Kaplan Simulated Exam 1 Flashcards
The MSRB defines an associated person of a broker dealer who is primarily engaged in municipal securities activities other than retail sales to individuals as
A municipal financial professional (MFP)
Which of the following statements about municipal brokers’ brokers is not true?
They perform trades on a principal basis only
One of your customers would like to begin an investment program calling for regular monthly contributions of $200. Which of the following would be the best source for determining if this plan is reasonable?
The investor’s income statement
Your broker dealer has prepared an advertising piece for general distribution to all of its retail customers regarding numerous option strategies. Filing the piece with FINRA is
Required at least 10 business days before first use or publication
European style foreign currency options can 2
Only be exercised at expiration
Be traded at any time
A customer purchases an XYZ bond at 108. It is scheduled to mature in 16 years. After owning the bond for 10 years, she sells the bond at 102. What capital gain or loss must she report for tax purposes at the time of the sale?
$10 loss
Which of the following regarding yield-based (interest rate) debt options is true?
They are European-style exercise
FINRA Rule 2111 places three obligations on members when determining if a specific recommendation to a customer is suitable. FINRA’s suitability rules would likely find a registered representative is not in violation of complying with those three if
The recommendation made would be suitable for at least some customers
If the customers of a selling group member sell into a penalty stabilizing bid, the selling group member must pay back the underwriter
The concession
Your customer is opening a new options account. Which of the following need not occur to open the account?
The OCC must verify the financial information supplied by the client to ultimately approve the account
Marking to market is used to adjust
The positions in margin accounts based upon current market prices
When a securities professional refers to a bond as a full faith and credit issue, it is
A general obligation bond
If interest rates are rising, which statements regarding collateralized mortgage obligations are true?2
Prepayment risk decreases
Extended maturity risk increases
A gain on the sale of a long equity put option is
Always a short term capital gain
Most business development companies (BDCs) are classified as
Closed-end investment company
The basis of a bond with a 5% nominal yield maturing in twenty years and selling at 85 is approximately
6.22%
An investor would assume all of the following risks when investing in a collateralized mortgage obligation (CMO) except
Regulatory risk
A due diligence meeting occurs between
The issuing corporation and the underwriters to review and re-examine the full details of the pending underwriting and negotiate final terms to be included in the formal underwriting contract
When a broker-dealer sends a communication to its customers that the sweep account used fir customer credit balances will be changed from one money market fund to a different one, the communication must include
A tabular comparison of the nature and amount of the fees charged by each fund
An investor purchases a newly issued convertible bond at par. The bond is convertible at $40. Three years later, the underlying common stock is trading at $50 per share. If the investor sells the bond at a $50 premium over the parity price, there is
A long term capital gain of $300
A 7% convertible debenture is selling at 101, and it is convertible into the common stock of the same corporation at $25. The common stock is currently trading at $23. What is the parity price of the debenture?
$920
The determination as to whether an over the counter stock is eligible for purchase on margin is made by
The Federal Reserve Board
Broker-dealers are required to maintain customer identification programs and check he names of new clients against
A list compiled by the Office of Foreign Assets Control (OFAC)
What option strategy might be used by an investor with a short position in a stock who wishes to generate some income?
Write a put on the stock
