Exam 8 Wrong Answers Flashcards
Which of the following is true concerning transactions in index options in an ERISA plan?
They can be made if their use conforms to the overall objectives of the plan
The buyer of a long straddle
Buys a put and a call on the same underlying security with the same strike price and expiration date
All of the following statements are true about an individual who sells a stock which he or she owns but does not intend to deliver except
It is used to convert a short term gain into long term gain
All of the following are considerations in determining the economic feasibility of an airport revenue bond issue except
Per capita debt
A customer’s margin account contains the following registered, non exempt securities: 100 shares EWH current market price 40; 100 shares CDA current market price 50; 100 shares IRE current market price 80. The account has a debit balance of $10,800 and the initial margin requirement is 65%. How much equity is in the account?
$6,200
Retail communications and the names of the people who prepared and approved them must be kept on file for
3 years
Which of the following best describes a variable annuity?
The method of payment is fixed, but the amount of the payment changes
Which of the following statements are true of unrated municipal securities?
They may not be rated because the issuer’s total debt is relatively small
Under SEC Rule 147, which of the following investors would qualify as offered and/or purchasers of an intrastate offering?
A corporation whose home office is located within the state of issuance
The rate covenant on a municipal revenue bond sets the
Minimum rate
While engaged in a distribution, a managing underwriter may do all of the following except
Solicit purchases through an updated research report
What is the maximum fine under FINRA’s Summary Compliant Procedure?
$2,500
Which of the following would be considered overlapping debt when analyzing the total debt of a municipality?
School district debt
An open end investment company may do each of the following except
Issue senior securities
When would a member firm use a Form NRF (Non-Registered Fingerprint)?
When a non registered person has access to or handles books and records
You have an option contract with a unit size of 108. The bid is 2.50. What is the total premium of this contract?
$270
When a revenue bond issue has a non qualified legal opinion, it means that
The legal opinion is not subject to any limiting qualifications
Under what conditions may a FINRA member firm sell initial public offering (IPO) to one of its non registered employees?
Under no circumstances
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
A customer buys 100 shares of XYZ stock for $40 per share and sells one XYZ July 45 call for a premium of $2.00. What is the maximum loss the customer could sustain?
$3,800
Fund A has a current bid of $23 and a current ask of $25. During the past calendar year, the fund paid income dividends of $0.80 and capital gains distribution of $3.10. Its current yield is
3.2%
The Securities and Exchange Commission (SEC) is in charge of the enforcement of securities laws. All of the following are correct about SEC board members except that
They are appointed to lifetime terms
A registered representative receives $15,000 from a customer with instructions to “buy whatever stock you think is the best selection.” This order
Is discretionary and may not be entered without prior written authorization from the customer
The federal tax exempt status of municipal bonds originated from a/an
Reciprocal agreement
An investor owns 1,000 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
XYZ Corp. has a $50,000,000 outstanding issue of convertible debentures. Each debenture is convertible into common stock at $50. The debentures are trading at 118 1/2 and the common stock is trading at 57.50. The company announces that it is calling the entire debenture issue at 101 and 3/4. What advice should an RR give to customers who hold debentures?
Convert to common stock before the call date
The ratio of overall debt to assessed valuation does not provide an accurate comparison of the general obligation debt of different municipal issuers for which of the following reasons?
The basis of assessment is not consistent among municipalities
A Regulation T can be met by which of the following?2
Depositing cash
Depositing marginable securities
A firm offering of bonds by a municipal trader to a potential buying dealer is attractive to the buyer for which of the following reasons?2
The trader can control the bonds for a specific time period
The trader does not have to own the bonds before selling them
For SIPC Coverage, the term customer account will not mean
Cash, margin, and convertible bond accounts, all in the same name
The Federal Reserve System performs all of the following functions except
Fixing the prime rate for commercial banks
The ex-dividend date for a mutual fund is
The day after the record date
An investment banker may do all of the following except
Extend credit for the purchase of new issues
At what price do bonds go out of the syndicate for member orders on a new municipal issue?
List less the takedown
All of the following statements about a trade in a municipal security are correct except
The trade date is the date used for calculating interest accumulation
