General Test Questions Flashcards

1
Q

Treasury receipts are purchased at a ______

A

discount and mature at par

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2
Q

Series EE bonds are not _____

A

marketeable

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3
Q

T-Bills are quoted on a ______ basis, while long term notes are quoted in _____

A

yield basis, long term notes quoted in 32nds

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4
Q

The term “modified” regarding GNMA pass-through certificates means they are _____

A

fully backed by the US gov’t

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5
Q

Interest payments on pass-through certs are made _____

A

monthly

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6
Q

Sallie Mae is ______ and does/does not trade on the exchanges?

A

IS privatized and DOES trade on the exchanges

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7
Q

Sallie Mae does not lend directly to students. T/F

A

True - they do not make direct loans

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8
Q

CMOs have a lower or higher market risk than pass-through certificates?

A

Lower - since they are “tranched” they divide up the market risk

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9
Q

Each CMO tranche has the same credit rating. T/F

A

True - but they have different maturities and yields

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10
Q

If using a sinking fund to retire debt, can either call bonds on a _____ basis or purchase them ______

A

call them on a random basis or purchase them on the open market

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11
Q

A “sinking fund” is also called a ______

A

mandatory call

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12
Q

To be “bank qualified”, a muni issue must be _____, not ______

A

must be “public purpose”, not “private use”

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13
Q

A bank that has purchased “bank qualified” munis can deduct _____ of interest on funds used to purchase the bonds

A

80%

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14
Q

A bank that has purchased “bank qualified” munis does not have to pay taxes on ____ of income received

A

100%

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15
Q

Banker’s acceptances are used to finance _____ and _____, and are the least ____

A

imports and exports and are the least liquid

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16
Q

A “prime” BA is one that is eligible for being traded on the _______

A

fed desk

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17
Q

Eurobonds pay interest ________

A

annually

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18
Q

A “matched sale” is the same thing as a ______

A

reverse repo

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19
Q

Tax anticipation notes are money market instruments. T/F

A

True

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20
Q

If inflation increases/decreases, the holder of a TIPS bond will receive ____ at maturity

A

par - doesn’t change

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21
Q

________ muni bonds are likely to have mandatory sinking funds.

A

Revenue (GO bonds are safer)

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22
Q

BANs are _______

A

Bond anticipation notes

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23
Q

TANs are ______

A

tax anticipation notes

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24
Q

RANs are ______

A

revenue anticipation notes

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25
Q

TRANs are _____

A

combo tax and revenue anticipation notes

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26
Q

1 mill =

A

.001

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27
Q

______ regulates the third market

A

FINRA

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28
Q

DIAmonds are _____ based on the _____

A

exchange traded funds based on the DJIA

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29
Q

Trades must be reported to the tape within _____ by the _____

A

10 seconds by the executing member

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30
Q

Increases in “help wanted” adds is a _____ that economic activity will ______

A

leading indicator that economic activity will increase

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31
Q

Can you purchase an annuity “periodic payment: immediate annuity”?

A

NO - can only do a deferred annuity for periodic payments because the value needs to accumulate

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32
Q

Interest income from US territories is exempt from fed, state, and local tax, no matter where the purchaser is from. T/F

A

True

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33
Q

For a closed-end fund, an investor selling shares will get the _______ less _______

A

share price less commission

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34
Q

If the market value of a money market fund increases, do your shares increase in value or do you receive more shares worth $1.00?

A

you receive MORE SHARES worth $1.00

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35
Q

If a bond trading with accrued interest settles on the exact date of interest payment, _______ accrued interest is due

A

$0

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36
Q

Revenue bonds can be backed by any source of income other than _______, including _____ tax, _____ tax, and ______ tax

A

anything other than ad valorem - including excise, sales, and income taxes

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37
Q

“Ad valorem” is the fancy name for ______

A

property taxes

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38
Q

For Reg A, which tier has limitations on purchases by non-accredited investors?

A

Tier 2 (those issues above $20 up to $50m) - Tier 1 does not have those limitations

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39
Q

Can you use index options in an ERISA plan?

A

Yes, if it complies with the plan documents

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40
Q

For credit spreads purchased in a margin account, the margin requirement is the _______

A

amount of potential loss

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41
Q

FINRA requires that accounts be approved for structured products and generally must have approval for _______ as well

A

options

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42
Q

Do you consider the current market price of the security when determining a mark up by a principal?

