Exam 16 Wrong Answers Flashcards
Long the stock. Sell a call. The call is exercised. The seller will receive the dividend if the call is exercised after the
X-dividend date
XYZ Corporation is a well known seasoned issuer (WKSI) and is planning to expand operations. XYZ will need additional capital in stages to for this expansion. If XYZ does a shelf offering, hoe much time will it have to issue additional shares before it has to refile?
Three years from the effective date of the shelf offering
Which type of investor has increased buying power on margin that exceeds the Federal Reserve’s mandates?
Pattern day trader
Which of the following types of preferred stock might have regular changes in the dollar amount of its dividend?
Adjustable rate
An investor invests $20,000 in a limited partnership. The investor’s share of recourse debt is $80,000. What is true?2
The basis is $100,000
The maximum risk is $100,000
A guaranteed bond is one that is guaranteed by another company or entity. We would typically see a guaranteed bond used in which of the following situations?
Spinoff
After a customer’s brokerage account is closed, the account information must be maintained for how many years?
6 years
Any retail communication relating to investment companies must be filed with FINRA within how many days after initial use?
10 days
Which system is used to report corporate bond trades?
TRACE
To calculate taxes due on mutual fund shares being sold using the average cost basis for the shares, what must the investor account for?
The taxes paid on dividend and capital gain reinvestment made for additional shares
One method that the Securities and Exchange Commission has incorporated into the yield reporting standards that provides for greater clarity of income results is called
Standardized yield reporting
A dispute has developed between a broker at XYZ Brokerage and a client. The amount involved in the dispute is $21,500. What recourse is available to the client and what is the process?
Simplified arbitration is available and one arbitrator is appointed, hears the case from both parties, and renders a decision which is final.
An investor buys a 4% 10 year municipal bond at 96. Six years later, the investor sells at 99. What is the investor’s gain or loss?
$30 gain
XYZ Industries: 6% non cumulative preferred; 9% debentures convertible at $25. The trust indenture for the debentures contains an “anti-dilution” clause. If the company distributes a 10% stock dividend on the common stock, an investor who owns 10 XYZ Industries debentures would receive
A notice that the conversion price of his bonds has been reduced to $22.73
Mary Parker has a very large annual salary and is two years from retirement. She has an immediate need to shelter her income from taxes. Which of the following would best suit her objectives?
An oil and gas income program
An 8.5% CMO yielding 9.55% does not have which of the following risks?
Refinance
Which of the following is true regarding a non qualified deferred compensation plan?
Employer may discriminate among employees
Which of the following is the order of the liquidating distribution when a direct participation program is dissolved?4
Secured lender, general creditor, limited partner, general partner
The Act that requires financial institutions to develop, implement and monitor procedures that prevent its registered representatives and associated persons from misusing no public information is the
Securities and Exchange Act of 1934
You are long 200 shares of ABC at 54 and simultaneously buy 2 ABC Aug 55 puts for 3. The puts are exercised with the market at 52. What is your gain or loss?
$400 loss
Your client is interested in knowing the expected distributions of dividends and capital gains from their mutual fund investments. Which one of the following statements is correct?
Dividends are distributed quarterly, while capital gains are distributed one a year, usually at the end of the year
A municipal securities dealer buys $500,000 of 6% revenue bonds at par. The dealer immediately reoffend the bonds. Under MSRB rules, which two of the following would be considered bonds fide quotes under the circumstances described?2
5.8, less 1/2
101
Which of the following is not a concern when executing a 1035 exchange?
Capital gains tax
When discussing CDSCs with a client, it should be pointed out that
Costs associated with each share class are fully disclosed in the prospectus
Which of the following is designed to prevent fraud in the issue of securities?
The Securities Act of 1933
According to FINRA Rules, the definition of correspondence is messages that are distributed to how many prospective customers within a 30-calendar day period?
No more than 25
The definition of Consumer may include all of the following statements except
An individual who has a continuing relationship with a financial institution
Which of the following will be a violation of the Private Transactions Conduct Rule 3040?
An associated person offering securities that are not registered with the Commission
An investment company can perform certain activities only with the approval of a majority of the shareholders. Which of the following is the board of directors allowed to do without a shareholder vote?
Appointment officers of the investment company
