STC Questions Flashcards
(422 cards)
1
Q
Does the OCC oversee BDs, clients or both?
A
Only with broker dealers
2
Q
Who are the buyers for all sellers and the sellers for all buyers?
A
OCC & DTCC
3
Q
What is the $ threshold for an investment advisor to have to register with the SEC?
A
$100 million
4
Q
What is the $ threshold for FINRA to consider an account institutional?
A
$50 million and cant be an individual person
5
Q
Is a clearing corp responsible for automated book-entry changes in securities ownership?
A
No, DTC is
6
Q
Does the DTC hold customer cash or securities?
A
No
7
Q
If and investment advisor has AUM <$100million, who is it regulated by?
A
the state(s) that they conduct business in (not FINRA)
8
Q
Can ECNs be used to trade anonymously?
A
Yes
9
Q
The third market is concerned with (vs secondary market):
A
Securities listed on exchange but traded OTC
10
Q
The primary purpose of the North American Securities Administrators Association is to:
A
Create rules, laws, and exam requirements FOR STATES
11
Q
Who helps to administer the dispute arbitration process?
A
FINRA
12
Q
What is the Pink Open Market
A
a quotation system for securities not listed on an exchange
13
Q
What kind of investments are not protected by SIPC?
A
stocks held in customers name (instead of broker’s street name)
14
Q
The manual which details the rules and identifies the person(s) responsible for enforcing the rules is called
A
the Written Supervisory Procedures (WSP) manual
15
Q
What are the hours of the telephone act?
A
8am-9pm
16
Q
How much can the SEC sue for on insider trading?
A
3x the profit/avoided loss
17
Q
A signed disclosure document must be received from the client prior to the execution of what type of trade?
A
An OTC trade <$5
18
Q
Does a muutal funds summary prospectus contain number of shares issued?
A
No, it only contains static info like objectives, fees, performance table, expenses, risks, management info, tax info (BUT NOT STRUCTURE OF THE ORGANIZATION EITHER)
19
Q
If a BD violates a rule of the MSRB, the violation is enforced by
A
FINRA
20
Q
When a BD opens an account for a customer, is it required to provide the name of the SIPC trustee?
A
No, the name of trustee is only provided if the BD declares bankruptcy
21
Q
Which act covers the regulatory requirements of a 401k plan?
A
The Employee Retirement Income Security Act of 1974 (ERISA)
22
Q
What act established Blue Sky Laws?
A
Uniform Securities Act
23
Q
what shares (total/outstanding/treasury) are used in Market Cap and EPS calculations?
A
only outstanding
24
Q
is restricted or controlled stock required to hold for 6 months under Rule 144?
A
restricted stock, controlled can be sold by filling form 144
25
what type of investors is allowed to buy stock sold under restricted stock selling rule 144?
Qualified institutional buyers (QIBs)
26
What types of investors can buy unregistered stock from an issuer, via a Regulation D private placement?
Institutional and accredited investors
27
after filing form 144, how long do controlled stock owners have to sell?
90 days
28
what is the max amount of shares a controlled stock owner can call via Form 144?
1% of outstanding, OR the average weekly trading volume over last 4 weeks (whichever is higher)
29
Whats the difference between ACATs and Section 1035 for making changes to annuities?
ACATs is one broker dealer to another, 1035 is one annuity to another (for one subaccount to another they just contact the BD)
30
when is form 144 not required for selling controlled stock?
if <5000 shares OR $50,000 worth (whichever is lower)
31
Does preferred stock have voting rights?
No
32
what type of preferred stock allows holders to share in common stock dividends?
participating preferred stock
33
formula for pricing convertible preferred stock price value
common stock price x conversion ration (par value/conversion price)
34
does preferred stock recieve rights offerings?
no, only common stock
35
what is the par value of preferred stock?
100
36
Is current yeild the same as nominal yield?
No, current yield is annual interest $/market price
37
If you own 500 shares of 3% convertible preferred stock, and the conversion price is $20, how many shares of common stock do you get if you convert?
$100 par preferred/$20 conversion price = 5 shares of commons stock per 1 share of preferred. 5 * 500 shares you own is 2500 shares
38
At what price can a company/issuer buy back its own stock?
equal or lower than the highest independent bid, or last independent transaction price, whichever is higher
39
what is the benefit of issuing a subscription warrant?
lower interest rate on issuers bond
40
what is the first date an investor can purchase stock without the dividend included in the price?
ex-date
41
formula for stock's dividend yield
ANNUAL dividend/current stock price
42
what maturity of bonds prices move the most with interest rate changes?
long term maturities
43
does a stock split require a vote by shareholders?
yes
44
what 2 dividend dates are typically the same?
ex-date and record date
45
what happens to a stock price on dividend ex-date?
it decreases by the amount of the dividend
46
are both stock and cash dividends taxable?
No, just cash dividends but stock dividends do adjust cost basis per share
47
from longest to shortest, what is the order of lifespan of Options, Warrants and Right?
Warrants (lifespan), Options (usually <9mo), Rights(<60 days)
48
formula for current bond yield
ANNUAL interest $/current market price
49
what is another term for basis?
YTM
50
will issuers make tender offers for their bonds when interest rates are low?
No, more likely when rates are high (and bond prices are low)
51
convertible bond conversion ratio formula (to find # of shares investor receives at conversion)
par value(NOT MARKET VALUE)/conversion price
52
what bonds have 30/360 day accrued interest calc?
corps, munis and gov agencies (everything except treasuries)
53
what 2 types of treasury bonds are zero coupon/sold at discount?
Bills and STRIPS
54
a bond offering issued on the same date, but with small amounts maturing in early years and large amounts maturing at the end, is called a:
balloon maturity
55
are short term bond prices more volatile than long term? What about yields?
short term prices are less vol than long term, but short term yields are more volatile
56
Are catastrophe calls required to be disclosed on a bond confirmation?
no
57
what does 99.23 treasury bond price calculate to?
99.(24/32)
58
if you want a bond portfolio with stable value, what maturity of bonds should you buy?
short term maturities
59
What do you purchase when investing in a variable annuity contract, and do you purchase a fixed amount?
accumulation units, and they vary if you contribute a fixed $ amount each month bc they value of each fluctuates. Once you annuitize you get a fixed # of annuity units
60
are capital gains and interest on muni bonds taxable?
capital gains are taxable, interest is tax free (federally)
61
What 2 types of bonds have interest rates set at specified intervals, are often issued by municipalities, are long term securities with short term trading features BUT DO NOT both have a put feature allowing holders to redeem the security at par?
Auction rate securiites (ARSs) and variable rate demand obligations (VRDOs) - VRDOs have the put feature
62
what type of agency bond does the US Gov not guarantee payment of interest and principal of?
