D1 - Practice Exam Flashcards
Which of the following disputes must be resolved using the Code of Arbitration?
I. A dispute between a member of FINRA and a registered rep
II. A dispute between a member of FINRA and a customer
Ill. A dispute between two members of FINRA
IV. A dispute between a bank and a member of FINRA
(A) IV only
(B) II and IV
(C) I and III
(D) I, III, and IV
C
Which of the following are important to investors evaluating direct participation programs?
I. The economic soundness of the program
II. The expertise of the general partner
Ill. The basic objectives of the program
IV. The start-up costs
(A) I, II, and III
(B) I, II, and IV
(C) II, III, and IV
(D) I, II, III, and IV
D
The FDIC covers each
(A) depositor for up to $250,000
(B) investor for up to $250,000
(C) depositor for up to $500,000
(D) investor for up to $500,000
A
If one of your clients wants to purchase municipal securities that you believe to be unsuitable for her investment objectives, what should you do?
(A) Execute the order as long as you mark the order ticket as “unsolicited.”
(B) You must refuse the order unless the client changes her investment objectives.
(C) You must obtain the permission of the firm’s compliance officer before executing the order.
(D) You may only execute the order with prior permission of a principal of the firm.
A
Common stockholders of PXPX Corporation have which of the following rights and privileges?
(A) The right to receive an audited financial report weekly
(B) The right to vote for cash dividends to be paid
(C) A residual claim to assets at dissolution
(D) The right to vote for stock dividends to be paid
C
Which of the following statements is NOT true of life-cycle funds?
(A) As life-cycle funds get nearer to their target date, the portfolio holdings will be adjusted to purchase more equity securities and less fixed-income securities.
(B) These funds are usually set up as funds of funds.
(C) The asset allocation of the fund will be rebalanced on a regular basis to make sure that the risk/reward balance is correct given the target date of the fund.
(D) The objective of the fund assumes that most investors cannot tolerate as much risk as they get older.
A
The ex-date is:
(A) the date on which the corporation ceases paying a dividend
(B) the date on and after the date the seller is entitled to the dividend
(C) the third business day before the record date
(D) the day the stock price is increased by the amount of the dividend
B
When compared to statutory voting, cumulative voting provides an advantage to
I. larger shareholders
II. mortgage bondholders
III. smaller shareholders
IV. convertible bondholders
(A) I only
(B) II and IV
(C) III only
(D) II and III
C
If a customer wants to open a new account but refuses to provide some of the financial information requested by the member firm, which of the following statements is TRUE?
(A) The firm may open the account for the customer and make recommendations freely.
(B) The firm may open the account if it can determine from other sources that the customer has the financial means to handle the account.
(C) The firm may open the account and take unsolicited trades only.
(D) The firm may not accept any trades for the account until the information is received from the customer.
B
Which of the following IS TRUE of the Telephone Act of 1991?
I. You cannot make calls before 8 a.m. or after 9 p.m. in the local time zone of the potential customer.
II. You are required to provide your name, company name, company address, and phone number.
Ill. Individuals who ask not to be called need to be placed on the company’s do-not¬ call list.
IV. You may not send unsolicited ads by fax machine.
(A) I and III
(B) II and IV
(C) I, II, and III
(D) I, II, III, and IV
D
An investor buys 100 shares of common stock of T- Prompters, Inc. at $15 per share. Six months later, T-Prompter Inc. is trading at
$12.40-$12.65, and the registered representative offers to purchase the 100 shares back from the investor for his own account at
$15 per share. This procedure is
(A) permitted by FINRA rules
(B) permitted with the written permission of a manager of the firm
(C) prohibited because it violates the Code of Procedure
(D) prohibited because it is a guarantee against a loss
D
Which of the following occurs under the provisions of the Uniform Gifts to Minors Act (UGMA) when a minor reaches the age of majority?
(A) The account must be transferred to the donor.
(B) The account is automatically changed to a UTMA account.
