Exam 17 Wrong Answers

Question 1

In pricing a new issue, a municipal bond underwriter would most likely check

Answer 1

The 30-day visible supply

Question 2

FINRA bylaws which relate to a member firm’s dealings with the public are provided for in the

Answer 2

Conduct Rules

Question 3

Which of the following is not required on confirmations?

Answer 3

CUSIP

Question 4

All of the following are duties of a transfer agent except

Answer 4

Holding customers’ securities for safekeeping

Question 5

In early May, a customer buys 100 SOP at 27 and writes one SOP Oct 30 call for 3. This is his first option transaction and takes place in his cash account. The initial option order ticket must be written as an opening

Answer 5

Covered sale

Question 6

The announcement that must be filed in connection with a Regulation D offering is

Answer 6

An offering memorandum

Question 7

Which annuity provision guarantees payments as long as the annuitant lives?

Answer 7

Mortality guarantee

Question 8

The responsibility of a broker/dealer’s cashiering department is all of the following except

Answer 8

Handling the execution of a customer’s orders

Question 9

Which of the following statements is not true concerning a non qualified deferred compensation plan?

Answer 9

Any investments grow on a tax-free basis

Question 10

A convertible preferred is convertible at $20 per share. The stock is currently selling on the market at $120. Which of the following are correct statements is correct?

Answer 10

The common stock must be selling at $24 to be at parity with the preferred stock

Question 11

Which of the following is true of customer complaints received by an NYSE member?2

Answer 11

They must be maintained in a central file in the home office

Both written and oral complaints must be maintained

Question 12

An investor is long 100 shares XYZ and sells a call. The investor is

Answer 12

Conservative

Question 13

An investor writes an XYZ May 25 put and buys an XYZ May 35 put. This position 2

Answer 13

Is a debit spread

Loses money if premiums narrow

Question 14

Jack owns 300 shares of cumulative, convertible preferred stock. All of the statements below are true except

Answer 14

The issuing company could call the stock at par value

Question 15

The MSRB was created by

Answer 15

The Securities Amendment Act of 1975

Question 16

Yield curve analysis is useful to an investor purchasing debt securities for which of the following reasons?2

Answer 16

Allows the comparison of rates of return as maturities are extended

Is useful in determining the market expectations for interest rates

Question 17

A registered representative associate with a municipal broker/dealer firm has received a written customer complaint. Which two of the following are required by the broker/dealer and the associated person?

Answer 17

The firm would be required to send an investor brochure to the customer

The registered representatives immediately tell their supervising principal

Question 18

A man is 52 years old. He is terminating his employment at a state university. He is fully vested in a 457(b) plan. If he withdraws the money from his 457(b) plan,

Answer 18

He must pay income tax

Question 19

Which of the following securities acts governs the variable annuity separate account?

Answer 19

Investment Company Act of 1940

Question 20

Which of the following is a US government agency backed by the full faith and credit of the US government?

Answer 20

GNMA

Question 21

Which of the following is a lagging indicator?

Answer 21

Average prime rate

Question 22

Concerning the reporting of last sale price information for OTC stocks, which of the following is true?

Answer 22

Last-sale price information is available on OTC transactions in the National Market System

Question 23

The FINRA bylaw category which defines the proper methods for handling securities violations and complaints is the

Answer 23

Code of Procedure

Question 24

If the Federal Reserve Board through the FOMC (Federal Open Market Committee) lowers the discount rate, which of the following will decline?2

Answer 24

T-bill discount rate

Federal funds rate

Question 25

Which of the following are required by the MSRB on each trade confirmation2

Answer 25

Principal or agent capacity

Broker/dealer’s phone number

Question 26

The responsibility for the payment of principal and interest on an industrial development revenue bond issue rests with the

Answer 26

Corporate guarantor

Question 27

With a variable annuity, which of the following factors are not involved in determining the amount of an annuitant’s first annuity payment?

Answer 27

The number of annuity units

Question 28

Under Rule 144A, a qualified institutional buyer has

Answer 28

At least $100 million in assets under discretionary management