Exam #7 Missed Questions

Question 1

Comparisons and “Don’t Know” notices are sent from

Answer 1

Dealer to Dealer

Question 2

Cabinet trades effected on the CBOE can be used by customer to

Answer 2

Close out worthless long positions and close out worthless short positions

Question 3

An account that can not be effected under REG T

Answer 3

Non-securities credit account

Question 4

Which investors are required to amortize municipal bond premiums

Answer 4

All

Question 5

Which municipal bond issue is not exempt from taxation by the Federal Government

Answer 5

“Non essential use” private purpose municipal issues. Subject to AMT

Question 6

If you redeem 100 shares. Under the Investment Company Act of 1940 you must be paid within

Answer 6

7 days

Question 7

The CAPM is a methodology that values securities based on

Answer 7

The issues risk-free rate of return plus a risk premium

Question 8

A growth investor would consider a companies

Answer 8

Stock price appreciation rate

Question 9

Determining the Net Interest Cost on a bid for a new municipal issue, any discount specified by the bidder to the issuer

Answer 9

Increases the net interest cost. Is added when determining net interest cost

Question 10

A mutual fund has a Net Asset Value per share of $46.00 and the following breakpoint schedule.

$0 - $50,000 5%
$50,001 - $100,000 4%
$100,001 - $250,000 3%
$250,001 - $1,000,000 2%
A customer has $300,000 to invest in the fund. The customer will pay what price per share?

Answer 10

This customer qualifies for a 2% sales charge. The formula to fund the offering price of a mutual fund is:

The P.O.P. = $46.00 / (100% - 2%) = $46/.98 = $46.94 per share.

Question 11

A customer that wishes to open a portfolio margin account must:

Answer 11

receive a copy of the risk disclosure statement describing the risks and nature of portfolio margining at, or prior to, the initial transaction in a portfolio margin account. Sign an acknowledgment attesting that he or she has read and understands the disclosure document at, or prior to, the initial transaction in a portfolio margin account

Question 12

All of the following are functions of the Federal Reserve Board EXCEPT:

Answer 12

Setting margins on municipal securities. They are exempt.

Question 13

When opening an account to trade stocks and options, which of the following signatures are needed on the new account form(s)?

Answer 13

Registered options principal signature
General principal signature
Registered representative signature

Question 14

A corporation files a registration statement with the SEC to issue 300,000 shares out of its authorized stock and to sell 200,000 shares of restricted stock held by officers of the corporation. Which statements are TRUE?

Answer 14

This is a primary distribution of 300,000 shares. Proceeds from the sale of 300,000 shares will go to the company.

Question 15

Due to high inflation, a company’s cost of goods has risen steadily over the past year and is expected to rise at least a year into the future. The company currently uses FIFO inventory accounting. Assuming there are no other changes, it would be expected that:

Answer 15

Reported profits and reported inventory values will be higher.

Question 16

A customer holds 100 shares of ABC Corp $100 par convertible preferred stock convertible at a 10 to 1 ratio. If ABC declares and pays a 10% stock dividend, then as of the payable date, the customer will now have:

Answer 16

100 shares of ABC preferred stock

Question 17

The Trust Indenture Act of 1939 applies to which of the following offerings?

Answer 17

$100,000,000 of Corporate Debentures sold interstate

applies to non-exempt interstate securities offerings over $50,000,000.

Question 18

Rule 105 of Regulation M, covering transactions that occur in the secondary market during the 20-day cooling off period for “add on” securities offerings, requires that any short sales of the issue:

Answer 18

That occur 5 business days prior to the effective date. Cannot be covered by purchasing the issue from the syndicate.

Question 19

The DMM (Specialist) on the NYSE, just prior to market opening, has orders to sell 100,000,000 shares of ABC stock at the open, but only has orders to buy 5,000,000 shares. Because of the extreme order imbalance, the DMM, at the open, displays “ABC - OPD” on the Network A Tape. Which statement about this is FALSE?

Answer 19

Any other market that wishes to trade the stock during the halt must get prior FINRA approval.

Question 20

A customer has $24,000 to invest in mutual fund shares. The registered representative advises the customer to invest $8,000 on ABCD fund; $8,000 in DEFF fund; and $8,000 in XYZZ fund; to give the customer complete diversification and reduce risk. These 3 funds all have different sponsors. This action is:

Answer 20

A violation known as a breakpoint sale

Question 21

Exchange Traded Funds (ETFs) are:

Answer 21

Registered under the Investment Company Act of 1940. Open end management companies.