Questions I Got Wrong

Question 1

The minimum dollar amount required for a negotiable CD is:

Answer 1

$100,000

Question 2

What would lead to a lower dividend yield?

Answer 2

Stable dividend, rising market price

Question 3

When you were single, you purchased a variable life insurance policy. You have since gotten married and want to exchange it for a whole life policy to protect your family. How long from the policies issuance do you have to make the conversion?

Answer 3

24 months

Question 4

As a registered municipal bond representative for your broker dealer, you have been given discretion over the account of a physician residing in New York. The client’s profile shows that he is conservative, avoids investment risk, and seeks long-term growth potential. What do you deem to be the most suitable to include in the physician’s portfolio?

Answer 4

New York transit authority revenue bond rated Aa

Question 5

Under the front load contribution method for 529 plans, the maximum amount that may be contributed tax-free by a couple is:

Answer 5

$110,000

Question 6

A long established mutual fund company wants to place ads in the financial papers to try to attract new investors, what do they need to do with FINRA?

Answer 6

The ad must be filed with FINRA 10 days after it is used

Question 7

Outstanding stock is best described as:

Answer 7

The number of shares that the public owns

Question 8

What percentage of employee contributions to a 403b plan are vested after one year?

Answer 8

All employee contributions vest immediately

Question 9

What is the maximum maturity for a CD?

Answer 9

There’s no maximum maturity

Question 10

An underwriter that is taking a new issue of securities to market can do what prior to the following date?

Answer 10

Prepare the registration statement

Question 11

The provisions of ERISA would apply to:

Answer 11

The profit sharing plan

Question 12

What will receive a MIG rating?

Answer 12

Tax anticipation note

Question 13

Discounting and investments expected cash flows to present value determines

Answer 13

Net present value

Question 14

What type of investment have historically shown a great deal of exposure to regulatory risk?

Answer 14

Limited partnerships

Question 15

The largest component of the money supply (m1) is:

Answer 15

Currency

Question 16

What would not be suitable to recommend for investors primarily seeking income?

Answer 16

Sector fund

Question 17

The investment company act of 1940 specifies that no more than 49% of the directors of an investment company can be

Answer 17

Interested persons

Question 18

If a person who is a lawyer for a bank write to daily investment column for the local newspaper, what would be true about their status?

Answer 18

The person is not considered an investment advisor because the writers for the newspaper, magazines and business journals who do not give specific investment situations to individuals are exempt

Question 19

As the CPI rises, what happens to bond prices, interest rates and consumer prices?

Answer 19

Bond prices are falling while interest rates and consumer prices are rising

Question 20

What are deducted from the separate account for a variable life policy?

Answer 20

Expense risk fee, mortality risk fee, management fee

Question 21

List the following order from least important to most important factors when considering an investing in a DPP

Answer 21

Liquidity, safety, tax considerations, profitability

Question 22

An investor who is over 50 may contribute how much to their traditional IRA under the catch-up option?

Answer 22

7,000

Question 23

Which act states that the trustee will diversify unless there is a good reason not to

Answer 23

Uniform prudent investor act

Question 24

Which preferred stock is likely to have the lowest state of dividend rate?

Answer 24

Cumulative preferred

Question 25

What type of bond only promises to pay the investor interest if the corporation earns enough money to do so?

Answer 25

Adjustment bond

Question 26

What is the only investment that would allow investors to move money between portfolios at the NAV?

Answer 26

Open end mutual fund

Question 27

What is the policy that determines how to manage the budget and government spending?

Answer 27

Fiscal policy

Question 28

What is true as it relates to the collection ratio?

Answer 28

The collection ratio is concerned with the amount of tax assessed and the amount of tax collected. Also, the lower the collection ratio the higher the risk associated with the bonds.

Question 29

All variable insurance policies must offer the investor. How many days of a free look period?

