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Series 7 > Greenlight Exam > Flashcards

Greenlight Exam Flashcards

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Series 7 Top-off Exam flashcards
1
Q

PLM broker dealer is the lead underwriter for an all or none equity offering of XCV Enterprises. Which of the following is correct regarding the offering?

A

The proceeds will be held in escrow

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2
Q

XYZ broker dealer has been acting as a financial adviser to Big City USA. XYZ has advised Big City to raise a significant amount of capital through the sale of a new municipal issue. XYZ plans on maintaining its role as an adviser to Big City. Which of the following would XYZ be allowed to do?4

A

Prepare the official statement
Purchase bonds for its customers
Purchase bonds for its own account
Receive a fee for its advisory services

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3
Q

WayFast funds has just signed a contract with a new investment adviser. Which of the following will be part of the required duties of the adviser?2

A

Determine the tax consequences

Determine assets to purchase or sell

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4
Q

Annuities can play a key role in a client’s portfolio. Sales of annuities like other packaged products need to be supervised closely by the firm. Which of the following are true?3

A

A series 24 or series 26 may approve an annuity application presented by a series 7 licensed agent

1035 exchanges may constitute churning

A variable annuity illustration may use a maximum rate of 12 percent

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5
Q

A customer feels that the brokerage firm he has been using has violated FINRA rules. A copy of the FINRA manual must:

A

Be made available to the customer upon request in hard copy or in electronic format

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6
Q

An investor is long $50,000 worth of XYQ 6 percent convertible bonds. The bonds are convertible into XYQ common stock at $20 per share. The bonds are quoted at 118 and XYQ common is trading in the market place at $23. How many XYQ June 25 calls can this investor write without being approved for naked option trading?

A

25

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7
Q

Which of the following information provided by a registered rep would be subject to suitability standards under FINRA Rule 2111?

A

Financial and investment information detailing the advantages of holding a security

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8
Q

FGHJ, is applying for listing on the NASDAQ Global Select market. Which of the following criteria must FGHJ meet to be considered for the listing of its shares?3

A

At least 3 market makers

Establishment of an audit committee

Have a minimum number of shares held by public investors

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9
Q

ARG Broker dealer’s has just completed its quarterly meetings. ARG maintains a product committee to perform due diligence on potential investment product offerings. Having performed its review of a new variable annuity, the committee approves the contract for sale to its clients. As it relates to reasonable basis suitability

A

ARG has not met the retirement by performing this review

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10
Q

An active trading day is coming to a close. PQW listed on the NYSE has seen extremely heavy volume ahead of its earnings real ease after the close. An investor wishes to close out a long position on the close of the market. It is now 3:48 PM. The investor may enter a market on close order:

A

Only if there is a buy side imbalance of $50,000 shares or more

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11
Q

ZAQ Mutual fund family offers portfolios that are consistently at the top of the list of highly ranked funds. ZAQ charges a sales charge to invest of 8 percent and a 12b1 fee of .125 percent. Upon redemption ZAQ can charge investors a redemption fee:

A

That is no more than 1/2 of 1 percent

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12
Q

An aggressive investor purchases a leveraged ETF at $60 with double the long exposure of the market. The shares of the ETF increase by 10 percent and subsequently fall 30 percent in several extremely volatile weeks. What is the current price of the leveraged ETF?

A

$46.20

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13
Q

You have be managing a client’s account for over 20 years and have become close with the client and his family. The client is 80 years old and has been investing in equities for over 40 years. You have been informed by the client’s daughter that your client is losing mental capacity. The client phones you and asks to move his portfolio into mid cap stock. What should you do?

A

Consult you principal

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14
Q

WER a large multinational corporation feels that the time is right to offer bonds for sale to investors in Europe. WER issues a substantial amount of Eurodollar bonds. Which of the following statements is or are false?4

A

The bonds must be registered with the SEC prior to sale
WER is assuming significant amount of currency risk
Purchasers of the bonds will receive payments in Euros
Purchasers of the bonds must be accredited

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15
Q

As it elated to 144A transactions, which of the following would qualify as a QIB?3

A

A broker dealer with $12 million in investments

A bank with $225 million in investments

An investment company registered under the investment company act with $210 million in investments

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16
Q

An analyst who has been working on a report covering XYZ Industries may not execute an order for his own account

A

30 days prior to issuing the report

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17
Q

Your customer has purchased a 6 percent municipal GO bond. The bond issue was significant in size and had a sinking fund established for the benefit of the bond holders. A portion of the bond issue will be called in two months and the bond holders subject to the call will receive their principal payments from he sinking fund account. Under MSRB rules the confirmation must

A

Show the YTM

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18
Q

Fast Growth Mutual Funds is seeking increase the sales of its funds. A wholesaler for Fast Growth host a lunch at your office catered by a very nice local restaurant. Which of the following may have a meal provided by Fast Growth?

