Exam 31 Wrong Answers Flashcards
All of the following must appear on the order ticket except?
Commission
Which of the following are false as it relates to the operation of an account registered in the names of more than one two party and established as JTWROS?2
Checks may be made out to either party with the agreement of all tenants
The account may be established between no more than two tenants
As it relates to an account established as joint tenants in common, which of the following is/are not true?2
If one party dies the assets will become the property of the survivor
Accounts must be established with equal ownership among the parties
Which of the following statements are true regarding the management of discretionary accounts?3
Discretionary accounts must be approved by a registered principal
The broker dealer must keep a record of all discretionary trades
Each discretionary order must be marked discretionary
A customer and their spouse have an account registered as joint tenants in common. If the customer dies what would happen to the account?
The decedent’s assets will be distributed according to their will
A customer has just had their first child and they want to start putting money away for his future. They ask about the maximum contribution to an educational IRA. You should tell them
The maximum contribution is $2,000 er year after tax
You own a long term corporate bond. Which of the following risks should you be least concerned about?
Liquidity risk
Which is true regarding Treasury securities?
Treasury bills, notes, and bonds differ in their interest, term and price
As structured products equity linked notes or ELNs may not be suitable for all investors. Which of the following is a typical characteristic of ELNs that investors should be made aware of
ELNs convert to cash at maturity
Which of the following debt securities pays interest?
Industrial revenue bond
What does a proponent of fundamental analysis use to value common stock?2
Trade volume
P/E ratio
What is the best definition of interest rates?
The cost of money
The prime rate is
The rate that banks charge their most credit worthy corporate customers on loans
Your customer’s house has been damaged by a flood. They bring in a certificate that has been severely damaged. Who could validate the certificate?2
The transfer agent
The registrar
All of the following are true with regard to a 12 B 1 plan except
It is a type of sales charge
A sector fund is one, which has at least what percentage of its assets invested in any one area
25%
All of the following would require approval of stockholders pursuant to SEC Rule 145 except2
New shares are issued under the terms of a 3:1 stock split
A change in par value of stock after a stock split
XYZ wants to sell its shares in its home state and in one other state. They would file
A standard registration statement
A broker dealer that is acting as a selling group member in an initial public offering of corporate securities is paid
The selling concession
Which of the following activities may an underwriter engage in during the cooling off period?3
Blue sky the issue
Obtain indications of interest
Send out red herrings
The initial margin requirement for municipal bonds is set by
NYSE
A customer has a margin account with a market value if $22,000 and a debit balance of $3,000. The FRB margin requirement is 50%. To what level can the market value decline to be on the NYSE minimum maintenance requirement?
$4,000
Minimum maintenance is set in a new margin account by
NYSE/FINRA
Under Regulation T, credit may be extended on all of the following positions except
Listed options
A customer’s only position in a margin account is $100,000 of 5% muni caps bonds. What is the net interest income or interest expense that is reportable for Federal tax purposes if the debit balance in the account is $70,000 at 8%?
$0
All of the following are submitted when making a municipal bond bid except
Name if the bond counsel
Which of the following are considered revenue bond covenants that are disclosed to investors in a trust indenture3
Additional bonds test
Flow of funds
Sinking fund provisions
Which of the following syndicate practices is true when a new issue of municipal bonds is being sold?3
Customer orders will receive priority over syndicate member related orders
There must be a period of time allowed for the accumulation of orders
The issue may be sold as soon as it is awarded
All of the following appear in a municipal revenue bond indenture except
Terms of delivery
Which of the following terms are associated with municipal revenue bonds?
Negotiated underwriting
A county is offering a new issue of 10 year GO bonds that are bit in high demand. As a result the issue must be sold to investors at a price that is equal to 92. An investor who holds the bonds until they mature will have which of the following?
Zero tax liability per bond
Dallas Texas is seeking to issue $100,000,000 worth of new bonds and publishes an invitation to underwriters who may be interested in offering the bonds for sale to investors. This is known as
A competitive bid
The disclosure document used in the municipal securities industry is prepared by the issuer and it must contain which of the following if applicable?3
Purpose of the issue
Feasibility statement
Sources of collateral
When an issuer advance refunds a municipal bond issue, the funds are typically invested in all of the following except
Investment grade municipal bonds
What is meant by the statement 4.50% less 3/4’ for a municipal bond traded in the secondary market?
4.50% yield to maturity less $7.50 per $1,000
Your city has a statutory debt limit of $300,000,000. Currently there is $225,000,000 worth of debt outstanding. The city will be hosting the Olympics and wants to issue a revenue bond to build a new facility in the amount of $175,000,000. Which of the following is true?
They may issue the white $175,000,000 immediately
The OCC publishes its disclosure document The Characteristics and Risk of Standardized Option’s in order to2
Meet the prospectus requirements of the Securities Act of 1933
Disclose the risks of option investing
An investor is short stock could protect the position by doing all of the following except
Entering a sell stop loss order
Long 100 shares XYZ @ 40. Short XYZ Oct 50 call @ 2.25. What is the maximum loss in this hedged position?
37.75 per share
An investor has sold 10 OEX June 550 Calls at 7.15 to open when the underlying index is at 551.40. Over the next few weeks the OEX index advances to 556.29. The investor closes out the position at its intrinsic value. What is the investor’s gain or loss?
$950 gain
Current MSRB regulations would allow for which of the following to occur?
An RR recommends that a client purchase a put option on municipal security
If a client wishes to open an account for a minor whereby he the donor retains ownership of the account he would most likely open a
529 plan
An investor seeking some current income would most likely invest in
Treasury bond
What percentage of employee contributions to a 403b plan are vested after one year?
All employee contributions vest immediately
Assume the customer purchased 100 ABC in a cash transaction on Monday July 1. When would the trade settle?
Monday July 1
Who participated in the trade as a principal?
Dealer
Each broker dealer must designate a principal whose jobs it is to
Supervise all of the actions of a firm and its employees
When making a public appearance, members must file which of the following with FINRA?3
Any power point slides that will be used in the presentation
All handouts that will be distributed to the participants
The script that the presenter will be using
An investment executive decides it is time for a career change after 12 years with his firm and opens up a restaurant. After five years he sells his restaurant and returns to his old firm. He will receive notice of his regulator CE requirement based on
His date of reassociation
Electronic advertising must
Both of the choices listed
The Trust Indenture Act of 1939 covers2
A $20,000,000 sale of corporate bonds sold interstate
A sale by a brokerage firm throughout the country of $25,000,000 worth of corporate debentures
A designated principal at a member firm has just received a new email list of known and suspected persons and entities from FinCEN. Upon review of the list the principal notices that one of the businesses on the list has an account with his firm. Which of the following is true?
The principal must notify FinCEN within 14 days
