General Test Questions Flashcards
Treasury receipts are purchased at a ______
discount and mature at par
Series EE bonds are not _____
marketeable
T-Bills are quoted on a ______ basis, while long term notes are quoted in _____
yield basis, long term notes quoted in 32nds
The term “modified” regarding GNMA pass-through certificates means they are _____
fully backed by the US gov’t
Interest payments on pass-through certs are made _____
monthly
Sallie Mae is ______ and does/does not trade on the exchanges?
IS privatized and DOES trade on the exchanges
Sallie Mae does not lend directly to students. T/F
True - they do not make direct loans
CMOs have a lower or higher market risk than pass-through certificates?
Lower - since they are “tranched” they divide up the market risk
Each CMO tranche has the same credit rating. T/F
True - but they have different maturities and yields
If using a sinking fund to retire debt, can either call bonds on a _____ basis or purchase them ______
call them on a random basis or purchase them on the open market
A “sinking fund” is also called a ______
mandatory call
To be “bank qualified”, a muni issue must be _____, not ______
must be “public purpose”, not “private use”
A bank that has purchased “bank qualified” munis can deduct _____ of interest on funds used to purchase the bonds
80%
A bank that has purchased “bank qualified” munis does not have to pay taxes on ____ of income received
100%
Banker’s acceptances are used to finance _____ and _____, and are the least ____
imports and exports and are the least liquid
A “prime” BA is one that is eligible for being traded on the _______
fed desk
Eurobonds pay interest ________
annually
A “matched sale” is the same thing as a ______
reverse repo
Tax anticipation notes are money market instruments. T/F
True
If inflation increases/decreases, the holder of a TIPS bond will receive ____ at maturity
par - doesn’t change
________ muni bonds are likely to have mandatory sinking funds.
Revenue (GO bonds are safer)
BANs are _______
Bond anticipation notes
TANs are ______
tax anticipation notes
RANs are ______
revenue anticipation notes
TRANs are _____
combo tax and revenue anticipation notes
1 mill =
.001
______ regulates the third market
FINRA
DIAmonds are _____ based on the _____
exchange traded funds based on the DJIA
Trades must be reported to the tape within _____ by the _____
10 seconds by the executing member
Increases in “help wanted” adds is a _____ that economic activity will ______
leading indicator that economic activity will increase
Can you purchase an annuity “periodic payment: immediate annuity”?
NO - can only do a deferred annuity for periodic payments because the value needs to accumulate
Interest income from US territories is exempt from fed, state, and local tax, no matter where the purchaser is from. T/F
True
For a closed-end fund, an investor selling shares will get the _______ less _______
share price less commission
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?
you receive MORE SHARES worth $1.00
If a bond trading with accrued interest settles on the exact date of interest payment, _______ accrued interest is due
$0
Revenue bonds can be backed by any source of income other than _______, including _____ tax, _____ tax, and ______ tax
anything other than ad valorem - including excise, sales, and income taxes
“Ad valorem” is the fancy name for ______
property taxes
For Reg A, which tier has limitations on purchases by non-accredited investors?
Tier 2 (those issues above $20 up to $50m) - Tier 1 does not have those limitations
Can you use index options in an ERISA plan?
Yes, if it complies with the plan documents
For credit spreads purchased in a margin account, the margin requirement is the _______
amount of potential loss
FINRA requires that accounts be approved for structured products and generally must have approval for _______ as well
options
Do you consider the current market price of the security when determining a mark up by a principal?
YES
An RR can effect a private transaction if they receive ________, provide _____ to the members of the transactions, and details any _______ to be received
receive written permission from the firm, notify the members of the transaction, and detail commissions to be received
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 ______
another member firm, or a non-member bank or non-member investment adviser
A “variable rate note” is a ______ muni security with _________; the holder can ______ the note at preset dates
long term muni with “short term” rates that reset; the holder can put the note at preset dates
If time or price discretion are given for more than _____, then ______ must be obtained
given for more than 1 day, then POA must be obtained
If you’ve placed an order and the stock has declared a stock dividend, you adjust the _____ and _____ on the order ticket
number of shares and price on the order ticker
Margin agreements must be signed no later than _______
settlement of the first trade
“Participating” preferred gets to participate in any other ______ dividends the company might declare
“extra”
“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
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
Default risk is the same thing as _____ risk
credit
CMO investors are not subject to ______ risk
credit/default
GNMA pass throughs are back by the full F&C of both ____ and ____
GNMA and the US gov’t
Which gift to minors act allows you to set the transfer date?
