Random #13

Question 1

The total cost (the price) of an option is called

Answer 1

it’s premium

Question 2

Under the guidelines of Subchapter M of the Internal Revenue Code, a REIT can avoid being taxed as a corporation by receiving what % of income from RE?

Answer 2

75%

Question 3

The lowest potential yield that can be received on a bond without the issuer actually defaulting is which of the following?

Answer 3

Yield to Worst

Question 4

Short-term securities, especially treasury bills, held by banks to increase their liquidity are known as which of the following?

Answer 4

Secondary reserves are high-quality, short-term marketable securities- more liquid!

Question 5

DNR

Answer 5

A “Do Not Reduce” (DNR) order is a trade type used on a buy or sell order. It tells the broker not to decrease the limit price on buy-limit and sell-stop orders on the record date of a cash dividend. When a stock goes ex-dividend the price is usually reduced by the amount of the dividend.

Question 6

Uniform Prudent Investors Act of 1994

Answer 6

sets the basic standards by which all investment professionals acting in a fiduciary capacity must abide.

Question 7

market on open, market on close orders

Answer 7

On a market-on-open or market-on-close order, the investor wants the order executed on the opening or closing of the market or as reasonably close to the opening or closing as practical. Partial executions are allowed.

Question 8

The Uniform Gift to Minors Act requires how many persons to be on the account

Answer 8

One custodian and one minor

Question 9

Coincident indicator

Answer 9

an economic measurement that changes directly and simultaneously with the business cycle.

Question 10

Because of the time value of money, a dollar earned in the future…

Answer 10

Won’t be worth as much as a dollar today

Question 11

Reverse Churning

Answer 11

Putting inactive accounts into a fee based plan and charging an annual fee

Question 12

What is a hypothecation agreement

Answer 12

pledges the customer’s securities for the loan

Question 13

When a customer signs a loan consent agreement for a margin account he does which of the following

Answer 13

Allows the brokerage to lend out securities

Question 14

Which entity is not one of the types of investment companies set forth by the Investment Company Act of 1940.

Answer 14

Commercial Bank is not an investment co.

Question 15

FINRA 3310

Answer 15

reporting a fallacious purchase or sale price.

Question 16

The SEC rule that requires broker-dealers to send written confirmation for any transaction in a customer’s account is which of the following?

Answer 16

SEC Rule 10B-10

Question 17

A private placement is also know as

Answer 17

A reg D offering

Question 18

QDRO

Answer 18

Distribution by court order to a third party

Question 19

457 comp plans are municipal plans and are not covered under ERISA. T or F

Answer 19

True

Question 20

Dividend Growth Model

Answer 20

About taking the dist of the dividends to present value

Question 21

Div Growth Model

Answer 21

Dividend income stream expected to grow

Question 22

Capital Asset Pricing Model

Answer 22

Describes the relationship between Systematic risk and expect return for assets