Exam 19 Wrong Answers Flashcards

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1
Q

An asset backed security is backed by

A

Short term loans on credit cards or automobiles

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2
Q

A portfolio manager purchases a bond on a yield to call basis. This bond is trading at

A

A premium

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3
Q

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?

A

$200

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4
Q

Which of the following have an active secondary market?

A

Eurodollar CDs

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5
Q

Maximum coverage for an investor under SIPC is

A

$500,000 per separate customer, with a limit of $250,000 of coverage for cash

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6
Q

Which of the following are considered to be technical indicators?3

A

200 day moving average

Put/call ratio

Short interest

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7
Q

All of the following are duties of a transfer agent except

A

Holding customer’s securities for safekeeping

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8
Q

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?

A

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

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9
Q

Bond premium amortization 2

A

Reduces investor’s cost basis

Reduces YTM and YTC

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10
Q

Which one of the following statements regarding Coverdell Education Savings Accounts is correct?

A

Contributions are made with after tax dollars and grow tax deferred

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11
Q

Funds are escrowed to retire a bond on its next call date. This bond is2

A

Prerefunded

Defeased

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12
Q

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

A

Conduct Rules

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13
Q

Which of the following statements are true regarding income bonds?2

A

They do not pay semi annual interest

They may not return 100% of principal at maturity

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14
Q

Jennifer is selling securities at a loss. She will not be allowed to claim the loss if she

A

Repurchases the same securities within 30 days

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15
Q

Which of the following preferred shares has the highest yield?

A

Callable

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16
Q

Which of the following statements is false with respect to value mutual funds?

A

They hold growth stocks and bonds that are deemed to be undervalued in price

17
Q

Which of the following orders are reduced by the specialist of the NYSE on the ex dividend date of a listed stock?2

A

Open buy limits

Open sell stops

18
Q

The death benefit payable during the accumulation period of an annuity contract2

A

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

19
Q

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

A

$0.80

20
Q

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?

A

$50,000

21
Q

Which of the following most closely expresses FINRA’s Five Precent Policy?

A

Markups/markdowns and commissions should be fair under the circumstances and should probably not exceed 5%

22
Q

Which of the following is a wash sale?

A

Selling a put or buying a call within 30 days of sale of stock