Exam 20 Wrong Answers Flashcards
A customer buys an 8 1/2% T-bond maturing in 2015. He also buys a T-bond put. Interest rates appreciate to 10%. Which of the following will occur upon sale of the bond and exercise of the put?
Position will be closed for a loss
Commercial paper 2
Is generally issued at a discount
Can be traded
Which of the following would increase US Exports?2
Weakening dollar
Balance of Payment deficits
How often can an investor purchase the maximum number of option contracts?
5 business days
A well known seasoned issuer is issuing securities in an APO. To meet Act of ‘33 disclosure requirements, the issuer may use a/an
Free-writing prospectus
Conventional and Roth IRAs are different in which of the following ways?
Income eligibility limits
A 50-year old individual needs $20,000 for his child’s education, and wishes to withdraw the necessary funds from his traditional IRA. Which of the following statements is true concerning taxation on the withdrawal?
The entire amount will be taxed as ordinary income
An issuer can avoid registration by engaging in a private placement of securities under Regulation D if certain requirements are met. Which of the following statements is correct?
All of the above are correct statements
An inexperienced conservative investor is selecting his first equity fund. He wants to limit his risk while acquiring equity exposure. Which fund is most suitable for this investor?
Value fund
A mutual fund prospectus can no longer be used if financial information is older than
16 months
A client who believes the Canadian dollar will soon strengthen relative to the US dollar might profit from which of the following strategies?
Sell calls on the Canadian dollar
A customer sells 1 XYZ July 70 call @ 4 after having purchased 200 shares of XYZ @ 65 per share. If the customer is exercised, the tax consequences are 2
Cost basis of $65
Sale proceeds of $74 per share
A firm has a joint account for a married couple. Any request for disbursement from the account, made by either spouse would require that
The check must be payable to both owners jointly
The least active secondary market exists in
Commercial paper
All of the following require employer permission to open an account at a NYSE member firm except
A margin account by an officer of a bank
A cash account by an officer of a bank
The dollar is strengthening against the pound sterling. Which are the probable causes?
Rising interest rates/lowering prices
The highest price a buyer is willing to pay for a security is known as the
Bid price
Which of the following is a wash sale?
Selling a put or buying a call within 30 days of sale of stock
An indication of investor sentiment is found in which of the following?
Increase in stock prices
An investor purchases a 10% interest in a limited partnership with a $100,000 cash deposit. Her share of nonrecourse debt is $300,000. What is the customer’s maximum potential loss?
$100,000
Which of the following is not a characteristic of SIMPLE plans?
There are liberal loan provisions for hardships
Under Reg D rule 506, how much money can be raised within 12 months?
An unlimited amount
The payment to mutual fund investors who redeem their shares will be based on the
Next computed bid price as of the day he shares are received
If interest rates are falling, which statement is true?
Premium bonds will appreciate faster than discount bonds
The SIPC (Securities Investor Protection Corporation) insures a customer’s account for unreturned cash for up to
$250,000
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
The death benefit payable during the accumulation period of an annuity contract 2
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 until the annuity payments have started
A mutual fund portfolio manager expects interest rates to increase. He wishes to protect his Treasury bond portfolio but also wishes to generate some additional income. What would be the most appropriate action for the portfolio manager to take?
Sell T-bond calls
Concerning valuation of a variable annuity, which of the following are true?3
The value is expressed in units similar to mutual fund shares
Units are revalued daily similar to mutual fund shares
The value of a unit varies with the performance of the separate account
Maximum coverage for an investor under SIPC is
$500,000 per separate customer, with a limit of $250,000 of coverage for cash