UTMA
BDs must send their customers their _______, which includes _______ and _______, semi-annually
balance sheet, which includes subordinated loan balances and net capital computation (NO requirement to share their inventory levels)
The Second Market has no ________
listing standards
An option goes “in the money” when the ______ exceeds the strike price (for a call) or falls beneath the strike price (for a put)
market price (does not matter what you are paying for it)
The rules for stabilizing bids fall under the ______ act
1934 act - since they happen in the secondary market
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 _____
control person
How many SSNs go on a joint account?
1 only!
Can domestic corporations issue Eurodollar bonds?
Yes
Cash dividends in a margin account reduce the debit _____
directly (by 100%)
The “monetary environment” is a combination of _____ and _____
monetary and fiscal policy
What document is required to be sent to a customer at, or prior to, opening an options account?
The Options Disclosure Document (the agreement must be sent to the customer and signed within 15 days)
For trust accounts, a copy of the ______ must be obtained prior to making any transactions.
trust agreement
Every order ticket that is discretionary must be ______
marked as discretionary (as well as “promptly reviewed by the manager or principal)
Extensions for payment may be requested on the _____ day after the trade date
5th day after the trade date (S+2)
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_
custodian
Does a stock dividend received in a margin account change the debit balance or equity?
NO - it only effects the number of shares
If a muni bond is called, ______ to accrue and the bond may be ______ at any time
interest ceases to accrue and the bondhold may tender them at any time
Warrants have ______ and rights have ______
time value and rights have intrinsic value
Once a trade hits _______ shares it is considered a block trade
10,000 shares
The financial adviser for a new muni issue ______ also the underwriter
CANNOT
Contributions to IRAs must be made by ______ of the year ______ the year you want to claim deductions in
by April 15th the year after the year you want to claim taxes in
A primary dealer of US gov’t securities buying securities for their own inventory would most likely get them from ______
the weekly auctions
A “western” style syndicate is divided in terms of both its selling _______ and _______
responsibility and liability - you only have to sell what you said you would sell
For a long margin account, deposited cash is used to reduce the ______ and increase _____
debit and increase SMA
For a long margin account, cash dividends reduce the _____ and increase ______
reduce the debit and increase SMA
For long margin accounts, stock dividends have ______ on the debit or the _____
has no effect on the debit or SMA, just ends up with more shares
If a covering purchase is made in a short margin account, _____ of the credit released must be retained to increase the ______
50% of the credit released must be retained to increase the equity
Is the repayment of principal on a loan in an LP tax deductible?
NO
When stock is purchased, any ______ are not tax deductible and are added to the ______
commissions are not deductible and are added to the cost basis
The cost basis for the writer of a put that is exercised is equal to the ______
breakeven point for the holder
Gains or losses from short selling are always treated as _____
SHORT term
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 ______
held for at least a year
Preferred stock is typically an appropriate investment for _______ investors
corporate (because of the dividend treatment)
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
free riding
The periodic payment with an annuity will be higher for a life annuity or a period certain annuity?
life annuity (since the period certain annuity has a longer guaranteed period)
Are REITs covered under the 1940 investment company act?
NO - they are not (they make direct investments in real estate and are set up as a trust)
To open a fee-based account, the customer must receive a ______ at, or prior to, opening the account
disclosure document
Contributions to Coverdell accounts are _____ tax deductible
never
Tier 1 securities under Reg M have at least ______ of trading volume and a ______ float; the restricted period is ______
at least $1m volume and $150m float; no restriction
Tier 2 securities under Reg M have at least ______ of trading volume and a ______ float; the restricted period is ______
at least $100k volume and $25m float; 1 business day restriction
Tier 3 securities under Reg M have at less than ______ of trading volume and a ______ float; the restricted period is ______
less than $100k volume and $25m float; restricted for 5 days
Can a short call be covered by depositing cash?
