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STC Greenlight Exam 2
Which of the following statements is TRUE concerning member firms' suitability requirements for institutional investors? Institutional investors are exempt from SRO suitability requirements The SRO suitability requirements apply unless the account is defined as a Qualified Institutional Buyer The suitability requirements are more stringent than those of retail accounts The suitability requirements are less stringent than those of retail accounts The suitability requirements are less stringent than those of retail accounts Institutional investors are subject to FINRA suitability requirements, but they are less stringent than those of retail accounts Which of the following is NOT monitored by a technical analyst? Advance/decline data Chart patterns Market momentum
Dividend payout ratios Dividend payout ratios Technical analysts use price and trading volume information. Dividend payout ratios would be important to a fundamental analyst. A client’s market order to sell is executed at $21.35; however, the client is told that it was executed at $21.85. In this case, the customer will: Cancel and rebill the original order Receive $21. Receive $21. File a complaint Receive $21. Relative to a convertible bond, which of the following choices will produce a desirable arbitrage situation? The stock is at parity with the bond The stock is at a premium to parity and the bond is trading at par
The members of the underwriting syndicate receive $8.75 for bonds they sell. This is the total takedown which is composed of a selling concession of $5.00 per bond and an additional takedown of $3.75 per bond for their risk. The total spread is $10.00 ($1.25 manager's fee plus $3.75 to the syndicate for risk plus a $5.00 profit for the sale of the bonds) A company is in the process of an initial public offering. The issuer has asked what action it would need to take in order to register the securities in nine states. It is important for the issuer to make sure the: Issuer has registered the securities in all nine states Registered persons offering the securities are registered in all nine states Broker-dealers offering the securities are registered in all nine states Issuer's securities are exempt from state registration requirements in all nine states Broker-dealers offering the securities are registered in all nine states State securities laws (blue-sky laws) are designed to protect investors from fraudulent securities dealings.
In addition to federal filing requirements, issuers may be required to register the securities in any state where they anticipate sale The issuer's only requirement is to register the securities in all nine states. B roker- dealers and their representatives are required to register in any state in which they are offering the securities to clients residing in that state. Which of the following persons establishes positions in secondary market municipal bonds for a broker-dealer? Underwriter Trader Agent Principal Trader A trader is responsible for positioning (carrying inventory) secondary market municipal bond s. An underwriter is involved in the distribution of new issues.
It signifies that a trend is reversing A head-and-shoulders bottom formation (inverted head and shoulders) is bullish since it indicates the reversal of a downward trend. We have an expert-written solution to this problem! A high put/call ratio would MOST likely be associated with a(n): Bullish indicator Bearish indicator Indicator that the market will trade within a narrow range Indicator that the trading volume will be increasing Bullish indicator The put/call ratio is a technical market indicator and is found by dividing the volume of all put transactions by the volume of all call transactions on a daily basis.
The higher the ratio, the more oversold the market, and the higher the probability that the market will reverse course and turn bullish. A 28-year old individual has income of $60,000 per year, has outstanding college loans, and recently inherited $100,000. If the individual is worried about taxes and wants to know how best to invest the inheritance, his registered representative should recommend: Putting the money in a 529 plan and using it to pay back the loans Putting the money in a tax-exempt municipal bond fund Putting the money in a money market fund Putting the money in an IRA Putting the money in a tax-exempt municipal bond fund Although putting the inheritance into a tax-exempt municipal bond fund will not provide any immediate tax benefit s, the i ncome generated by the interest payments from the bonds in the portfolio a re federally tax-free Putting the m oney into a 529 plan offers no immediate deductions and only allows for a one-time payment of up to $10,000 to pay for student loans.