FHLMC (Feddie Mac)
63
a quote of 5.90 - 5.75 is a quote for which of the following securities?
treasury bills since they are issued on discount yield terms
64
what is the minimum denomination for a CD?
$100,000 (typically $1,000,000)
65
what's an example of secured bonds that receive first payout at liquidation
mortgage bonds
66
Which type of Treasury has weekly auction? What do the rest do?
Bills are weekly, the rest are periodic
67
what are the maturity terms for the 3 types of treasuries?
Bills <1 year, Notes 1-10 years, Bonds >10 years
68
What agency bonds are technically guaranteed by the government?
Ginnie Mae
69
Do agency securities require state and federal registration?
no
70
is interest on US government bonds taxable?
yes federal taxes, but no state income tax
71
what is the creditworthiness of an industrial revenue bond judged by?
net lease entered into by the industrial corporation
72
VRDOs and ARS (munis) both provide tax free income, long term maturities and adjustable interest. What is the main difference?
VRDOs can be put back to the issuer at par on interest adjustment days, while ARS allows the security to be sold at auction on interest adjustment days, but it isnt gauranteed b/c the auction could fail
73
what approval is required for a municipality to start making payments on a moral obligation bond?
approval by the state legislature
74
what is the maximum maturity of commercial paper?
270 days
75
a bond with 6% coupon is priced at 7..20 basis, if YTM increases by 40 basis points, what would the yield be?
7.20+.4 = 7.60
76
what dividend dates are determined by the corporation?
declaration date, payment date, record date
77
what is the order or dividend dates?
declaration date, ex-date, record date, payment date
78
What taxes are US treasuries subject to? What about Munis?
UST are federally taxable but excepmt from state, munis may be state taxable but excempt from federal
79
what are the short term and long term capital gains tax rates?
short term = your income tax rate, long term = max of 20%
80
If you inherit shares from a deceased relative who bought them for $22/share, and they are $34/share at the time you inherit (date of death), what cost basis are the capital gains taxed at?
$34, the market price on the date of death
81
What is the formula for mutual fund Public Offering Price (POP)?
NAV/(100-Sales Charge)*100 - then divide that by $ you are investing to get # of shares you can buy
82
the right to add up the total of all past and present purchases when determing sales charge of a mutual fund is called:
rights of accumulation
83
who must a mutual fund's statement of additional information be sent to?
to any interested party who requests it
84
when you redeem shares of a mutual fund, how long does the fund have to deliver the money?
7 calendar days
85
between open end and closed end funds, which have commissions and which have sales charge?
open end (mutual fund) = sales charge, closed end = comission
86
what is section 1035 for (annuities) and what is the benefit?
moving money from one annuity to another (like fixed to variable), it avoids taxes
87
What is ACATs for (annuities)?
Automated Customer Account Transfer service, for moving securities from one broker dealer to another
88
what kind of fund has no provisions for future purchases or redemptions from the issuing fund?
closed end fund - it is just shares being bought and sold in the open market
89
Are 529 plan contributions deductible at the federal or state level?
non deductible at federal level, potentially deductible from state level. EARNINGS are tax free from federal level
90
If you have a variable annunity and want to transfer from XYZ growth seperate account to ABC growth seperate account, who should you reach out to?
the insurance company that sponsors the account
91
what is an accumulation unit in a variable account?
its an accounting measure used to determine the contract owners interest in the seperate account where their contributions are invested.
92
In a variable annuity, the size of the first monthly payment is based on age, gender, account value etc but not:
the person's health
93
An annuitant has been receiving payments from a variable annuity for six years, and at the time of his death, his beneficiary receives a lump-sum payment. The annuity payout option type was:
unit refund life annuity
94
a joint and last survivor life annuity settlement can be established between
any 2 individuals
95
when the holder of a variable annuity dies, what is the growth of the annuity taxed as to the beneficiary?
ordinary income tax
96
what is the tax treatment of qualified annuities?
funded pre-tax and the payouts are taxed (like traditional IRA)
97
what type of sales charge do variable annuities assess?
contingent deferred sales charge
98
when a city establishes a local government investment pool (LGIP), what entities are allowed to make investments?
state, county and city only
99
does the number of annuity units in a variable annuity change over time?
No its a fixed number
100
Can loans be taken on variable annuities? When?
Yes, but only during the accumulation period. The advantages of a loan include the potential for avoiding surrender charges, taxes and early distribution penalties
101
whats the max distribution that can be taken from a 529 plan to pay for K-12 private school?
$10k annually
102
Is an equity indexed annuity (EIA) considered a security?
No, it is a fixed annuity (insurance product)
103
What primarily impacts the value of a variable life insurance policy?
the performance of the seperate account
104
Can you reallocate the investments in a seperate account after annuitizing a variable annuity?
yes, but the decision to annuitize and the chosen settlement option are final
105
Are contributions to a 529 plan limited? What about income of contributors?
They ARE liimited (determined by the state) but there is no income limit
106
What's the maximum contribution you can make to a 529 plan without being subject to gift taxes?
$190,000 from married couple if no additional contributions are made for the next 5 years
107
An investment company that is purchased in installments and that matures at a fixed-dollar amount is called a
Face-amount certificates company
108
what type of accounts are fixed vs variable annuities based on?
Fixed = the insurance company's general account, variable = seperate account
109
What is required for an REIT to qualify, and what are the tax implications?
no more than 25% of revenue from non real estate activities, and at least 90% of income must be distributed. Shareholders do pay taxes on income distributed by the REIT, it is a non-qualified dividend for tax purposes
110
what is SEC rule 147?
allows issuers to sell security without registration to investors in the state where the issuer is located (unless the investor entity is formed specifically to purchase the securities)
111
a grant anticipation note is normally paid from:
the federal government
112
whats the maximum amount of time an investor is given to meet the amount promised in a letter of intent when investing in a mutual fund?
13 months
113
Do DPPs and REITs have a minimum amount of income they need to distribute? Do they have a maximum number of shareholders?
Yes, 90% for REITS and 100% for DPPs. REITs must have at least 100 shareholders and DPPs no more than 35
114
Who can contibute to a 529 plan?
anyone of legal age, and the beneficiary can be of any age, can be the owner, and can contribute. a 529 cannot be rolled into an IRA but some can be rolled into ROTH IRA
115
Are UITs considered investment companies under the 1940 act? What about REITs?
UITs yes (as well as face amount certificate companies and managed companies (aka mutual funds). Not REITs
116
When selling limited partnership interests, is a RR required to certify the customer is an institution?
no, a accredited investor
117
If an investor purchases a new issue of mutual fund shares, when does the investor receive a prospectus?
By no later than the time the investor receives a confirmation
118
Are registered non-traded REITs required to distribute 90% of income to investors like exchange traded?
