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Flashcards in Exam Online Two Deck (18):

When the yield curve is inverted all of the following statements are true except:
A. Yields on long-term securities are higher than those of short-term securities
B. Demand for long-term debt greatly exceeds demand for short term money market securities
C. The Federal Reserve is pursuing a tight money policy
D. Investors are more likely to shift funds out of the equity investments into money market instruments

The correct answer is a
When the yield curve is inverted short-term interest rates are higher than long-term interest rates this occurs when the Federal Reserve pursues a tight money policy forcing up short-term rates mainly through open market operations


A corporation is attempting to sell additional shares to its existing shareholders through a writes distribution. The shareholder who wishes to subscribe must send the purchase amount with the rights certificate to the:

Rights agent


Zero-coupon bonds trade
A. And interest
B. With accrued interest
C. Flat
D. Part

The correct answer is C
Zero-coupon bonds do not make semiannual interest payments therefore they trade flat that is without accrued interest the term and interest means trading with accrued interest


When does an investor receive payment of interest and principal on capital appreciation bonds

Both interest and principal are paid out at maturity

Capital appreciation bond is a municipal zero coupon bond


Which of the following statements are true regarding short-term negotiable certificates of deposit
A. The minimum denomination is $10,000
B. Trading occurs in the secondary market
C. Short-term negotiable CDs are callable
D. They are issued by banks

The correct answers are B and D


Which orders are lower in price than the current market value?

The correct answer is open buy limits, and open sell stops

Buy limits and sell stops are orders that are placed below the current market and are filled as the market drops remember 0BLOSS equals open buy limits and open sell stops as the orders placed below the current market


Trade of NYSE - MKT (Amex) listed securities that take place in all markets are consolidated and reported through which network tape

The network B tape

The network b tape reports trades of New York Stock Exchange-MKT listed issues, regardless of the market venue where the trade took place. Network a tape reports trades of New York Stock Exchange listed issues, regardless of the market and you were the trade took place. Reports of trades of the NASDAQ issues are made through network see tape and there is no at work detail


The orders that are higher in price than the current market are:

Open buy stops and open sell limits

Sell limits and buy stops are the orders that are placed above the current market and are elected as the market rises remember OSLOBS equals open so limits and open by Stocks has the orders placed above the current market


All of the following orders can be placed in the NASDAQ system except which?
A. Market order
B. Marketable limit order
C. Limit order
D. Stop orders

The best answer is D
Single book is the quotation and trading system for all NASDAQ issues, both global market, and Capital Market. The system except market orders, marketable limit orders this is a limit order at the current inside price, and limit orders that are away from the market. The system cannot except orders that require human judgment for execution such as a market not held orders


The FINRA 5% policy applies to

Only applies to trades of over-the-counter securities


Discretion over what two variables in an order can be given verbally by a customer to his agent without requiring a written power of attorney?

Price and time of execution


How long is discretion over price and time of execution given verbally by a customer to a broker with a written power of attorney good for?

The correct answer is one day. Discretion over price and time of execution can be given verbally however the order must be filled by the close of market on that day or it is canceled


What is the main difference between a UGMA account and a UTMA account?

The main difference is that assets in a UGMA account transferred to the new adult at legal age automatically, and a UTMA account the custodian sets the transfer up to the maximum age sent by that state, in most states the maximum age is 25


In order to recommend a fee-based account to a customer, under FINRA rules, customer must be provided with WHAT DOCUMENT?

The correct answer is a disclosure document at or prior to account opening.


When he selling group member Sells a Security in a corporate underwriting, what do they earn?

Selling group members help syndicate fine customers, acting as agent. For this the selling group member earns the selling concessions


And open and fund has a net asset value of $10 per share. The minimum price at which share can be purchased is?


Mutual fund, open and management company, shares are newly issued by the fund to any purchaser. The purchaser pays the next computed net asset value plus a sales charge if the fund in poses a sales load. For a no-load fund the customer would simply pay net asset value, this is the minimum price for an open and fund.


Which ratio is the least stringent test of liquidity

Current ratio

The cash assets ratio is the ratio of cash to current liabilities, this is the most stringent test of the quiddity. The quick ratio or acid test is the ratio of current assets minus inventories and prepaid expenses to current liabilities. As a less stringent test and the cash asset ratio


SEC rule 10 B-18 allows an issuer to buy its shares in the open market

At the highest independent. Over the last reported sale price, whichever is higher

SEC rule 10 B-$.18 ground rolls for issuers or affiliated person who wish to buy their shares in the open market. If an issue or aggressively buys it Stocks in the market, or bids for it Stocks, it can manipulate the market price upwards.