NO - because potential loss is unlimited
Which annuity payment options will pay the estate of the annuitant if the full value of the account was not received?
Unit refund annuity
In order for a communication to be considered a “retail communication”, it must be sent to more than _____ existing or prospective clients
25
Rights are _____, _____, and _____, but not redeemable
exercisable, negotiable, and giftable
Income from securities held in pension plans is ________
tax deferred
The ex date for stock splits and stock dividends is unusual and is set ______ business day _____ the payable date
set 1 business day AFTER the payable date
Market index linked CDs can be redeemed at any time. T/F
FALSE
Are market index linked CDs qualified for FDIC insurance?
Yes
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 ______
cancel that order - any loss the BD may incur can be settled up with the exchange that made the false quote
Is there an “non-accredited investor” min or max for Reg A offerings?
NO - no restrictions like with Reg D
Can US states issue Eurodollar bonds (unlike the US gov’t)?
YES they can
The pink sheets show ______ quotes for OTC issues
wholesaler quotes - they do NOT show completed trades
With expansionary monetary policy, interest rates will ______ and inflation will ______
interest rates will drop and inflation will increase (although delayed)
Call loans are secured by _______
partially paid, margined customer securities
Restrictions on “affiliated” persons from buying new issues are ________ of RRs
immediate family members (aunts, uncles, grandparents, etc. are excluded unless materially supported by that RR)
For Reg D purchases, a trust, non-profit, partnership, etc. that has $5m or more in assets is an accredited investor UNLESS they _______
formed the entity SPECIFICALLY for investing in private placements
Issuers are prohibited from what options strategy on their stock?
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
GNMA securities are ______ from registration
exempt - because owned by the US Gov’t
______ orders have priority over “one-sided” orders according to the CBOE
spread/straddle/combo, etc - called the “spread priority rule”
What accounting method is used for concerning the taxation of variable annuities?
LIFO
If opening an account for an employee of another member firm, you must determine if the opening of the account would ______ the employing firm
adversely
All foreign currency options contracts are quoted in _____
US dollars
When a customer buys newly issued stock from the syndicate, they pay the _____
POP - no commission (it is baked in)
GO bond funds must be used to provide _____ to the community
general services (no specific stuff like an industrial park, toll roads, water & sewage, etc.)
The Fed Reserve allocated T-Bills from the _____ yield to the _____
lowest to the highest
“Comparisons” and “Don’t Knows” are sent between ______
dealers
“Bear” call spread is the same as a _____ call spread
short
The Bond Buyer 11 Bond Index is composed of 11 _____ rated ____ or better
GO bonds rated AA or better
To open a portfolio margin account, the customer must be provided with the disclosure document at, or prior to, the account opening and must _______
sign an acknowledgement saying they have read and understand the risks
The ACT system is used to perform ______ comparisons
trade
The ADF is used by _____ that choose not to connect to an _____
used by ECNs that choose to not be connected to an exchange
An appropriate investment choice for someone looking to take money out in 5 years and reduce taxable income is 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)
Under Reg SHO, the “upbid” rule is applicable when a stock declines by more than 10% for that day and _____
the next trading day
Mortality risk in a variable annuity is borne by the _____
insurance company
Is credit risk a risk borne by the purchaser of an ETN?
Yes - it is the risk that the issuing bank goes bust
Any “fixed fee” account is considered an ______ product
advisory
Management fees for mutual funds cannot be based on _________
fund performance
The only type of fund that can trade for less than NAV is a _______
closed-end fund
Stock market prices are considered ______ indicators
leading
Personal income levels are considered _______ indicators
coincident
Exchanges cannot accept ______ orders (or mkt - not held orders)
stop orders
Muni advertising can be approved by either the ______ or the ______
muni principal or the general principal
“Do Not Call” lists are maintained by _____ and the _____
member firms and the FTC
Commercial loans outstanding are considered _______ indicators
lagging
AMBAC insures muni bonds for both _____ and ____
principal and interest
Do you get more than one chance to fill an AON order?