Yes
119
Can shares of an IPO be purchased in a margin account?
Yes but they have to be paid for in full, not on margin
120
What kind of options are cash settled (rather than delivering actual shares)?
index options
121
What is the primary disclosure doc for a private placement?
Offering memorandum (also called private placement memorandum)
122
What is a shelf registration, and how long does it apply for?
Shelf registration allows new shares to be issued under the same registration for up to 3 years
123
what disclosure doc is used for muni bond offerings?
Official Statement
124
do munis require registration?
no
125
Are ADRs required to register under Securities Act of 1933?
Yes
126
what is the disclosure document called for a public offering of corporate securities?
prospectus
127
who creates an Options Disclosure Document?
The OCC
128
Who creates the official statement for a muni bond offering?
the issuer
129
Does an underwriter have to deliver a prospectus for a following-on stock offering?
No
130
When filing for an IPO, how many days does a firm have to deliver a prospectus to an aftermarket purchaser? What about if the company will not be listed?
within 25 days of the effective date. 90 days after the deal closes if the company will not be listed
131
Who has the responsibility to investigate the accuracy of the info in a prospectus for a DPP?
the managing underwriter (SEC never attests to accuracy)
132
what kind of account can an uncovered call writing strategy be executed with?
only margin account bc its uncovered (on margin)
133
What % allows the equity shares of a company to be sold in a state under Rule 147
80% of the issuers assets are in the state OR revenues derived from the state OR proceeds from the sale used in the state AND DONT FORGET 100% of the buyers of the offering must be residents of the state
134
Is an RR required to disclose probate fees to the buyer of a variable annuity?
No, but they do have to disclose Surrender, mortality and administrative fees
135
When redeeming shares of an open-end investment company (mutual fund), an investor will receive:
the NAV (not sales charge)
136
Volume and holding-period restrictions do NOT apply to the resale of private placements when:
The purchaser is a qualified institutional buyer
137
How does the OCC select which member firm receives exercise notice of an option? The how does that member firm select a customer with open position to fill it?
Random selection of firm by OCC, then member first can use random, FIFO, or anything fair and equitable
138
Can a RR buy stock for a customer in a discretionary account if its stock of their employing BD?
No since its a conflict of interest, even though its discretionaty, they need written approval from the customer
139
when judging the fairness of a BDs markup, do industry rules require the type of account (retail vs institutional) to be considered?
No, but type of security, availability, price, pattern of markups, nature of the BDs business etc are considered
140
Are fee based accounts good for buy and hold strategy?
no bc they charge annual fees instead of commission, buy and hold is better for commission based
141
What is a proceeds transaction and what is the BD required to charge?
Proceeds transaction is when a customer sells stock and uses the proceeds to buy another. The BD charges a markup on both transactions, but computes it only on the sale of stock to a customer. They must be sure not to violate the 5% markup policy
142
What's the margin requirement for an initial short transaction?
50% of the market value OR $2000, whichever is higher
143
Can margin accounts offer an extension of time to meet a maintenace/margin call? do they have to contact the customer when they sell securities to meet margin requirement?
No and no
144
are customers allowed to sell securities back to the manager of the syndicate during the underwriting period? can underwriters engage in stabalization?
no they are not allow to sell back, yes underwriters can engage in stabilization
145
what is a stock power?
a certificate used to ensure transfer of securities when they dont want to sign the actual stock certificate and send them in the mail. it is sent in a seperate envelope
146
what is a hypothecation agreement?
they permit a BD to pledge a customers securities to a bank as collateral against the customers margin loan. The customer must sign the agreement when opening a margin account
147
who determines the investments in a Coverdell Education Savings Account (CESA)?
the investor who opens it (unlike 529 plans where the entity managing the plan determines the investments)
148
when are 10-Ks file?
at the end of the fiscal year, within 60 days (10-Qs are quarterly within 40 days)
149
does a reverse stock split create a smaller or larger number of shares
smaller (stock splits split the price down creating a larger # of shares)
150
how much can each individual contribute annually to an IRA? Can a couple combine into 1 IRA?
$7k per person, another $7k for their spouse if they dont work but they must be into seperate accounts
151
are Uniform Transfer to Minors Act (UTMA) earnings tax deferred?
No
152
what are the 3 requirements for RR to accept a customer order?
1. specific security 2. buy or sell 3. the amount to buy or sell
153
can OTC equities be purchased on margin? what about corporate bonds? Mutual funds?
No to OTC equities and mutual funds - but yes you can buy corporate bonds on margin
154
what does the 5% markup policy apply to?
noexempt securities, it doesnt apply to transactions requiring a prospectus (new issues, mutual funds, registered secondaries OR excempt securities like munis
155
can markups of more than 5% be charged
yes the 5% markup policy is a guideline, not a ceiling, and applies to both agency and principal transactions
156
what securities does the 5% markup policy not apply to?
mutual funds, munis, new issues sold at a fixed IPO price
157
how much assets do you need to be a qualified institutional buyer (QIB)?
at least $100 million of investable assets
158
is cash settlement for securities T+1?
no T+0 - all cash settlements are on the trade date
159
Do Coverdell Education Savings Account (CESA) distributions need to be for higher education?
No, they can be for elementary education
160
What is the max yearly contribution to a Coverdell Education Savings Account? Can you contribute after the beneficiary turns 18? Can you transfer to family members under the age of 30?
$2k, you can only contribute until they turn 18, and you can transfer to family members who are under 30
161
what pre age 59 1/2 withdrawals from a Roth IRA wont result in a 10% tax penalty?
equal withdrawals over the individals life, first time homebuyer withdrawing <$10k, payment of IRS tax levy (but the IRS must withdraw that directly)
162
what type of security doesnt require T+1 settlement?
mutual funds
163
how do spinoffs trade when they are not yet available for delivery?
as a when-issued security and settle after the shares become available for delivery
164
What is Regulation D used for, and does it require registration with the SEC?
Reg D is used for issuing private placement securities, and avoids registration with the SEC
165
What kind of security is considered unsecured securities since the issuer doesn't hold the assets that are being tracked. They're subject to the creditworthiness of the issuer, can be linked to nearly any index or asset, and don't make regular interest payments?
ETNs
166
What kind of charges do Unit Investment Trusts (UITs) include and not include?
initial sales charge (load) and operating fees. Since they are non-managed they dont have management fees
167
What is an assessment of a limited partner?
it is a request to provide additional funds to the partnership. Failure to provide the funds may result in the LP losing investment interest in the program
168
What's the typical maturity for an ECN?
10-30 years
169
After filing Form 144, what's the maximum amount of restricted securities that can be sold within a 90-day period?
