Bounce Back 3 Flashcards
(198 cards)
1
Q
SIPC covers up to _____ but only up to _____ in cash within that amount
A
500,000 / 250,000
2
Q
Sell short + sell puts= ____
A
Covered put writer
3
Q
Put options can be closed by _____ a _____
A
Buying a call
4
Q
You open a short call position, which would close the position?
A
Purchase of an identical call
Closing means you take opposite position to what you had open
5
Q
When interest rates fall, the price of a fixed rate preferred stock will __
A
Rise
6
Q
If you sell short and then buy a call you are _____
A
Cautiously bearish
7
Q
Call risk is the risk that a bond will be called when _____ rates are declining
Example- you’re forced to redeem a bond with a 5% coupon and you reinvest in a bond with a 3% coupon
A
Interest
8
Q
What is the in the money amount for the following:
1 ABC Jan 45 Call @ $4
ABC Market Price = $49
A
4
Intrinsic value between 45-49
9
Q
A call option writer/ seller of a call option has the obligation to ____ the underlying securities to the call option holder when the option is exercised
A
Sell
10
Q
Cash settlement is:
A
Same day before 2:30PM
11
Q
A seller who has filed form 144 can sell 1% of the outstanding shares or the average of the last 4 week’s trading volume every ____ days
A
90
12
Q
Before purchasing penny stocks for a client you don’t have to _____
A
Sign a waiver
13
Q
You can’t sell stock in compliance with Rule 144 for
A
Registered control stock must be held for 6 months fully paid, before it can be sold
14
Q
To qualify for a rule 147 intrastate offering you must meet these requirements:
A
The corporate issuers principal place of doing business located in the state
80% of gross revenues come from the state
80% of the proceeds will be invested in the state
15
Q
Treasury STRIPS are not subject to ___ risk
A
Reinvestment
16
Q
Buy stock and write calls =
A
Bull creating income
17
Q
When comparing a full power of attorney given in a brokerage account to a limited power of attorney, the person given the limited power of attorney can _____
A
Enter orders only
18
Q
QIBS buy ____
A
Restricted securities
19
Q
Buy stock, buy put =
A
Partially hedged bull
20
Q
Restricted stock is best described by a security which was never registered and can only be sold in the public markets when it is either _____ or sold under a _____ provision
A
Registered, exemption
21
Q
_____ is primarily responsible for enforcing anti money laundering laws
A
FinCEN
22
Q
Call premium on a bond is the amount by which the _____ price prior to maturity exceeds par
A
Redemption
23
Q
For stocks that go public over the counter, the prospectus has to be given for up to ____ days after the IPO
A
90 days
24
Q
Associated persons are permitted to borrow or lend money to a customer who is an _____ whose business is to lend money
A
Institution
25
Options exercised with settle with the delivery of ____
Cash
26
Penalty tax applied for not taking required min distribution from a qualified retirement plan in a given year is ___% or shortfall
25
27
Which entities most commonly issue commercial paper
Corporations and financial institutions
28
For credit on new issues, they are not marginally until ___ days from the completion of the offering
30
29
A rep who has a bank as a customer is permitted to borrow from that bank as long as the loan is offered on the same terms and conditions as those that apply to ____
The general public
30
Max tax rate on cash dividends received by those who are not extremely high earners is ____%
15%
31
Fully vested means you have full _
Rights
32
Variable annuity contracts are ____ securities
Non exempt
33
True or False. The periodic payment for a period certain annuity will be lower than the periodic payment for a life annuity.
