Practice Exam 1

Question 1

Which of the following statements best describes financial risk?

Answer 1

The risk that an issuer were will be unable to meet interest and principal payments on debt obligations

Question 2

Real estate investment trusts REITS

Answer 2

Pay dividends and pass against through two investors but not losses

Question 3

45 puts are trading at 2.5. The CMV is at 42.50. The May 45 put is??

Answer 3

Parity

CMV+P=SP=Parity

Question 4

During a discussion with a customer about a potential investment opportunity involving securities standing alone all of the following would likely be permissible except

Answer 4

The registered wrap points out correctly that the maximum possible loss on this particular investment is probably smaller than the maximum possible gain

Question 5

Which of the following is an SRO

Answer 5

FINRA

Question 6

Members and nonmembers alike can look into a brokerage service and qualifications record by accessing which of the following services

Answer 6

Broker check

Question 7

Common dividends may be

Answer 7

Declared increased reduced or suspended by the Board of Directors

Question 8

These would cause a change in the net asset value of a neutral funds share

Answer 8

The fund pays a small dividend

The market value of the portfolio declines

Question 9

Past due dividends on cumulative preferred shares

Answer 9

Accumulate on the company’s books until paid

Question 10

Treasury bills pay

Answer 10

All Interest at maturity

Question 11

A municipal securities dealer has just made a contribution to the mayors reelection campaign. How long must a firm wait before it can enter competitive bids on proposed bond issues by the city?

Answer 11

No waiting period

Question 12

These all mature at par value

Answer 12

Treasury strips, receipts, bills, notes and bonds

Question 13

A firm designated as self clearing can

Answer 13

Act in a back office capacity for an introducing firm

Clear and settled transactions executed by other firms

Question 14

The regulation enacted by the SEC to protect the privacy of customer information is known as

Answer 14

Regulation S – P

Question 15

To meet a regulation T margin call a customer would have how long?

Answer 15

Settlement +2 additional business days

Question 16

And open and company may sell fractional shares true or false?

Answer 16

True

Question 17

A closed end Company may not sell fractional shares true or false?

Answer 17

True

Question 18

Secured debt is asset backed T or F?

Answer 18

True

Question 19

Unsecured debt is not asset backed TorF?

Answer 19

T

Question 20

Margin calls can be met with deposits of?

Answer 20

Cash or fully paid for marginable securities

Question 21

Records relating to a currency transaction report must be retained for how long?

Answer 21

5 years

Question 22

And investor would expect which type of preferred stock to pay the highest stated dividend rate?

Answer 22

Callable

Question 23

“ these securities have not been approved or disapproved nor have any representation is been made about the accuracy or the adequacy of the information”

Answer 23

Mandated to be in the final prospectus by the SEC

Question 24

What dollar limit is placed on damages if a suit is filed based on allegations of manipulative practices?

Answer 24

No dollar limit

Question 25

For a new issue that qualifies for listing on an exchange, a prospectus must be provided to all purchasers for how many days after the effective date?

Answer 25

25

Question 26

Money market debt instruments typically have maturities of?

Answer 26

One year or less

Question 27

In an LP is the partnership entity responsible for paying taxes on gains?

Answer 27

NO

Question 28

ETFs are

Answer 28

Open end funds

Have operating costs and expenses that are lower than most mutual funds

Question 29

Underwriters acting as principles and committing to purchase any unsold shares for the syndicate account would be best described as being engaged in

Answer 29

Firm commitment

Question 30

A broker dealer that executes trades and settles transactions for another broker dealer is called?

Answer 30

Carrying firm

Question 31

The flow of money between the United States and other countries is known as

Answer 31

The balance of payments

Question 32

When I corporation issues a mortgage bond, the issues total value

Answer 32

Should be less than that of the real estate it is backed by

Question 33

If a broker dealer firm wishes to become a FINRA member firm, it must make its application

Answer 33

To the FINRA district office where the applying firm has its home office

Question 34

Economists call mild, short term contractions

Answer 34

Recessions

Question 35

Shelf offerings are covered under which act?

Answer 35

The securities act of 1933

Question 36

Promissory notes are a form of?

Answer 36

Commercial paper issued by corporations

Question 37

With regard to the issuance of securities the securities act of 1933 provides criminal penalties for fraud true or false?

Answer 37

TRUE

Question 38

A bond having a call feature

Answer 38

Can be redeemed before maturity at the issuers option