Final #7

Question 1

When does the KYC rule apply, compared to the suitability rule?

Answer 1

The KYC rule applies at all times - whether a recommendation was made or not.

In contrast, the Suitability rule only applies when recommendations are made

Question 2

Which annuity payout option usually results in the largest periodic payment?

Answer 2

The shorter the expected annuity period, the larger the payment. A life annuity lasts only for that person’s life - this is the shortest expected period of those given

Question 3

During which phase of the economic cycle would one most likely find monetary “deflation” starting to occur?

Answer 3

Recession

Question 4

All options communications must be approved in writing prior to use, by a:

Answer 4

ROP - Registered options principal

Question 5

When, as, and if issued trades occur without knowing the:

Answer 5

Settlement date

Question 6

The MSRB defines as “advertising”:

Answer 6

any form letters, circulars, sales literature, and abstracts of official statements (since these would be written by the firm)

Prospectuses and Official statements are not considered advertisements

Question 7

Who are considered owners of a corporation?

Answer 7

Common and Preferred stockholders

Question 8

What is an ETN?

Answer 8

An ETN is a FIXED income structured product that trades

Question 9

An accumulation unit is:

Answer 9

an accounting measure used for valuing a variable annuity holder’s interest in the separate account

Question 10

Retail communications that must ALWAYS be filed 10 business days in ADVANCE of first use are:

Answer 10

• Options retail communications; and

- Mutual fund retail communications with member-prepared performance rankings

Question 11

Retail communications that must ALWAYS be filed 10 business days AFTER first use are:

Answer 11

• All other mutual fund retail communications;
• CMO retail communications; and
• DPP retail communications

Question 12

What are the settlement types for foreign currency?

Answer 12

1. Spot

2. Forward

Question 13

What are the settlement types for foreign currency OPTIONS?

Answer 13

1. Cash

2. Regular Way

Question 14

Rule 144 allows the sale of the greater of:

Answer 14

1. 1% of the outstanding shares

2. weekly average of the preceding 4 weeks’ trading volume every 90 days

Question 15

What is the computation for EPS?

Answer 15

EBIT - Preferred Dividends = Earnings for common

Earnings per common / common shares = EPS

Question 16

The VIX is a bearish indicator when S&P 500 option ________ are increasing

Answer 16

Premiums

Question 17

What is the VIX based on?

Answer 17

S and P 500

Question 18

If a mutual fund distributes 99% of its Net Investment Income to its shareholders, how much of the Net Investment Income will be taxable?

Answer 18

1%

Question 19

A bank qualified municipal issue is one where:

Answer 19

• 80% of the interest expense the bank pays on deposits used to fund the purchase of the bonds can be deducted
• 100% of the interest income received is not taxable to the bank holding the bonds

Question 20

ERISA regulations cover:

Answer 20

Private sector retirement plans

Question 21

When can a “red herring” preliminary prospectus be sent?

Answer 21

The preliminary prospectus may only be sent to customers who have expressed an indication of interest or who are likely purchasers DURING the cooling off period

Nothing may be sent to the customer prior to the start of the “20 day cooling off” period

Question 22

What do money market funds invest in?

Answer 22

Money market funds invest in short term maturity money market instruments. These include Treasury Bills issued by the U.S. Government, commercial paper issued by corporations and banker’s acceptances issued by banks

Question 23

What value are mutual funds redeemed at?

Answer 23

Mutual funds are redeemed at NAV less a redemption fee (if any)