register new securities without selling any of the shares until later when it anticipates it will be retooling all of its existing manufacturing plants. Which of the following applies? a. this can be accomplished by utilizing a new IPO, which is necessary for registration of all new shares b. this cannot be done because newly registered securities must be made available for sale immediately c. this can be accomplished by utilizing a shelf registration specifically designed to register shares presently to be sold later d. this can be accomplished by utilizing an additional issue offering, which is specifically for publicly traded companies wanting to register new shares to be issued later >>>c. this can be accomplished by utilizing a shelf registration specifically designed to register shares presently to be sold later. Which of the following are TRUE of municipal revenue bonds? I. They are secured by a specific pledge of property II. They are a type of general obligation bond III. They are not subject to statutory debt limits IV. They are backed by a facilities ability to generate revenue >>>They are not subject to statutory debt limits & 72[Date] They are backed by a facilities ability to generate revenue Regarding capital gains, which of the following is TRUE? >>>Short-term gains are those realized on positions held for 12 months or less Common shareholders have the right to: >>>limited access to a company's books and records Fingerprint records are required for each of the following employees of a registered broker-dealer EXCEPT: a. a registered representative who sells or offers to sell municipal or government bonds 75[Date] & The account passes to the minor's estate FINRA is concerned about potential conflicts of interest in providing incentives or rewards for selling a sponsor's product. Which of the following situations regarding a product sponsors product training or education for outside RRs would FINRA disallow? a. Spouses are included in the invitation with travel expenses paid for b. a member firm's permission for its RRs to attend is required c. Separate outings are planned in conjunction with the training at the expense of the attendees if they wish to participate d. A training location is chosen based on its being convenient for attendees to get to and its proximity to the main office >>>a. Spouses are included in the invitation with travel expenses paid for Which of the following corporate actions are designed to allow investors to buy shares of stock under specific, defined conditions? I. A rights offering II. A forward split III. Issuing warrants IV. A stock dividend >>>A rights offering & Issuing warrants 76[Date] Which of the following describes the results of a 1 for 2 reverse stock split? >>>Half as many shares at twice the original prie If a stock price has become too low, a corporation may carry out a reverse stock split. The sales charge for Class A shares may NOT exceed: >>>8.5% of the total investment The decision to pay a dividend rests with >>>the BOD but it is not guaranteed Which of the following would be unacceptable reasons for an officer of a member firm to make a contribution to the election campaign of a political candidate? I. the candidate is a member of the officer's political party II. the candidate has promised to steer business to the officer's firm 77[Date] III. the candidate is a close relative of a potential customer of the firm IV. the officer approves of the policies and programs the candidate has proposed >>>The candidate has promised to steer business to the officer's firm & The candidate is a close relative of a potential customer of the firm A convertible feature for a corporate bond allows >>>a bondholder t oconvert a debt instrument into securities that give the investor ownership rights An investor establishes the following position: Long 1 XYZ September 40 call at 2. Utilizing the position, the max potential gain for the investor is >>>unlimited A broker-dealer's customer will be relocating for a position with a higher salary and bonus potential. This requires: >>>notification to the BD of the change within 30 days The firm element of a BDs continuing education requirement must be undergone by all registered persons who: >>>have direct contact with the public Examples of investments in assets that would be considered illiquid would be all of the following EXCEPT: a. common stock b. works of art c. classic automobiles d. real estate >>>a. common stock 80[Date] a. in the money b. at the money c. out of the money d. above the money >>>d. above the money Which of the following would constitute improper use of a customer's securities or funds? I. agreeing to a stock purchase the representative thinks is beyond the client's means II. selling a bond at the client's insistence during a period of high interest rates III. lending securities for a short sale when the client has agreed to it on the phone 81[Date] IV. borrowing a client's funds without permission, though it will be repaid the same day >>>Lending securities for a short sale when the client has agreed to it on the phone & Borrowing a client's funds without permission, though it will be repaid the same day For the risk disclosures found in the options disclosure document (ODD), all of the following would be accurate disclosures EXCEPT: a. customers are not entitled to an extension of time to meet a margin call b. firms can increase their in-house margin requirements without advance notice c. customers can lose more money than initially deposited d. if a maintenance call is not met, the customer must direct which securities to sell >>>d. if a maintenance call is not met, the customer must direct which securities to sell An investor purchases a bond in the secondary market at $950. Assuming $1,000 par value, this bond is trading at: >>>a discount When a bank lends money to a BD for the purpose of lending to margin account customers, the bank is lending at which of the following rates? >>>Broker call loan A RR has left one firm to join another. Sometime later, the former employer discovers that some information on Form U-5 filed at the time of termination was inaccurate. The firm need not file an amended U-5 if at least how much time has gone by? >>>No stated time limit 82[Date] It must be sent out within 30 days of discovery of the inaccuracy however Which of the following corporate bonds is backed by the securities of other corporations or those of a subsidiary? >>>Collateral trust bond A decline in the GDP must last for at least how many quarters to be considered a recession? >>>2 quarters The owner of which of the following products is most exposed to inflationary risk a. utility stocks b. treasury bills c. treasury bonds d. blue chip industrials >>>c. treasury bonds 85[Date] Roth 401(k) and Roth IRA plans share which of the following features? >>>Qualified distributions are excluded from federal income tax Under normal circumstances, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? >>>13 months Which of the following statements is true regarding the concept of an annuity contract >>>the kind of annuity selected partly determines the payment amounts to the annuitant A registered representative is reviewing the following portfolio: - 30% ABC Energy Company - 30% XYZ Health Care Company - 30% ETF (tracks the S&P 500) - 10% Money market funds Which of the following risks is inherent in this portfolio? a. credit b. liquidity c. political d. nonsystematic >>>d. nonsystematic Which of the following comparisons BEST describes the essential difference between a primary distribution and a secondary distribution? >>>a primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares At the time of issuance, which of the following securities normally has the longest period to expiration? 