The greater of 1% of the total outstanding shares or the stock's weekly average over the past four weeks
170
For unlisted follow-on offerings, for how long must a prospectus be delivered in the aftermarket?
For unlisted follow-on offerings, prospectuses must be delivered for 40 days in the aftermarket.
171
Is a BD being reimbursed by an issuer for registration fees associated with filing a new issue a FINRA violation? what about if they publish a quote or act as a market maker?
No but the 2nd are violations
172
An individual has made a tender offer for a fixed number of shares of XYZ Corporation. If more shares are tendered than desired by the individual, a shareholder who has offered her shares will have what amount of them accepted?
When a tender offer is made for a fixed number of shares and more shares are tendered, a proportionate number of shares will be accepted from those who tender their shares. For example, if twice as many shares are tendered than those for which the offer is made, each shareholder will have half of her shares accepted.
173
When opening a margin account is a customer required to sign a loan consent agreement?
No
174
In a Joint Tenancy in Common (JTIC) account, can the joint ownership be unequal?
yes it can be unequal
175
To avoid an IRA rollover from being taxable, it must be completed within
60 days
176
Distributions from Traditional or Roth retirement plans may be tax-free?
Roth
177
Is a corporate charter required to open margin and option corporate accounts?
Yes, but not for cash accounts
178
After the opening of an options account has been approved, the customer must sign and return the Options Account Agreement within how many days
15 calendar days of approval
179
There's no limit to the contributions to a Uniform Transfers to Minors Act account (UTMA), but you should consider
that >$19,000 gift will incur taxes
180
Which of the following employer-sponsored retirement plans provides employees with guaranteed payouts at retirement?
Defined Benefit Plans provide employees with guaranteed payouts at retirement. Payouts from defined contribution, 401(k), and profit-sharing plans are based on performance of the investments in the account.
181
When opening a new customer account, who's required to sign the new account form?
The principal only
182
The account of a specified adult has been placed on a temporary hold due to a concern of financial exploitation. For how long will the hold generally remain in effect?
15 business days
183
After four years in the industry, a person's registration became inactive. This person may re-register with a member firm without having to requalify if he does so within
2 years from being inactive (unless they are enrolled in the Maintaining Qualifications Program (MQP) - then it is 5 years
184
Whats the first thing you have to do after passing SIE exam?
file for U4
185
If a broker-dealer is considering hiring an individual who was previous registered with another broker-dealer, the firm must review the form:
U5
186
Is a non-registered person who processes orders for a firm that sells only mutual fund shares required to be fingerprinted?
No
187
Is an Investment Company and Variable Contracts/Products Representative considered a limited or fully registered rep?
limited
188
A reverse repurchase agreement may also be referred to as a(n)
a matched sale
189
An announcement on a financial news website states that the money supply (M1) has dropped for the week. what type of money is M1?
Demand deposits and currency in circulation
190
What economic theory states that government intervention in the marketplace is necessary for controlling economic growth
Keynesian theory (Keynesian economic theory states that government intervention (e.g., decreasing taxes, creating stimulus programs) is necessary for bringing an economy out of a recession.)
191
What type of bonds dont have reinvestment risk?
Zero coupon bonds
192
What is Capital Risk and what has the least amount of it?
Capital risk is the risk of an investor losing her entire investment. When compared to the other securities, bonds have the least amount of capital risk because they're paid first in bankruptcy.
193
What type of muni bond is a charge against property that receives a benefit from the improvement? (like sewers). Can it be paid by property taxes or fees?
Special Assesment Bond, yes they can be paid by property taxes or fees
194
The Bond Buyer Index is based on what types of securities?
Munis
195
Do revenue muni bonds' maturity need to match the useful life of the facility being built?
no it should be less than the life of the facility
196
What is the requirement for a Qualified Institutional Buyer (QIB)?
entities with at least $100 million of investable securities, or banks with a net worth of at least $25 million (CANNOT BE INDIVIDUAL INVESTORS)
197
what is a not-held order and does it require written approval from the client to execute?
an order from client that specifies asset, action and amount of securiites to be bought/sold. WRITTEN APPROVAL IS NOT REQUIRED, just verbal is ok
198
Does the SEC Customer Protection Rule apply to both cash and margin accounts?
Yes
199
Under the SEC Customer Protection Rule, if a client sells a security and fails to deliver within 10 business days of settlement, what happens?
the Broker Dealer must buy-in the customer
200
What kind of stockholders are entitled to preemptive rights?
common stock holders, not preferred
201
how often do BDs send statements for active & inactive accounts? What makes them inactive?
monthly for active, quarterly for inactive, at least 18mo without a trade make it inactive
202
An individual may roll over a lump-sum distribution from a corporate pension plan to an IRA without tax consequences if it is done within how many days?
60 days
203
Can a BD open an options trading account for a customer that refuses to provide financial information?
Yes but must record the refusal and use their own judgement to decide about opening the account
204
What is the difference b/w Joint Tenants in Common vs Joint Tenants with right of survivorship accounts?
Joint tenants in common each person has a percentage share, and if they die their share goes into their estate. While JT right of survivorship the survivor gets all the funds
205
when must a firm provide a client with a privacy notice? Can the firm disclose personal info to a third party?
when the account is first setup and then annually after. Yes the info can be disclosed if the client doesn't opt out
206
When cold calling clients are you required to disclose your name, phone # OR address of your firm?
yes
207
what clause in an underwriting agreement allows the underwriter to withdraw from the issue if certain events occur that make the sale of the issue difficult or impossible?
market-out clause
208
are munis and government/government entity securities excempt from registration/1933 act?
Yes but must record the refusal and use their own judgement to decide about opening the account
209
Is short term coprorate date (<270 days) excempt from registration/1933 act?
Yes
210
are securities issued by domestic banks and trust companies excempt from registration/1933 act?
Yes
211
Is preffered stock excempt from registration/1933 act?
No
212
Are securities issued by small business investment companies or non profit orgs excempt from registration/1933 act?
Yes
213
Does the 5% markup rule apply to munis and new issue securities with a prospectus?
No, secondary securities
214
Can short sales be executed in a cash account?
no shorts are always in margin account
215
the 5% markup policy applies when a BD is acting in what capacity?
as a principal dealer
216
If a seller knows she requires additional time to settle due to legal issues with the stock certificate, can she request a sellers option?
Yes and if the buyer agrees then it is ok
217
Under Regulation T, what happens if a purchase is made in cash/margin account but the customer doesnt pay within 2 business days?
