6th Set Flashcards

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1
Q

Does the TAC (targeted amortization class) tranche of a CMO have pre payment risk?

A

No

They’re designed not to

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2
Q

When an officer or director acquires control stock when a company goes public and then wants to sell the securities to a retail investor, what is the mandatory holding period?

A

None

When an officer or director acquires control stock when a company goes public and then wants to sell the securities to a retail investor, what is the mandatory holding period?

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3
Q

A client has purchased a nonqualified variable annuity from a commercial insurance company. Before the contract is annuitized, your client, age 60, withdraws some funds for personal purposes. What is the taxable consequence of this withdrawal to your client?

A

A client has purchased a nonqualified variable annuity from a commercial insurance company. Before the contract is annuitized, your client, age 60, withdraws some funds for personal purposes. What is the taxable consequence of this withdrawal to your client?

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4
Q

A stock pays a $0.50 quarterly dividend. The company had earnings per share last year of $10. The company’s dividend retention ratio is

A

80%

The company retains 80% of what it could have paid out in dividends

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5
Q

In a new margin account, if a customer buys 300 XYZ at 48 and simultaneously writes 3 XYZ Jan 50 calls at 1, the Regulation T margin requirement is

A

$7,200

It asks for the Reg T requirement, not the deposit that must be made

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6
Q

529 plans grow tax deferred, and the withdrawals are tax free if used for ____

A

Qualified education expenses

(529 plans are tax advantages savings for education)

(No federal income tax deductions for contributions)

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7
Q

Why is it smart to invest in a 529 plan (education savings) from your own state?

A

Because you might be able to get state tax deductions or credits (contributions not deductible for federal income tax purposes)

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8
Q

Are contributions to a 529 plan (education savings) tax deductible?

A

No, not for federal income taxes.

However, if investing in plan from your home state, might be able to get state tax deductions or credits

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9
Q

Are securities traded OTC considered to be “listed”?

A

No

If trade OTC, unlisted

(OTC considered negotiated market)

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10
Q

Are securities traded on an exchange considered to be “listed”?

A

Yes

If trade on an exchange, listed

(Exchange means auction market)

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11
Q

Can day orders be partially filled?

A

Yes, any unexecuted portion canceled at end of day

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12
Q

Is a buy limit entered above or below CMV

A

Below current market value

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13
Q

Is a buy stop entered above or below current market value

A

Above current market value

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14
Q

Buy stop limit

A
  • Entered above CMV
  • Triggered at or above stop price
  • Execute at limit price or lower
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15
Q

Sell stop limit

A
  • Entered below CMV
  • Triggered at or below stop price
  • Execute at limit price or higher
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16
Q

Nickname for Securities Act of 1933

A

Paper act; Prospectus act

•Regulates new issues, requires registration of securities

17
Q

Nickname for Securities and Exchange Act of 1934

A

People and Places Act

  • Regulates exchanges, BDs and associated ppl
  • Anti fraud provision
  • Defined inside info
18
Q

What Act would regulate exchanges and BDs?

A

Securities and Exchange Act of 1934

•It’s the “People and Places Act”

19
Q

What act requires registration of securities?

A

Securities Act of 1933

•The “Paper Act; Prospectus Act”

20
Q

What Act classifies and regulates the 3 types of investment companies

A

Investment Company Act of 1940

21
Q

ERISA was established to prevent misuse of pension funds, does it also apply to private-sector retirement plans?

A

Yes, applies to private sector retirement plans too

22
Q

Are the securities in the portfolio of a unit investment trust actively traded?

A

No

Not traded

23
Q

The individual responsible for the overall supervision of all of a firm’s options activities on behalf of its customers must be

A)
a registered options principal (ROP).
 B)
the general securities principal.
 C)
the financial and operations principal.
 D)
an office manager.
A

A) ROP

“Explanation
Any firm that transacts options trades will have a ROP to oversee trading and a ROP designated to carry the ultimate responsibility of supervision and ensure that options compliance procedures are followed.”

24
Q

Would a bond offering with a maturity of less than 9 months be covered under the Trust Indenture Act of 1939?

A

No

Not if maturity in less than 9 months

25
Q

T/F:
On the exam, there are two accepted measures of the economic viability of a DPP. Those are cash flow analysis and internal rate of return (IRR). Cash flow analysis compares the income to the expenses, not the debt.

A

True,
Cash flow analysis
Internal rate of return
Measure DPP profit motive

26
Q

Are UITs managed?

A

No

> but they are redeemable

27
Q

T/F: a municipal finance professional is registered representative engaged in the retail sale of municipal securities to individual investors.

A

False, activity other than retail sales

> an associated person of a broker-dealer engaged in municipal securities representative activities other than retail sales.