A

YES

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43
Q

An RR can effect a private transaction if they receive ________, provide _____ to the members of the transactions, and details any _______ to be received

A

receive written permission from the firm, notify the members of the transaction, and detail commissions to be received

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44
Q

Special procedures must be followed when opening an account for an employee of a FINRA/NASD member firm if they are trying to open an account at ______, a _______, or a ______

A

another member firm, or a non-member bank or non-member investment adviser

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45
Q

A “variable rate note” is a ______ muni security with _________; the holder can ______ the note at preset dates

A

long term muni with “short term” rates that reset; the holder can put the note at preset dates

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46
Q

If time or price discretion are given for more than _____, then ______ must be obtained

A

given for more than 1 day, then POA must be obtained

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47
Q

If you’ve placed an order and the stock has declared a stock dividend, you adjust the _____ and _____ on the order ticket

A

number of shares and price on the order ticker

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48
Q

Margin agreements must be signed no later than _______

A

settlement of the first trade

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49
Q

“Participating” preferred gets to participate in any other ______ dividends the company might declare

A

“extra”

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50
Q

“Cumulative” voting is when a shareholder can accumulate all their votes and vote for ______ in any way they please, ______ their votes as they see fit; “statutory” voting means they have to ______ their shares evenly for

A

directors in any way they please, allocating their votes as they see fit - statutory voting means that you have to divide your votes evenly among the directors you want to vote for

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51
Q

Default risk is the same thing as _____ risk

A

credit

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52
Q

CMO investors are not subject to ______ risk

A

credit/default

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53
Q

GNMA pass throughs are back by the full F&C of both ____ and ____

A

GNMA and the US gov’t

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54
Q

Which gift to minors act allows you to set the transfer date?

A

UTMA

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55
Q

BDs must send their customers their _______, which includes _______ and _______, semi-annually

A

balance sheet, which includes subordinated loan balances and net capital computation (NO requirement to share their inventory levels)

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56
Q

The Second Market has no ________

A

listing standards

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57
Q

An option goes “in the money” when the ______ exceeds the strike price (for a call) or falls beneath the strike price (for a put)

A

market price (does not matter what you are paying for it)

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58
Q

The rules for stabilizing bids fall under the ______ act

A

1934 act - since they happen in the secondary market

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59
Q

If an employee of a muni BD is on the board of the township that is issuing a new bond that the BD is working on, this person is considered a _____

A

control person

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60
Q

How many SSNs go on a joint account?

A

1 only!

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61
Q

Can domestic corporations issue Eurodollar bonds?

A

Yes

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62
Q

Cash dividends in a margin account reduce the debit _____

A

directly (by 100%)

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63
Q

The “monetary environment” is a combination of _____ and _____

A

monetary and fiscal policy

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64
Q

What document is required to be sent to a customer at, or prior to, opening an options account?

A

The Options Disclosure Document (the agreement must be sent to the customer and signed within 15 days)

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65
Q

For trust accounts, a copy of the ______ must be obtained prior to making any transactions.

A

trust agreement

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66
Q

Every order ticket that is discretionary must be ______

A

marked as discretionary (as well as “promptly reviewed by the manager or principal)

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67
Q

Extensions for payment may be requested on the _____ day after the trade date

A

5th day after the trade date (S+2)

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68
Q

Delivery versus payment accounts are used when you want to open an account at a BD but want another institution to be the _______ (often used by mutual funds_

A

custodian

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69
Q

Does a stock dividend received in a margin account change the debit balance or equity?

A

NO - it only effects the number of shares

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70
Q

If a muni bond is called, ______ to accrue and the bond may be ______ at any time

A

interest ceases to accrue and the bondhold may tender them at any time

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71
Q

Warrants have ______ and rights have ______

A

time value and rights have intrinsic value

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72
Q

Once a trade hits _______ shares it is considered a block trade

A

10,000 shares

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73
Q

The financial adviser for a new muni issue ______ also the underwriter

A

CANNOT

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74
Q

Contributions to IRAs must be made by ______ of the year ______ the year you want to claim deductions in

A

by April 15th the year after the year you want to claim taxes in

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75
Q

A primary dealer of US gov’t securities buying securities for their own inventory would most likely get them from ______

A

the weekly auctions

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76
Q

A “western” style syndicate is divided in terms of both its selling _______ and _______

A

responsibility and liability - you only have to sell what you said you would sell

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77
Q

For a long margin account, deposited cash is used to reduce the ______ and increase _____

A

debit and increase SMA

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78
Q

For a long margin account, cash dividends reduce the _____ and increase ______

A

reduce the debit and increase SMA

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79
Q

For long margin accounts, stock dividends have ______ on the debit or the _____

A

has no effect on the debit or SMA, just ends up with more shares

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80
Q

If a covering purchase is made in a short margin account, _____ of the credit released must be retained to increase the ______

A

50% of the credit released must be retained to increase the equity

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81
Q

Is the repayment of principal on a loan in an LP tax deductible?