Long 1 DEF put Short 1 DEF put Long 1 DEF call Short 1 DEF call Long 1 DEF call The best possible upside protection can be accomplished with the purchase of 1 DEF call. If Mrs. Smith is long a call, this allows her to buy the stock from the writer if the stock goes up, thus protecting the short position. Bud Jones purchased 100 shares of DEF at 20 on June 16 and passed away on July 27 when the market value of DEF was 25. If the 100 shares of DEF are inherited by Mr. Jones's daughter Mary, what are the tax implications? Mary assumes a cost basis of 20 Mary assumes a cost basis of 25 The holding period for the stock is short-term The holding period for the stock is long-term
I and III only I and IV only II and III only II and IV only II and IV only When securities are inherited , the r ecipient's cost basis is the market value of the securities at the time of the deceased' s death. The recipient's holding period for the stock will be long-term, regardless of the deceased's actual holding period. According to MSRB rules, which of the following documents need not be approved by a principal prior to being sent to a customer? An abstract of an official statement A preliminary official statement An advertisement regarding the firm's products and services A research report A preliminary official statement
Southern California Gas is issuing 5 3/4% first mortgage bonds at a price of 96.35% of their par value. The payment of interest and principal on the bond is secured by: Revenue from the Southern California Gas company The mortgages on property owned by the state of California The state of California Property owned by Southern California Gas Property owned by Southern California Gas The bonds are first mortgage bond s, which means they are (ASSET BACKED SECURITY) secured by property that is owned by the Southern California Gas Company. Since the company is publicly owned, the bonds are not secured by property that is owned by the state of California. In February, Mr. Hedge wrote an uncovered DOG Oct 90 put @ 7. The put was exercised in June. Mr. Hedge sold the 100 shares of DOG in November at
94. What was Mr. Hedge's profit on the sale of the stock? $
Upon exercise, Mr. Hedge is obligated to purchase 100 shares of DOG. For tax purposes, his cost is $83 per share (90 strike price - 7 premium). His sale at $ per share results in a profit of $1,100 ([$94 sale price - $83 cost] x 100 shares). or Brought in 7 points in the put contract Made 4 points from the stock ------ = 11 or 1, An RR's client has recently finalized her divorce. For the RR to be able to change the name on her account to her maiden name, the client MUST provide: Her reissued driver's license with her updated name
The spread will widen as the market price rises. The maximum spread occurs at a market price of 95. If it rises above 95, the spread will not widen beyond 5 ( the difference between the strike prices ). A small company would like to raise capital through a private placement in order to expand its operations. As an investment banking representative working on the deal, you would be LEAST likely to target which of the following investors when offering these securities? Hedge funds Existing shareholders who are also employees of the company Individual investors with a net worth exceeding $1,000, Senior executives at the company Existing shareholders who are also employees of the company
The fact that they are existing shareholders would not change that status since the company may have given or allowed the purchase of its stock to employees regardless of the income and net worth. Which of the following choices BEST describes a municipal security that is referred to as a certificate of participation (COP)? A type of bond that is backed by a special tax A type of bond that is typically created to fund a project for a corporation A type of bond that is typically created through a lease agreement A type of bond that is based on payments from residential mortgages A type of bond that is typically created through a lease agreement A certificate of participation (COP) is a lease financing agreement which is typically issued in the form of a tax-exempt or municipal revenue bond. COPs have traditionally been used as a method of monetizing existing surplus real estate. This financing technique provides long-term funding through a lease that does not legally constitute a loan, thereby eliminating the need for a public referendum or vote.
From the issuer's perspective, when comparing serial bonds to term bonds, serial bonds have: Declining interest payments and declining principal amounts Increasing interest payments and increasing principal amounts Stable interest payments and stable principal amounts Stable interest payments and declining principal payments Declining interest payments and declining principal amounts Serial bonds have several (a series of) maturity dates with a lower amount of debt outstanding as time goes by. Each series of bonds will have declining interest payments and declining principal amounts. In comparison, term bonds have one maturity date (i.e., the entire principal balance is paid on one date) and have stable interest payments. Which of the following events would generally require approval by common stockholders? The declaration of a stock dividend
The declaration of a stock split The declaration of a cash dividend The election of a director I and III only I and IV only II and III only II and IV only II and IV only Common stockholders are provided the right to vote on stock splits and director elections , but not on cash dividends and stock dividends. The declaration of cash dividends and stock dividends falls under the authority of the board of directors. An RR sees that a CMO is yielding 5.95% while the comparable Treasury is yielding 5.10%. This means that: The CMO is rated below investment-grade
