Missed Q’s Flashcards
(200 cards)
1
Q
An investor is informed the investment company security is subject to breakpoints. Breakpoint are issued with which of the following?
A
Front End Loads. More purchased smaller the sales charge. CDSC are associated with back end loaded funds.
2
Q
What is a MFP?
A
Municipal Finance Professional
3
Q
Are Eurodollar Bonds subject to registration requirements?
A
No because they are issued outside the US.
4
Q
What is the term called for backtracking a breakpoint 3 months?
A
Rights of accumulation
5
Q
A 20 year, 12% bond is callable in 6 years at 110, 8 years at 107 and 14 years at 105. If this bond is called ASAP, what’s the premium?
A
The amount above par at first call six years at 110 so call premium is $100
6
Q
Who is subject to market risk? A policy holder or insurance company?
A
Policyholder
7
Q
There is an ex day tomorrow for a dividend. How is the order adjusted?
A
Only orders below market price are adjusted. buy limits and sell stops are adjusted downwards by the dividend
8
Q
What is finance risk?
A
When a company over leverages itself
9
Q
What is business risk?
A
When revenue falls from competition or mismanagement
10
Q
When can no deductible contributions be made to a traditional IRA?
A
When covered by workplace plan and making above 150,000 in earned income.
11
Q
Are interest-rate and inflation positively or negatively correlated?
A
Positively
12
Q
Are interest rate and reinvestment risk positive positively or negatively correlated?
A
Negatively
13
Q
What is the bond basis also known as?
A
YTM
14
Q
What is the holding period for publicly traded stock?
A
None
15
Q
What must an investor have for a trade to be considered long?
A
Possession of shares being sold
16
Q
The company needs to raise long-term capital to expand business operations officers and directors. Prefer to maintain complete control the company with his little cost as possible. What would make more sense mortgage bond or unsecured debenture?
A
Mortgage bond because lower coupon then debentures.
17
Q
Does participating stock have a higher or lower yield than preferred stock?
A
Lower! Higher prices for dividends added additionally
18
Q
Does Ginnie Mae have publicly traded stock?
A
No it’s a government holding
19
Q
What do warrants do to the market?
A
Dilute
20
Q
What is the sales proceeds on security transactions in the secondary market?
A
Liquidation price minus commission
21
Q
What’s the difference between regulatory risk and legislative risk?
A
Legislation is synonymous with statutory law. The laws have been enacted by the register, as well as those still in the process of being enacted legislation is both the description of legal requirements and a punishment for violating the law. This includes president and congress.
Regulatory law is the ongoing process of monitoring enforcing the law, such as government agency regulating the sector that imposes cost intensive rules that impact an issuer
22
Q
What happens when an owner of a WROS account passes away?
A
The ownership is passed to other owner in account.
23
Q
Who must pay who in a short situation with dividends?
A
Dividends must be paid by the Short seller to the lender.
24
Q
How often must firm send account statements?
A
Quarterly, monthly if penny stocks
25
A customer received a significant bonus from their employer at the end of the previous year. Assuming the bonus was invested in a dividend pay fund when it was received by the customer what will the bonus be considered for tax purposes?
Earned income. Any money from a job is considered earned income doesn’t matter that the money was invested.
26
What is ERISA and what does it do?
Employee retirement income security act, protect retirement assets of private companies
27
When must coverDell be taken by?
30
28
What is price elasticity?
Comparison of demand in price for a good
29
How do you find current yield?
Dividing annual income by market price
30
What is commercial paper?
Short term, unsecured and exempt from SEC registration
31
When can an insider with restricted shares trade?
Volume limitations and six month holding period
32
When must SAR be filed?
Within 30 days of activity
33
What does an official statement for municipal bonds require?
A source of repayment funds
34
Rights provided per share does not vary how many rights per share?
1
35
Who is the defined benefit plan most suitable to?
Large salaries closest to retirement. A pension is equal to the highest years of earning until death.
36
How long must a tender offer be available for including the additional days of changes are made?
At least 20 days and an additional 10 if changes are made
37
Are nonqualified distributions from Coverdell ESA, subject to taxes and/or penalties?
Both
38
What are treasury notes timeframe?