The BD may cancel the transaction by selling out the securities, and then is required to freeze the account for 90 days, during which all purchases must be paid for in advance
218
Does an RR need to try to obtain the customer's occupation? What about educational background
Yes to occupation but no educational background
219
communication/advertising is considered retails communication unless its distributed to less than x ppl - then it's correspondence
25 retail investors (within 30 day calendar period) (Retail investors are any non institutional investor)
220
All materials that are prepared for the public media in which the ultimate audience is unknown are considered
Retail communications (unless < 25 retail investors)
221
Do fee based accounts charge 1 annual cost, or per trade costs
Fee-based accounts charge clients an annual fee that's based on a percentage of assets under management (AUM) - opposite of commission based accounts
222
When is disclosure required for municipal securities trades?
for all muni transactions
223
When is it acceptable for a RR to receive a loan without Principal approval? Can they get approval for any type of loan otherwise?
from institutions that regularly engage in lending funds (e.g., a bank) and immediate family members are permitted and don't require principal approval. However, loans from a personal friend, business partner, or co-worker, all require the advance approval of the broker-dealer.
224
When is a BD required to file a Currency Transaction Report (CTR)?
when cash total amount >$10k in one day
225
When can a family member of an RR purchase shares in an IPO?
If they are NON-SUPPORTED, immediate family member buying from a different BD
226
Where is a FINRA member required to place a link for FINRA’s BrokerCheck website?
On the first landing page of the broker-dealer’s publicly available website
227
Can Trust accounts be setup with limitiations on where the money can be spent/withdrawn?
Yes
228
The guidelines regarding brokerage employees opening personal accounts with other brokerage firms do not apply if the transactions involve
Investment companies (Mutal funds, UITs, Variable contracts or 529 Plans). Otherwise they need prior written consent from their BD employer
229
If acting as an agent on a trade, does the RR need to disclose the amount of commission charged? Do they have to disclose if their firm was also an investment banker for the issuer of the security?
Yes, No they dont have to disclose if they're an investment banker for the issuer on the trade confirmation but they do disclose that in research reports
230
Is a transfer of IRA funds from one trustee to another considered a distribution or rollover? Is there a limit to # of transfers per year or taxes/penalities?
No its considered neither and there are no restrictions or fees
231
To avoid fees in an IRA, how long does a distribution have to be rolled into another qualified account?
60 days
232
How often can IRA rollovers be done?
only once per year
233
A customer has recently closed her account. How long is her broker-dealer required to keep records related to her account?
6 years
234
How long must customer complaint records be kept for?
4 years
235
How long are most brokerage records kept for?
3 years
236
According to FinCEN, who is considered a control person?
an individual with significant responsibility to control, manage, or direct a legal entity. This includes the chief executive officer (CEO), president, chief operating officer (COO), chief financial officer (CFO), managing partner, general partner, managing member, and managing director. A control person may (or may not) be a beneficial owner.
237
What is "structuring" when it comes to money laundering?
Structuring occurs when a client attempts to circumvent anti-money laundering (AML) reporting requirements by depositing funds in amounts just below the reporting levels.
238
Broker-dealers are required to send balance sheets to customers every:
6 months
239
Do account statements show transactions for the entire year?
no just the period, required quarterly but usually sent monthly for active accounts
240
Does an account statement need to include a disclosure that clients should promptly notify the broker-dealer if they discover a discrepancy?
Yes
241
For how long must a firm maintain records in an EASILY ACCESSIBLE LOCATION?
at least 2 years
242
How often must clients be notified of their free credit balances?
at least quarterly
243
How much can you contribute to an IRA?
lesser of 100% of earned income or $7k - over 50 years old you can contribute an extra $1k ($8k total) - REMEMBER EARNED INCOME ONLY, PENSION ETC DOESNT COUNT AS EARNED INCOME
244
Can a donor give gifts to a custodian account? What kind?
Yes, cash or stock
245
What is the difference b/w Tenants in Common accounts and Joint accounts?
Joint accounts allow multiple owners with varying share (doesnt need to be equal). Tenant in common need to be equal share and divided when one of the owners dies via their will or state law if no will exists
246
How many ppl can join a Tenants in Common or Joint account?
Any number of people and Tenants in Common is usually used for businesses (but Joint Tenants with Rights of Survivorship usually is only allowed 2 ppl)
247
What does Qualified account typically mean?
funded with pre-tax dollars (tax deffered)
248
By federal law can a stock that a customer borrowed to go short in a margin account be tendered?
No, the stock has been temporarily borrowed and does not belong to the customer and may not be tendered.
249
The 5% rule applies when a BD is acting in what capacity?
As a dealer selling from their own inventory
250
What regulation protects the confidentiality of the information that a broker-dealer collects from their clients?
Regulation SP is about privacy protection for clients
251
What does The Securities Investor Protection Act of 1970 protect customers from?
From failed Broker Dealers
252
What does Regulation FD apply to?
sharing non-public info with select individuals like research analysts
253
Who must approve a firm's AML program?
in writing by a member of senior management
254
What act must a BD's AML policy adhere to? Who must be designated to be responsible for the firm's AML program?
Bank Secrecy Act (BSA) and a compliance officer must be dedicated to oversee the firm's AML program
255
Do discretionary accounts require written or oral authorization from the customer?
Discretionary accounts require written authorization from the customer. In addition, each discretionary order must be approved on the day the order is entered by a manager, partner, or authorized person.
256
What are the rules around a firm holding mail for a customer?
It requires a written request from the customer that includes how long it should be held. Holding for more than 3 months requires a reason from the customer. The firm must have procedures to make sure there is no tampering with the mail
257
Does OFAC cover US broker dealers based in the US?
Yes
258
Do BDs need to maintain records of wire transfers from customers of $1k or more?
No it is $3k or more under the Bank Secrecy Act (BSA)
259
When must a FINCEN report be filed?
cash transactions >$10k (except personal checks or credit card payments) and whenever a transaction of >$5k is believed to be suspicious
260
At what age are you required to start taking the minimum distribution from an IRA?
73
261
Who must sign the new account form when a customer opens an account?
the Principal, the client signing is not a FINRA requirement (but many firms still do it)
262
What does a Fidelity bond protect?
it is insurance that protects a BD in case of forgery or counterfeit money. It covers securities held by the brokerage or in transit. FINRA must be notified if the bond is cancelled or substantially modified
263
Selling away is when a RR:
engages in private securities transactions outside his regular scope of employment without his firms permission
264
Are firms required to report all customer complaints? To who and when?
Yes statistical and summary of all complaints, to the appropriate SRO on a quarterly basis.
265
When must a firm IMMEDIATLEY notify the SRO of a customer complaint (rather than quarterly)?