YES
A “workable” bid is a _____ bid
likely
Prior to sending an options worksheet to a customer, the customer must have _____ and the options worksheet must have _____
customer must have received the ODD and workbook must have been approved by the ROP
When an exchange stops trading in a security, the options exchanges _____
stop trading that option
The Third Market trades ______
listed securities OTC
Can minors participate in joint accounts?
NO - only in fiduciary accounts
If a customer with a margin account has a material change to their financial condition, the RR must ______ and get it signed within ______
amend the options agreement and get it signed withing 15 days (account form must also be changed)
Distributions from 401(k) plans are _____ taxable
fully - since the monies going in were tax-deductible
Settlement of spot contracts taking place on the Intrabank market takes place ________ after the trade date
one or two business days (less actively traded currencies settle in 2 business days
Stockholder approval is needed for stock splits because it changes the ______
par value of the stocks
The “Penny Stock Rules” are rules _____ through _____
15g-1 through 15g-6
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
Risk Disclosure Document
Does a GIMB rider cap returns at a max level?
NO, just guarantees a minimum rate (which occurs at annuitization)
The only reason to buy raw land tax shelters are for the potential for ______
appreciation (no depletion, no depreciation, no tax credits)
Active management uses a determined ______ as its benchmark
market index
Dividends in a short margin account are ______ to their account, reducing the credit
debited
Index options contracts have a multiplier of ____
100 (so a 1 point gain is = $100 per contract)
Callable issues have _____ yields than similar non-callable issues
higher
The Index of Industrial Production is a ______ indicator
coincident
If determining how a portfolio would be affected during the economic cycle, first thing to look at is total percent allocated to _____
equities
Exercising an options results in a _______ trade
regular way
CMBs are ______
Cash management bills
CMBs are sold at _____ min face values, are sold at _____, and are priced at ______
$100 min face value, sold at auction, and priced at a discount to par (maturities are as little as 5 days)
If you buy variable annuity units with funds deposited to a qualified account, what is the tax implication for the annuity payments?
they are 100% taxable since you bought them with untaxed dollars
If a bond is called, the bondholder can either ____ or ____
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
The Specialist tends to trade _____ the market trend
against - to keep an orderly market place and dampen volatility
Will margin’ing securities eat up current income you receive on fully-paid securities?
YES - you will have to make margin, pay interest on the loan, and use existing stock as collateral
Passive income/loss are defined as that derived from investments in _____ and ____
real estate and limited partnership interests
Are special tax bonds sel-supporting?
NO - they are non-self supporting because they are not backed by an entity generating revenues, just by a specific tax
Who acts as the enforcement agency for the MSRB?
FINRA does
Do ETNs pay interest or dividends?
NO
Are ETNs structured products?
YES
A Form 144 must be filed ________ the placement of the sell order
at or prior to
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 _____
10 days following the effective date
Rule 606 of Reg NMS requires _____ reports on ______ orders
quarterly reports on non-directed orders
Rule 605 of Reg NMS requires ______ reports on quality of _______ and _____
monthly reports on quality of execution and spreads
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?
NO - must be the exact same time frame
The FINRA 5% policy applies to _____ and ____ on principal transactions, as well as ______ on agency transactions
mark ups and mark downs, as well as commissions on agency transactions
When is the disclosure doc required to be sent for a non-managed fee based account?
At or prior to account opening
Is commercial paper available for trading by the Fed?
NO - only gov’t securities, gov’t agency securities, and prime BAs
Are quotes for NYSE issues found on the NASDAQ Level II?
NO
The name of the “Specialist” on the CBOE is the ____
market maker
Do floor brokers on the NYSE trade for their own account?
NO - they handle public orders
The death benefit for a variable annuity is paid out during the _____ phase if the holder dies
accumulation phase
Are foreign currency valuations affected by fixed exchange rates?
