Exam 21 Wrong Answers Flashcards

1
Q

A domestic company is exporting goods to Europe. Which of the following option strategies would it use?

A

Buy euro puts

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2
Q

A parent has been using distributions from a 529 plan to pay for her son’s college education. In his spare time and unrelated to his college curriculum, the son decides to start a business and needs $15,000 in seed money. If $15,000 is withdrawn from the 529 plan to cover this business venture, what are the implications?

A

10% penalty and ordinary income taxes on earnings

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3
Q

The amount of money that an investor pays for newly issued common stock in excess of its par value is called

A

Paid in capital surplus

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4
Q

An investment company can perform certain activities only with the approval of a majority of the shareholders. Which of the following is the board of directors allowed to do without a shareholder vote?

A

Appoint officers of the investment company

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5
Q

Lump sum distributions without penalty from qualified retirement plans may not be made to an individual for

A

30 years of service with the company

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6
Q

Triple witching involves the expiration of which of the following four times a year?2

A

Equity options

Equity option indexes

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7
Q

Which of the following employees is eligible for a SEP?2

A

An employee with an annual salary above a specified limit

An employee who worked for the company for 3 of the last 5 years

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8
Q

A sale of securities in a long margin position affects which of the following?3

A

Market value

Debit

SMA

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9
Q

Which has the best rating?

A

Aaa 5 years to maturity

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10
Q

The expense limitation clause of a life insurance policy

A

Requires the insurance company to pay administrative expenses above the maximum charges stated in the policy

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11
Q

A corporation has a $4 million profit. The corporation is in the 34% tax bracket. What is pre dilutive EPS? Common stock: 1,000,000 shares ($10 par) = $10,000,000; 5% preferred: 50,000 shares ($100 par) = $5,000,000; 7% debentures: 5,000 bonds ($1,000 par convertible at $10) = $5,000,000

A

$2.16

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12
Q

Which of the following lower investor basis in a DPP?3

A

Depletion

Depreciation

Passive loss

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13
Q

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

A

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

Both written and oral complaints must be maintained

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14
Q

Mortgage-backed issues are considered to be safe instruments. Which statement is incorrect concerning these securities?

A

GMNA, FNMA, and FHLMC are all fully backed by the federal government

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15
Q

Which of the following are powers of the SEC?2

A

Write laws

Revoke registrations

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16
Q

Regarding CDSCs, which of the following is not true?

A

They reduce the amount of the initial investment

17
Q

When a stock is crossed on the NYSE floor and then appears on the tape after execution, the transaction is a

A

Exchange distribution

18
Q

In a DPP a limited partner’s participation does not take effect until

A

The general partner signs the subscription agreement

19
Q

A broker goes to a designated market maker (DMM) to sell 100 XYZ. The DMM stops the broker at 31. Which of the following is true?

A

The DMM has guaranteed the broker a price of 31

20
Q

Which of the following would be least suitable for a very wealthy investor seeking tax relief?

21
Q

What is the cost of a March 129 T bond call with a premium of .20?

22
Q

An investor can be granted an extension of time by

A

FINRA and the transacting exchange

23
Q

The yield curves for high grade and low grade bonds are both positive and are moving further apart. An investment in which of the following would be most consistent with the economic expectations reflected in this relationship?

A

Government bonds

24
Q

A Treasury bond with a 10 1/4% coupon due on July 1 has interest payment dates of Jan. 1 and July 1. It is traded for settlement on Feb. 24. What is the number of days of accrued interest?

25
Q

An investor buys a 10 year municipal bond at 107. The investor sells the bond after 3 years at 102. What is the investor’s gain or loss?