A

NO

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82
Q

When stock is purchased, any ______ are not tax deductible and are added to the ______

A

commissions are not deductible and are added to the cost basis

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83
Q

The cost basis for the writer of a put that is exercised is equal to the ______

A

breakeven point for the holder

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84
Q

Gains or losses from short selling are always treated as _____

A

SHORT term

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85
Q

If a gift of securities is made to a charity, the donor is able to deduct the fair mkt value of the securities from his taxes only if they have been ______

A

held for at least a year

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86
Q

Preferred stock is typically an appropriate investment for _______ investors

A

corporate (because of the dividend treatment)

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87
Q

If a customer buys securities without the intention to pay and then sells them without the intention to deliver, this is called ________ and it is prohibited

A

free riding

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88
Q

The periodic payment with an annuity will be higher for a life annuity or a period certain annuity?

A

life annuity (since the period certain annuity has a longer guaranteed period)

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89
Q

Are REITs covered under the 1940 investment company act?

A

NO - they are not (they make direct investments in real estate and are set up as a trust)

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90
Q

To open a fee-based account, the customer must receive a ______ at, or prior to, opening the account

A

disclosure document

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91
Q

Contributions to Coverdell accounts are _____ tax deductible

A

never

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92
Q

Tier 1 securities under Reg M have at least ______ of trading volume and a ______ float; the restricted period is ______

A

at least $1m volume and $150m float; no restriction

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93
Q

Tier 2 securities under Reg M have at least ______ of trading volume and a ______ float; the restricted period is ______

A

at least $100k volume and $25m float; 1 business day restriction

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94
Q

Tier 3 securities under Reg M have at less than ______ of trading volume and a ______ float; the restricted period is ______

A

less than $100k volume and $25m float; restricted for 5 days

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95
Q

Can a short call be covered by depositing cash?

A

NO - because potential loss is unlimited

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96
Q

Which annuity payment options will pay the estate of the annuitant if the full value of the account was not received?

A

Unit refund annuity

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97
Q

In order for a communication to be considered a “retail communication”, it must be sent to more than _____ existing or prospective clients

A

25

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98
Q

Rights are _____, _____, and _____, but not redeemable

A

exercisable, negotiable, and giftable

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99
Q

Income from securities held in pension plans is ________

A

tax deferred

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100
Q

The ex date for stock splits and stock dividends is unusual and is set ______ business day _____ the payable date

A

set 1 business day AFTER the payable date

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101
Q

Market index linked CDs can be redeemed at any time. T/F

A

FALSE

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102
Q

Are market index linked CDs qualified for FDIC insurance?

A

Yes

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103
Q

If an exchange publishes an incorrect quote and a customer order is executed at a price they did not want, the customer has the option to ______

A

cancel that order - any loss the BD may incur can be settled up with the exchange that made the false quote

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104
Q

Is there an “non-accredited investor” min or max for Reg A offerings?

A

NO - no restrictions like with Reg D

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105
Q

Can US states issue Eurodollar bonds (unlike the US gov’t)?

A

YES they can

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106
Q

The pink sheets show ______ quotes for OTC issues

A

wholesaler quotes - they do NOT show completed trades

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107
Q

With expansionary monetary policy, interest rates will ______ and inflation will ______

A

interest rates will drop and inflation will increase (although delayed)

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108
Q

Call loans are secured by _______

A

partially paid, margined customer securities

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109
Q

Restrictions on “affiliated” persons from buying new issues are ________ of RRs

A

immediate family members (aunts, uncles, grandparents, etc. are excluded unless materially supported by that RR)

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110
Q

For Reg D purchases, a trust, non-profit, partnership, etc. that has $5m or more in assets is an accredited investor UNLESS they _______

A

formed the entity SPECIFICALLY for investing in private placements

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111
Q

Issuers are prohibited from what options strategy on their stock?

A

selling calls - because to cover them they would have to issue new shares - thereby diluting existing shareholders and having to register new shares with the SEC

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112
Q

GNMA securities are ______ from registration

A

exempt - because owned by the US Gov’t

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113
Q

______ orders have priority over “one-sided” orders according to the CBOE

A

spread/straddle/combo, etc - called the “spread priority rule”

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114
Q

What accounting method is used for concerning the taxation of variable annuities?