True
34
Reg SP must tell you what info they may collect and the fact that it may be sold to ______
3rd parties
35
Industrial development bonds take on the credit rating of the ____
Corporate lessee
36
____ are reported in form 1099-DIV
Cash dividends
37
Interest payments for step down certificates of deposits may be ____
Reduced
38
_____ bonds are backed by the full faith and credit of the municipality
GO
39
Securities that trade for less than $5 are not _____
Marginable
40
ETF’s, Gov securities, and investment grade bonds are all _____
Marginable
41
Accrued interest on treasury bonds is computed to be ____
actual/actual
For US Governments interest accrues on an actual day month/actual day year basis
42
Price/earnings ratio is a measure of
Valuation
43
True or False: For IRA’s, $7000 annual contributions don’t matter whether the spouse works or not
True
44
Marginable securities include
Stocks, bonds, and ETF’s, CEF’s, mutual funds after 30 days
45
Non Marginable securities include
Penny stocks, UIT’s, Money markets, initial public offerings (need to wait until they are), and OTC stocks
46
Even if a stock receives 1 dividend payment a year in which the customer withdraws the entire balance immediately, a statement still must be sent every ____
Quarter
47
Preliminary prospectus may be first sent to a customer once the registration statement has been filed with the _____
SEC
48
The date that a mutual fund share is reduced for a dividend distribution is the ____
Ex date
49
A mutual fund can be used as collateral for a margin account after it has been held in the account for ____ days
30
50
_____ compares a bond’s annual interest to its price
Current yield
51
Roth IRA contributions are not _______ and qualifying distributions are not ______
Tax deductible, tax deductible
52
Short selling is not _____ in trust accounts
Permitted
53
Income funds invest in _____, ______, ______
Debentures, preferred stocks, high yield bonds
54
Municipal revenue bonds are backed by _____ sources of revenue
Specific
55
High yield bonds include a corporate bond with a ____ rating
CCC
56
After a period of recession, the economy will move to a period of _____
Recovery
57
Prime brokerage accounts help with consolidation, lower financing costs on margined positions, and facilitate record keeping but it does not achieve lower _____ costs by using one executing broker
Commission
58
_______, _________, and ________ are types of oil and gas DPP’s
Income, exploratory, developmental
59
____bonds have higher investment yields than _____, and ______ bonds with the same expense ratios
Corporate
Government, municipal,
60
An investor seeking a moderate level of income and low level of risk would buy _____ bonds
Mortgage
61
ADR’s are not very sensitive to ____ risk
Interest rate risk
62
Tombstone ad can be published ______ after the registration for a new security is filed
At any time
63
ERISA Plans do not have to comply with _____ plans
Federal Government
64
In a period of rising interest rates, an investor in Ginnie Mae mutual funds are likely to be exposed to increased _____ risk
Extension
65
RMD’s are based on the _____ of the account beneficiary
Life expectancy
66
If a customer has been declared legal incompetent by the state judge and his son has presented the proper legal papers appointing him as the guardian, the account will be transferred from the customer’s name to a ____ account
Guardian account
67
An unqualified legal opinion is one which gives an unconditional affirmation of the ___ of the securities
Legality
68
Which of the following will usually pay the lowest level of income?
Straight life payout, life with period certain, joint with a 20 year period certain
Joint with 20 year period certain
69
True or False. A bank is considered to be an accredited investor.
True
70
Additional supporting documentation is needed to open all of the following customer accounts: ______, ______, ______
Trust, guardian, corporate
71
Writer of a call is obligated to ____
Sell
72
Municipal bonds are exempt from federal tax and subject to ____ and ____ tax
State and local
73
The Fed _____ interest rates to combat inflation
Raises
74
True or False: In a tax qualified account, since no tax were paid on contributions, distributions are 100% taxable.
True
75
Breakpoint sales are a violation of _____ rules
FINRA rules
76
Call loans made by banks to broker dealers are secured by partially paid securities held in margin accounts for customers of the ____
Broker dealer
77
If a customer switches to a growth fund to an income fund in the same fund family, is it a taxable event?
Yes
78
Why do prices of bonds decline in the secondary market?
New bonds are issued with higher coupon rates than those for existing bonds
79
Bond indenture is a contract between bond issuer and a ____
Trustee
80
If an official loses a campaign, a MFP can donate _____
An unlimited amount
81
Is commercial paper non exempt to SEC Act of 1933?
Yes
82
Eurodollars are US Dollar Deposits held in foreign branches of _____ or _____
US Banks, Foreign Banks
83
Expense ratio of a mutual fund is a measure of
Operating efficiency
84
Fiduciary accounts
85
True or False: in a fund of hedge funds, investors are subject to an extra layer of fees including not only fund management fees but also fees charged by the underlying hedge fund managers
True
86
True or false: a fund of hedge funds is only sold to accredited investors
False
87
Selling dividends is a practice that refers to the purchase of shares in a fund just before a _____ payment date
Dividend
88
No load funds still impose a _____ fee
Management
89
Fed funds rate is not set by the ____
Federal reserve
90
Registration statements are good for ___ years
3
91
Prospectus contains ____ statements
Financial
92
Distributions from Roth IRA is subject to penalty if withdrawals are made within _____ years of contribution
5 years of contribution
93
True or False: Stock options cannot be bought on margin
True
94
Time Value= _____ - _____
Premium - intrinsic value
95
Payment for a trade made in accordance with Reg T must occur within ____ business days after the trade
3
96
A customer can offer a discounted price for mutual funds if the customer meets the breakpoint requirements and the breakpoint schedule is listed in the ______
Prospectus
97
Right to transfer common stock refers to the right to freely trade securities on the _____
Secondary market
98
Income from limited partnerships or partnership interests is defined as ____ income
Passive
99
True or False: Income bonds are non exempt from the SEC Act of 1933
True
100
Distributions from a ______ and a ____ plan to pay for higher education costs are not taxable
Coverdell ESA, 529 Plan
101
OFAC creates list of SDN’s that must be checked when opening an account for a ______ or _____
Foreigner or foreign entity
102
Under SEC rules, at or prior to the making of a recommendation or account opening, a ____ must be provided only for retail clients
Form CRS
103
Which 3 things are standardized for listed options contract?
