Exam 38 Wrong Answers

Question 1

A firm is acting in the capacity of a broker and receiving a commission. The firm is performing as

Answer 1

An agent

Question 2

An 8.5% CMO yielding 9.55% does not have which of the following risks?

Answer 2

Refinance

Question 3

All of the following are differences between qualified and non qualified retirement plans except

Answer 3

Taxation on accumulation

Question 4

Which of the following transactions requires distribution of an offering circular to prospective investors?

Answer 4

Reg A+

Question 5

Your broker/dealer is a member of the underwriting syndicate and re-offers 100,000 M of bank qualified municipal debt at 99.75 net. There’s a .75 point selling concession, .25 point re-allowance and 1 point additional takedown. What’s the member’s profit?

Answer 5

$1.75 million

Question 6

XYZ Corporation Primary Distribution Total issue: 1,000,000 shares; Retained for sale by underwriters: 800,000 shares. Reserved for distribution to selling group 200,000 shares. Per share: Public Offering Price: $10.00; Manager’s fees and expenses: .10; Underwriter’s allowance: .70; selling concession: .50, proceeds to issuer 9.20. The underwriting spread is

Answer 6

$0.80

Question 7

A customer has purchased $15,000 worth of XYZ Corporation over a period of time. Which of the following is true about his subsequent sale of $5,000 of XYZ stock?

Answer 7

The investor is allowed to specify which shares are being sold to minimize his capital gain

Question 8

Which of the following applies to put option contracts?

Answer 8

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

Question 9

Option orders are transmitted to the CBOE trading floor via

Answer 9

OSS

Question 10

An investment company can perform certain activities only with approval of a majority of the shareholders. Which of the following is the board of directors allowed to do without a shareholder vote?

Answer 10

Appoint officers of the investment company

Question 11

Which of the following are characteristics of auction rate securities?2

Answer 11

They have regularly resetting interest rates

They are issued by corporations and municipalities

Question 12

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

Answer 12

Ask price

Question 13

XYZ 25.25 + .25; bid 25, ask 25.12. If an investor wishes to purchase 1,000 shares of XYZ, excluding commission or markup, what price would be paid per share?

Answer 13

25.12

Question 14

A very busy executive wants to diversify by investing in a variety of mutual funds, but doesn’t have time to research and choose the fund. Which of the following may be an appropriate investment for this investor?

Answer 14

A fund of funds

Question 15

Under SIMPLE plans, employers must make a matching contribution of up to what percentage of the employee’s annual wages?

Answer 15

3%

Question 16

A registered representative qualified to sell only municipal securities may solicit orders for which of the following?2

Answer 16

Sewer and water revenue bonds

General obligation bonds

Question 17

Which of the following terms would be used to describe a pre offering solicitation under Reg A+?

Answer 17

Testing the waters

Question 18

Which annuity provisions guarantees payments as long as the annuitant lives?

Answer 18

Mortality guarantee

Question 19

Under Simple plans, the employer must contribute matching contributions of up to

Answer 19

3% of employee annual salary

Question 20

A well known seasoned issuer is issuing securities in an APO. To meet Act of ‘33 disclosure requirements, the issuer may use a/an

Answer 20

Free-writing prospectus

Question 21

Which of the following entities does not issue Eurodollar bonds?

Answer 21

US government

Question 22

15c2-6 involves the sale of low priced non-listed equities. According to 15c2-6 which of the following is an experienced customer?2

Answer 22

A customer with an account opened and funded more than a year within the prior year

A customer who has done 3 penny stock trades with the same firm

Question 23

A customer margin account has market value of $10,000, debit balance of $8,000 and SMA of $1,000. The margin call can be met with

Answer 23

$500 cash

Question 24

An investor is long 100 shares XYZ and sells a call. The investor is

Answer 24

Conservative

Question 25

A $200 million new issue is being underwritten by a syndicate. A “tombstone” ad has been placed in the Wall Street journal listing the manager of the syndicate and the syndicate’s members. The placing of the ad was required by the

Answer 25

None of the above

Question 26

When a municipal securities broker/dealer receives ACATS from another dealer, it has 2

Answer 26

Three days to verify account positions

Four days to complete transfer of account positions

Question 27

All of the following are agency issues backed by government guaranteed or insured mortgages except

Answer 27

SLMA

Question 28

With variable annuity, which of the following factors are not involved in determining the amount of an annuitant’s first annuity payment?

Answer 28

The number of annuity units

Question 29

A security is being offered on a When Issued basis. However before you place the trade, the When Issue notice is suspended. How should you explain this to your client, who is interest in buying the stock?

Answer 29

The suspension terminates the When Issued basis and now orders taken must be delivered on regular way settlement and delivery basis. The client can place the order at his convenience

Question 30

Regular way settlement in a DVP/RVP account is

Answer 30

Up to 35 calendar days

Question 31

A registered representative wants to increase his sales and decides to increase his option business. He sends a letter to all of his customers discussing covered call writing, but he makes no specific recommendations. When must the OCC Disclosure Statement be delivered?

Answer 31

At or prior to the time the client receives the letter

Question 32

On a discount bond, which of the following lists is correct from the lowest to highest yield?

Answer 32

Nominal yield,current yield, yield to maturity

Question 33

Which of the following is shown at Nasdaq Level 2?4

Answer 33

Highest bid
Lowest bid
Highest offered
Lowest offered