A

LIFO

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115
Q

If opening an account for an employee of another member firm, you must determine if the opening of the account would ______ the employing firm

A

adversely

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116
Q

All foreign currency options contracts are quoted in _____

A

US dollars

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117
Q

When a customer buys newly issued stock from the syndicate, they pay the _____

A

POP - no commission (it is baked in)

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118
Q

GO bond funds must be used to provide _____ to the community

A

general services (no specific stuff like an industrial park, toll roads, water & sewage, etc.)

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119
Q

The Fed Reserve allocated T-Bills from the _____ yield to the _____

A

lowest to the highest

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120
Q

“Comparisons” and “Don’t Knows” are sent between ______

A

dealers

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121
Q

“Bear” call spread is the same as a _____ call spread

A

short

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122
Q

The Bond Buyer 11 Bond Index is composed of 11 _____ rated ____ or better

A

GO bonds rated AA or better

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123
Q

To open a portfolio margin account, the customer must be provided with the disclosure document at, or prior to, the account opening and must _______

A

sign an acknowledgement saying they have read and understand the risks

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124
Q

The ACT system is used to perform ______ comparisons

A

trade

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125
Q

The ADF is used by _____ that choose not to connect to an _____

A

used by ECNs that choose to not be connected to an exchange

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126
Q

An appropriate investment choice for someone looking to take money out in 5 years and reduce taxable income is a ______

A

mutual fund - the income is taxed at the more favorable capital gains rate as opposed to bonds or STRIPs (the accreted amount is taxed at the income level)

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127
Q

Under Reg SHO, the “upbid” rule is applicable when a stock declines by more than 10% for that day and _____

A

the next trading day

128
Q

Mortality risk in a variable annuity is borne by the _____

A

insurance company

129
Q

Is credit risk a risk borne by the purchaser of an ETN?

A

Yes - it is the risk that the issuing bank goes bust

130
Q

Any “fixed fee” account is considered an ______ product

A

advisory

131
Q

Management fees for mutual funds cannot be based on _________

A

fund performance

132
Q

The only type of fund that can trade for less than NAV is a _______

A

closed-end fund

133
Q

Stock market prices are considered ______ indicators

A

leading

134
Q

Personal income levels are considered _______ indicators

A

coincident

135
Q

Exchanges cannot accept ______ orders (or mkt - not held orders)

A

stop orders

136
Q

Muni advertising can be approved by either the ______ or the ______

A

muni principal or the general principal

137
Q

“Do Not Call” lists are maintained by _____ and the _____

A

member firms and the FTC

138
Q

Commercial loans outstanding are considered _______ indicators

A

lagging

139
Q

AMBAC insures muni bonds for both _____ and ____

A

principal and interest

140
Q

Do you get more than one chance to fill an AON order?

A

YES

141
Q

A “workable” bid is a _____ bid

A

likely

142
Q

Prior to sending an options worksheet to a customer, the customer must have _____ and the options worksheet must have _____

A

customer must have received the ODD and workbook must have been approved by the ROP

143
Q

When an exchange stops trading in a security, the options exchanges _____

A

stop trading that option

144
Q

The Third Market trades ______

A

listed securities OTC

145
Q

Can minors participate in joint accounts?

A

NO - only in fiduciary accounts

146
Q

If a customer with a margin account has a material change to their financial condition, the RR must ______ and get it signed within ______

A

amend the options agreement and get it signed withing 15 days (account form must also be changed)

147
Q

Distributions from 401(k) plans are _____ taxable

A

fully - since the monies going in were tax-deductible

148
Q

Settlement of spot contracts taking place on the Intrabank market takes place ________ after the trade date

A

one or two business days (less actively traded currencies settle in 2 business days

149
Q

Stockholder approval is needed for stock splits because it changes the ______

A

par value of the stocks

150
Q

The “Penny Stock Rules” are rules _____ through _____

A

15g-1 through 15g-6

151
Q

Penny Stock Rule 15g-2 requires that customer be provided with a ________ at, or prior to, opening an account that is recommended penny stock transactions

A

Risk Disclosure Document

152
Q

Does a GIMB rider cap returns at a max level?