If the complaint involves theft, forgery or misappropriation of funds
266
What has historically been a hedge against inflation?
common stock
267
What is required alongside best execution for all muni trades for a client? and why
Time of Trade disclosure - all material info known or reasonably accessible to the market, at or prior to the time of trade either verbally or in writing - why is b/c munis often have unique characteristics
268
nvolves the insertion of a third party in a trade with a customer and is generally prohibited?
interpositioning
269
When opening an account for a person who is age 65 or older, what is required?
make a reasonable effort to obtain the name and contact information for the account owner’s trusted contact person
270
What happens when the FRB conducts a repo, and what is the affect to short term yields?
they initially purchase securities, increasing money supply. This reduces short term yields
271
How long can your qualifications be maintained if enrolled in the FINRA Maintaining Qualifications Program (MQP)
5 years, but you're not permitted to act in a registered capacity, and if you become subject to statutory disqualification, the enrollment is terminated
272
Do bankruptcies and liens need to be disclosed on form U4? For how far back?
Yes for 10 years back
273
Do misdemeanors need to be disclosed on form U4?
ONLY securities related misdemeanors - and all felonies
274
An associated person of a broker-dealer will be receiving warrants as compensation for selling a security that is not being offered by her firm - does he need approval in in writing or verbal?
Yes in writing for all private securities transactions if they are receiving compensation
275
Is a RR required to get written approval from the firm if involved in private securities transaction where they dont receive compensation?
No its not required, only if receiving compensation
276
How long does FINRA juristication/registration last after an RR leaves a member firm?
2 years
277
What's the penalty if a person violates the MSRB's political contribution rule? And how long are you restricted from contributing?
(MSRB Rule G-37) prohibits municipal finance professionals (MFPs) who are able to vote for a candidate from contributing more than $250 to that candidate's election. If an MFP violates the political contribution rule, his firm is banned from obtaining negotiated business from that issuer for the NEXT 2 YEARS
278
What is the benefit of participating preferred stock?
It lets the holders share in extra profits/dividends if available
279
Final arbitration awards against registered representatives and/or firms are reported on which form?
U6 - Form U6 is used to report disciplinary actions against RR's and firms as well as final arbitration awards against individuals or firms. Form U4 is filed with FINRA when a person is applying for securities registration. Form U5 is filed with FINRA when a person's registration is terminated. Form BD is filed by brokerage firms to register with FINRA, the SEC, and states.
280
What is form U5 for
When a persons registration is terminated (but U6 has disciplinary actions and arbitration)
281
Does FINRA Brokercheck show registrations for individuals only?
No individuals and BDs
282
A country that has a trade surplus will have a currency that (appreciates or depreciates)
appreciates - When a country exports more than it imports, it has a trade surplus. Running a trade surplus creates demand for a currency, which causes the value to rise or appreciate. The rise is primarily caused by foreign consumers buying a currency in order to pay for the exports.
283
State or Blue-Sky Laws may require a registered person to
pass an exam/pay fee etc for their state (but not have an office in the state)
284
What types of securities have market risk?
listed securities (not private)
285
When is a registered representative required to complete the Regulatory Element of continuing education?
By December 31 every year
286
What is the requirement to be a trusted contact for an older client?
a natural person (not a law firm) over 18
287
What type of security has the most capital risk?
Options b/c a change in underlying price can make you lose all capital (premium)
288
How long does a temporary hold on an account last initially? How long can it be extended for and how many times?
15 days initially, it can be extended twice, first 10 days then 30 days (total of 55 max days)
289
A full-service broker-dealer is required to conduct a test of its anti-money laundering procedures at least:
annually
290
What is the prime rate?
The rate that commercial banks charge their best customers
291
What is the Federal Funds Rate?
The rate charged for overnight loans between member banks
292
What is the call rate?
the rate commercial banks charge on loans for broker dealer margin accounts
293
Can RRs borrow money from customers? Any exceptions?
No, except immediate family, the customer is an institution who lends money for their business, The customer and registered person are both registered with the same member firm, The customer has a personal relationship with the registered person wherein the loan would not have been solicited, offered, or given if the relationship did not exist, The loan is based on a business relationship other than that of a broker-customer.
294
What happens if an RR doesnt complete the Regulatory Element of continuing education by Dec 31?
The representative will be placed in CE inactive status.
295
If an RR commits an offense subject to statutory disqualification, what does the firm need to do?
File with FINRA and terminate them bc they cannot be associated with a FINRA member in any capacity (unless appealled succesfully)
296
How often must FINRA members provide each customer with FINRA's website address, Brokercheck hotline # and a statement about the availability of an investor brochure that describes Brokercheck
annually
297
how much can you spend on dinner with a client to discuss business?
unlimited if you are with them at the dinner and its a legit business expense
298
Does a temporary hold always apply to a customers entire account?
no it can apply to enter account or specific disbursements
299
If you are accused of stock manipulation are you subject to statutory disqualification?
No, only if convicted
300
Is the number of market makers for a security a factor in best execution?
No, the factors considered are price and volatility of the security, general character of the market, size and type of transaction, and the locations and accessibility of the member organization to primary markets.
301
How long does a firm have to file U5 after terminating an employee?
30 days
302
A municipal finance professional (MFP) and her spouse make a political contribution of $400 from a joint account. Only the MFP signs the check. According to the MSRB political contribution rules, the contribution would be viewed as a:
$400 contribution from the MFP b/c they are the only party that signed the check
303
The maximum criminal penalty for individuals who are convicted of insider trading violations is:
$5,000,000 fine and/or 20 years in prison per offense
304
Can non registered employees of a BD purchase an equity IPO?
no employees can
305
What does a BD employee need to do to open an outside brokerage account?
obtain prior written consent from their firm
306
If a broker-dealer decides to change the electronic storage method that it currently uses to maintain its records, what's the firm's obligation?
It must notify its primary regulator at least 90 days prior to using the new method
307
If a firm decides to use electronic storage media, when must it notify the regulator?
prior to its use
308
If a temporary hold has been placed on a customer’s account, the firm must provide notice to and how soon?
the account owner and trusted contact person within 2 business days
309
A broker-dealer makes a $900 political contribution to an official of a municipality. The contribution is reported to:
The MSRB
310
Money received by a corporation when it sells its stock above its par value is called:
Paid-in capital (or capital surplus)
311
What is earned surplus (retained earnings)
profits that have been retained by the company and have not been paid as dividends.
312
If a registered representative (RR) of a member firm intends to open an account with another member firm, the RR:
provide written notice to the firm that they're opening the account with AND obtain written approval from their employer (this includes the spouse and children of the employee) - firms can also create rules that prohibit outside accounts
313
Is industrial production index a leading, coincident or lagging indicator?
coincident
314
Are premium bonds (priced above par) or discount bonds (below par) more volatile?
discount bonds are more volatile
315
Do RRs have to notify employer if their involved in a joint account with another BD firm?
