Marked Test 3 Flashcards
Which TWO of the following choices are methods of underwriting municipal securities? I) Standby II) Negotiated III) Competitive IV) Fill-or-kill
II and III
A corporation’s shareholders must vote for: a) Cash dividends b) Stock dividends c) Stock splits d) Stopping dividends
c) Stock splits
Which TWO of the following securities are typically sold at a discount? I) TIPS II) Treasury bills III) Bankers’ acceptances IV) Collateralized mortgage obligations
II & III
Quotes on the OTCBB or the electronic Pink Sheets generally…
Firm
Sales Charge Formula
(Offer Price - Bid Price) / Offer Price
The minimum maintenance requirement for a stock sold short at $5 per share or above
The greater of $5 per share or 30% of the market value
Short sales are always treated as…
Short-term capital gains or losses, since a holding period for the security is never established
Record Date
Day the one must own the stock to receive a divident; 2 days after the Ex-Dividend Rate
Needs to be paid only if the corporation has sufficient income
Income (Adjustment) Bond
Day to settle stock bought on margin:
3 business days
A customer wishes to open an account with a brokerage firm to trade options. The customer provides all the necessary new account information required but refuses to provide financial information. The brokerage firm: a) May not open the account under any circumstances b) Must record the customer’s refusal on its records and may open the account with the approval of the Options Clearing Corporation only c) Must record the customer’s refusal on its records and use whatever information it can obtain on its own in determining whether it should accept the account for options trading d) May open the account without restrictions but requires the customer to sign a waiver
c) Must record the customer’s refusal on its records and use whatever information it can obtain on its own in determining whether it should accept the account for options trading
A municipal securities broker-dealer has a control relationship with an issuer. When selling the bonds subject to the control relationship, the broker-dealer must disclose this relationship to customers: I) Prior to the trade II) In writing at or prior to settlement III) For discretionary accounts only IV) For all accounts and for all types of transactions
I, II, and IV
Conversion Ratio Formula
Par / Conversion Price
Don’t know (DK) trades occur when…
Contrabrokers disagree or have conflicting details of a trade
A direct participation program in real estate does NOT have which of the following characteristics? a) Passive income b) The tax benefit of depreciation c) Cash dividends that are taxable as ordinary income d) A lower tax rate on capital gains
c) Cash dividends that are taxable as ordinary income
The margin requirement for a short sale of stock
50%
Hypothecation Agreement
Borrower pledges asset as collateral on a loan without the lender taking possession of the collateral
Bond Power
A separate legal form that authorizes the transfer of ownership of a registered bond from one party to another
A customer can meet the call by either depositing in his account…
Cash equal to the amount of the call or marginable stock with a loan value equal to the dollar amount of the call
An IRA contribution may be claimed for a tax year providing the contribution is deposited in the IRA no later than:
April 15 of the subsequent year
Unit investment trusts
Investment company that offers a fixed, unmanaged portfolio, generally of stocks and bonds, as redeemable “units” to investors for a specific period of time
Red Herring
Prliminary Prospectus
