Kaplan Simulated Exam 4 Flashcards
Pristine Brokerage Services, (PBS), accepted as a FINRA member firm seven months ago, is planning a direct mail campaign to several thousand potential investors. The topic of the campaign deals with owning real estate through direct participation programs. Under FINRA Rule 2210 on communications with the public, this is considered
A retail communication and must be filed with FINRA at least 10 business days before first use or publication
An underwriting bid for a municipal general obligation issue would include which of the following?2
The dollar amount
The coupon rate
When a broker-dealer specializing in new issue municipal bonds needs current information, the usual choice is to consult
The Bond Buyer
When is the sales charge deducted from purchases of mutual fund shares made under a letter of intent?
When each purchase is made
An investor purchased an interest in a limited partnership, paying $10,000 in cash and signing a recourse note to the partnership under a letter of credit for $40,000. Which of the following statements are true?2
The investor’s tax basis will be $50,000
The investor’s maximum loss will be $50,000
If a customer buys callable municipal bond, Municipal Securities Rulemaking Board (MSRB) rules state that the confirmation sent to the customer must disclose
The lower of either the yield to call or yield to maturity
Under FINRA rules, members are prohibited from soliciting votes from limited partners in connection with a proposed roll up unless any compensation to be received by the member
Does not exceed 2% of the value of the securities to be received in the exchange
One of your customers exercises a put option. The stock is in the customer’s account and your firm makes timely delivery. The proceeds form the sale of the stock will be paid to your firm by
The broker dealer to whom the exercise notice was assigned
A city has issued bonds to construct a new sewage treatment facility. If the bonds are not backed by the full taxing authority of the city, all of the following statements about the bond issue are true except
The disbursement of principal and interest payments must be approved semiannually by the state public service commission
If a customer buys 2 Canadian dollar 78 calls and writes 2 Canadian dollar 80 calls, this position is
A bull call spread
One of your customers has asked you about trading penny stocks. After discussing the risk, the customer decides to go ahead. The firm sends the individual a copy of the special penny stock risk disclosure document. The firm needs the customer’s signed and dated acknowledgment of receipt of the document. Trading in penny stocks may not begin in that account until
At least two business days after sending the statement
All of the following statements regarding the 5% markup policy are true except
A risk less transaction is not generally covered by the 5% markup policy
How many business days after an index option is exercised should a cash settlement occur?
One
Your client invests $20,000 to purchase a 10% interest in a movie production limited partnership. At the time of subscribing, the investor signs on an $800,000 recourse loan to the partnership. After completing the first year of operations, the program shows a loss of $1,200,000. All of the following statements are correct except
The investor’s original basis was $20,000
Capital gains distributed by a mutual fund to shareholders are reported and taxable for the year
Earned (accrued)
