Exam 10 Wrong Answers Flashcards
A municipal securities trader’s authority generally extends to which of the following?4
Buying
Selling
Positioning
Pricing
XYZ Corporation wants to open a margin account. Documentation would include which of the following?
Corporate charter
The 1934 Act anti-fraud provisions prohibit 3
Indicating to customers that an all or none municipal underwriting is a firm commitment
Using manipulative technique to reduce price of municipal security
Omitting material information about a municipal issue from a dealer’s offering schedule
A public school teacher has contributed $10,000 to a tax qualified annuity over a period of time. The teacher retires with an account balance of $16,000 at age 60. How much of this is subject to tax?
$16,000
Which of the following are established uses of the stop order? 2
To protect a customer’s existing profit in a long position
To limit a loss on a short position
An open-end investment company fund that charges an 8 1/2% sales load for single payment plans must offer all of the following except
Conversion privileges
Which of the following securities would be least appropriate for an investor who is planning to retire in 2 years and wants to purchase securities that would provide safe, dependable income?
Income bond of a reorganized corporation
GDP (industrial production) and personal income are examples of what type of economic indicator?
Coincident indicator
Which of the following is an incorrect statement pertaining to stop orders?
They permit brokers to exercise discretion as to the time of execution and the total number of shares purchased
Which of the following is considered to be a lagging indicator of economic trends?
Unemployment
Which of the following is true about Treasury bills? 3
They mature in 52 weeks or less
They generally sell for less than par
They are a direct, guaranteed credit of the US government
Which of the following is true concerning eastern accounts?
Syndicate members participate in the liability for unsold portions in proportion to the original participation in the account
A customer has sold certain securities but has not delivered them to her registered representative by the settlement date. The SEC mandatory buy in period for customers who fail to deliver on time is
10 business days after the settlement date
In a margin account, based on hypothecation rules of self regulatory agencies and SEC Customer Protection and Custody of Securities rule, a broker may collateralize to a bank a customer’s securities up to what percentage of the debit balance?
140%
Deductions available in the first year of an oil and gas drilling partnership come primarily from
Intangible drilling costs
MRSB rules allow a representative to engage in all of the following activities with respect to municipal securities except
Supervise other representatives
Which one of the following types of investment companies pays out 90% of its net investment income to its shareholders?
Regulated
All of the following are true about using US Treasury Bonds to cover debt security call options except
A market basket of US Treasury securities of adequate value is acceptable
An investor begins receiving monthly annuity payments from his or her non qualified variable annuity contract. For tax purposes, these payments are considered to be
Partly ordinary income and partly a return of capital
An investor with no cash or securities positions purchases 100 shares of XYZ at 74 and 1 XYZ July 80 listed put at 8 in a margin account. If the Regulation T margin requirement is 50%, what must the investor deposit for the transactions?
$4,500
Each of the following is a violation of FINRA rules except
Marking to the market
Which of the following is true of shares of a closed end investment company?
The shares have no redemption price
All of the following are allowable investments for an individual retirement account except
Artworks and collectibles
Which two of the following types of domestic securities will provide partially tax exempt income to a corporation?2
Common stocks
Preferred stocks
Which of the following coupon rates, maturity dates and yields to maturity would result in the lowest dollar price of a municipal bond?
7% due in 30 years at a 9.60
Which statement is incorrect with respect to a SEP plan?
Employees can make contributions to the account
A long term policy of investing in Treasury bills (T-bills) will result in which of the following?2
Fluctuating rate of return
Stable value of principal
Publicly held corporations differ from limited partnerships with respect to which of the following?3
Length of existence
Transferability of ownership
Application of the conduit concept
A registered representative (RR) wishes to buy shares of an initial public offering for a new technology company that the RR’s firm is distributing. Under FINRA Rules, the RR may
Not do so under any circumstances
A DPP investor puts $200,000 into a tennis condominium escort development. The investor’s share of the income from the operation the first year is $300,000. The share of the interest paid on the bank loan for the year is $200,000. The share of the maintenance expenses and taxes are $95,000. The share of the depreciation is $55,000. The investor is in the 28% tax bracket. How much, if any, can the investor deduct from income from other passive sources this year?
$50,000
Which of the following will affect the holding period of a security held for less than 12 months?
Buy a put
All of the following are generally true about commercial paper except
It is issued as interest bearing paper
Interest rate conditions which encourage the refunding off debt issues are
Falling rates
At a customer’s request, an RR accepts an order for a listed stock as good through the month. The responsibility for cancellation of the order at the end of the month rests with the
Member firm that accepted the order