A

NO, just guarantees a minimum rate (which occurs at annuitization)

153
Q

The only reason to buy raw land tax shelters are for the potential for ______

A

appreciation (no depletion, no depreciation, no tax credits)

154
Q

Active management uses a determined ______ as its benchmark

A

market index

155
Q

Dividends in a short margin account are ______ to their account, reducing the credit

A

debited

156
Q

Index options contracts have a multiplier of ____

A

100 (so a 1 point gain is = $100 per contract)

157
Q

Callable issues have _____ yields than similar non-callable issues

A

higher

158
Q

The Index of Industrial Production is a ______ indicator

A

coincident

159
Q

If determining how a portfolio would be affected during the economic cycle, first thing to look at is total percent allocated to _____

A

equities

160
Q

Exercising an options results in a _______ trade

A

regular way

161
Q

CMBs are ______

A

Cash management bills

162
Q

CMBs are sold at _____ min face values, are sold at _____, and are priced at ______

A

$100 min face value, sold at auction, and priced at a discount to par (maturities are as little as 5 days)

163
Q

If you buy variable annuity units with funds deposited to a qualified account, what is the tax implication for the annuity payments?

A

they are 100% taxable since you bought them with untaxed dollars

164
Q

If a bond is called, the bondholder can either ____ or ____

A

sell it in the market or tender it - if they want to exchange them they just have to buy the new issue in the market

165
Q

The Specialist tends to trade _____ the market trend

A

against - to keep an orderly market place and dampen volatility

166
Q

Will margin’ing securities eat up current income you receive on fully-paid securities?

A

YES - you will have to make margin, pay interest on the loan, and use existing stock as collateral

167
Q

Passive income/loss are defined as that derived from investments in _____ and ____

A

real estate and limited partnership interests

168
Q

Are special tax bonds sel-supporting?

A

NO - they are non-self supporting because they are not backed by an entity generating revenues, just by a specific tax

169
Q

Who acts as the enforcement agency for the MSRB?

A

FINRA does

170
Q

Do ETNs pay interest or dividends?

A

NO

171
Q

Are ETNs structured products?

A

YES

172
Q

A Form 144 must be filed ________ the placement of the sell order

A

at or prior to

173
Q

If a member firm is acting as the managing underwriter for a new issue, they cannot publish a research report on that company for _____ following the _____

A

10 days following the effective date

174
Q

Rule 606 of Reg NMS requires _____ reports on ______ orders

A

quarterly reports on non-directed orders

175
Q

Rule 605 of Reg NMS requires ______ reports on quality of _______ and _____

A

monthly reports on quality of execution and spreads

176
Q

Can you show a customer a comparison of a mutual fund’s return over the last 5 years compared to S&P 500 last 10 years?

A

NO - must be the exact same time frame

177
Q

The FINRA 5% policy applies to _____ and ____ on principal transactions, as well as ______ on agency transactions

A

mark ups and mark downs, as well as commissions on agency transactions

178
Q

When is the disclosure doc required to be sent for a non-managed fee based account?

A

At or prior to account opening

179
Q

Is commercial paper available for trading by the Fed?

A

NO - only gov’t securities, gov’t agency securities, and prime BAs

180
Q

Are quotes for NYSE issues found on the NASDAQ Level II?

A

NO

181
Q

The name of the “Specialist” on the CBOE is the ____

A

market maker

182
Q

Do floor brokers on the NYSE trade for their own account?

A

NO - they handle public orders

183
Q

The death benefit for a variable annuity is paid out during the _____ phase if the holder dies

A

accumulation phase

184
Q

Are foreign currency valuations affected by fixed exchange rates?

A

NO - they are fixed

185
Q

Can you call and cancel an order if it has not already been filled?

A

Yes

186
Q

The Broker Loan Rate is the rate at which a ____ borrows from a ____ using customer securities as collateral

A

broker borrows from a bank using customer securities

187
Q

New issues of municipal notes are available in _____ form

A

book entry

188
Q

A consolidating market is one where prices are ____

A

flat

189
Q

A red herring may be sent to investors once the issue has entered the _____

A

20 day cooling off period

190
Q

Level debt service means that the issuer pays the _____ amount each year with proceeds going to both _____ and _____. The amount to _____ increases each year.

A

they pay the same amount each year to pay down principal and interest. the amount going to principal increases each year

191
Q

If you hear someone has died, you can immediately mark the account _______ and cancel _____

A

mark the account “deceased” and cancel any open orders

192
Q

If you have a margin account, SPIC insurance will cover what amount of securities?

A

the equity you have in the account

193
Q

Primary reason for an institutional investor to open a prime brokerage account is to _______

A

consolidate all their positions with one broker

194
Q

The prohibition of “trade-throughs” is so that market makers cannot execute a trade at an ______

A

inferior price to another posted quote on another exchange

195
Q

Detailed financial disclosures are required for a customer to invest in _______

A

direct participation programs

196
Q

To open a corporate account, must receive the corporate charter, the corporate ______ and must have the ______ on it.

