Exam 35 Wrong Answers

Question 1

A technical analyst interprets a reverse head and shoulders formation to be

Answer 1

Reversal of a downward trend

Question 2

Which of the following describe developmental oil and gas drilling programs?2

Answer 2

Drilling takes place only in proven areas

Return potential is not as great as it is in exploratory drilling

Question 3

Under Regulation D rule 506, how much money can be raised within 12 months?

Answer 3

An unlimited amount

Question 4

A municipal securities dealer buys $500,000 of 6% revenue bonds at par. The dealer immediately reoffers the bonds. Under MSRB rules, which two of the following would be considered bona fide quotes under the circumstances described?2

Answer 4

5.8 less 1/2

101

Question 5

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 If $15,000 is withdrawn from the 529 plan to cover this business venture, what are the implications?

Answer 5

10% penalty and ordinary income taxes on earnings

Question 6

A grandfather wants to select an annuity settlement option that will provide the best benefit to both his son and granddaughter. What annuity type would best suit his needs?

Answer 6

Joint and last survivor

Question 7

Which of the following statements are true regarding the over the counter market?2

Answer 7

The Federal Reserve Board regulates which OTC securities are marginable

FINRA regulates trading practices in the OTC market

Question 8

A corporation’s capitalization consists of: Debenture - 7% - $1,000 par, maturity 2022: $4,000,000; Common Stock - $1 par, 200,000 shares outstanding: $200,000 Capital in excess of par: $800,000; Retained earnings: $5,000,000. The corporation, for the year 2010 earns $1,500,000 before interest and taxes and is in the 50% tax bracket. What is the return on common equity?

Answer 8

10.2%

Question 9

All of the following are used to properly evaluate the yield to maturity of a bond investment except

Answer 9

Current price of the bond

Question 10

Most fund companies will permit shareholders to request an actual certificate, similar to a stock certificate, which proves ownership of the shares, however before those shares can be redeemed

Answer 10

They must be deposited into the account and re evaluated by the fund company

Question 11

With systematic withdrawal plan, from what source are the first payments made?

Answer 11

Dividends

Question 12

A mutual fund prospectus can no longer be used if financial information is older than

Answer 12

16 months

Question 13

A Third Market trade involves

Answer 13

Listed stocks traded over the counter

Question 14

All of the following are true statements regarding a full arbitration hearings except

Answer 14

The maximum award is $50,000

Question 15

The purchase of a put has all the following advantages over selling short except

Answer 15

Decreasing time value

Question 16

Which of the following would be quoted on a bond confirmation when an investor purchases a bond that has been advanced refunded?

Answer 16

Yield to call

Question 17

What is the lowest price that a seller is willing to accept for a security from a customer?

Answer 17

Ask price

Question 18

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?

Answer 18

$5,000

Question 19

The syndicator of a limited partnership acts as

Answer 19

The organizer of the partnership responsible for securities registration

Question 20

CQS transactions involve all of the following except

Answer 20

OTCBB

Question 21

Which of the following applies to put option contracts?

Answer 21

The put holder has the right to sell at the strike price

Question 22

How are funds contributed to a tax sheltered annuity treated as taxation?

Answer 22

The contributions are not included as income for the employee, but are taxable upon distribution

Question 23

A client wishes to open a portfolio margin account. What must be completed prior to opening the account?

Answer 23

Be approved by a designated ROP for uncovered option writing and customer must receive a copy of and sign the risk disclosure document at the time of application or earlier

Question 24

With regard to a collect on delivery order, what is the proper procedure for the receiving firm should the funds not be available to pay for the securities at delivery?

Answer 24

The receiving firm must promptly return the securities to the selling firm

Question 25

A customer has requested that an account be opened for trading options. Which of the following would the registered representative do in addition to mailing out the options agreement form?

Answer 25

Send an options disclosure document