Fourth mock exam

Question 1

True or false: Agent must be licensed in state where client is domiciled

Answer 1

True

Question 2

Bond prices are subject to ___ risk

Answer 2

Interest rate

Question 3

Form 8-K must be filed __ days after the event

Answer 3

4

Question 4

True of false: Participants in SEPs are vested after 1 year in the plan

Answer 4

False. Immediately vested.

Question 5

Minimum face value of negotiable CD

Answer 5

$100,000

Question 6

Warrants’ terms are generally ___ than rights’ terms

Answer 6

Longer

Question 7

Parity price =

Answer 7

Current price / (Par / conversion price)

Question 8

IPS

Answer 8

Investment policy statement

Question 9

SPD

Answer 9

Summary plan description

Question 10

BD whose primary business model is providing quotes for OTC stocks in which they position trade

Answer 10

Market maker

Question 11

BD whose primary business model is providing quotes for exchange stocks in which they position trade

Answer 11

Specialist

Question 12

Proponents of ___ assume small investors are usually wrong

Answer 12

Odd lot

Question 13

Commodities have a positive correlation with ___

Answer 13

Unexpected inflation

Question 14

Index options reduce ___ risk

Answer 14

Systematic

Question 15

Asset based sales charge

Answer 15

12b-1 fees

Question 16

Rate that is charged when a Fed Reserve bank borrows from another member bank

Answer 16

Federal funds rate

Question 17

Rate charged with banks borrow directly from Federal Reserve

Answer 17

Discount rate

Question 18

Nonmaterial changes on Form ADV must be noted on amendment filed within ___ days

Answer 18

90

Question 19

Direct obligation of US government

Answer 19

Ginnie Maes

Question 20

The lower the coupon on the bond, the ___ the price appreciation

Answer 20

Greater

Question 21

Which can have ask price below NAV? Closed or open end fund

Answer 21

Closed-end fund

Question 22

Which can trade at a premium or discount to NAV? Closed or open end fund

Answer 22

Closed-end fund

Question 23

Insurance company issuing variable security bears __ risk

Answer 23

Mortality

Question 24

Type of account that must be approved by a specially qualified supervisor

Answer 24

Options account

Question 25

Guaranteed in variable life policy

Answer 25

Minimum death benefit

Question 26

True or false: Variable life policy has guaranteed cash value

Answer 26

False

Question 27

Policy loans are required after a variable life policy has been in effect for __ years

Answer 27

3

Question 28

True or false: Earnings on a variable annuity are tax deferred

Answer 28

True

Question 29

True or false: Variable life policy has guaranteed rate of return

Answer 29

False

Question 30

Most risk for an investor

Answer 30

Short sale coupled with sale of a put

Question 31

Primary difference between open and closed end investment companies is

Answer 31

Capitalization

Question 32

Participation rate of 85% with cap of 11%

Answer 32

Can participate in 85% of gain but no more than 11%

Question 33

Universal life policies let you adjust

Answer 33

Death benefit, premium, and cash value

Question 34

Number of death benefit options in universal life policy

Answer 34

Two

Question 35

True or false: Universal life policies may include a minimum guaranteed interest rate

Answer 35

True