A

corporate resolution with a corporate seal on it

197
Q

EMMA shows ______ trades but not dealer _____

A

shows completed trades but not dealer quotes

198
Q

The main risk of investing in an ETN is ______ risk

A

credit - market, liquidity and marketability are all mitigated through the investments, but the bank issuing the ETN could still go bust

199
Q

Do custodian accounts grow tax deferred?

A

NO

200
Q

In order to open a cash account for a partnership, the ______ must be obtained

A

partnership agreement

201
Q

FINRA is the regulator for all _______

A

securities markets (including the primary market)

202
Q

The Consolidated Tape reports trades of NYSE issues no matter where _____

A

they occurred

203
Q

Commercial paper may be sold without a ______

A

prospectus

204
Q

The highest investment grade rating for debt is _____

A

AAA

205
Q

Can holders of ADRs vote?

A

NO

206
Q

Is the interbank market centralized in any one location?

A

NO

207
Q

The “mortality guarantee” on a variable annuity states that the insurance company will pay even if the holder ______ their expected life time

A

lives past

208
Q

Building permits are a _____ economic indicator

A

leading

209
Q

Communications that must be approved by the ROP include ads, sale lit, and ______

A

independently prepared reprints

210
Q

The two public communications that don’t require ROP approval are ______ sale lit and _____

A

institutional sales lit and public appearances

211
Q

For a portfolio margin account, there must be $100k of equity and approval for ______ options writing

A

naked

212
Q

Where would you look to understand call provisions for a muni offering?

A

The bond resolution (the official notice of sale is to solicit bids from underwriters)

213
Q

For a calendar spread, which exercise date is cheaper, the near or the far?

A

the near, since it has less time value

214
Q

Which regulation requires that market centers accept trade executions that do not discriminate against the class of user?

A

Reg NMS

215
Q

Are US gov’t agency securities sold at par to the public?

A

YES, by the selling group

216
Q

Under a death benefit, the insurance company will pay the bene of the var annuity holder the greater of the _____ or the _____

A

NAV or amount invested

217
Q

Are OEX LEAPs american or European style contracts?

A

AMERICAN

218
Q

Does OATS capture trades in the OTCBB and Pink Sheet markets?

A

Yes

219
Q

Mandatory call provisions can only be satisfied by depositing monies into the ______

A

sinking fund

220
Q

The bene of a Coverdell account can be changed to any relative of the ____ or ____ generation

A

same or later generation

221
Q

Interest income from GNMA and FNMA pass throughs are _____ taxable

A

fully (at both federal and state and local)

222
Q

Can you say the money received from a GNMA pass through is “all income”?

A

NO, because the principal portion is considered return of capital

223
Q

What is the average monthly volume requirement for moving to the NYSE?

A

100,000 monthly average

224
Q

A short cover transaction in a margin account reduces both the _____ and the _____

A

short market value and the credit

225
Q

For a mutual fund, is the ex date set by rules or by the BOD?

A

The BOD, since they do not trade

226
Q

Capital gains on the sale of a muni bond are _____ taxable

A

fully - at fed, state, and local level (only interest income is exempt from fed taxes)

227
Q

Does the market maker on the CBOE hold an open book of public orders?

A

NO - done by the order book official

228
Q

If an issuer has previously filed registrations with a state for previous issues, are they exempt from registering subsequent issues?

A

NO

229
Q

What kind of orders need to be adjusted if there is an impending cash dividend?

A

Order placed BELOW the current market (which will get executed once the share price is reduced)

230
Q

Is asset appreciation untaxed for mutual funds and variable annuities?

A

YES - because mutual funds do not have to distribute capital gains

231
Q

Good faith deposits are required when a BD is biding on a _______

A

new muni issue

232
Q

Is there a requirement to renew POA for discretionary accounts annually?

A

NO

233
Q

Are discretionary order tickets required to be reviewed prior to entry?

A

NO - just by end of the day

234
Q

Does accrued interest paid at purchase or received at sale effect the capital gains on a bond?

A

NO

235
Q

During inflationary periods, are stock an attractive investment?

A

NO - they usually cannot keep pace with the rising rates of inflation

236
Q

Who is responsible for keeping the records of names and addresses for stockholders?

A

The REGISTRAR

237
Q

The options contract with the highest premium is the one that is most in the money and has the ______

A

longest time to expiration

238
Q

Can you make IRA contributions up to an extension date with the IRS?

