Final p.1

Question 1

High trading volume and narrow bid/ask spreads would be characteristic of a:

Answer 1

Efficient Market

Question 2

Municipal securities advertising must be approved prior to use by:

Answer 2

Either the General Principal or Municipal Securities Principal

Question 3

Under Regulation D permits a private placement to be sold to a maximum of ______ non-accredited investors and a ______ of accredited (wealthy and institutional) investors.

Answer 3

35 non-accredited investors

Unlimited number of accredited investors

Question 4

Corporate debentures are backed by:

Answer 4

Full faith and credit

Question 5

All of the following must be registered under state blue sky laws EXCEPT:

Broker Dealers

Special Tax Bonds

Limited Partnership Offerings

Sales Reps

Answer 5

Issues that are exempt from registration under federal laws are also exempt under state laws, so USA governments and municipal issues do not have to be registered with the state.

However, sales reps, broker dealers, and nonexempt issues (such as limited partnership offerings) must be registered.

Special tax bond is a type of municipal Issue, so it is exempt from registration at both the federal and state level.

Question 6

A company that has issued a first mortgage bonds is declared in default by the trustee what happens?

Answer 6

The bondholders have a “first mortgage lien” to the property backing the bond

Question 7

HR-10 plan

Answer 7

Aka Keogh plan

Retirement plans for self-employed individuals

Limited to 25% of pre-deduction income annually

Capped at a maximum of $57,000

100% distributions from Keoghs are taxable

Question 8

In a firm commitment underwriting, the underwriter is acting as a:

Answer 8

Principal

Question 9

Mutual fund shares are:

Answer 9

Redeemable and managed

Question 10

The max contribution that an individual who earns $1,000 can make to an IRA is:

Answer 10

$1,000

The max contribution to an IRA id the lesser of 100% of income or $6,000

Question 11

Under FINRA rules, If a member suspects that a senior citizen is being financially exploited, a temporary hold may be placed on disbursements from the account for up to:

Answer 11

15 business days

In addition, if the member’s review of the situation supports this, the member can extend the hold for another 10 business days.

Question 12

403 (b) plans

Answer 12

Only available to non-profit organization employees (teachers, hospital employees)

Contributions are tax deductible

Earnings grow tax deferred

100% taxable as an ordinary income as taken

Question 13

Stabilizing bids

Answer 13

Placed by the syndicate manager

Only 1 stabilizing bid permitted at any time

Must be equal or lower than the public offering price

There is no time limitation on the period that a stabilizing bid can be maintained

Question 14

Publicly Traded Fund shares

Answer 14

Are Negotiable with a one-time stock issuance

Question 15

Supply Side Theory

Answer 15

Popularly known as Reganomics.

States that the reduction of fiscal stimulus and reducing taxes will give entrepreneurial individuals the incentive to form businesses, resulting in an expanding economy

Question 16

Monetarist Theory

Answer 16

States that the level of economic growth is determined by monetary policy

Stimulated by lower interest rate levels

Controlled by Fed Reserve Actions

Question 17

Keynesian Theory

Answer 17

Economic growth us determined by the level of fiscal stimulus provided by the gov’t

Question 18

The max amount of customer securities that can be rehypothecated by a broker is:

Answer 18

140% of the debit balance

Question 19

It working couple that has a combined income of $150,000 are both covered by qualified pension plans. Which statement is true about IRA contributions by these persons?

Answer 19

IRA contributions are permitted; however the contribution amount is not deductible

Anyone can contribute to an IRA, whether covered by a pension plan or not. If a couple is not covered by a qualified plan, the contribution is tax deductible and the maximum that can be contributed is $6,000 each ($12,000 total).

However? The contribution is not tax-deductible for couples, we’re both are covered by qualified plans, who earn over $124,000 in a year (the deduction phases out between $104,000-$124,000 of income)

Question 20

Almost all index options are issued as

Answer 20

European style options except for the OEX