NO - they are fixed
Can you call and cancel an order if it has not already been filled?
Yes
The Broker Loan Rate is the rate at which a ____ borrows from a ____ using customer securities as collateral
broker borrows from a bank using customer securities
New issues of municipal notes are available in _____ form
book entry
A consolidating market is one where prices are ____
flat
A red herring may be sent to investors once the issue has entered the _____
20 day cooling off period
Level debt service means that the issuer pays the _____ amount each year with proceeds going to both _____ and _____. The amount to _____ increases each year.
they pay the same amount each year to pay down principal and interest. the amount going to principal increases each year
If you hear someone has died, you can immediately mark the account _______ and cancel _____
mark the account “deceased” and cancel any open orders
If you have a margin account, SPIC insurance will cover what amount of securities?
the equity you have in the account
Primary reason for an institutional investor to open a prime brokerage account is to _______
consolidate all their positions with one broker
The prohibition of “trade-throughs” is so that market makers cannot execute a trade at an ______
inferior price to another posted quote on another exchange
Detailed financial disclosures are required for a customer to invest in _______
direct participation programs
To open a corporate account, must receive the corporate charter, the corporate ______ and must have the ______ on it.
corporate resolution with a corporate seal on it
EMMA shows ______ trades but not dealer _____
shows completed trades but not dealer quotes
The main risk of investing in an ETN is ______ risk
credit - market, liquidity and marketability are all mitigated through the investments, but the bank issuing the ETN could still go bust
Do custodian accounts grow tax deferred?
NO
In order to open a cash account for a partnership, the ______ must be obtained
partnership agreement
FINRA is the regulator for all _______
securities markets (including the primary market)
The Consolidated Tape reports trades of NYSE issues no matter where _____
they occurred
Commercial paper may be sold without a ______
prospectus
The highest investment grade rating for debt is _____
AAA
Can holders of ADRs vote?
NO
Is the interbank market centralized in any one location?
NO
The “mortality guarantee” on a variable annuity states that the insurance company will pay even if the holder ______ their expected life time
lives past
Building permits are a _____ economic indicator
leading
Communications that must be approved by the ROP include ads, sale lit, and ______
independently prepared reprints
The two public communications that don’t require ROP approval are ______ sale lit and _____
institutional sales lit and public appearances
For a portfolio margin account, there must be $100k of equity and approval for ______ options writing
naked
Where would you look to understand call provisions for a muni offering?
The bond resolution (the official notice of sale is to solicit bids from underwriters)
For a calendar spread, which exercise date is cheaper, the near or the far?
the near, since it has less time value
Which regulation requires that market centers accept trade executions that do not discriminate against the class of user?
Reg NMS
Are US gov’t agency securities sold at par to the public?
YES, by the selling group
Under a death benefit, the insurance company will pay the bene of the var annuity holder the greater of the _____ or the _____
NAV or amount invested
Are OEX LEAPs american or European style contracts?
AMERICAN
Does OATS capture trades in the OTCBB and Pink Sheet markets?
Yes
Mandatory call provisions can only be satisfied by depositing monies into the ______
sinking fund
The bene of a Coverdell account can be changed to any relative of the ____ or ____ generation
same or later generation
Interest income from GNMA and FNMA pass throughs are _____ taxable
fully (at both federal and state and local)
Can you say the money received from a GNMA pass through is “all income”?
NO, because the principal portion is considered return of capital
What is the average monthly volume requirement for moving to the NYSE?
100,000 monthly average
A short cover transaction in a margin account reduces both the _____ and the _____
short market value and the credit
For a mutual fund, is the ex date set by rules or by the BOD?
The BOD, since they do not trade
Capital gains on the sale of a muni bond are _____ taxable
fully - at fed, state, and local level (only interest income is exempt from fed taxes)
Does the market maker on the CBOE hold an open book of public orders?
NO - done by the order book official
If an issuer has previously filed registrations with a state for previous issues, are they exempt from registering subsequent issues?
NO
What kind of orders need to be adjusted if there is an impending cash dividend?