2-10 years
39
What is an APO?
Additional public offering 
40
What is the insurance in FDIC coverage for CD purchases?
$250,000
41
What does the SEC use to file their forms?
EDGAR
42
Under regulation D, how many accredited and non-accredited investors can a private company have?
Unlimited accredited and 35 non-accredited.
43
What is painting the tape a.k.a. matched orders a.k.a. wash sales?
Repeatedly buying and selling securities to create false appearance of market activity 
44
What is a bond basis when quoted?
YTM
45
What class are CDSC’s associated with?
Class B, no sales charge at purchase but there is one at sale.
46
What is associated with a variable annuity?
Separate account
47
True or false contributions cannot be made to a Roth IRA if the investor reports substantial income
True
48
Custodial accounts require what supplemental documentation to be opened?
None
49
Between Roth 401(k)s and IRAs, which ones are considered qualified plans?
Roth IRA’s
50
Where is US government debt always traded?
OTC market
51
When are capital gain distributions from mutual funds taxable?
When reinvesting are taking as cash
52
Is the limited partnership investing from a rep required permission from the firm or FINRA?
No, it’s considered passive investing
53
Custodial accounts aren’t considered UTMA’s true or false
False
54
If a fun makes a capital gains distribution is it NAV affected?
Yes, it falls
55
If an investor wants immediate execution of an order, what should they use?
Market order
56
A mutual fine investor chooses to implement systematic withdrawal plan from the fund. What may this result in?
Reduction of capital
57
What does form U6 report?
Disciplinary actions against registered representatives and firms as well as arbitration awards against individuals or firms
58
What investments are most sensitive to regulatory risk?
Limited partnerships
59
What is the order in days on account holds for exploited customers?
15, 10, 30
60
What are good for investors Who want to trade anonymously?
ECN’s
61
What is a Fidelity bond?
Insurance that protects broker dealer in case of fraud, FINRA must be notified if bond is canceled or substantially modified, and it covers securities that are held at the brokerage firm
62
How long must records be kept easily accessible location?
2 years
63
When interest rates are trending up what stage is the economy in?
Expansion
64
Aftermarket prospectus delivery rule?
Does not require the firm to deliver the prospectus
65
Can a registered representative loan from a bank without notifying employer?
Yes
66
What investment strategy is it if various asset categories are adjusted as financial markets change?
Asset allocation fund
67
How often is a 10K filed?
Annually at the end of the fiscal year
68
How often is a 10 Q filed?
Quarterly
69
Out of these four fees, what is not a disclosure item for annuities. Surrender probate mortality and administration fees.
Probate fees
70
Can I give an entertainment ticket over $100 if I’m not there?
No
71
In a 529 prepaid tuition plan, how might the account owner lose financially if the student goes to college?
The student doesn’t attend public school in that state
72
How to avoid corporate taxes in a REIT?
If 90% of the income is distributed, only the shareholders pay taxes
73
What must investment banking and trading departments do with information?
Distribute through compliance
74
What are ETN?
Debt instrumental link to the performance of a commodity currency or index
75
Is correspondence subject to review and supervision?
Yes
76
Is retail communication, subject to review and supervision?
Retail communication often needs preapproval
77
In a markup judgment does it matter if the investor is retail or institutional?
No
78
Where does the official statement of a municipal bond offering come from?
Issuer
79
What information is in the preliminary prospectus?
Number of issues being shared
80
When will shares not be tendered?
Minimum isn’t hit
81
What is persistent deflation?
A decreasing interest rates
82
Who track shareholders of a mutual fund?
Transfer agent 
83
What stocks perform parallel to the economy?
Cyclical stock
84
An investor fails to pay for securities by payment date what happens?
Sell them out and freeze account 
85
A fund charges shareholders for operating the fund. What should a person check to evaluate these charges?
Expense ratio
86
A customer purchases shares of a closed end fund on NYSE. What will they pay?
Price plus commission from broker
87
What is an advisor paid on for mutual funds?
Assets under management
88
What must the solicitation or offer to sell a funds share be proceeded or accompanied by?
Current prospectus
89
What is dollar cost averaging?
