Exam 6 Wrong Answers Flashcards
Which one of the following statements regarding Coverdell Education Savings Accounts is correct?
Contributions are made with after-tax dollars and grow tax deferred
Most stockholders vote by proxy. What does this mean?
They grant limited power of attorney to someone to vote on their behalf
The Federal Act that established procedures for the protection of customer funds and securities in the event that a broker/dealer becomes insolvent is called
The Securities Investor Protection Act of 1970
If a limited partnership interests are distributed in a public offering, what is the name of the disclosure document?
Prospectus
When discussing CDSCs with a client, it should be pointed out that
Costs associated with each share class are fully disclosed in the prospectus
Which of the following could be an open-end fund?
RTC Balanced with NAV of $12.50 and NAV of $12.50
Which of the following is a function of depositories?
Move securities from one participant’s account to another participant’s account
A client calls his registered representative (RR) to ask her to buy 500 shares of XYZ Corp because he heard a dividend has been declared, but not paid yet, and he wants to receive the dividend. How should the RR respond to the client?
Inform the client of the consequences and refuse the order
Which of the following is true of restricted stock?
The purchase must be paid for in its entirety
Why might the expense ratio of a no load mutual fund be lower than that of a mutual fund with a load?
No-load funds may not charge a 12b-1 fee that is greater than 25 basis points
All of the following are differences between qualified and non qualified retirement plans except
Taxation on accumulation
The options disclosure document of the Options Clearing Corporation (OCC) must be sent to the customer
At or prior to account approval
Liability to contemporaneous traders for insider trading means
Insider traders may be liable to traders with no inside information who traded at the same time and lost money
Which entity enforces MRSB rules that pertain to NYSE member firms?
FINRA
With respect to the Securities Exchange Act of 1934, which of the following is false?
The act gave the SEC the right to set margin requirements
Asset-backed securities are traded based on
Average life
A bond’s call premium is defined as the amount
The issuer pays the bond holder to exercise the call
An issuer who has at least $100,000 in average daily trading volume and $25 million in public float is planning to bring additional shares to market. What would the restriction period be?
1 day prior to the effective date
Under Regulation T, the 90-day restriction applies to a customer who purchases and subsequently sells
Same stock in a cash account without having fully paid for the purchase
The board of directors declares a dividend on Wednesday, Oct. 5, to shareholders of record as of Thursday, Oct. 20. If an investor purchased the stock on Thursday, Oct. 20, in a cash transaction, which of the following statements would be true?
The investor would be entitled to receive the dividend because the stock was purchased using cash settlement
All of the following are duties of a transfer agent except
Holding customer’s securities for safekeeping
