Guarantee Exam Flashcards
The number of authorized shares can only be changed by which of the following?
The majority approval of the shareholders
During the payout period of a variable annuity the owner receives an initial payment of $400 based on an assumed interest rate (AIR) of 4%. In the second month, the annuity owner received a check of $500, based on an annualized net investment return of 10% earned in the separate account. If the separate account experiences an annualized net investment return of 8% during the third month, what would be the payout to the annuity owner?
Greater than $500
A feasibility study would most likely occur in which of the following?
A revenue bond
An OTC market maker is allowed to 2
Buy at highest bid
Sell at lowest offered
Which statements correctly describe bid and offer price information?2
The difference between the bid price and the offering price is the spread
The size of the spread indicates how actively the security is trading in the market
When an issuer is offering new shares to the public there is a quiet period. The quiet period is the period of time in which
No research may be published on the issuer’s securities
Which of the following is not a characteristic of ETNs?
Limited principal protection
5 M of 6 1/2% municipal revenue bonds, dated J and J, settles March 14. How many days of accrued interest will be included on the seller’s confirmation?
73
Which of the following best defines an underwriter?
A broker/dealer that helps an issuer sell securities to the public
Compute SMA in the following account: $20,000 LMV; $48,000 credit; $8,000 debit; $30,000 SMV
$5,000
A registered representative must obtain written verification of an investor’s net worth for which of the following investments?
Direct participation program
An investor in a limited partnership, for tax purposes, has established a basis of $20,000. During the year, the investor received a cash distribution of $15,000 and a distributed share of operating losses of $18,000. How much of the loss can be used?
$5,000
Class B mutual fund shares are characterized by a
Conversion into Class A shares when the CDSC reaches 0%
Which of the following would not trigger the payment of accelerated death benefits?
Being permanently disabled
FINRA bylaws are divided into four major categories. The category which relates to dealings between member firms is the
Uniform Practice Code
Which of the following requires a feasibility study?
Airport
What is the collateral for a collateral trust certificate?
Securities from a different issuer
Quotes in which of the following are reported to the CQS?
NYSE listed
It is especially important for retired investors and retirement plan administrators to monitor
Interest rate and reinvestment risks
In which of the following qualified plans are the benefits linked to the employee’s number of years of service and/or the amount of compensation earned?
Defined benefit plan
Stabilizing the bid is permitted
Only by the managing underwriter or it’s designee
The disclosure requirements for marketing CMO’s to retail clients include all of the following except
The government guarantee; if applicable, applies both to the face amount of the certificate and the premium paid
The Five Percent Policy applies to all of the following except
Transactions in municipal bonds
According to the Uniform Gifts to Minor’s Act, whose Social Security number must appear on the account?
The minor’s only
An existing client wishes to begin trading options. When should the options disclosure document be sent?
At or prior to the trade date and approval by the ROP
To facilitate a method of comparing investment yields of mutual funds, the Securities and Exchange Commission established a measurement of yield that takes the 30 day income of the fund for the previous month and divides it by the highest offering price on the last trading day of that month. This measure of yield is called the
Standardized yield
The principal difference between a REIT and a DPP is
Utilization of tax benefits
A rate covenant would is associated with which of the following?
Revenue bond
An investor purchases a 10-year municipal OID at 90. Five years later, the investor sells at 96. What is the investor’s gain or loss?
$10 gain
When analyzing two companies in the same sector, which of the following indicates better management?
Inventory turnover ratio
In reference to the NAV, buy and sell orders are based on the next price to be computed. This is called
Forward pricing
A registered representative decides to terminate his FINRA registration. Which requirement still applies to the registered representative and the member firm?
The registered representative is still subject to any complaint filings for 2 years after the termination
Communication with institutional investors regarding an employee benefit plan that involves more than 100 employees is called
Institutional sales material
Which two legislative acts contain the penalties for insider trading?
The Insider Trading Act of 1984 and the Securities Fraud Enforcement Act of 1988
Securities held in a UIT’s fixed portfolio might be changed
With notice to the SEC and notification to the shareholders within 5 days of when the SEC was notified
Under the Code of Procedure, initial jurisdiction in the handling of complaints lies with
The Department of Enforcement
An investor is long 100 shares of ABC at $51. He puts on a short ABC Oct 50 straddle, receiving 3.25 for the call and 2.25 for the put. What is the maximum loss?