Contract size, expiration date, strike price interval
104
Cyclical means that it is affected by what?
By changes in the overall economy
105
Call provision of a bond stipulates the call ___ and call ____
Date, price
106
_____ are usually traded according to their average life rather than their stated maturity dates
Asset backed securities
107
Lower management fees due to passive management of a fund are advantages of a ____ fund
Index
108
When a broker dealer charges a commission it has acted as a ___
Agent
109
Which security type provides investors with a stated maturity date, floating interest rate, and an option to put the security back to a financial intermediary on a daily or weekly basis?
Variable rate demand note
110
_____ does not apply to both foreign and domestic debt instruments
Exchange
111
A transaction in which a writer covers a position by purchasing an option is called a ____
Closing purchase
112
A registered rep who wants to place a mutual fund advertisement must obtain written approval from which party
A registered principal of the registered rep’s firm
113
Stability in the value of a debt portfolio is greatest when the maturities of the debt securities are ____
Short
114
Reg way settlements of treasury bonds is T+____
T+1
115
Fixed amount of a base currency to purchase a counter currency, is primarily used to determine how much of the counter currency the customer will receive and is done by the ____
Spot exchange rate
116
Syndicate desks build an order book and ______
Allocate the stock
117
Market risk is the greatest risk in a _____ insurance policy
Variable life
118
DPP’s provide exposure to _______
Non correlated assets
119
____ offer its shareholders a privilege to obtain its shares at a fixed price
Rights
120
A high beta means that it moves rapidly in _____ compared to overall market prices changes
Price
121
_____ fees are paid for out of a mutual fund’s 12b1 fees
Distribution
122
Private placements are ______ transactions
Exempt
123
Disbursement of funds is typically controlled by the ____
Trustee
124
Interest rate charged from commercial banks to their best custom word is the ____ rate
Prime
125
For _____ all transactions must be paid in full on settlement
Cash accounts
126
True or False. For 529 accounts, parents can withdraw funds from the account with income tax only penalty if the kid gets a scholarship
True
127
Examples of institutional investors includes:
Registered investment company, bank, investment adviser registered with the SEC
128
If you gift a customer $68 tickets that were given to you first, does that still get enforced in the $100 policy?
Yes
129
GNMA does not have ____ risk
Default
130
In order to open a discretionary cash account, a _____ is not needed
Signed customers account
131
Disinflation is a decline in the ____ rate
Inflation
132
Contributions to 529 savings plans are treated as part of the ____ gift tax exclusion
Annual
133
Stabilization rules are set under Reg ____
Reg M
134
Federal Telephone Consumer Protection Act permits
Solicited calls to be made anytime
135
Intrinsic value is between the
Market price and strike price
136
Warrants are issued with
A new bond offering
137
Rights are issued to
A company’s existing shareholders
138
Issued shares are _____ + ______
Outstanding shares
Treasury shares
139
When an option is exercised, a put option writer is obligated to _____
Buy
140
Bond counsels do not render economic opinions such as ____. Rather, it lends options on legality, validity, tax exempt status
Feasibility
141
Interest income from municipal bonds are exempt from what kind of tax?
Federal, state, and local
142
True or false: 529’s can be rolled over tax free to another qualified family member
True
143
529 withdrawals for personal use are subject to both ___ and ____ tax
Ordinary income tax
10% tax penalty
144
GO Bonds are ____ bonds backed by ______
Unsecured, taxpayers
145
Bonds that mature at specified intervals over pre-determined time period are known as as ____ bonds
Serial
146
Callable binds allow the issuer to ___ all or a portion of a bond prior to maturity
Redeem
147
Puttable bonds allow the investor to redeem the bond at par before the _____ date
Maturity date
148
Things to work on
Closing purchase
Opening purchase
Closing sale
Opening sale
Cover
149
In 529’s are there tax consequences to transferring the account to another qualified beneficiary?
