Exam 27 Wrong Answers Flashcards
Which of the following is correct regarding a qualified profit sharing plan?
The plan must be nondiscriminatory
A common fund found in the indenture of a venue bond that provides money for additions, expansions and improvements is the
Replacement and renewal fund
A customer opens a margin account with a $20,000 purchase. If Reg T = 50% and the customer pays for the purchase, what is the SMA in the account?
$10,000
Which of the following are true regarding municipal offerings?2
Revenue bonds are usually offered through a negotiated process
General obligation bonds are usually offered through competitive bidding
Which of the following statements about series bonds is true?
They may only be redeemed by the Treasury
The customer has no cash available to trade in his cash account. On Monday, he purchases ABC stock for $5,000. He does not deposit cash in his account by Wednesday’s settlement date. On Thursday, he sells the ABC stock for $5,500 to cover the cost of his purchase. Which of the following statements is true?
This is a free riding violation
In an options contract, which party receives the premium and is obligated to buy the underlying security at the strike price?
Put writer
Which of the following is not true concerning the Central Registration Depository?
Information is available only via written inquiry
On a discount bond, which of the following lists is correct from lowest to highest yield?3
Nominal yield, current yield, yield to maturity
Which of the following is not a method to register a security at the state level?
Application
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
Under MSRB uniform practice rules, regular way settlement on municipal bonds is
Three business days following trade date
If a bond investor wants to know the rate of return measuring the total performance on a bond held from purchase through maturity, the investor should calculate the
Yield to maturity
Which of the following is true regarding private securities transactions for compensation?3
They must be approved by a person’s member firm
They must be recorded on the member firm’s books
The member firm must supervise the person’s participation
A customer receives a red herring from his registered representative and has indicated interest in the offering. Which two of the following are true?
The customer is not obligated to buy the stock
The broker/dealer is not allowed to accept a deposit to secure the customer’s indication of interest
Which of the following large block transactions appears on the exchange tape prior to execution on the exchange floor?
Special offer
A client with $1,000 to invest in a mutual fund for his IRA account is concerned about front end loads reducing the size of the already small investment. The client plans on holding the investment until retirement (20 years or more). Class B shares may be more appropriate for this client than Class A shares for all of the following reasons except
Class B shares have a lower expense ratio than Class A shares
Where can retail investors find information on municipal bond issuers?
EMMA
The lowest yielding CMO tranche is the
PAC
Regular way settlement in a DVP/RVP account is
Up to 35 calendar days
What is the major difference between an oil and gas limited partnership and a real estate limited partnership?
IDCs
Sell ABC short 20 stop 20.50. The ticker tape shows: 19, 20, 21, 20.50, 20.25. At what price was the trade executed?
21
Which of the following is a wash sale?
Selling a put or buying a call within 30 days of sale of stock
The responsibility for the payment of principal and interest on an industrial development revenue bond issue rests with the
Corporate guarantor
A decision that comes form the FINRA Board of Arbitration is
Binding on all parties involved
The term for active stock that represents the number of shares owned by the public is
Outstanding stock
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
When a stock is crossed on the NYSE floor and then appears on the tape after execution, the transaction is a
Exchange distribution
Assuming that a bond is purchased at a discount, then
Nominal yield, or stated rate is less than YTC
An investor in a limited partnership has established a basis for tax purposes of $20,000. During the year, the investor’s distributed share of the partnership losses was $18,000, and a cash distribution of $15,000 was received. How much of the loss can be used to offset other ordinary income?
$0
A person transferring an IRA to another trustee via a trustee to trustee transfer
Will not be subject to any penalties or taxation
