Exam 19 Wrong Answers Flashcards
An asset backed security is backed by
Short term loans on credit cards or automobiles
A portfolio manager purchases a bond on a yield to call basis. This bond is trading at
A premium
A customer shorts one ABC Jan 65 call for a premium of 4 and holds one ABC 70 call for a premium of 1. What is the customer’s maximum potential loss?
$200
Which of the following have an active secondary market?
Eurodollar CDs
Maximum coverage for an investor under SIPC is
$500,000 per separate customer, with a limit of $250,000 of coverage for cash
Which of the following are considered to be technical indicators?3
200 day moving average
Put/call ratio
Short interest
All of the following are duties of a transfer agent except
Holding customer’s securities for safekeeping
Your client is interested in XYZ Company, a stock on Nasdaq, however the client is not certain if it is better to buy the stock or sell it short. In communication with a market maker in the security, you receive the following quotes. 500/54 bid - 200/54.17 ask. What does this series of quotes represent for your client?
Your client can buy up to 200 shares at $54.17 or sell up to 500 shares of the stock at $54 to the market maker
Bond premium amortization 2
Reduces investor’s cost basis
Reduces YTM and YTC
Which one of the following statements regarding Coverdell Education Savings Accounts is correct?
Contributions are made with after tax dollars and grow tax deferred
Funds are escrowed to retire a bond on its next call date. This bond is2
Prerefunded
Defeased
FINRA bylaws which relate to a member firm’s dealings with the public are provided for in the
Conduct Rules
Which of the following statements are true regarding income bonds?2
They do not pay semi annual interest
They may not return 100% of principal at maturity
Jennifer is selling securities at a loss. She will not be allowed to claim the loss if she
Repurchases the same securities within 30 days
Which of the following preferred shares has the highest yield?
Callable
Which of the following statements is false with respect to value mutual funds?
They hold growth stocks and bonds that are deemed to be undervalued in price
Which of the following orders are reduced by the specialist of the NYSE on the ex dividend date of a listed stock?2
Open buy limits
Open sell stops
The death benefit payable during the accumulation period of an annuity contract2
Is based on the greater of the gross payments to date or the value of the account at the time of death
Is not payable after annuity payments have started
XYZ Corporation Primary Distribution Total issue: 1,000,000 shares, retained for sale by underwriters: 800,000 shares, reserved for distribution to selling group, 200,000 shares. Per share: Public offering price$10.00, Manager’s fees and expenses: .10; Underwriter’s allowance: .70; selling concession: .50; proceeds to issuer; 9.20. The underwriting spread is
$0.80
A customer’s margin account statement shows the following: Long Market Value $100,000; Debit Balance $54,000; Short Market Value $6,000; credit balance $10,000; SMA Available Balance $10,000. What is the equity in the customer’s account?
$50,000
Which of the following most closely expresses FINRA’s Five Precent Policy?
Markups/markdowns and commissions should be fair under the circumstances and should probably not exceed 5%
Which of the following is a wash sale?
Selling a put or buying a call within 30 days of sale of stock