A period of fluctuating prices and investing the same amount of money each month
90
UTS are designed to hold security portfolios, which are not actively managed, but remain fixed for the life of the trust true or false
True
91
Do mutual fund investors own shares in the companies within the fund?
No, they represent an interest in portfolio
92
When must the payment be entered for a mutual fund?
Seven days for the payment or to redeem
93
Who must an investment advisor under 100 m assets under management register with, between 100 to 110 m assets under management register with 110m or over assets under management register?
Under 100 million – state register, 100 to 110 – SEC or state, over 110 mil– SEC
94
Are 529 account contributions unlimited?
No, the state determines dollar amount that may be contributed 
95
If an investor buys a stock for a broker dealer and then purchases it with the retained earnings, the broker dealer charge markup on both?
Yes as long as it’s within the markup laws
96
I registered person set up a charity investment program that is nonpaid. What do they need to do?
The person needs to notify, but if there was pay, they would need written approval
97
What’s the balance sheet equation?
Equity plus liabilities equals total assets
98
The conversion ratio of a convertible bond is equal to
Par divided by conversion price 
99
What index has the largest measure of market for all the indexes?
Wilshire associates equity index
100
You were supposed to go to an event with the client but last minute something popped up how are you able to avoid the gift expense for this event?
Have another registered representative coworker go with the client to this event to avoid the gift expense 
101
Client should notify broker dealer of any discrepancies on the account statement. How would they be reminded to do this?
The statement should be included in the disclosure 
102
Would a senior officer who only offers capital to the firm need to be fingerprinted?
No
103
When does the cash settlement transaction occur?
Day of
104
What is the value of one basis point?
0.010%
105
Is the cost basis per share equal to the purchase price or the market value?
Purchase price
106
SPDR is what?
An exchange traded fund (etf)
107
Delivery of stocks must be made in what share certificates?
Multiples of 100 or any combo that adds up to 100
108
If one person signed a check for two people, can it be splitting on a contribution?
No, the entire amount will go towards the signee
109
A publicly listed partnership isn’t subject to market risk true or false
False
110
Which of the following is not a pass-through entity, REIT, S Corp., LLC, C corp?
C-corp
111
Payment date for securities purchased in cash or on Margin is?
T+2
112
Phone calls can be made from?
8 AM to 9 PM
113
A fee based account is most suitable for customers who?
Engage in frequent trading
114
Who should investigate the accuracy of the prospectus to make sure it’s free from error?
The managing underwriter
115
What is the main factor in determining the amount of the counter currency? The investor is able to buy?
The spot exchange rate
116
How often do broker dealers send balance sheets?
Semi annually
117
What is broker check commonly used for?
Active registration
118
A clearing corporation does what?
Provides trade comparison and reporting services, has real time trade matching and assist broker dealers in transferring assets to another broker dealer
119
Which of the following consideration should a registered representative explain to a customer when recommending a 529 savings plan?
The potential deductibility of contributions from state taxes
120
The redemption value of an open and investment company shares is based on?
NAV computed after the order is received
121
The primary purpose of a syndicate desk in the context of an equity offering is?
Build an order book and allocate the stock
122
Which of the following comparisons best describes the essential difference between a primary distribution and secondary distribution?
A primary distribution involves a sale of newly issued shares by the issue issue while a secondary distribution involves a sale of already issued and outstanding shares
123
A customer has a cash balance in her account together with Long positioned in several securities. She has made no transactions in the account during the past 18 months how often must the firm send an account statement?
Quarterly
124
Which of the following statements is true regarding the concept of annuity contract?
A. Payouts of an investment and a nonqualified annuity or all income tax free.
B. The kind of annuity selected partly determines the payment amount to the annuitant
C. In the case of life annuity contracts, the age and sex of the annuity do not affect the payment amounts.
D. The amount of the periodic payments to the annuity are determined by the performance of the insurance companies investment returns.
B. The kind of annuity selected partly determines the payment amount to the annuitant
125
Which of the following communications with the public is considered misleading?
