MOCK TEST 7 06/24 Flashcards
The coupon rate on a deb security represents?
The interest rate the issuer has agreed to pay the investor
Monetarist Theory
A well-controlled, moderately increasing money supply leads to price stability and a healthy economy
Major benefit of owning municipal bonds
Tax-free at the federal level
For senior customers, if senior exploitation is suspected, a hold can be placed and a trusted person can be contacted if on file
What is the primary purpose of a revocable trust?
use a substitute for a will
Leading vs. Lagging Indicators
Leading:
Lagging: Increase in the consumer loan to personal income ratio
All of the following actions would cause the NAV per a share of a mutual fund to decrease except:
A: the fund distributes capital gains
B: the fund distributes dividends
C: a large number of shareholders make withdrawals from the fund
D: liabilities increase
C
Who is responsible for meeting the desired returns on defined contribution plan?
The employee chooses how the money they contribute is invested so they take responsibility on the returns
ABC currently has the following quotes:
MARKET BID ASK SIZE
MM1 10.00 10.50 3X2
MM2 10.20 10.45 4X3
MM3 10.25 10.60 3X2
The inside bid is good for: A: 300 Shares B: 100 Shares C: 400 Shares D: 200 Shares
The inside bid is the highest bid, or the most someone is willing to pay. In this situation,MM3 is willing to pay 10.25 for 300 shares
Repurchase agreements and reverse repurchase agreements are:
money market instruments
The current yield on a bond with a coupon (nominal) rate of 7.5% currently selling at 105.5 is approximately:
A bond with a coupon rate of 7.5% pays $75 of interest annually. Current yield equals annual interest amount divided by bond market price, or $75/$1,055=7.109%
Mutual funds may NOT be sold either on an exchange or OTC
Which types of investments are MOST susceptible to interest rate risk? A: Options B: Bonds C: Money market instruments D: Common Stocks
B
Your client, Alice Tate, with no other positions in her margin account, is bearish on ABC stock. Which of the following transactions would you recommend? A: Buy ABC to close B: Sell ABC to close C: Sell ABC to open D: Buy ABC to open
C: because there are no other positions, this would be an opening transaction and selling the stock would be bearish
For hedge funds organized as private investment partnerships, which of the following are true?
A: They will allow unlimited # of investors and require large or minimum initial investments.
B: They can limit the # of investors and require large or minimum initial investments
C: They will allow unlimited # of investors and allow small initial investments
D: They can limit the # of investors and typically have no minimum initial investment requirement
B
