Exam 36 Wrong Answer Flashcards
In July, the price of XYZ stock is 18. A customer sells 1 XYZ Oct 20 put for 5 and 1 XYZ Oct 20 call for 3. If the put expires unexercised and the call is exercised at expiration with the delivered stock being subsequently purchased for 29, what is the resulting profit or loss?
$100 loss
A company announced a 35 cent dividend payable July 15 to stock of record on June 20. It also declared a 7% stock dividend payable July 15 to stockholders of record on June 14. A customer purchases 2,000 shares regular way on June 13. He should expect to receive a cash dividend of
35 cents per share on 2,000 shares
Which of the following securities are exempt under the Securities Act of 1933?3
State and municipal securities
Common stock of savings and loan associations
Securities issued by the federal government
An over the counter transaction may be executed by a broker/dealer for all of the following except
As an agent with proper disclosure of a fair and reasonable markup
At a customer’s request, an RR accepts an order for a listed stock as good through the month. The responsibility for cancellation of the order at the end of the month rests with
Member firm that accepted the order
A customer has sold certain securities but has not delivered them to her registered representative by the settlement date. The SEC mandatory buy-in period for customers who fail to deliver on time is
10 business days after the settlement date
An investor who buys municipal bonds on margin may deduct a maximum investment interest of
0
A long term policy of investing in Treasury bills (T-bills) Wikipedia result in which of the following?2
Fluctuating rate of return
Stable value of principal
The MSRB has rules relating to all of the following except
Minimum commissions
US Treasury bills offer investors all of the following except
A fixed interest rate
The spread on a municipal dollar bond with a market of 87-7/8 to 88-3/4 is/are which of the following?2
7/8 of a point
$87.50 per bond
For SIPC Coverage, the term customer account will not mean
Cash, margin, and convertible bond accounts, all in the same name
A family of open end investment company funds permits investors to switch from one fund to another for a nominal service fee. What are the tax consequences of such an exchange?
It may be a taxable event because it is considered a sale and purchase
A DPP investor puts $200,000 into a tennis condominium resort development. The investor’s share of the income from the operation the first year us $300,000. The share of interest paid on the bank loan for the year is $200,000. The share of the maintenance expenses and taxes are $95,000. The share of the depreciation is $55,000. The investor is in the 28% tax bracket. How much, if any, can the investor deduct from income from other passive sources this year?
$50,000
The document filed with the Secretary of State attesting to the formation of a limited partnership (DPP) is called the
Certificate of limited partnership
Which of the following is true of cash dividends?
They are carried as a current liability by the company as soon as they are declared by the Board of Directors
The priority of orders for a municipal new issue syndicate is normally found in the
Syndicate letter
For the year ending 12/31, a company with only common shares outstanding reported net sales of $910 million, net earnings before taxes of $99.2 million and net earnings after taxes of $49.6 million. The earnings per share were $3.29, depreciation totaled $32 million, cash flow per share was $4.22, and book value at the year end was $21 per share. $1.10 per share was distributed as dividends for the year and the market price of the stock at the close on 12/31 was $24. The margin of profit ratio was
10.9%
A customer sells an over the counter stock and uses the proceeds to purchase another OTC stock. FINRA’s markup policy applies to
Purchase and sale combined
An investor owns 1000 shares of ABC, a biotechnology company that is still in the early stages of testing a new drug. The price of the stock dropped recently, but the investor believes that the drug the company is developing will be a blockbuster. Which of the following strategies would enable the investor to increase the overall return on his portfolio during this time?
Write 10 ABC calls
Payment of debt service for moral obligation bonds is typically dependent on
Legislative appropriation
In a customer’s properly margined short account, the credit balance is $20,000. What will interest be charged on?
Zero