A. Historical illustrations based on factual performance.
B. Product comparisons that illustrate material differences.
C. A research report that includes a recommendation for a specific security
D. Literature providing 10 year performance information to support predictions of future performance
D. Literature providing 10 year performance information to support prediction to future performance.
126
Broker dealer ABC seeks to underwrite municipal securities offering by a local town in which the mayor is currently seeking reelection. A municipal finance professional who resides in the town and works for ABC contributed $200 to the mayors reelection and campaign 13 months ago if the employee wants to support the campaign further without impacting the municipal securities business of the firm, he is permitted to make an additional contribution of up to what amount?
$50
127
Yeah, which of the following statements is true regarding a customer account held as tenants in common?
A. The owners must equally share the assets.
B. The ownership of the descendants assets is governed by their will or state law.
C. Tenants In common is permitted for use only for two individuals.
D. Tenants in common is permitted for use only for married couples or family members.
B. The ownership of the descendants assets is governed by their will or state law
128
Upon expiration all in the money, S&P 100 index call options are settled by the delivery of what?
Cash
129
Which of the following statements is true about all government agency issues?
A. They are exempt from federal taxes.
B. They are exempt from registration under the security act of 1933.
C. They are issued in bearer form only.
D. They are general obligations of the federal government.
B. They are exempt from registration under the security act of 1933.
130
A savings account at a bank is guaranteed by which of the following entities? FDIC or SIPC?
FDIC
131
An associated person who is not a registered representative is allowed to provide account opening forms to a new customer. True or false.
True
132
When is stability in the value of a debt portfolio the greatest?
Maturity of the debt securities are short
133
All of the following risk supply to both foreign and domestic debt instruments except? Political, exchange, repayment, or interest rate?
Exchange
134
Roth 401(k) and Roth individual retirement account plan share which of the following features?
A. Contributions are made pretax.
B. Neither account has maximum contribution limits.
C. Neither account is subject to distribution penalties.
D. Qualified distributions are excluded from federal income tax.
D. Qualified distributions are excluded from federal income tax.
135
Would this be violating instead of trading laws? An independent securities analyst explains to the employee why the earnings for the company next quarter could be markedly poorer than expected.
No, merely discussing poor future earnings does not indicate breaking inside trading laws. If the information is not public and could effect the stock it could be problematic
136
No load funds may have lower expense ratios than load mutual funds for which reason?
No load funds are not permitted to charge a 12b-1 fee greater than 25 basis points
137
Variable life annuity greatest risk
Market risk
138
The call provision of a bond stipulates which of the following factors?
Call date and call price
139
Interest on treasury notes paid how often?
Semi annually
140
Under FINRA rules, noncash compensation connected with the sale of variable contracts including all of the following except: gifts, meals, lodging, and commissions.
Commisions
141
Any felony conviction in last 10 years results in?
Statutory disqualification
142
Direct participation programs, a.k.a. DPP’s provide?
Exposure to non correlated assets
143
Which of the following investments are generally traded according to their average life rather than their stated, maturity dates? Corporate bonds, government, bonds, asset, back securities, or fixed rate capital securities
Asset-backed securities
144
Affirm is a participant in a public offering. To sell a substantial amount of of the securities to its customers the firm agrees to re-purchase the shares at no less than the original sales price such agreements are?
Fraudulent and manipulative and prohibited
145
A customer buys one ABC January 35 put for a premium of three dollars and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling at what price per share at expiration?
38
146
A transaction in which writer covers a position by purchasing an option is called?
A closing purchase
147
How much can a RR contribute to MSRB politician?
250
148
Which of the following is disclosed on a mutual fund confirmation? The name of the funds, investment advisor, the fact that the fund has a contingent deferred sales charge CD SC, the securities in the fund portfolio or the rating of the fund.
The fact that the fund has a contingent deferred sales charge CDSC
149
An investor writes an uncovered RST May 25 put for a premium of four. At what market price will the investor break even?
21
150
What product does a registered representative Need to be churning for it to be a prohibited practice?
Doesn’t matter
151
Which of the following items is considered a coincident economic indicator? The industrial production index, the S&P index, housing starts, or expenditures for capital goods.
The industrial production index economic — indicators are classified as leading coincident, or lagging. leading indicators, precede the change in the economy as a whole, coincident indicators change with the economy as a whole and lagging indicators change after the economy as a whole. Industrial production comprises a large part of the economy, and therefore changes at the same time as the whole economy the other choices are examples of leading indicators.
