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Series 7 > Exam 31 Wrong Answers > Flashcards

Exam 31 Wrong Answers Flashcards

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Series 7 Top-off Exam flashcards
1
Q

All of the following must appear on the order ticket except?

A

Commission

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2
Q

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

A

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

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3
Q

As it relates to an account established as joint tenants in common, which of the following is/are not true?2

A

If one party dies the assets will become the property of the survivor

Accounts must be established with equal ownership among the parties

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4
Q

Which of the following statements are true regarding the management of discretionary accounts?3

A

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

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5
Q

A customer and their spouse have an account registered as joint tenants in common. If the customer dies what would happen to the account?

A

The decedent’s assets will be distributed according to their will

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6
Q

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

A

The maximum contribution is $2,000 er year after tax

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7
Q

You own a long term corporate bond. Which of the following risks should you be least concerned about?

A

Liquidity risk

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8
Q

Which is true regarding Treasury securities?

A

Treasury bills, notes, and bonds differ in their interest, term and price

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9
Q

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

A

ELNs convert to cash at maturity

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10
Q

Which of the following debt securities pays interest?

A

Industrial revenue bond

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11
Q

What does a proponent of fundamental analysis use to value common stock?2

A

Trade volume

P/E ratio

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12
Q

What is the best definition of interest rates?

A

The cost of money

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13
Q

The prime rate is

A

The rate that banks charge their most credit worthy corporate customers on loans

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14
Q

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

A

The transfer agent

The registrar

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15
Q

All of the following are true with regard to a 12 B 1 plan except

A

It is a type of sales charge

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16
Q

A sector fund is one, which has at least what percentage of its assets invested in any one area

A

25%

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17
Q

All of the following would require approval of stockholders pursuant to SEC Rule 145 except2

A

New shares are issued under the terms of a 3:1 stock split

A change in par value of stock after a stock split

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18
Q

XYZ wants to sell its shares in its home state and in one other state. They would file

A

A standard registration statement

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19
Q

A broker dealer that is acting as a selling group member in an initial public offering of corporate securities is paid

A

The selling concession

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20
Q

Which of the following activities may an underwriter engage in during the cooling off period?3

A

Blue sky the issue

Obtain indications of interest

Send out red herrings

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21
Q

The initial margin requirement for municipal bonds is set by

A

NYSE

22
Q

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?

A

$4,000

23
Q

Minimum maintenance is set in a new margin account by

A

NYSE/FINRA

24
Q

Under Regulation T, credit may be extended on all of the following positions except

A

Listed options

25
Q

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%?

A

$0

26
Q

All of the following are submitted when making a municipal bond bid except

A

Name if the bond counsel

27
Q

Which of the following are considered revenue bond covenants that are disclosed to investors in a trust indenture3

A

Additional bonds test

Flow of funds

Sinking fund provisions

28
Q

Which of the following syndicate practices is true when a new issue of municipal bonds is being sold?3

A

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

29
Q

All of the following appear in a municipal revenue bond indenture except

A

Terms of delivery

30
Q

Which of the following terms are associated with municipal revenue bonds?

A

Negotiated underwriting

31
Q

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?

A

Zero tax liability per bond

32
Q

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

A competitive bid

33
Q

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

A

Purpose of the issue

Feasibility statement

Sources of collateral

34
Q

When an issuer advance refunds a municipal bond issue, the funds are typically invested in all of the following except

A

Investment grade municipal bonds

35
Q

What is meant by the statement 4.50% less 3/4’ for a municipal bond traded in the secondary market?

A

4.50% yield to maturity less $7.50 per $1,000

36
Q

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?

A

They may issue the white $175,000,000 immediately

37
Q

The OCC publishes its disclosure document The Characteristics and Risk of Standardized Option’s in order to2

A

Meet the prospectus requirements of the Securities Act of 1933

Disclose the risks of option investing

38
Q

An investor is short stock could protect the position by doing all of the following except

A

Entering a sell stop loss order

39
Q

Long 100 shares XYZ @ 40. Short XYZ Oct 50 call @ 2.25. What is the maximum loss in this hedged position?

A

37.75 per share

40
Q

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?

A

$950 gain

41
Q

Current MSRB regulations would allow for which of the following to occur?

A

An RR recommends that a client purchase a put option on municipal security

42
Q

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

A

529 plan

43
Q

An investor seeking some current income would most likely invest in

A

Treasury bond

44
Q

What percentage of employee contributions to a 403b plan are vested after one year?

A

All employee contributions vest immediately

45
Q

Assume the customer purchased 100 ABC in a cash transaction on Monday July 1. When would the trade settle?

A

Monday July 1

46
Q

Who participated in the trade as a principal?

A

Dealer

47
Q

Each broker dealer must designate a principal whose jobs it is to

A

Supervise all of the actions of a firm and its employees

48
Q

When making a public appearance, members must file which of the following with FINRA?3

A

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

49
Q

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

A

His date of reassociation

50
Q

Electronic advertising must

A

Both of the choices listed

51
Q

The Trust Indenture Act of 1939 covers2

A

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

52
Q

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?

A

The principal must notify FinCEN within 14 days

Series 7 (47 decks)

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