Exam 18 Wrong Answers

Question 1

Normally a stock starts trading ex-dividend on the

Answer 1

One business day prior to the record date

Question 2

NASDAQ Level III displays which of the following?2

Answer 2

Registered market makers’ quote and size

Trading volume for each issue

Question 3

All of the following about customer confirmations of principal transactions in municipal securities are true except

Answer 3

They must disclose any dealer markup

Question 4

Under Regulation T, a customer purchases stock in her existing margin account and creates a Reg T call. If the customer fails to meet this call within 4 business days, which of the following can occur?3

Answer 4

The broker can sell sufficient stock to meet the call

The broker can request an extension to meet the call

The customer can sell sufficient stock to meet the call

Question 5

All of the following are generally true about commercial paper except?

Answer 5

It is issued as interest bearing paper

Question 6

Which of the following is/are true with respect to he risk and liquidity of federal agency securities?2

Answer 6

They are actively traded and have good marketability

In time, the longer maturities fluctuate considerably in price

Question 7

The spread on a municipal dollar bond with a market of 87 - 7/8 to 88 3/4 is/are which of the following?

Answer 7

7/8 of a point

$8.75 per bond

Question 8

A customer sells an over the counter (OTC) stock and uses the proceeds to purchase another OTC stock. FINRA’s markup policy applies to

Answer 8

Purchase and sale combined

Question 9

For a customer in the 28% tax bracket, what is the taxable equivalent yield on a 6 1/2% tax exempt municipal bond priced to yield 6.40%?

Answer 9

8.89%

Question 10

To be considered a special tax bond, a bond may be secured by all of the following taxes except

Answer 10

Ad valorem

Question 11

The major difference between an open end investment company and a closed end investment company is in the

Answer 11

Capitalization

Question 12

When a customer buys a US Treasury note put option, the maximum potential loss is

Answer 12

100% of the premium

Question 13

An RR with a NYSE member firm cannot be engaged in any other business without the prior written consent of the

Answer 13

Employing broker/dealer

Question 14

What is the holding period to determine long term capital gains?

Answer 14

1 year plus 1 day from trade date

Question 15

Money to pay off general obligation debt can be derived from all of the following except

Answer 15

User fees

Question 16

Which of the following types of investment companies pays out 90% of its net investment income to its shareholders?

Answer 16

Regulated

Question 17

All of the following are functions of the secondary market except

Answer 17

The purchase of new issue bonds

Question 18

How many days after the closing date of the public offering must a broker/dealer wait before extending credit on a new issue if that broker/dealer has participated in the distribution of the issue?

Answer 18

30

Question 19

All of the following are advantages to an investor who owns convertible bonds except

Answer 19

Their guarantee against loss of principal

Question 20

Under NYSE Rules, when a long sale order is prepared, the registered representative must record which of the following?

Answer 20

Location of the security at the time of the sale

Question 21

A municipal new issue in which the managers have been appointed by the issuer to purchase and market the bonds is best described as a/an

Answer 21

Negotiated sale

Question 22

An over the counter (OTC) transaction may be executed by a broker/dealer for all of the following except

Answer 22

As an agent with proper disclosure of a fair and reasonable markup

Question 23

If Trader X gives bonds to Trader Y with a recall 4

Answer 23

Y has an exclusive option to sell the bonds
A price for the bonds has been agreed upon
A time period has been established
A time for exercising the recall has been established

Question 24

All of the following are leading indicators except

Answer 24

GDP

Building materials