Order placed BELOW the current market (which will get executed once the share price is reduced)
Is asset appreciation untaxed for mutual funds and variable annuities?
YES - because mutual funds do not have to distribute capital gains
Good faith deposits are required when a BD is biding on a _______
new muni issue
Is there a requirement to renew POA for discretionary accounts annually?
NO
Are discretionary order tickets required to be reviewed prior to entry?
NO - just by end of the day
Does accrued interest paid at purchase or received at sale effect the capital gains on a bond?
NO
During inflationary periods, are stock an attractive investment?
NO - they usually cannot keep pace with the rising rates of inflation
Who is responsible for keeping the records of names and addresses for stockholders?
The REGISTRAR
The options contract with the highest premium is the one that is most in the money and has the ______
longest time to expiration
Can you make IRA contributions up to an extension date with the IRS?
NO, must be made by April 15th of year after the tax year
Stock stopping is only available for _____ orders
public
Savings bonds are ________
non-negotiable
Money market instruments are _____
negotiable
A constant ratio investment plan is one where a constant % must be continually ______
invested in specified assets classes
An 8K must be filed within _____ of the event
4 days
The GDP is measured in ______ dollars
constant
Partnerships are ____ taxable entities
NOT
Both dividends and capital gains are reinvested at _____ for mutual funds
NAV
Payout for inherited IRAs with multiple benes is calculated using the _____ bene
oldest
CE requirements for FINRA members are the ______ anniversary and every ______ afterwards
2nd anniversary and every 3 years afterwards
Participating preferred stock has a _______ fixed dividend rate, but not a _____
has a min fixed rate but not a max (since they get pieces of “extra” dividends)
The Fourth Market is trading between ______ using _____
institutions using ECNs
Can the Super Display Book handle any size order?
NO - example: only up to 3m shares for limit orders
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?
NO - does not matter, that is a separate issue
If an order marked “market - at the opening” doesn’t get filled at the opening, what do you do with it?
you would cancel it
Do blue chip stocks tend to move with the market?
yes - tend to track the market overall
Distributions from Keogh plans must be made no later than _____ of the year following your _____ birthday
April 1st following year of your 70.5 birthday
Portfolio margin rules are based on _______ of the portfolio and generally result in _____ margin and _____ leverage than standard margin calculations
based on probable loss (NOT Reg T requirements) and generally results in LOWER margin levels and GREATER leverage (since it is a diversified holding)
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 ______
only received the discount amount, not the par value; interest and principal are both paid at maturity
Would a pension plan invest in munis?
NO - since the account is tax deferred
Reg ATS requires than any ECN or ATS register as 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)
Stand by underwritings are used in connection with ______
rights offerings
Do bonds with a big premium or small premium fall faster in rising interest rate environments?
Small premiums (since their price is lower - the lower the price, the faster they fall)
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
3 days
What type of preferred stock would have the most volatility in a stable interest rate environment?
Participating - if they declare extra dividends then the stock would appreciate
Foreign bonds are treated like ______ bonds for tax purposes
corporate
If a variable annuity is exchanged for a life insurance policy, it is _____ a like-kind exchange
NOT a like-kind exchange and tax is due
Does a muni principal need to approve all transactions? If so, at what time?
Yes, and must do so by end of the day
Common carrier issues are exempt from the 1933 act and are not required to be sold with a _____
prospectus
“Non essential use” muni bonds are subject to the ______ tax and therefore subject to _____ tax
subject to the AMT tax and therefore Fed taxes
SPIDERS and DIAmonds trade on the ____; QQQs trade on the _____
AMEX; QQQs trade on the NASDAQ
If you receive mutilated certificates from a customer, you contact the _____ and request a _____
contact the transfer agent and request a validation letter
Does restricted stock need to be fully paid to be sold?