Yes any beneficial interest accounts must be cleared (regardless of trade authority)
316
A registered representative has been indicted for theft that was unrelated to his employment at the member firm, what is required?
they can remain employed but it must be reported to FINRA (any felony or any misdemeanor that involves the purchase or sale of a security, theft, robbery, burglary, extortion, forgery, or counterfeiting, the event must be reported to FINRA. This includes shoplifting and, in some states, driving under the influence (DUI). However, in this question, since the person has not been convicted, he's not subject to statutory disqualification and may remain employed by the member firm.)
317
what types of bonds perform best during periods of deflation?
existing bonds all do well during deflation but long term zero coupon bonds perform best
318
What's required if a registered representative intends to sell limited partnership interest outside of her employment with a broker-dealer?
Receive written consent from her employer - A registered representative (RR) is not allowed to sell securities outside of her employment unless she provides written notification to her employing broker-dealer. Additionally, if an RR is being compensated (e.g., receiving commission), she also need to obtain her employer's written consent. If an RR fails to notify her firm of outside securities trades, she's guilty of selling away.
319
Under what circumstances may a registered representative share in a customer's account?
The customer and firm gave permission - if the customer is not an immediate family member, the RR's stake must be proportionate to their contributions
320
Can RRs share a customers account? When must their access be proportionate to their contributions?
Yes with permission from the customer and firm - if they customer is not an immediate family member their sharing must be proportionate to RRs contributions
321
what kind of action would improve the US balance of payments?
better balance of payments is when more money flows into the US, so foreign investors buying US assets would help the balance of payments
322
What has more interest rate risk, 30 yr premium bond or 30 year zero coupon bond?
30 year zero coupon bc it is at a discount
323
Are bonds with lower or higher interest rates more sensitive to interest rate risk?
lower interest rate
324
How far back to felony convictions need to be reported on U4
at any time in the past
325
What excludes an associated person of a broker-dealer from being considered "executing private securities transactions" ?
If they are getting commissions by THEIR OWN EMPLOYING BD
326
what is the definition of a "specified adult"?
65+ or 18+ with mental or physical impairment
327
Do you have to disclose bankruptcys on U4, for how long in the past? Can you update it if you don’t?
Yes for 10 years. and no it should be updated immediatley and you already filed a false or misleading statement so FINRA could reject
328
A registered person wants to borrow funds from a neighbor who is also a customer of his firm, what is required?
He must notify and receive approval from his firm
329
what does low beta mean?
The security goes up less when market is up and down less when market is down
330
What statement provides the capital percentages of the company?
Balance sheet (capital percentages are stock, preferred stock, bonds…)
331
Who should be notified when the proceeds of a short sale of property is used to settle the payment of a mortgage at less than its full amount (a type of comprimise with creditors)? How are they notified?
FINRA must be notified by filing an updated U4
332
Who needs to be fingerprinted according to SEC Rule 17-2?
all partners, directors, officers and employees of BDs who are involved in selling or handing securities or money, or RECORDS OF ORIGINAL ENTRY or supervise any of the above
333
Are in-laws considered immediate family under the New Issue Rule? What about aunts, uncles, cousins, grandparents
Yes they cant buy IPOs. No those other ones arent restricted unless they are materially supported by the RR
334
According to U4, how are rule violations handled?
FINRA or SEC hearings - all ARGUMENTS with employer, other FINRA members/people are settled by arbitration
335
Are BDs allowed to do STABILIZATION of an IPO? When?
Yes only at or below the public offering price
336
During periods of easy money when interest rates are declining, yield curves tend to slope:
upwards b/c yields on short maturities are much less than yields on longer maturities
337
Can an MFP make a $100 contribution to a candidate for whom they ARE NOT allowed to vote
No, only who they are allowed to vote for (ie a NJ resident MFP cant contribute to a campaign in NY)
338
The arbitration panel for disputes that involve public customers will consist of:
A mix of individuals who represent the public and financial industry
339
Does an RR have to get trades in a discretionary account approved by someone?
Yes a manager, partner or authorized person
340
If an investor sells 10 ABC June 40 calls at a premium of $4 each, his maximum profit is:
(10 x 100 shares per call) * $4
341
for an account held as Tenants in Common, are both owners required to have an equal share of assets?
No
342
What is the maximum civil penalty for insider trading?
3x the amount gained or lost ($5M and 20 years in CRIMINAL penalty)
343
How much can corporations be criminally penalized for insider trading?
$25M per violation
344
Is money supply (M2) a leading/coincident or lagging indicator?
leading
345
The primary concern for investors who use a buy-and-hold strategy to maintain their portfolios is:
The allocation of assets
346
pharmaceuticals, utilities, and packaged food are cyclical or defensive sectors?
defensive
347
appliances, steel, construction, and automobiles are cyclical or defensive sectors
cyclical
348
if a registered person doesnt complete continuing education annually, are they inactive or suspended?
CE inactive
349
is interest rate risk higher for a 30 year bond or 10 year?
30 year - the longer the maturity the higher interest rate risk
350
What does the registrar do?
ensures that a corporation doesn’t issue more shares than it’s authorized to issue.
351
what does 20 x 10 on a bid/ask convert to in # of shares?
Its the # of 100 lots of shares bid/asked, so 2000 and 1000 shares
352
what are the requirements for an accredited investor?
$1M net worth (except their primary residence) or $200k per year ($300k for married couples) over the past 2 years (ALSO SERIES 7 ETC REGISTERED PPL)
353
what type of stock has the 6 month holding requirement (restricted or controlled)?
Restricted stock
354
when does controlled (no holding period) become restricted stock? What does this mean as far as holding requirement?
if it is acquired through private placement - so it has the 6 month holding requirement now
355
Are Hedge Funds required to register under the Investment Company Act of 1940?
No
356
An investor purchases a 20-year 5.30% bond at par value that will yield 5.75% if called at the first call date in five years. The yield to maturity on the bond is:
5.30% b/c it is still at par value
357
Are fee tables on a preliminary prospectus? What about the number of shares being issued?
No (only final prospectus), Yes
358
A previously registered person was convicted of a felony 14 years ago and has served out his sentence in federal prison. Can he be hired as a registered rep?
Yes since it was > 10 years from conviction
359
A 5% $1,000 par value bond sells at $900 and matures in 10 years. What is the amount of each interest payment?
25$ (DONT FORGET TO DIVIDE ANNUAL INTEREST TO SEMIANNUALLY)
360
361
When must an RR provide written notice about a private securities transaction? When does he need written approval and record the transactions on the firm's books and records?
written notice if they are not being compensated, written approval if he is being compensated
362
do REITs generate passive losses?
