Final 4 Flashcards
The separate account of a Variable Annuity will fluctuate in value with which of the following?
[A] Market value of securities in the account
[B] Fixed value of bonds in the account
[C] The separate account does not fluctuate in value but is a set amount
[D] The S & P 500 Index
[A] Market value of securities in the account
The exercise price of a listed equity option would be adjusted for all of the following EXCEPT? [A] a 2:1 stock split [B] dividends paid in cash [C] rights issued on common stock [D] dividends paid in stock
[B] dividends paid in cash
When a cash dividend is paid on common stock, the exercise price on options is NOT adjusted since there is no change in the number of shares that the customer will own or that the option will represent. All of the other choices represent a change in the number of shares that will be owned by the investor or holder of the option.
Predictions about the future performance of mutual funds and variable annuities are
[A] permitted if the basis of the prediction is provided.
[B] not permitted, regardless of the situation.
[C] permitted if prepared by an outside and unbiased analyst.
[D] not permitted unless reviewed by FINRA 10 days before first use.
[B] not permitted, regardless of the situation.
All of the following documentation is required to open a customer margin account for the president of a bank EXCEPT:
[A] a new account report form
[B] a margin agreement
[C] a hypothecation agreement
[D] authorization from the bank’s board of directors
[D] authorization from the bank’s board of directors
You are an RR and one of your clients informs you that they will now be participating in a pension plan offered at work. The plan takes the average salary of the employee over the last three years of service and pays 50% of that figure. Which of the following best describes this type of plan?
[A] The client has an annuity plan that is tax-deferred.
[B] The client has a defined contribution plan.
[C] The client has a defined benefit plan.
[D] The client has a deferred compensation plan.
[C] The client has a defined benefit plan.
The description of the plan in the question falls within the parameters of a defined-benefit plan. In this type of plan, the terms and benefits of the plan are defined. An example of such a plan would be after 30 years of service, an employee can retire collecting 50% of their average salary over the last 3 years of service.
What is the amount of interest payable per year on a $1,000 par value 5% bond selling at 80 and redeemable at par in 10 years?
[A] $10
[B] $40
[C] $45
[D] $50
[D] $50
The Statement of Additional Information must be delivered
[A] within 10 days of opening a new customer account
[B] when the prospectus is sent to clients or prospective clients
[C] at the request of a client or prospective client
[D] at least once a year to each client
[C] at the request of a client or prospective client
An individual receives her paycheck and pays for her rent and groceries for the month. After all the essential needs are paid for the remaining income is called
[A] disposable income
[B] gross income
[C] discretionary income
[D] residual income
[C] discretionary income
A customer opens an account at a member firm and gives the minimum amount of information necessary to open the account, refusing to answer several questions. The customer deposits multiple checks into the account over a period of a month, all of which are just below $5,000. Shortly thereafter, the customer liquidates the majority of the assets in the account with checks drawn over a period of several days, all of which are below $5,000. An Operations Professional or Registered Representative who notices this behavior should
[A] file a Currency Transaction Report (CTR) immediately if the various transfers exceeded $10,000 and report the customer to FINRA’s Whistleblower Department.
[B] completely freeze the customer’s account so that the customer cannot deposit, withdraw, or invest any assets.
[C] file a Suspicious Activity Report (SAR), even though the amounts that are deposited or withdrawn never exceeded $5,000 in any one transaction.
[D] personally take possession of the customer’s assets into the firm’s error account, since opening an account for this customer was clearly an error in judgement.
[C] file a Suspicious Activity Report (SAR), even though the amounts that are deposited or withdrawn never exceeded $5,000 in any one transaction.
Which of the following bond offerings would be required to have a trust indenture under the Trust Indenture Act of 1939?
[A] U.S. Treasury Bond
[B] airport authority revenue bond
[C] general obligation bond
[D] mortgage bond
[D] mortgage bond
When a company does a Rights Offering, the rights are
[A] sold to the general public.
[B] sold to only existing shareholders.
[C] only given to existing shareholders, proportionately to shares held.
[D] given to the public on a first come, first serve basis.
[C] only given to existing shareholders, proportionately to shares held.
Among the various economic theories, the one that says that economic growth and stability can be promoted by the active intervention of government fiscal policies in the marketplace is referred to as which of the following?
[A] Keynesian
[B] Supply-side
[C] Monetarist
[D] Libertarian
[A] Keynesian
Which of the following activities would NOT be done by a designated market maker on the floor of an exchange?
[A] Handle the execution of odd lot orders.
[B] Record limit orders in the book.
[C] Handle the distribution of new issues.
[D] Trade for their own account.
[C] Handle the distribution of new issues.
When a 529 Education Savings Plan is set up, the withdrawals are controlled by which of the following?
[A] The Plan Sponsor
[B] The Account owner
[C] The Beneficiary
[D] The Trustee
[B] The Account owner
A corporation that issued several types of securities is being liquidated. Investors who own which of the following securities will have the most junior claim to company assets?
[A] Common stock
[B] Convertible bonds
[C] Preferred stock
[D] Collateral bonds
[A] Common stock
