Exam 3 Wrong Answers Flashcards
XYZ Limited Partnership is seeking to roll up 50 individual limited partnerships into a Master Limited Partnership. The General Partner is charging limited partnership a substantial fee for implementing the roll up as well as increasing its share of the total assets. Which Two of the following must occur in order for the roll up to go forward?
Limited partners must vote to approve the roll up
The General Partner’s fees and increases share of assets are a conflict of interest and must be disclosed to the limited partners
Writing a straddle is
Writing an equal number of puts and calls with the same strike price and expiration date on the same underlying security
Rule 144A allows
Domestic purchase of foreign securities
George sold 100 shares of Karkraft for $20, which was a $5 per share loss. Fifteen days later, he purchased 100 shares of Karkraft at $22. What is his cost basis per share for the new purchase?
$27
Who enforces MRSB rules on NYSE member firms?
FINRA
The options position limit on ABC stock is 75,000 contracts on the same side of the market. Which of the following positions would violate the position limit?
Long 50,000 ABC June 60 calls, Long 25,000 ABC Sept 55 calls and short 10,000 ABC June 50 puts
The owner of a variable annuity is guaranteed to receive payments for a minimum of 15 years. This annuity is a
Life annuity with period certain
MSRB rules do not permit
Nominal quotes distributed as bids
Nominal quotes distributed as offers
All of the following apply to defined benefit plans except
Contributions are tied to the company profits
Prior to writing an option in a newly opened account, which of the following must be completed and delivered?
Margin agreement
Options disclosure
All of the following are true regarding indications of interest received by an underwriter of a new public offering during the 20 day cooling off period except
Indications cannot be canceled by the customer
Indications cannot be canceled by the underwriting firm
A grandfather wants to select an annuity settlement option that will provide the best benefit to both his sons and granddaughter. What annuity type would best suit his needs?
Joint and last survivor
An employee contributed $3,000 to her employer’s qualified plan. What percentage of this contribution is she vested in?
100%
A large corporation places an order to purchase a block of its own stock. The order is placed with a floor broker who enters the order with a specialist. The order is taken off the floor and filled. The announcement of the order is to
Only the specialist
The least active secondary market exists in
Commercial paper
The priority accorded to municipal orders taken for a new issue would be found in the
Agreement among underwriters
Your client has the following results for the current year: Capital gains $20,000; Capital losses $30,000. What is the tax status of the client?
$3,000 capital loss for the current year and then $3,000 can be claimed as capital loss for the next tax year
A municipal securities money market fund is a suitable investment for a high income investor seeking which of the following?
A safe investment vehicle to park the money while looking for a long term investment
ERISA qualified pension plan fund managers’ fiduciary responsibilities regarding plan investments are determined by
“Prudent Man” rules in the state where the fund operates
A coffee producer, an OTC traded company, did an add-on offering to update its roasting facility and expand into the tea market. The prospectus must be delivered within
40 days of the effective date
A client’s margin account currently has $8,000 of equity and an SMA balance of $1,000. The customer wants to buy $4,000 of marginable stock. How much money must be deposited in the account in order to purchase the securities?
$1,000
An order from the public is represented on the trading floor of the New York Stock Exchange by a
Floor broker
Which of the following are true of negotiable certificates of deposit?
The issuing bank guarantees the instrument
They can be traded in the secondary market
If a member and a nonmember of the FINRA have a dispute, it can go to arbitration at the insistence of
The non-member
In a DPP a limited partner’s participation in the partnership does not take effect until
The general partner signs the subscription agreement
When must a client receive an option’s disclosure document?
At or before account approval
A limited partnership reaches the crossover point, and the general partner refinances using a recourse mortgage. This results in a
Increased cost basis
A variable life insurance policyowner took a loan against his policy several years ago. Because of poor investment performance, his policy’s cash value has dropped to a negative value of $500. What are the policy owner’s options?
He has 31 days to pay back enough of the loan to bring the cash value positive
Cheryl has an individual retirement account as well as a joint account with her husband at her brokerage firm. What is her maximum coverage under SIPC?
$1,000,000
Which of the following best illustrates marketability risk?
A person selling a security at an inappropriate time sustains a loss
Opening purchase in a margin account with no other positions is 2,000 shares at $2. With Reg T at 50%, what is the minimum deposit required?
$5,000
If a municipal securities dealer, as a member of a syndicate, enters an order for its own account, which priority would it have, if normal priority were followed?
Member
Which of the following transactions requires distribution of an offering circular to prospective investors?
Reg A+
What oil and gas program has the least capital risk?
Income
Advantages and risks of an equipment leading program include 3
High initial write offs due to depreciation
Phantom income
Dangers of equipment obsolescence
Which of the following are issued with a specified fixed rate of interest?
US Government bonds and notes
Which of the following applies to a call option contract?
The call holder has the right to buy at the strike price
The terms for systematically recognizing the premium or discount associated with a municipal bond’s price are
Amortization
Accretion