No
363
What is a pass-through entity? Is a C Corp a pass-through entity?they avoid double taxation (on business and owners) - S Corps, LLCs and REITs are pass-through, not C Corp
No
364
If a temporary hold is placed on an account, does the firm have to provide notice to 1) the account holder 2) trusted contact person 3) FINRA?
the account holder and trusted contact person
365
do SRO suitability requirements apply to institutional, accredited investors and institutional buyers?
Yes but they are less stringent than retail investors
366
Whats the typical maturity of an ETN?
10-30 years
367
How much is SIPC coverage for, in what event are you covered?
$500k, up to $250k in cash - it covers against BD bankrupties - per customer per account (IRA, 401k etc)
368
If an investor has securities bought at $50k + interest and dividends, how much is included in their cost basis?
all 3, interest and dividends count towards cost basis taxation
369
A customer has recently funded a custodial account for his child and wants to make a favored uncle the custodian. who's name will it be titled in and who's social security number? Who recieves statements etc and who's responsible for taxes?
uncles name is the custodian, the childs social security number (The custodian receives all correspondence (e.g., confirms, statements, etc.). However, since the child is the owner of the account, the child is responsible for taxes and the child’s Social Security number is assigned to the account.)
370
Are official statements for muni offerings required to be approved by anyone?
No, they are not even required to be made but if they are made they must be distributed to all purchasers
371
What's the penalty if a person violates the MSRB's political contribution rule?
2 year ban on muni deals
372
When can a european option style be excercised?
only be exercised at expiration
373
what are 12b-1 fees? Who pays them?
are annual marketing or distribution fees charged by some mutual funds - they are paid out of the funds assets rather than by the investor
374
Can no-load funds assess 12b-1 fees?
Yes but not more than .25% of the average NAV
375
Do REITs let investors share directly in the funds earnings?
No, DPP investors do though and can also be real estate
376
Under Regulation S-P, when must a firm make the required disclosures?
It is the privacy disclosure - must be given at the opening of the account, annually and when changes are made
377
what department is responsible for collecting taxes?
the Treasury (which the IRS is a part of)
378
Are 12b-1 fees used to pay commissions for executing trades in the funds portfolio?
No, but they can be used to pay sales concessions to registered reps
379
If an RR suspects financial exploitation, should they attempt to resolve the matter or immediatley place the account on hold?
first attempt to resolve the matter then place the account on hold
380
Can BDs place a temporary hold on the account of any customer?
No, only specified (65+ or 18+ and impaired) individuals
381
for a 529 plan is the change of beneficiary allowed?
yes
382
How many days must after IPO must BDs deliver prospectus to purchasers for 1) listed securities 2)unlisted follow on offerings 3) unlisted IPOs? Which ones are they not required to provide for?
listed IPOs 25 days, unlisted follow on offerings 40 days, unlisted IPOs 90 days - no requirement for listed follow on offerings
383
A limited partner would be in jeopardy of losing her limited liability if the partner:
they get involved in management of the fund (ie assist in deciding what properties to acquire)
384
Which agency regulates hte process of issuers raising capital?
SEC
385
which interest rates fluctuate the most?
shorter term (opposite of bond price volatility) - fed funds rate
386
In a limited partnership, a general partner's minimum participation in profits and losses is:
0.01
387
what kind of communication is considered institutional (rather than retail or correspondence). Is it required to be approved by a principal?
only distributed to investment advisers (or institutional investors) - no only subject to review not approval
388
do ppl with supervisory responsibility (but not directly involved) in handling money, books & records etc required to be fingerprinted?
Yes
389
does a transfer agent act as a proxy agent?
Yes, but does maintaint issuers ownership for issuance of securities (that's registrar)
390
If a cash dividend is distributed on a stock that has been sold short, who gets the dividend?
the person who sold the stock short has to pay the dividend to the lender
391
Does ERISA cover both pension and defined benefits plans?
Only PRIVATE pension plans
392
What is an example of a collateralized time draft?
Bankers Acceptance (used to facilitate foreign trade and guaranteed (collateralized) by a bank
393
When securities are sold in a private placement under Reg D, how long does the investor have to hold before selling them again?
6 months they have to file 144 - after 1 year holding they dont have to file 144
394
When selling limited partnership investments (Regulation D) do you have to make sure the buyer is an institution?
No, they have to be an accredited investor - and you must make sure they can lose the entire investment and know about the lack of liquidity
395
Which type of annuity generally has the longest surrender charge periods?
Index annuity
396
how many shares is a block of securities?
10000
397
When opening up a brokerage account for a retail customer, Form CRS must be given:
before opening the account
398
What year was the SEC created?
1934
399
what kind of stock do corporations issue when they go public?
common stock
400
Does regulation T allow for margin under normal circumstances on options contracts?
No
401
What are yankee bonds vs eurodollars?
yankee bonds = issued in the US by foreign corps and $ denominated, eurodollars = US companies and sold oversees
402
are eurodollars required to register with the SEC?
No b/c they are not offered to US investors
403
what economic theory looks at the demand side of the market and says government intervention is necessary?
keynesian theory
404
What economic theory states that the government should reduce marginal tax rates and the size of government to promote economic growth?
Supply side economics (opposite of keynesian theory)
405
What economic theory ooks to increase or decrease the money supply in order to control the economy?
monetary theory
406
according to SHO when can you buy new issue shares on an offering if you were short the stock?
if the short sale has been covered at least one business day prior to the effective date
407
are rights and warrants both typically set below the current stock price?
No only rights, warrants are typically above
408
when is the CE exam required to be taken after becoming an RR?
within 2 years of the anniversary date (and every 3 years thereafter)
409
an offering done under Regulation D is often called a
private placement
410
are 529 plans referred to by FINRA as municipal fund plans? Why?
Yes b/c they are issued by the states
411
do long or short dated bonds react more in price when rates change?
short dated
412
how quickly are NASDAQ trades during business hours typically reported?
10 seconds
413
in shelf registrations, does the issuer sell part of the offering immediatley?
yes then the rest over 3 years
414
Can reinvested dividends and capital gains be used towards a breakpoint sale amount?
No
415
via regulation SP (customer privacy) does the firm provide info on the fees to opt out, or the deadline to opt out?
No but they do provide policies to protect the security of nonpublic info
416
What does the Electronic Municipal Market Access (EMMA) system provide?
trade data and other information for municipal securities
417
money market securiites mature in..
1 year or less
418
what kind of securities trade on average life rather than actual maturity?
ABS
419
can married couples pool funds to reach a mutual fund breakpoint?
Yes if its the same fund and the same BD
420
are UIT shares redeemable?
Yes but also tradable on secondary market
421
who are controlled stock owners?
officers, directors and >10% owners (ie affiliated persons)
422
if an issuer makes an offering to more than __ non-institutional investors, its considered a public offering and must register with SEC
35 non-institutional investors
