Exam Wrong Answers 1

Question 1

Which of the following is exempt from FINRA Rule 5130, which prohibits the purchase of IPOs by member firms and associated persons?

Answer 1

An associated person whose limited registration permits selling only investment company products

Question 2

If a customer purchases securities and does not settle the account in 4 business days, the brokerage firm’s first order of business is to

Answer 2

Cancel the trade and sell the purchased securities

Question 3

All of the following are considered conflicts of interest for the general partner in a limited partnership except

Answer 3

Accepting $20,000 for a covenant not to compete with the limited partnership

Question 4

With regard to variable life insurance policies, the largest expense for an insurance company associated with

Answer 4

Investment management

Question 5

The purpose of a Rule 144 filing is to

Answer 5

Alert the SEC that a control person is offering securities for sale

Question 6

A US government bond quoted at 94.20 - 95.08 has a bid price of

Answer 6

946.25

Question 7

Which one of the following statements describes the market manipulation practice of painting the tape?

Answer 7

Buying and selling a security among traders to create a high level of activity to influence the price of a stock

Question 8

Open market operations of the Federal Reserve Board cause direct changes in

Answer 8

M1

Question 9

Which of the following is False regarding warrants?

Answer 9

Warrants are issued at a discount to the underlying equity in order to make security offerings more attractive to the investor

Question 10

Where can retail investors find information in municipal bond issuers?

Answer 10

EMMA

Question 11

A private securities transaction exists when a representative

Answer 11

Is selling away

Question 12

An analyst includes ABC’s 6% debenture in his newsletter. The analyst’s employer is currently underwriting an ABC stock offering. This is permissible

Answer 12

If the bonds are not convertible

Question 13

Which is true regarding UGMA/UTMA accounts?

Answer 13

The donor can be the custodian

Question 14

FinCEN requires banks and broker/dealers to adhere to anti-money laundering (AML) rules, including

Answer 14

A designated independent party to test the procedures

Question 15

A mutual fund prospectus can no longer be used if financial information is older than

Answer 15

16 months

Question 16

The ABC European Bond Fund invests in the debt of European corporations and other companies doing business in Europe. Investors in this fund are subject to all of the following risks except

Answer 16

Liquidity risk

Question 17

Which of the following instruments trades on a discount yield basis?

Answer 17

Treasury basis

Question 18

Most stock options are settled which way?

Answer 18

Physically

Question 19

A variable life policy’s nonforfeiture provision

Answer 19

Entitles the policyowner to the cash value less any outstanding loan amount if the policy is terminated

Question 20

Maximum civil and criminal penalties for an individual for insider trading violations are

Answer 20

$5,000,000 and or 20 years imprisonment

Question 21

In evaluating a limited partnership, which is the most important consideration?

Answer 21

Economic viability

Question 22

Which of the following activities is an associated person who is not a registered representative permitted to perform?

Answer 22

Provide account opening forms to a new customer

Question 23

Which of the following is a lagging indicator?

Answer 23

Average prime rate

Question 24

Under Regulation T, if a customer’s account is frozen for 90 days, the customer may make

Answer 24

Purchases on a cash basis

Question 25

The Act that requires financial institutions to develop, implement and monitor procedures that prevent its agents and associates from misusing no public information is the

Answer 25

Securities and Exchange Act of 1934