YES - and held for at least 6 months
Insiders are prohibited from selling their company’s stock _____
short
All dividends, interest, and capital gains grow _____ in a variable annuity account
tax deferred
Convertible bonds give the holder the opportunity for _____
growth
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 _____
dates or strike prices
Listed options trade until _______ on the 3rd Friday of the expiration month and expire at _____ on the 3rd Friday of the expiration month
trade until 4pm, expire at 11:59pm (all EST)
Diversification reduces _______ (among others)
capital risk
Reversionary working interest in an O&G DP program means that the GP will not take any gains until all _____
costs have been covered
Net profits interest in an O&G program is when the GP gets a designated portion of _____
net profits (usually excluding intangible drilling costs)
Disproportionate sharing arrangement in an O&G program is when the GP bears a portion of the ____ for a much larger portion of the _____
portion of the costs for a much larger portion of the profits
Functional allocation in an O&G program is where the LPs bear the _______ costs and the GP bears the ______
LPs bear the intangible drilling costs and the GP bears the tangible costs
Bond interest is deducted from _______ income
operating (for some reason on this test it is NOT EBIT)
REIT dividends are taxed at _______
regular income (a disadvantage of investing in REITs over common stock)
ECNs do NOT trade _______ issues
OTCBB or Pink Sheet issues, there is not enough liquidity
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?
Sell it in the market at the market price (don’t wait for the tender)
Net bonded debt includes any bonds that are not fully ________
self-supporting
Order the following in terms of highest to lowest yields: gov’t / corp / muni
corporate, gov’t, muni (gov’t yields are slightly higher than muni yields because they are federally taxed)
Do options trade OTC?
NO - virtually all done on exchanges
The limit for a single beneficiary under a Coverdell account is $2,000 across one or multiple accounts?
multiple - does not matter if there are several accounts open, can only get $2,000 total contribution
Can options sales lit accompanied by an ODD show past or projected performance figures?
YES
Certificates of Participation (COPs) are backed by a ______ pledge and depend on the gov’t appropriating sufficient _____
backed by a revenue pledge and depend on the gov’t appropriating the necessary funds
Gov’t STRIPS are quoted on a ______ basis
1/32nd basis (only T-Bills quoted on a yield basis)
The top income range for an individual to open a Coverdell account / Roth IRA is ______, for a couple is _____
$110k; couple is $220k
To transfer an account from one RR to another at the same BD, it requires ______
approval from the branch manager
_______ muni bonds would be most likely to require a mandatory sinking fund
Revenue (since they are most risky)
Trades of foreign currency options settle _____ or _____
cash or regular way (DON’T confuse with settlement of foreign currency which settles forward or spot)
Only the _____ can pay money to an RR (whether commission or salary)
the broker dealer (never the customer)
Is the principal portion of income received from a CMO taxable?
NO - it is return of capital
Can you use a birth certificate to open a new account?
NO - does not have the required information
If you sell shares short and sell a put on the same stock, what is the max potential loss?
UNLIMITED - because the short put can expire and you still have an uncovered short position
A TAC has less ______ risk protection than a PAC
extension risk
The Fed Reserve is or is not a primary purchaser of gov’t securities?
IS NOT - they don’t bid at the weekly auctions
REITs do NOT invest in _____
LPs
To subscribe to a rights offering, you would mail your subscription to the ______
rights agent
GO bonds are typically issued without a ______
trust indenture
Which money market instruments trade “with interest”
CDs
The % depletion allowance for an O&G program is based on oil that is ______
sold
Growth investors make their decisions based solely on how the stock has performed _______
in the market
In a variable annuity contract, the principle amount is ________
never guaranteed
No matter what is happening with the yield curve (flat, inverted, whatever), short term rates are always MORE ______ than long term rates
MORE volatile
Revenue bonds are NEVER considered _________
never considered overlapping debt (since they are self-supporting)
The UQDF consolidates all quotes for ______ issues
NASDAQ
Customers must be notified of SIPC and contact information _______
annually
Do bond counsels render opinions on feasibility?
NO - that is an economic opinion
Options contracts are adjusted for what types of stock splits?
2:1 and 4:1 (strike price and number of contracts are changed)
In a restricted account, _____% of any sale proceeds are credited to the SMA
50%
Customer complaints, under FINRA rules, must be kept for _____ years
4 years