A

NO, must be made by April 15th of year after the tax year

239
Q

Stock stopping is only available for _____ orders

A

public

240
Q

Savings bonds are ________

A

non-negotiable

241
Q

Money market instruments are _____

A

negotiable

242
Q

A constant ratio investment plan is one where a constant % must be continually ______

A

invested in specified assets classes

243
Q

An 8K must be filed within _____ of the event

A

4 days

244
Q

The GDP is measured in ______ dollars

A

constant

245
Q

Partnerships are ____ taxable entities

A

NOT

246
Q

Both dividends and capital gains are reinvested at _____ for mutual funds

A

NAV

247
Q

Payout for inherited IRAs with multiple benes is calculated using the _____ bene

A

oldest

248
Q

CE requirements for FINRA members are the ______ anniversary and every ______ afterwards

A

2nd anniversary and every 3 years afterwards

249
Q

Participating preferred stock has a _______ fixed dividend rate, but not a _____

A

has a min fixed rate but not a max (since they get pieces of “extra” dividends)

250
Q

The Fourth Market is trading between ______ using _____

A

institutions using ECNs

251
Q

Can the Super Display Book handle any size order?

A

NO - example: only up to 3m shares for limit orders

252
Q

When considering whether or not a BD or RR needs to be registered in a particular state to sell to customers in that state, does the exempt status of the securities to be sold matter?

A

NO - does not matter, that is a separate issue

253
Q

If an order marked “market - at the opening” doesn’t get filled at the opening, what do you do with it?

A

you would cancel it

254
Q

Do blue chip stocks tend to move with the market?

A

yes - tend to track the market overall

255
Q

Distributions from Keogh plans must be made no later than _____ of the year following your _____ birthday

A

April 1st following year of your 70.5 birthday

256
Q

Portfolio margin rules are based on _______ of the portfolio and generally result in _____ margin and _____ leverage than standard margin calculations

A

based on probable loss (NOT Reg T requirements) and generally results in LOWER margin levels and GREATER leverage (since it is a diversified holding)

257
Q

A Capital Appreciation Bond (CAB) is a zero coupon muni bond where the issuer is only credited with having received the _______ amount (for debt load purposes); interest and principal are paid at ______

A

only received the discount amount, not the par value; interest and principal are both paid at maturity

258
Q

Would a pension plan invest in munis?

A

NO - since the account is tax deferred

259
Q

Reg ATS requires than any ECN or ATS register as a _____

A

BD (once they trade more than 5% of trading volume in a given stock for the last 6 months they must publicly display its orders)

260
Q

Stand by underwritings are used in connection with ______

A

rights offerings

261
Q

Do bonds with a big premium or small premium fall faster in rising interest rate environments?

A

Small premiums (since their price is lower - the lower the price, the faster they fall)

262
Q

a member firm that acted as manager or co-manager for a SECONDARY offering of an issuer cannot publish a research report on that issuer for _____ following the effective date

A

3 days

263
Q

What type of preferred stock would have the most volatility in a stable interest rate environment?

A

Participating - if they declare extra dividends then the stock would appreciate

264
Q

Foreign bonds are treated like ______ bonds for tax purposes

A

corporate

265
Q

If a variable annuity is exchanged for a life insurance policy, it is _____ a like-kind exchange

A

NOT a like-kind exchange and tax is due

266
Q

Does a muni principal need to approve all transactions? If so, at what time?

A

Yes, and must do so by end of the day

267
Q

Common carrier issues are exempt from the 1933 act and are not required to be sold with a _____

A

prospectus

268
Q

“Non essential use” muni bonds are subject to the ______ tax and therefore subject to _____ tax

A

subject to the AMT tax and therefore Fed taxes

269
Q

SPIDERS and DIAmonds trade on the ____; QQQs trade on the _____

A

AMEX; QQQs trade on the NASDAQ

270
Q

If you receive mutilated certificates from a customer, you contact the _____ and request a _____

A

contact the transfer agent and request a validation letter

271
Q

Does restricted stock need to be fully paid to be sold?

A

YES - and held for at least 6 months

272
Q

Insiders are prohibited from selling their company’s stock _____

A

short

273
Q

All dividends, interest, and capital gains grow _____ in a variable annuity account

A

tax deferred

274
Q

Convertible bonds give the holder the opportunity for _____

A

growth

275
Q

A “combination” is the same as a straddle (the sale of a call and a put, or the purchase of a call and a put) but with different ______ or _____

A

dates or strike prices

276
Q

Listed options trade until _______ on the 3rd Friday of the expiration month and expire at _____ on the 3rd Friday of the expiration month

A

trade until 4pm, expire at 11:59pm (all EST)

277
Q

Diversification reduces _______ (among others)

A

capital risk

278
Q

Reversionary working interest in an O&G DP program means that the GP will not take any gains until all _____

