Final #6

Question 1

Are tax deduction allowed for contributions to a variable annuity?

Answer 1

NO. Taxes paid on the principal of a variable annuity are paid when distributions are taken. The major advantage of a variable annuity is that the earnings accumulate tax free

Question 2

How often can money be withdrawn from a hedge fund?

Answer 2

Once per year (with partner approval)

Question 3

The S and P 500 Average is composed of mainly what exchange?

Answer 3

the NYSE

Question 4

What is the formula for EPS?

Answer 4

Market price / multiple

Question 5

The interest rate charged from one Federal Reserve member bank to another Federal Reserve member bank is the:

Answer 5

Fed Funds Rate

Question 6

The rate that the Federal Reserve charges member banks for borrowing reserves from the Fed is the:

Answer 6

The discount rate

Question 7

An inverse ETF is most similar to?

Answer 7

a Long Put

Question 8

A prime bankers acceptance is one which is:

Answer 8

a banker’s acceptance, issued by one of the top credit rated money center banks, that is eligible for trading with the Federal Reserve in the Fed’s open market operations

Question 9

In a competitive bid municipal underwriting, what disclosed to customers?

Answer 9

The Reoffering yield

Question 10

What type of stock best describes a stock that pays out most of its earnings as dividends?

Answer 10

an Income stock

Question 11

Do regulation A offerings require a prospectus?

Answer 11

No. They require an offering circular.

Question 12

How does a stop order election and execution work?

Answer 12

Say for example that a customer places a stop order to buy 5M. Buy stop orders are placed at a price that is higher than the current market (OSLOBS). If the market price rises to 90 or higher, the buy stop order is elected (at 90% of par or higher), and the order is executed at the next available price - either at, above, or below the stop price. Thus, the order can be executed at any of the listed prices

Question 13

What is the primary function of a market maker?

Answer 13

Buying and selling the security in which the market is made into, and out of, the firm’s own account

Question 14

What are 12b-1 plans?

Answer 14

12b-1 plans allow a mutual fund to charge, as an expense to the existing shareholders, the cost of advertising and soliciting for new customers (included are mailings)

Question 15

Under FINRA rules, orders can be effected for an account that is transferred from another brokerage firm when the:

Answer 15

Carrying firm VALIDATES the account transfer form

Question 16

What 3 types of securities are available for Fed Fund trading?

Answer 16

• US Government Debt
• US Agency Debt
• PRIME Banker’s Acceptances

Question 17

Common dividends can be paid in which forms?

Answer 17

Product, Stock, and Cash

Question 18

A registered representative receives a written complaint from a customer regarding a purchase of G.O. bonds. The registered representative should:

Answer 18

attempt to resolve the complaint with the approval of the municipal principal

Question 19

In order to recommend a fee based account to a customer, under FINRA rules, the customer must be provided with a(n):

Answer 19

A disclosure document, at or prior to account opening

Question 20

Index ETFs are ________ managed:

Answer 20

Passivley

Question 21

The portfolio management technique that uses a performance benchmark such as a market index that any investments must match is called:

Answer 21

Passive management

Question 22

The issuer is responsible what 3 tasks in a corporate offering?

Answer 22

1. Printing prospectus
2. Printing certificates
3. Registering issue with SEC

Question 23

Are T-bills callable or non-callable?

Answer 23

Non-Callable. They are short term!