Answer 29

45

Question 30

Yield to maturity formula for a bond purchased at a premium

Answer 30

``` ( annual income - annual premium) / ( Price paid + par) / 2 ```

Question 31

What type of risk do zero coupon bonds eliminate?

Answer 31

Reinvestment risk

Question 32

The term principal shareholder means any person who is directly or indirectly the beneficial owner of more than what percent of any class of equity security of an issuer?

Answer 32

20%

Question 33

The bonds duration does not take into consideration the what of an issuer?

Answer 33

Credit quality

Question 34

If a corporation owns at least 20% of the distributing corporation, it must be declared as income how much of the dividends received?

Answer 34

20%

Question 35

If the corporation owns less than 20% of the distributing corporation, it must declare how much of the dividends received?

Answer 35

30%

Question 36

Parity price of a preferred stock formula

Answer 36

CMV of the preferred stock / # of shares

Question 37

If the Federal reserve board wants to stimulate the economy, what is the least likely they will do?

Answer 37

Change the reserve requirement

Question 38

What kind of taxes are not progressive?

Answer 38

Sales taxes

Question 39

What is a requirement for an offer of rescission?

Answer 39

It must be in writing

Question 40

How long is a state securities registration statement effective?

Answer 40

For one year or until all securities are sold and can be extended, providing there's no stop order

Question 41

Which type of life insurance policy allows policyholder to determine when the premiums are paid and how large those payments are?

Answer 41

Variable universal life insurance policy

Question 42

When can an investor in a variable annuity change their payout option?

Answer 42

May never change their payout option once it has been set

Question 43

What is the purpose of a consent to service of process?

Answer 43

It gives the administrator the authority to receive service of process against the applicant in non-criminal proceedings

Question 44

What type of annuity would provide the highest monthly payout on an immediate annuity?

Answer 44

Straight life annuity always has the highest monthly payouts of the options with life contingency

Question 45

Can a state administrator execute a search warrant?

Answer 45

No

Question 46

The net capital requirement for an agent cannot exceed?

Answer 46

The fee for each state in which they are registered

Question 47

The filing date for a new issue is considered to be?

Answer 47

The date of post mark

Question 48

If FINRA offers a respondent, a minor rule violation letter for an offense, the maximum fine is?

Answer 48

$2,500

Question 49

The internal rate of return is the point at which the net present value of an investment equals?

Answer 49

Zero

Question 50

The three key projections for estimating the lump sum that a person will need at retirement are?

Answer 50

Life expectancy, inflation rate, investment return

Question 51

A bond certificate issued will not contain?

Answer 51

Par value of the bond

Question 52

Bond interest starts to accrue on a new issue of bonds on which date?

Answer 52

The dated date

Question 53

Under the uniform security act, the statue of limitations for civil action is?

Answer 53

2 years from discovery, 3 years from occurrence

Question 54

The assumed interest rate only affects what?

Answer 54

The value of the annuity unit and the amount of the annuity payment

Question 55

The prime rate is?

Answer 55

The rate that banks charge their most credit worthy corporate customers on loans

Question 56

As per FINRA rule, 2210 electronic communications with the public must be based on what?

Answer 56

Must be based on the principles of fair dealing

Question 57

A respondent who is unhappy with the order of the administrator may appeal it to the court system within how many days?

Answer 57

60

Question 58

Which ratios are used to evaluate a company's earnings?

Answer 58

P/E ratio and earnings per share

Question 59

A client who is purchasing shares under regulation A offering must receive what?

Answer 59

An offering circular 48 hours prior to the sale

Question 60

The federal funds rate is?

Answer 60

The rate that member banks charge each other for overnight loans

Question 61

The FRB wants to stimulate the economy. What is the least likely they will do?

Answer 61

Change the reserve requirement

Question 62

The private advisor exemption is available to advisors who have given advice to how many people and how many months?

Answer 62

15 people in 12 months

Question 63

What is the only investment that would allow the investor to move money between portfolios at the NAV?

Answer 63

Opened and mutual fund

Question 64

When applying prudent investor standards, the focus is the?

Answer 64

Investors total portfolio

Question 65

What type of insurance policy provides the insured with a guaranteed death benefit equal to the face amount of the policy, plus a guaranteed cash value which the policy holder may borrow against?

Answer 65

Whole life

Question 66

A firm, acting on its own account as a principal, is considered a what?

Answer 66

A dealer

Question 67

An investor may only liquidate the variable rate demand obligation when?

Answer 67

By putting the security to the dealer or to the third party on the reset date

Question 68

How often can an investor transfer their IRA?

Answer 68

As often as they like

Question 69

How often can an investor roll over their IRA?

Answer 69

Can only be done once a year

Question 70

What type of retirement plan does not need to follow ERISA standards for vesting eligibility or funding?

Answer 70

Deferred compensation plans

Question 71

Under modern portfolio theory all portfolios should operate how?

Answer 71

At least equal to the efficient frontier

Question 72

What is included in the safe harbor under ERISA 404c?

Answer 72

The plan must offer a minimum of three investment portfolios and the participant must be given ample opportunity to move money between the portfolios offered

Question 73

Feel curve often inverts when interest rates are what?

Answer 73

When interest rates are relatively high but are expected to fall in the near future

Question 74

What is most useful in determining the price volatility of a bond to a significant change in interest rates?

Answer 74

Convexity

Question 75

What is the dividend payout ratio formula?

Answer 75