152
If ABC brokerage purchases 600 shares of stock from a customer and places a securities into its inventory, it’s likely acted as?
Dealer
153
Each calendar year, a member firm must provide customers with which of the following in writing? A commission schedule, FINRA website address, the SEC’s website address, or a copy of the firms arbitration policy
FINRAS website address, the broker check, hotline number and a statement regarding the availability of an investor brochure that describes finras broker check
154
Which mutual fund expenses used to pay the fund managers fee? Front end, sales charge, administration, expenses, operating expenses, or 12 B –1 fees.
Operating expenses
155
How do you remember whether it’s a reverse stock split or a stock split?
Divide the first number by the second number and if you get a whole number, it’s a reverse stock split and a number under one is a stock split
156
An individual who is considering the purchase of a closed end fund shares would pay?
A market priced as determined by the supply and demand for the shares
157
Municipality is offering securities using a competitive bidding process. This means that the offering will be sold at?
The lowest net interest cost
158
XYZ. Mutual fund an open and investment company, has a NAV Of $20 and a public offering price of $21.40. The perspective states that the sales charge for purchases of fun shares of $25,000 through $49,999 is 4% approximately how many shares can the customer buy for $35,000?
1680 shares. Because the 4% goes to the sales charge you do not divide the public offering price since it includes the sales and you have already deducted $1400 in sales charges.
159
A 60-year-old individual is receiving $60,000 per year from a pension and $2500 per year from a part-time job. How much can the individual contribute to her IRA?
$2500
160
Who is the organization that provides clearing services for equity securities?
The national securities clearing corporation a.k.a. NSCC
161
A registered representative purchases of vacation property, but has since fallen value. The RR decides to sell the property short and the bank agrees to accept the proceeds of the sale as payment in full for the mortgage. Is the registered representative required to take any action?
Yes, the registered representative must notify FINRA. When the proceeds of a short sale of property is used to settle the payment of a mortgage at less than its full amount it’s considered a compromise with creditors, and FINRA must be notified by the filing of an updated form U4
162
A company has declared a 7 for 5 stock split. An investor owns 300 shares at $15. What will his position be after this split?
420 shares at $10.71 per share
163
What type of outside business activity is required to be disclosed on a registered representative form U4. Maintaining an inactive real estate license, being a member of a charitable board, fixed annuity, sales, income from speculation in an outside brokerage account
Fixed annuity sales. Income from speculation in outside brokerage account requires broker dealers permission, but is not considered to be an outside business activity.
164
For an industrial development bond, a.k.a IDB, the primary source that backs the bond is? The issuing authority only, the leasing corporation only, or both.
The leasing corporation only
165
Is a foreign broker dealer that’s located in a foreign country subject of screening by the office of foreign assets control a.k.a. OFAC?
No
166
True or false: attacks qualified annuity has a zero cost basis and grows tax deferred
True
167
True or false a non-traded real estate investment trust is required to distribute the same percentage of taxable income as exchange traded REIT?
True
168
While taking the train home from the office one day, a registered representative system, municipal underwriting manager from his office and they both begin talking about local politics. They specifically discussed the mayoral race in the town and which they both reside. The municipal underwriting manager mentions that he’s thinking about making a contribution to one of the candidates who is running for mayor. Under MSRP rules, how much can the municipal underwriting manager contribute without disqualifying the firm from participating as an underwriter in the issuance of the municipalities bonds?
$250
169
When the stock splits 5 for 4, by what percentage will the price of the stock be reduced?
20%
170
Can beneficiary of a section 529 plan may qualified withdrawals from the plan for paying the tuition for an out-of-state college?
Yes
171
When purchasing shares of an ETF an investor pays?
Market price plus a commission
172
What are Roth IRA and a Roth 401(k) plan both excluded from due to qualified distributions?
Federal income tax
173
Which of the following statements is true considering custodian accounts? a donor may give gifts of cash only, a donor may give gifts of securities only, a donor may give gifts of cash and securities, an individual may not be both the custodian and donor
A donor may give gifts of cash and securities
174
What is the limit on the number of transfers per year regarding trustee to trustee IRA transfers?