A

Both registered and non registered employees of the broker dealer

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19
Q

A consecutive customer who holds his securities in his safety deposit box phones you and asks you to sell 500 shares of XYZ that he has kept in his safety deposit box for several years. Your firm sold him the securities and sent the certificate to his address on record. You execute the order and sell 500 shares of XYZ at 41.35. The following day your cus59:34 is called out of town for work matter and cannot deliver the securities by settlement date. Which of the following is true?

A

If an extension is not granted the customer must be bough5 in 10 days after settlement

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20
Q

Under SEC Rule 15 C 3-2 a general securities broker dealer must notify customers of free credit balances

A

Quarterly

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21
Q

Which of the following is true as it relates to Rule 144?3

A

When shares are sold under 144 those shares become part of the public float
Form 144 must be filed when an order is placed to sell securities

Control stock purchased in the open market is not subject to a holding period

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22
Q

As it relates to mutual fund taxation which of the following is not correct?

A

Short term gains distributed to investors will be taxed at a set rate contingent up the investor’s tax status

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23
Q

A bond investor purchases 8 US Treasury bonds at 101.02. After holding the bonds for several months the investor sells the 8 bonds at 102.14. Excluding accrued interest what did the investor make on the trade?

A

$110

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24
Q

Which of the following are covered under the Sarbanes Oxley Act of 2002?3

A

Regulation of conflicts of interest

Auditor requirements

Internal controls

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25
Q

A customer who has lost a significant amount of money by investing in a proprietary product offered by his broker dealer has agreed to try to resolve the issue through mediation. Which of the following is or are true?

A

If an agreement cannot be reached the dispute can be moved to arbitration

26
Q

MBS Broker Dealer is Part of a syndicate underwriting a new issue of GO bonds on a firm commitment basis and the syndicate is organized as an Eastern Account. The selling concession on the bonds is 80 cents, the total takedown is 1.25 and the underwriting fee is 75 cents. MBS sells 2,000 bonds to its customers. The total earned by MBS is

A

$25,000

27
Q

The spread on a GO bond competitive bid is equal to

A

The difference between the bid and the price paid by the public

28
Q

Mr Walsh an investor with a long time horizon has been investing with his broker for years. He has been diligent with his investments and his contributions to his account. His broker has been careful to recommend proper asset selection. Which of the following is correct with expect to Mr. Walsh?

A

The relationship between his time horizon and liquidity needs are inversely related

29
Q

Dart Manufacturing is a large international producer of heavy machinery. Dart purchases components for its machines from a well known German supplier. Dart must pay for components in Euros. Dart has just received a very large order from a Canadian mining company and will be working to produce the machines to be delivered in Canada in 6 months. Dart will be paid in Canadian dollars. Which currency changes would benefit Dart?2

A

The US dollar falls relative to the Canadian dollar

The US dollar rises relative to the Euro

30
Q

As it relates to a market maker executing an order to buy for its own account in front of a customer’s limit order to purchase the same stock, which of the following is true?

A

The market maker must pay a higher price to any order received to sell the security

31
Q

An investor is short 5 TYU October 75 puts at 1.75. The puts have last traded in the marketplace at 85 cents. Which of the following prices for TYU would be at parity?

A

74.15

32
Q

A customer who enters an order to establish an option position in one call option contract and who simultaneously enters an order to establish the opposite position in another call contract on the same security for a stated net credit would 2

A

Want the price of the security to fall

Want the options to expire

33
Q

A registered representative has engaged in a chat room discussion with a potential client detailing certain aspects of retirement planning. The rep feels that the chat log represents a great example of the issues that many people face when planning for retirement. The registered rep copies and pastes the details of the chat log on the firm’s website. Which of the following is true?

A

Registered representative may not post on the firm’s site

34
Q

Each of the following accounts have been approved for option trading at the appropriate level. A registered options principal should not approve which of the following orders?

A

Purchase of an XYZ July 40 call and the sale of an XYZ June 50 call for a net debit of 10

35
Q

An issuer classified ad a well known seasoned issuer has seen its market capitalization shrink significantly during the time it is offering securities under an automatic shelf registration. The issuer’s market capitalization is now $500 million dollars. Which of the following is true?

A

The issuer May continue to sell the securities until the filing of the next 10K

36
Q

A customer who entered an order to establish an option position in one option contract and who simultaneously enters an order to establish the opposite position in another contract on the same security, for a stated net credit would be establishing

A

A short spread

37
Q

An aggressive investor who feels the market is due for a correction purchases an inverse ETF in his margin account with a leverage factor of 3 times the inverse performance of the S&P 500. What is the minimum margin requirement for this position?

A

75 percent

38
Q

The debt service for overlapping debt would be supported by which of the following?

A

Property taxes

39
Q

Upon inspection of a member firm, FINRA’s staff concludes that the member in question has several outstanding items which constituted violation of FINRA’s rules. Which of the following would not be a way to resolve these issues with FINRA?