A

costs have been covered

279
Q

Net profits interest in an O&G program is when the GP gets a designated portion of _____

A

net profits (usually excluding intangible drilling costs)

280
Q

Disproportionate sharing arrangement in an O&G program is when the GP bears a portion of the ____ for a much larger portion of the _____

A

portion of the costs for a much larger portion of the profits

281
Q

Functional allocation in an O&G program is where the LPs bear the _______ costs and the GP bears the ______

A

LPs bear the intangible drilling costs and the GP bears the tangible costs

282
Q

Bond interest is deducted from _______ income

A

operating (for some reason on this test it is NOT EBIT)

283
Q

REIT dividends are taxed at _______

A

regular income (a disadvantage of investing in REITs over common stock)

284
Q

ECNs do NOT trade _______ issues

A

OTCBB or Pink Sheet issues, there is not enough liquidity

285
Q

If a customer wants to “cash out” of his shares (even if there is a tender offer on the table that would net him more), what do you do?

A

Sell it in the market at the market price (don’t wait for the tender)

286
Q

Net bonded debt includes any bonds that are not fully ________

A

self-supporting

287
Q

Order the following in terms of highest to lowest yields: gov’t / corp / muni

A

corporate, gov’t, muni (gov’t yields are slightly higher than muni yields because they are federally taxed)

288
Q

Do options trade OTC?

A

NO - virtually all done on exchanges

289
Q

The limit for a single beneficiary under a Coverdell account is $2,000 across one or multiple accounts?

A

multiple - does not matter if there are several accounts open, can only get $2,000 total contribution

290
Q

Can options sales lit accompanied by an ODD show past or projected performance figures?

A

YES

291
Q

Certificates of Participation (COPs) are backed by a ______ pledge and depend on the gov’t appropriating sufficient _____

A

backed by a revenue pledge and depend on the gov’t appropriating the necessary funds

292
Q

Gov’t STRIPS are quoted on a ______ basis

A

1/32nd basis (only T-Bills quoted on a yield basis)

293
Q

The top income range for an individual to open a Coverdell account / Roth IRA is ______, for a couple is _____

A

$110k; couple is $220k

294
Q

To transfer an account from one RR to another at the same BD, it requires ______

A

approval from the branch manager

295
Q

_______ muni bonds would be most likely to require a mandatory sinking fund

A

Revenue (since they are most risky)

296
Q

Trades of foreign currency options settle _____ or _____

A

cash or regular way (DON’T confuse with settlement of foreign currency which settles forward or spot)

297
Q

Only the _____ can pay money to an RR (whether commission or salary)

A

the broker dealer (never the customer)

298
Q

Is the principal portion of income received from a CMO taxable?

A

NO - it is return of capital

299
Q

Can you use a birth certificate to open a new account?

A

NO - does not have the required information

300
Q

If you sell shares short and sell a put on the same stock, what is the max potential loss?

A

UNLIMITED - because the short put can expire and you still have an uncovered short position

301
Q

A TAC has less ______ risk protection than a PAC

A

extension risk

302
Q

The Fed Reserve is or is not a primary purchaser of gov’t securities?

A

IS NOT - they don’t bid at the weekly auctions

303
Q

REITs do NOT invest in _____

A

LPs

304
Q

To subscribe to a rights offering, you would mail your subscription to the ______

A

rights agent

305
Q

GO bonds are typically issued without a ______

A

trust indenture

306
Q

Which money market instruments trade “with interest”

A

CDs

307
Q

The % depletion allowance for an O&G program is based on oil that is ______

A

sold

308
Q

Growth investors make their decisions based solely on how the stock has performed _______

A

in the market

309
Q

In a variable annuity contract, the principle amount is ________

A

never guaranteed

310
Q

No matter what is happening with the yield curve (flat, inverted, whatever), short term rates are always MORE ______ than long term rates

A

MORE volatile

311
Q

Revenue bonds are NEVER considered _________

A

never considered overlapping debt (since they are self-supporting)

312
Q

The UQDF consolidates all quotes for ______ issues

A

NASDAQ

313
Q

Customers must be notified of SIPC and contact information _______

A

annually

314
Q

Do bond counsels render opinions on feasibility?

A

NO - that is an economic opinion

315
Q

Options contracts are adjusted for what types of stock splits?

A

2:1 and 4:1 (strike price and number of contracts are changed)

316
Q

In a restricted account, _____% of any sale proceeds are credited to the SMA

A

50%

317
Q

Customer complaints, under FINRA rules, must be kept for _____ years

A

4 years