Chapter 2.6

Question 1

Catastrophic or Extraordinary Call

Answer 1

A call provision, which allows the issuer to call bonds in “due to conditions beyond their control”.

Question 2

When one dealer gives a quote on behalf of another

Answer 2

They must have reason to believe it is a reasonable quote.

Question 3

Repurchase Agreement

Answer 3

An agreement whereby securities are sold by a firm with the agreement to repurchase them at a later date and an agreed upon price. The agreement is usually short term and records for these agreements must be kept for 4 years.

**Re purchased agreements are not a guarantee of investment results.

Question 4

Can a B/D solicit transactions in municipal securities for the account of an investment company in return for sales of shares or units?

Answer 4

No, no reciprocal dealings are allowed. However, the fund is permitted to select a B/D to effect its portfolio transactions based upon the following factors:

• Execution capability
• Research capability
• Other financial services capability

Question 5

Municipal fund securities include what?

Answer 5

Local government investment pools and 529 Plans

Question 6

If discrepancies that arise from an uncompared trade are unresolved…

Answer 6

Either party pay void the transaction.

Question 7

When can a bank solicit securities transactions from an issuer if the bank is the paying agent for that issuer?

Answer 7

Only with consent of the issuer

Question 8

What forms of compensation are allowed if a B/D agrees to market shares of a municipal mutual fund?

Answer 8

• Commissions
• Sales Charges
• The mutual fund pays for the b/d advertising of the fund’s shares

**Vacation trips or cruises would not be allowable forms of compensation to the B/D from the municipal mutual fund.