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Flashcards in STC Cards Deck (446)
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1

Does SIPC protect separate customers or separate accounts?

Separate customers. A customer with both a cash and margin account with a BD would be covered once.

2

True or False: Jim's joint account with his wife is considered a separate customer by SIPC.

True. E.g. Jim's cash and margin account are combined for coverage, but Jim's joint account with his spouse is separate.

3

If a BD goes bankrupt, what happens to securities registered in the customer’s name?

They are returned to the customer without regard to SIPC limitations.

4

The Securities Act of 1933 regulates _____________.

The Securities Act of 1933 regulates new issues.

5

What is the primary purpose of the Securities Act of 1933?

Provide investors with full and fair disclosure regarding new issues (prospectus)

6

True or False: The SEC judges an offering’s investment merit and provides approval.

FALSE

7

List the securities that are exempt from registration.

Government/municipal bonds, commercial paper, bankers' acceptances, bank issues, non-profit and small business issues

8

Though some securities are exempt from registration, nothing is exempt from the ____________ provisions of the Act.

Though some securities are exempt from registration, nothing is exempt from the anti-fraud provisions of the Act.

9

What are the justifiable reasons for denying an individual's registration?

Conviction for any felony or securities-related misdemeanor within the last 10 years

10

True or False: An American Depositary Receipt (ADR) is a security.

TRUE

11

Is an option on a commodity futures contract a security?

Yes. The futures contract is not, but the option is a security. Options could be based on an equity, index, or currency.

12

Would an interest in a real estate condominium development be considered a security?

Yes

13

True or False: Precious metals are not considered securities.

TRUE

14

Is a voting trust certificate a security?

Yes

15

Is a Keogh plan considered a security?

No, but Keogh plan participation is considered a security.

16

Is an investment interest in livestock considered a security?

Yes

17

Is a certificate of interest in a mining lease a security?

Yes

18

Is a fixed annuity a security?

No, but variable contracts (e.g., variable annuities or variable life insurance) are considered securities.

19

Is an endowment life insurance policy a security?

No

20

Is a variable life insurance policy a security?

Yes, but a term or universal life insurance policy is not considered a security.

21

Is a universal life insurance policy considered a security?

No

22

Is Keogh plan participation considered a security?

Yes, but the Keogh plan itself is not a security.

23

Is a 401(k) plan considered a security?

No

24

Is treasury stock considered a security?

Yes. Treasury stock is stock that was issued and subsequently repurchased by the company.

25

Is a debenture considered a security?

Yes. A debenture is an unsecured corporate bond.

26

Is a preemptive right considered a security?

Yes

27

Is a warrant a security?

Yes. Warrants are financial instruments that allow investors to acquire stock at a preset price.

28

Is a preorganization certificate considered a security?

Yes

29

Is an IRA account considered a security?

No

30

Is a futures contract considered a security?

No, but an option on a futures contract is a security.