No limit
175
A stock that generally trades at a price that’s lower than its fundamentals would indicate it’s referred to as a?
Value stock
176
A registered representative can share in a customers account as long as they?
Are provided with permission from the customer
177
A stock power is a document that’s used to?
Assign a certificate to a new owner
178
The goal of which entity is to increase the volume of security transactions by eliminating physical delivery with a book entry system?
DTCC the depository, trust and clearing corporation
179
Which of the following is considered an investment company under the investment company act of 1940? ADR, REIT, variable rate demand obligation, UIT?
UIT, According to the investment company active 1940, the three types of investments companies are Face Amount Certificate Companies, Unit Investment Trusts, and Management Companies - closed end and open end mutual funds.
180
Is an equity-indexed annuity considered a security?
No
181
Investors in mortgage-backed securities are MOST concerned with prepayment risk if interest rates are?
Falling
182
An employee of a broker dealer is not permitted to purchase an equity ___?
IPO, they can make purchases of securities in secondary market.
183
Are spouses and dependent children included in who is required for the RR to get written consent in a new account opening at another broker/dealer?
Yes
184
While saving for her retirement, a variable annuity owner investing $1000 per month will buy a ___ number of accumulation units?
Varying
185
If the bid price for stock is 20.50 and ask price is 20.60, a client who enters a market order to sell the stock will most likely receive?
$20.50 minus a commission
186
A brokerage firm by Stockford own account at $30 per share. The firm is required to take which of the following actions. execute any limit orders that it’s currently holding for a customer, execute any limit order to buy at a price below $30 per share that is currently holding for a customer, execute any limit order to sell higher than $30 per share it’s holding for a customer, execute any limit order to buy at $30 per share that is currently holding for a customer
Execute any limit order to buy at $30 per share that it’s currently holding for a customer
187
Why does a mutual fund charge of redemption fee?
To discourage investors from redeeming shares too quickly.
188
Which of the following may be subject to a capital call? Mutual funds, ETFs, DPP, or ETNs?
DPP, investors may be required to contribute additional failure to meet this call could result in the investor forfeiting their initial interest.
189
Which of the following is a characteristic of most agency securities? They are guaranteed by the full faith and credit of the US treasury, they’re guaranteed as to principal only, they’re backed by the full faith and credit of the agency that issued the securities, they’re guaranteed as to interest payments only.
They’re backed by the full faith and credit of the agency that issued the securities. Fannie Mae and Freddie Mac issue securities that are not guaranteed by the US treasury.
190
The primary purpose of the North American securities administrators association is to?
Create rules, laws, and exam requirements for states
191
During a period of rising interest rates, an individual who invest in mortgage bag securities is most concerned with? Credit, opportunity, legislative, or prepayment risk.
Opportunity risk. During a period of rising interest rates prepayment risk is less of a factor and opportunity risk becomes more important.
192
For Corporate bonds, accrued interest is calculated based on?
30 days and every month and 360 days a year. Same as municipal.
193
Account does it apply to either the entire account or specific disbursements
Both
194
A member firm must submit a report to FIN summarizing all complaints received within the most recent?
Quarter
195
If a bond has a basis of 6.35 and a coupon rate of 6.15% the bond is selling at?
Discount. Bonds may be quoted based upon their yield to maturity. Basis and yield to maturity are synonymous.
196
 a customer of yours opens a Margin account, so frequently purchases $5500 of stock and deposit the regulation T requirement. The overall market value of the securities rises to 6000 what is the ending equity in their account?
3250. 6000-2750 (debit) = 3250
197
What is the settlement date on corporate and municipal bonds? What is the settlement date on treasury securities?
T +2 for corporate and municipal. T plus one for treasury.
198
Short put options Contract is most likely to be paired with what to create an income strategy?
Short stock. If the market remains flat, the investor keeps the option premium and increases the return of the investment. 
199
Which of the following securities requires an ongoing distribution of a prospectus? Speculative grade, debt securities, closed end fund, equity securities, or an open end fund
Open and find transactions always occur in the primary market and involve no secondary market transactions. Therefore, a prospectus must be delivered for every transaction.
200
Typical investors of commercial paper don’t usually include who?
Retail investors