(C) The account is closed, and the new adult receives a check in the amount equal to the market value of the account less any commission.
(D) The account must be transferred to the donee after she reaches adulthood.
D
All the following items must be included on a trade confirmation EXCEPT
(A) the customer’s account number
(B) the customer’s signature
(C) the price of the security
(D) the commission, if the trade took place on an agency basis
B
A customer, without giving written authorization, may permit a registered representative to exercise his judgment as to
(A) whether to buy or sell
(B) the security
(C) the price and timing to enter the order
(D) the number of shares
C
If the U.S. dollar has fallen in comparison with foreign currencies, which of the following statements is TRUE?
(A) U.S. exports are likely to fall.
(B) Foreign currencies buy fewer U.S. dollars.
(C) U.S. products cost more for foreign consumers.
(D) U.S. exports increase.
D
Which of the following establishes the U.S. Treasury Department as the regulator for anti-money-laundering programs?
(A) The Bank Secrecy Act
(B) OFAC
(C) SDN
(D) None of the above A
A
If Buddy Seagull has a limited amount of funds and wants to invest in the pharmaceutical industry but does not want to limit his investments to only one or two companies, which type of fund would be MOST suitable?
(A) A hedge fund
(B) A sector fund
(C) A balanced fund
(D) A money market fund
B
GHI convertible bonds are convertible into common stock for $20. If the stock is trading at $24, what is the parity price of the bonds?
(A) $1,120
(B) $1,200
(C) $1,320
(D) $1,000
B
RANs, BANs, TANs, and CLNs are issued by municipalities seeking
(A) to insure their municipal securities
(B) the approval of the SEC
(C) long-term financing
(D) short-term financing
D
Which of the following governmental bodies receives no revenue from ad valorem taxes?
(A) County governments
(B) State governments
(C) School districts
(D) Local municipalities
B
One of your clients is expecting to receive a lot of money over the next three years. Your client would like to shelter some of that money by investing in a DPP. Which of the following types of DPPs will help your client shelter the most money?
(A) Oil and gas income
(B) Oil and gas developmental
(C) Oil and gas combination
(D) Oil and gas wildcatting
D
The Federal Reserve Board is responsible for which of the following?
(A) Easing the money supply
(B) Setting Regulation T
(C) Printing currency
(D) All of the above
D
Which of the following have ownership positions in a corporation?
I. Convertible bondholders
II. Convertible preferred stockholders
Ill. Common stockholders
IV. Mortgage bondholders
(A) II and III
(B) I, II, III, and IV
(C) II and IV
(D) II only
A
Which of the following are factors that affect the marketability of municipal GO bonds?
I. The quality
II. Call features
III. The issuer’s name
IV. Credit enhancements
(A) I and II
(B) II and III
(C) I, II, and III
(D) I, II, III, and IV
D
You have a new client who is in a high tax bracket and is looking for investments with a tax advantage. Which of the following securities would you LEAST likely recommend?
(A) Municipal bonds
(B) GNMAs
(C) Retirement plans
(D) Direct participation programs
B
Which of the following partnership documents needs to be filed with the secretary of state in the home state of the partnership?
I. The certificate of limited partnership
II. The partnership agreement
Ill. The subscription agreement
(A) I only
(B) II and III
(C) I and III
(D) I, II, and III
A
Which of the following are true about the annuitization of a variable annuity?
I. The value of the annuity units is fixed.
II. The number of annuity units is fixed.
Ill. The value of the annuity units varies.
IV. The number of annuity units varies.
(A) I and II
(B) II and III
(C) II and IV
(D) None of the above
B
Which of the following would qualify as management companies?
(A) Face-amount certificate companies
(B) Unit investment trusts
(C) Closed-end funds
(D) None of the above
C
Exchange-listed securities trading over-the¬ counter takes place in the
(A) first market
(B) second market
(C) third market
(D) fourth market
C
Mutual funds must send financial statements to shareholders at least
(A) monthly
(B) bimonthly
(C) quarterly
(D) semiannually
D