Exam 4 Wrong Answers

Question 1

Which of the following entities does not issue Eurodollar bonds?

Answer 1

US government

Question 2

All of the following are duties of a transfer agent except

Answer 2

Holding customer’s securities for safekeeping

Question 3

In government yield auction of US Treasury bills, which of the following orders will always be filled?

Answer 3

Noncompetitive bid

Question 4

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

Answer 4

Yield to call

Question 5

Which of the following is the most secure?

Answer 5

TAN

Question 6

How often can an investor purchase the maximum number of option contracts?

Answer 6

5 business days

Question 7

A customer bought 100 shares of XYZ at 48. Within 31 days she sold her shares at 41. She then, within 30 days, wrote an XYZ May 40 put. How can she avoid deferral of her tax loss?

Answer 7

Nothing. The loss will be deferred.

Question 8

Jack owns a small manufacturing company in the Northeast. The company is publicly traded; however its capitalization is very small. Jack would like to expand his operations over the next 2 years. Which of the following types of offerings will best suit the manufacturing company’s needs?

Answer 8

A shelf offering

Question 9

In order of liquidation, which of the following has a residual claim to the assets of the corporation?

Answer 9

Common shareholders

Question 10

Face amount certificates issue debt certificates that offer predetermined interest rates. The certificates may be purchased by either periodic installments or with a lump sum payment. These certificates have a maturity of at least

Answer 10

24 months

Question 11

All of the following are components of the leading economic indicators as published by the Department of Commerce except

Answer 11

Index of industrial production

Question 12

The Revdex is found in which publication?

Answer 12

Daily Bond Buyer

Question 13

An investor has an adjusted basis of $20,000 in a direct participation program. During the year $12,000 in cash distributions is received, and the investor’s share of depletion is $6,000. What is the adjusted basis at the end of the year?

Answer 13

$2,000

Question 14

Which of the following statements regarding commercial paper is false?

Answer 14

Registration is required by the SEC

Question 15

The electronic system for reporting municipal bond trades in the OTC secondary market is

Answer 15

SHORT

Question 16

The cash value of a variable life insurance company must be calculated

Answer 16

Monthly

Question 17

A private securities transactions exists when a representative

Answer 17

Is selling away

Question 18

Which of the following is not subject to the short swing profit rule?

Answer 18

An investor with a net worth in excess of $5,000,000 (exclusive of primary residence)

Question 19

Which of the following is a coincident indicator?

Answer 19

Industrial production

Question 20

The maximum penalty which can be imposed on a business entity for false or misleading information on any SEC report or application is

Answer 20

$2,500,000

Question 21

Which of the following represents the order in which market orders are filled?

Answer 21

Priority, precedence and parity

Question 22

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

Answer 22

Reversal of a downtrend

Question 23

Which of the following is not true concerning simplified arbitration?

Answer 23

A single arbitrator conducts a hearing and renders a decision

Question 24

Which of the following accurately describes an ETN?

Answer 24

Principal at maturity is based on an index

Question 25

Who of the following are restricted persons associated with an IPO?2

Answer 25

The father in law of a registered representative A broker/dealer not involved in the syndicate

Question 26

Under the wash sale rule, a loss on the sale of a security is deferred if, within a period beginning 30 days before the sale and ending 30 days after the sale, a customer effects which of the following transactions which remain unexercised involving that security?

Answer 26

Sells a put

Question 27

The FINRA statute of limitations for arbitration claims is

Answer 27

6 years

Question 28

A corporation has a $4 million profit. The corporation is in the 34% tax bracket. What is pre-dilutive EPS? Common stock: 1,000,000 shares ($10 par) = $10,000,000; 5% preferred: 50,000 shares ($100 par) = $5,000,000; 7% debentures: 5,000 bonds ($1,000 par convertible at $10) = $5,000,000

Answer 28

$2.16

Question 29

If a bond investor wants to know the rate of return measuring the total performance on a bond held from purchase through maturity, the investor should calculate the

Answer 29

Yield to maturity

Question 30

Which of these sequences accurately describes the flow of an order to purchase a stock on the NYSE in a margin account?4

Answer 30

Wire room (order department), P&S, margin department, cashiering

Question 31

Which of the following is not affected by the declaration of a dividend?

Answer 31

Assets

Question 32

According to MRSB rules, under which of the following conditions may a municipal dealer share in the losses of a customer’s account?

Answer 32

Under no circumstances

Question 33

Sell one ABC May 45 call for 4.50. Sell one ABC May 45 put for 3. Assuming intrinsic value only, at what price is there a $500 profit?

Answer 33

42.50 and 47.50

Question 34

Which of the following is not an exempt transaction?

Answer 34

An issue of 5-year Treasury notes

Question 35

XYZ stock is trading at $1.25 per share. With Reg T at 50%, what is he required deposit to sell short 10,000 XYZ @ 1.25 per share?

Answer 35

$25,000

Question 36

A customer places a buy limit order at $36.50. This means that the order

Answer 36

Is held in the specialist’s book

Question 37

Which of the following is the highest yield when a bond is trading at a discount?

Answer 37

Yield-to-maturity

Question 38

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 38

Free-writing prospectus

Question 39

An engineering report would be used for which of the following?

Answer 39

Hospital revenue bond