``` Annual dividends per common share / Earnings per share ......... So to calculate, the dividends per share equals... Annual cash dividends / Number of common shares outstanding ```

Question 76

The Federal reserve Board wants to simulate the economy. What will they lease likely do?

Answer 76

Change the reserve requirement

Question 77

If an agent decides to file an appeal of the administrator's order, it must be done in how many days?

Answer 77

60 days

Question 78

The prime rate is the rate that banks charge who?

Answer 78

There are most creditworthy corporate customers on loans

Question 79

For state tax purposes, the IRS will include which of the following when determining the estates tax liability?

Answer 79

Assets transferred within 3 years of death

Question 80

What type of risk only relates to fixed income securities?

Answer 80

Credit risk is the risk of default

Question 81

Alone taken out by a limited partnership where there is no minimum payment liability for the limited partners is known as what kind of loan?

Answer 81

A non-recourse loan

Question 82

What are loans with no personal liability for repayment known as?

Answer 82

Non-recourse loans

Question 83

The firm acting for the accounts of others as an agency is known as a what?

Answer 83

Broker

Question 84

Corporations exclude much or all of the income received except for income received from holding what kind of security?

Answer 84

For holding another corporation's debentures

Question 85

Which plans are typically funded with contributions deductible from income for purposes of figuring federal income tax?

Answer 85

457 and 403b

Question 86

For a state tax purposes, the IRS will include assets transferred within how many years of death when determining the state's tax liability?

Answer 86

3 years

Question 87

what is not attached to a fully registered corporate Bond?

Answer 87

Coupons

Question 88

Which person is a fiduciary?

Answer 88

Investment adviser

Question 89

In order for an investor to be suitable to purchase a CMO they should be least concerned with what?

Answer 89

Liquidity

Question 90

What handles trade practice complaints for FINRA?

Answer 90

Department of enforcement

Question 91

1 mil when determining a tax liability for real property would be best described as?

Answer 91

$1 of tax for every $1,000 of assessed value of property

Question 92

A new registering through coordination must send the state securities administrator how many copies of the prospectus?

Answer 92

3

Question 93

Income from which type of bond is most likely to be subject to high income investors to the alternative minimum tax?

Answer 93

Industrial revenue Bond

Question 94

According to finra's code of arbitration the statute of limitations is how many years?

Answer 94

6 years

Question 95

The Federal reserve board does not set which rate?

Answer 95

Prime rate