$9,550
An analyst sends a memo to the investment banking department. This is permissible
If the memo is also sent to legal
All arbitration awards are deemed final and not subject to review or appeal, and must be paid within
30 business days
Investors are expected to make prompt payments for mutual fund shares. This is covered under
Regulation T
What is the main distinction between a rollover and a transfer when moving assets from one qualified retirement plan to another?
A rollover is distributed to the individual who is subject to 20% federal withholding tax and who then has 60 days to deposit the fund in an eligible retirement plan
An investor has made both pre tax and post tax contributions to her IRA over the years. What are the tax consequences of the withdrawals after reaching age 59 1/2?
Withdrawals are taxed on a pro rate basis because they are assumed to include both pre and post tax contributions
Which of the following is known as the paper act?
The securities Act of 1933
Which of these statements is incorrect concerning brokers and dealers?
A firm can act in both the capacity of a broker and a dealer when selling securities from its own inventory
An investor sells a 5% 10 year municipal bond at 106 after purchasing the bond at 110 two years before. What is the investor’s gain or loss?
$20 loss
A customer has traded throughout the year has generated $9,000 in net capital losses. What amount can be written off against the client’s ordinary income?
$0
For which reason may a limited partner sue a general partner?
Breaches of the partnership agreement
A broker/dealer executed a trade and charges a markdown. The trade was done as
Principal
Floyd is an officer of ABC company and owns 10,000 of ABC stock, which he purchased last month with funds from an inheritance. The stock has increased in value 50% and Floyd takes the profit on half of his shares.which of the following is true?2
Floyd must surrender the profit to his employer
Floyd must report the gain on his tax return
The GBH company has filed an S-1 with the SEC regarding a new offering of 10 million shares. Which of the following is/are true regarding the “20-day cooling-off period” for GBH stock?2
During this period no orders may be placed
During this period, no commissions may be paid
Arbitration rules apply to the following disputes except
Members against public customers
Trade confirmation delivery is governed by the
Uniform Practice Code
Which of the following enforces MSRB rules on an NYSE representative and his broker/dealer firm?
SEC
A customer has $425,000 in securities in his brokerage account and $190,000 in cash in the account. If the brokerage firm is to be liquidated due to bankruptcy filing, what amounts would the SIPC cover?
$310,000 in securities and $190,000 in cash
The direct trading of large blocks of securities between institutions that takes place off the exchange floor through electronic trading systems is the
Fourth Market
Jack is a registered representative with ABC brokerage firm. Jack’s wife Melissa works for a manufacturing company which is planning an IPO. The president of the manufacturing company would like Melissa to purchase some shares of the IPO. Which of the following is true?
Melissa May purchase in this issuer directed sale because she is not a registered person, though she is restricted person
Judy continued issuing trade instructions and making account withdrawals immediately after her husband died. Their account was a
JTWROS
A 50-year-old woman is the beneficiary of her husband’s traditional IRA. He passed away unexpectedly at age 51. With regard to the IRA, she has all of the following options except
Leave the money until she reaches age 59 1/2, when she can withdraw it tax free
Which of the following statements is correct regarding approval of institutional communications?
They must be approved or reviewed by a qualified registered principal before or after first use
Buy $20,000 of stock with cash. How much SMA does this create?
$20,000
A testimonial or endorsement of a security would be considered unlawful if
A fee was paid for the testimonial or endorsement and such fee was not disclosed
An investor exercised his option contract by delivering stock and receiving cash. The investor was
Long a put
Debt coverage is represented by which of the following?
Revenue/debt service
An investor bought stock for $10 per share and later gifted it to his son. At the time of the gift, the fair market value of the stock was $5 per share. Two months after receiving the stock, the son sells it for $3 per share. What are the tax consequences for the son?
Short term capital loss of $2 per share
A customer shorts an ABC Oct 15 put for $2. What is the maximum loss?
$1,300
Which of the following are methods of stock valuation accepted for tax purposes when selling a stock?3
FIFO
Weighted average
Security Identification
T-Bills are
Actively traded OTC
Shirt 10 Citicorp Aug 50 calls for 6.25. Buy 10 Citicorp Aug 60 calls for .25. Assuming intrinsic value only, at which market value will this position break even?
56
