Kaplan Simulated Exam 3

Question 1

Treasury STRIPS and Treasury receipts are quoted based on

Answer 1

Yield to maturity

Question 2

An investor purchasing an ADR for a company domiciled in South Korea should understand that

Answer 2

The investor will be subject to currency risk

Question 3

Which of the following statements describes an oil and gas blind pool offering?

Answer 3

Money is raised without specific property being stated, and the general partner selects the investments

Question 4

One of the goals of target date funds is to help manage

Answer 4

Investment risk

Question 5

A senior official of an issuer learns that non public information was disclosed to an institutional shareholder of the issuer and/or an analyst covering the issuer at a private meeting. To avoid violating Regulation FD, the issuer must do which of the following?

Answer 5

Promptly disclose the information no later than 24 hours after discovery

Question 6

When describing a new offering of municipal bonds, which statement is true regarding presale orders?

Answer 6

The takedown on presale orders is split among the syndicate members based on their participation.

Question 7

Which of the following would not be found in the underwriting of a new corporate bond issue?

Answer 7

A legal opinion

Question 8

In a new margin account, a customer sells short 1,000 shares of XYZ at $30 per share and deposits the required margin. If the stock subsequently falls to $25 per share, the equity in the account is

Answer 8

$20,000

Question 9

Amortization of a municipal bond premium does which of the following?2

Answer 9

Decreases cost basis

Decreases reported interest income

Question 10

A client of yours wishes to sell 400 shares of LMNO common stock. You contact your trading desk and receive the following quote. “We are currently quoting LMNO at 42-42.15, 6 by 4.” You report this to the client who says, “Do it.” The customer will receive

Answer 10

$16,800

Question 11

If a customer buys 300 ABC at 53 and writes 3 ABC Jun 55 calls at 4, and the contracts expire unexercised, the customer’s cost basis in ABC stock at expiration is

Answer 11

$53

Question 12

Yield quotes on collateralized mortgage obligations (CMOS) are based on

Answer 12

The tranche’s expected life

Question 13

A customer purchases a municipal bond in the secondary market with a settlement date of August 1. If the next interest payment is September 1, which of the following statements regarding interest on this bond are true?2

Answer 13

The bond pays interest on March 1 and September 1 each year

On September 1, the buyer will receive from the issuer interest for the period March 1 through August 31

Question 14

If a customer buys 5 ABC Jan 40 puts and writes 5 ABC Jan 45 puts, which of the following statements are true?2

Answer 14

The customer profits if the spread narrows

The customer is a bull

Question 15

Under Regulation FD, if an officer of an issuer makes an unintentional disclosure of non public, material information to an institutional investor, the issuer

Answer 15

Must promptly make public disclosure of the same information

Question 16

Under FINRA’s Rule 2210 communications with the public, which of he following is excluded from the filing requirements?

Answer 16

Correspondence with prospective clients that is delivered through electronic media

Question 17

Lorne Walters is a registered representative with Pecuniary Profits Securities, PPS, a FINRA member firm. Walters has decided to conduct virtual meetings using a system called Xoom. Because he has never used the system before, Walters decides to make a trial run of his securities presentation to six family members who are PPS customers. All of these family members are accredited investors. Which of the following choices best describes this situation?

Answer 17

Prior approval of PPS may be required, but it is not mandated by FINRA for this public appearance.

Question 18

Which of the following is required disclosure on the Form U4?

Answer 18

Residency for the previous 5 years

Question 19

Which of the following agencies approves private lending institutions to issue bonds that are backed by the full faith and credit of the US government?

Answer 19

Government National Mortgage Association (GNMA)

Question 20

A customer buys 100 shares of ABC at 56.50 and writes 1 ABC Aug 60 call at 2. If the call is exercised, the consequences are 2

Answer 20

A cost basis of $56.50 per share

Sales proceeds of $62 per share

Question 21

A new margin customer buys $12,000 CMV of ABC and sells short $10,000 CMV of XYZ. With Regulation T at 50%, what is the amount of his initial call?

Answer 21

$11,000

Question 22

An affiliate or insider holding unregistered shares can sell under Rule 144

Answer 22

4 times a year