86[Date] a. rights b. options c. warrants d. repurchase agreements >>>c. warrants Under SEC Regulation S-P (Consumer Privacy), which of the following information must a firm include in its customer privacy and opt-out notices? >>>The policies to protect the security of nonpublic information Which of the following actions is required when a firm receives cash in excess of $10,000 from one customer in one business day? >>>File a Currency Transaction Report (CTR) An investor owns 100 shares of XYZ common stock at the current market price of $50 per share. If XYZ conducts a 1-for-2 reverse stock split, the investor's post-split stock position will be: >>>50 shares at $100 per share 87[Date] 100 shares at $50 each before the reverse split Which of the following communications with the public is considered misleading? a. historical illustration based on factual performance b. product comparisons that illustrate material differences c. a research report that includes a buy recommendation for a specific security d. literature providing 10-year performance information to support predictions of future performance >>>d. literature providing 10-year performance information to support predictions of future performance Which of the following considerations should a RR explain to a customer when recommending a 529 college savings plan? >>>the potential deductibility of contributions from state taxes A BD is permitted to accept payment for a new issue from a new customer when the: >>>registration is effective The call provision of a bond stipulates which of the following factors? >>>call date and call price A firm is participating in a public offering. To sell a substantial amount of the securities to its customers, the firm agrees to repurchase the shares at no less than the original sales price. Such agreements are: >>>prohibited as fraudulent and manipulative Blue-sky laws are regulated by which of the following entities? >>>State securities regulators 90[Date] activity and compensation structure In which of the following situations is an employee of a public company permitted to trade upon information without violating insider trading laws? >>>an independent securities analyst explains to the employee why the earnings for the company next quarter could be markedly poorer than expected Which of the following statements is true about all US government agency issues a. they are exempt from federal taxes b. they are exempt from registration under the Securities Act of 1933 c. They are issued in bearer form only d. They are general obligations of the federal government >>>b. they are exempt from registration under the Securities Act of 1933 91[Date] Which of the following actions is required of a BDs anti-money laundering (AML) program? >>>Designating an AML compliance officer Which of the following outcomes are possible for the writer of a covered call option? >>>profit limited and loss limited In the event of a stock split, which of the following parties is required to maintain a record of the shareholders eligible to receive the additional shares? >>>transfer agent Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? >>>The same stock in a cash account without paying for the stock in full Which of the following responses describes an advantage of index funds? >>>Lower management fees due to passive management of the fund Under a system of statutory voting, a common stockholder has as many votes for each vacancy on the board of directors as the number of: >>>shares owned by the stockholder In a period of low inflation and economic recession, the Federal Reserve is expected to take which of the following actions? a. decrease taxes b. raise the fed funds rate c. buy bonds in the open market d. require banks to increase reserves >>>c. buy bonds in the open market A surplus in the US balance of payments can occur if: >>>interest rates in foreign countries are lower than US domestic rates foreign consumers are purchasing (importing) US goods 92[Date] Preferred shares have: >>>characteristics of both equity and debt securities In a real estate limited partnership, the general partner has: >>>unlimited liability and an active role Suspicious activity reports (SARS) are >>>Filed to FinCEN as required by the USA PATRIOT ACT Listed option transactions settle >>>trade date + 1 business day The FRB might impact the money supply using all of the following EXCEPT: a. reserve requirements for member banks b. prime rate 95[Date] b. the shareholders must accept the proxy's decision c. the proxy may be assigned to yet another person d. the shareholders may instead vote personally as they wish >>>b. the shareholders must accept the proxy's decision The holders of which of the following securities are considered owners of the issuing corporation? I. mortgage bonds II. debentures III. preferred stock IV. common stock >>>Common stock Preferred stock When selling a fixed amount of a base currency to purchase a counter currency, which of the following factors is primarily used to determine how much of the counter currency the customer will receive? >>>the spot exchange rate Stability in the value of a debt portfolio is greatest when: >>>maturities of the debt securities are short No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons? >>>No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points What is the cost basis of an inherited mutual fund? >>>The net asset value (NAV) of the shares when the owner dies In the over-the-counter market, the term 'spread' refers to the difference between 96[Date] the: >>>bid and asked prices Which of the following action violates FINRA rules regarding selling away? 97[Date] a. recommending to a customer the services of another broker-dealer b. sharing commissions with another RR in the same BD c. advising customers to buy mutual funds at amounts just below discount level d. engaging in private securities transactions without written prior consent of the employing BD >>>d. engaging in private securities transactions without written prior consent of the employing BD Under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors: a. financial institutions b. accredited investors c. qualified institutional buyers (QIBs) d. non-accredited investors who have previously purchased restricted stock >>>c. qualified institutional buyers (QIBs) Upon expiration, all in-the-money S&P 100 Index call options are settled by the delivery of which of the following? a. cash b. S&P 100 Index stocks c. S&P ETFs d. The same number of S&P 100 Index put options >>>a. cash When is interest on Treasury notes paid? >>>semiannually The computation of dollar prices and accrued interest on municipal bonds is normally