A

Mediation

40
Q

Your city is preparing a new issue of GO bonds and is reviewing the bids submitted by the various syndicates. The proceeds of the issue are going to be used to build new parks and recreation centers. The city wishes to start construction immediately. How might the city fund the project prior to the sale of the GOs?

A

Bond anticipation notes

41
Q

Which of the following are not required to be filed with FINRA’s Advertising Regulation Department?4

A

A member firm’s press release
A mutual fund profile, filed with the SEC
An offering circular
An ad announcing a new packaged product available though the member firm

42
Q

As it relates to issuance of securities, a split offering would be best described as one where

A

The proceeds of the issuer are split between the issuer and selling shareholders

43
Q

A conservative customer is seeking tax free income and safety of principal. After consulting your customer and evaluating options based on his needs, you recommend municipal GO bonds with put options. While explaining the various benefits of the put features to your customer, you should tell him all of the following except

A

Some of the features may be immediately exercised should your investment objectives change

44
Q

A client wishes to speculate on the performance of ZSE after it releases its earnings 3 days from now. The client is an aggressive trader and is seeking the most cost effective way to deploy risk capital. The client should execute which of the following?

A

Purchase weekly options

45
Q

A series 7 registered representative and the representative’s immediate family would be precluded from purchasing which of the following?

A

IPOs

46
Q

Broker dealer A, an order entry firm, has a relationship with broker dealer B to direct orders to broker dealer B for execution. Broker dealer B in consideration for the orders pays broker dealer A a fee based on the number of shares dissected. Which of the following is true?

A

Customers must be informed of the payments on any related confirmation

47
Q

XYZ broker dealer is a clearing firm carrying the accounts for thousands of investors. GMM Fitness a large national sporting good center is planning on merging with FHF Fitness to increase it’s national footprint. Proxies representing 14,000 shares of GMM held in street name by XYZ have not been returned by the beneficial owners. XYZ May vote the proxies

A

Under no circumstances

48
Q

Which of the following customer orders would not be required to be displayed by a market maker?4

A

All or none order
Not held order
Odd lot order
Block order

49
Q

As it relates to the delivery of a prospectus, which of the following may not be delivered electronically ?2

A

Mutual fund prospectus

Preliminary prospectus

50
Q

Tom a registered representative has been working with a prospective client for the last several weeks. Tom has designed a portfolio of mutual funds for the client within a single fund family. The client invests $250,000 with Tom and purchases the funds. The client later that week meets with his accountant and determines that the mutual funds will not meet his needs and redeems the shares shortly thereafter. Which of the following is correct?

A

If the shares are redeemed to the underwriter within 7 business days all fees will be returned to the underwriter

51
Q

As it relates to a FINRA member’s AML program, which of the following is true?2

A

The AML program should be reapproved by a senior member of the firm, if the member of senior management who approved the program leaves the firm

A member or members of the firm who are to oversee the day to day implementation of the program must be identified to FINRA

52
Q

Your broker dealer’s trading desk takes down 200,000 shares of TYUI, in anticipation of an upward trend over the next several trading sessions. If feels it will be able to sell the 200,000 shares on a principal basis in the market and to customers wishing to purchase shares of TYUI over the next week or two. What best describes the actions of your broker dealer?

A

Position trading

53
Q

An investor who is long XYZ options on the day prior to expiration must provide notice of his intent to exercise:

A

By 4:30 PM CST

54
Q

A resident if Greentown is looking at his state, local and county taxes. He notices that he seems to be paying many taxes to the state, the county and to his town. Which of the following is correct?

A

The state may not issue debt that overlaps the county or town

55
Q

All of the following are not exempt from FINRA’s filing requirement except

A

Retail communication posted online in an interactive forum

56
Q

In order for an issuer to be considered a well known seasoned issuer or WKSI, the issuer must have

A

Either $700,000,000 in market capitalization or $1 billion in non convertible securities issued

57
Q

You are considering investing in an oil and gas DPP. You have read the materials detailing the investment and have noticed that the partnership will have a reversionary working interest as the basis for distributions. Which of the following best describes this arrangement?

A

The general partner receives no income from sales until the limited partners have received the return of the costs absorbed by the limited partners

58
Q

As it relates to the trading of securities on the NYSE which of the following statements are correct?2

A

The NYSE executed orders via the Super Display Book

Orders entered as not held may be executed at any price

59
Q

An investor has been purchasing a variable annuity through a periodic payment option. The investor has asked his employer to deduct $500 each pay period and direct it to his annuity account. Which of the following choices is true?

A

The distributions received into the account will not be added to the investor’s cost basis

60
Q

The initiation of a repurchase agreement using 30 year bonds would be most like

A

A fully collateralized loan

61
Q

An investor who purchase shares of a diversified closed end fund must receive an up to date prospectus

A

At the time of initial offering

62
Q

Mr. Jones has just completed a review of your firm’s services and decides to open an account with your firm after meeting with his new representative. Your firm must provide Mr. Jones with a copy of the new account information:

A

Within 30 days

Series 7 (47 decks)

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