No
150
Can stabilizing bids be made by the underwriters of an offering?
Yes
151
Can a stabilizing bid only be made if indicated by a prospectus?
Yes
152
True or False- Only 1 stabilizing bid can happen at the same price and time
True
153
Are industrial revenue bonds backed by rental revenues or ad valorem?
Rental revenues
154
Principal and earnings are withdrawn ____ in a 529
Tax-free
155
True or False: TBills are an equity
False.
They are debt
156
Bonds with lowest price volatility will be ones with the _____ coupon rate
Highest
157
Bonds with the highest volatility will be ones with the ____ rate
Lowest
158
Customer trade confirmations must be provided to customers ___ or ____ the settlement date of the transaction
At, before
159
True or False: Form CRS does not need to disclose the type of info collected by the firm about the customer and how it is used
True- that is Ref SP that does this
160
When inflation happens and the Fed is worried about it increasing, it reduces the available money supply by taking a ____ tone
Hawkish
Inflation hawks watch out for inflation
161
When the Fed takes a ___ tone, the Fed takes a loose monetary approach, keeping rates low to fuel growth
Dovish
162
Covered puts are bears seeking ____
Income
Short stock, short put
163
True or False: When an executing member knowingly opens an account for a person associated with another member the executing member has to provide duplicate statements of account transactions when requested by employer member
True
164
___ and ___ determines the purchase price of a share of a CEF
Supply and demand
165
A REIT is considered to be a ____ security
Packages security
166
Officers or directors of the issue can be considered _____ investors
Accredited
167
Equity and bond and diversified and nondiversified are classifications of ______
Mutual funds
168
Covered calls ____ gains in the event of potential loss but do not ____ gains
Limit gains, protect
169
Member firms must provide a customer with account statements ____ showing the market value of each penny stock held in the customers account
Monthly
170
Overnight repurchase agreements do not have ____ risk
Liquidity
171
After hours market is characterized by ___ spreads and ___ trading volume
Wide, low
172
Interstate offerings are subject to the ____ act of 1956
Uniform Securities Act
173
True or False: Incoming and outgoing Fax and electronic correspondence must be reviewed
True
174
Names of those authorized to trade a corporate account are found in the ____ resolution
Corporate
175
Mortgage backed pass through Certificates are sold in minimum denominations of _______
$25,000
176
SEC Act of 1934 is most concerned with the prevention of manipulation and ____ in the secondary market
Fraud
177
Treasury stock is considered ____ stock
Issued
178
Do private placements have liquidity risk?
Yes
179
Principal is to ____
As agent is to _____
Dealer
Broker
P-D- P Diddy
A-B- Antonio Brown
180
Tombstone ad can run before an _____
Effective date
181
True or False: USA Patriot Act allows use of name, address, date of birth, social security number, tax ID
True
Must also be done within a reasonable amount of time after opening the account
182
A copy of the new account form must be sent within ____ days of opening the account and at least every __ years thereafter. And within ___ days of any updates
30, 3, 30
183
Reasonable basis obligation
firm and rep must understand the complexity and risks of a security or strategy and determine whether it is suitable
184
Customer specific obligation
Broker dealer must believe that a recommendation is suitable for the customer based on personal investment profile
185
Quantitative suitability
Broker dealer must believe that a series of recommended securities is not excessive
186
Fiduciary accounts are _____only
Cash
187
UGMA gifts are received when
They are of majority age
188
UTMA transfers when
Age that is stated
189
Coverdell
Can’t put money in account after they turn 18
2000 annual limit, even if multiple accounts
190
Preliminary prospectus may first be sent to a customer once the ______ has been filed with the SEC
Registration statement
191
Mutual fund can be used as ____ after being held in the account for 30 days
Collateral
192
_____ is the date that the price of a mutual fund share is reduced for a dividend distribution
Ex-date
193
Difference between systematic and nonsystematic
Systematic happens to the entire group
194
Trust Indenture Act of 1939 applies to corporate bond offerings in excess of ______ over one year
$50 million
195
Aside from money market movement, price of stock will fall on the morning of the _____
Ex date
196
Coupon rate and nominal yield are ___
The same thing
197
Money markets are ___
Debt instruments
198
Non exempt securities
Corp issues stocks and bonds, variable annuities, preferred stocks, UIT’s, CEF, ETF, Mutual Funds
