Pretest Questions Flashcards by leo Gottlieb

The transfer agent does which of the following?2

Maintains and records a list of stockholders

Locates lost shares

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An investor has purchased shares of a foreign company through an ADR, Which of the following is not true?

The dividend will be paid in US dollars

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An investor owns 100 shares of XYZ 8% participating preferred stock. XYZ’s common stock pays a quarterly dividend of $.25. Hoe much will the investor earn each year in dividends?

$900

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An investor has purchased 10 corporate bonds at a price of $135. At the end of the day, the bonds are quoted at 136.25. How much have the bonds risen in dollars?

$125

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Which type of bonds require the investor to deposit coupons to receive their interest payments but have the owner’s name corded on the books of the issuer?

Principal only bonds

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Which of the following will be the lowest for an intermediate term bond purchased at a premium?

YTC

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Which bonds are issued as a physical certificate without the owner’s name on hem and require whoever possesses these bonds to clip the coupon to receive their interest payments and to surrender the bond at maturity in order to receive the principal payment?

Bearer bonds

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XYZ has 8% subordinated debentures trading in the market place at $120. They are convertible into XYZ common stock at $25 per share. What is the parity price of the common stock?

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An MSRB member executed an order for an institutional customer in the marketplace. The customer purchases municipal bonds issued 10 years ago, maturing in 5 years. According to rule G-15, all of the following must be on the customer’s confirmation. Except

The legal opinion

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Trades between two MSRB members must be reported to which of the following?

NSCC

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As a municipal bond trader, you call a market maker asking for a quote on a specific municipal bond. The trade responds, “I have them 6.1 bid offered 5.9 out firm.” What does this mean?

The dealer is obligated to another party at those prices

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An investor buys 100m of NY 4% GOs due February 1, 2020. The bond is an OID bond. Any capital appreciation at maturity will be

Ordinary income

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Your state is selling municipal bonds to raise money to improve existing toll roads. The underwriting will most likely be awarded to a syndicate

Through negotiation

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Which of the following is not a corporate money market instrument?

Treasury bills

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A bank that is unable to meet its reserve requirement could borrow money from another bank and pay the

Federal funds rate

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The exercise of a call option results in the delivery of the stock

In two business days

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A US importer is buying $10,000,000 worth of goods from a Japanese manufacturer. The payment will be made six months from now in Japanese Yen. To provide a hedge, the US importer would do which of the following?

Buy calls on the Japanese Yen

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An investor buys 10 XYZ Nov 75 calls at 4.10 on Monday May 11th. The trade will settle on

Tuesday May 12

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The OCC is the

Options Clearing Corporation

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A fixed income investor may not write a

Rate based covered call

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Your existing customer has just been approved by your firm’s ROP to trade options. How long does the customer have to return the signed option agreement?

15 days

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The OCC is

Wholly owned by the exchanges

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The investment adviser of an investment company does all but which of the following?

Is a person hired by the board of directors and may not have any securities related convictions

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Which of the following is the pricing formula for an open end mutual fund?

NAV + SC = POP

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An investor has $70,000 to invest in a mutual with a POP of 20 and a sales charge of 8.5%. A breakpoint sales charge reduction is available to investors who invest $50,000 or more and they are charged 6% as a sales charge to invest. How many shares will this investor be able to purchase?

3,595

What is the equation for regulated sub chapter M investment income?

Investment income = (dividends received + interest received - operating expenses) x 90%

Which of the following is true regarding the ex dividend date for an open end mutual fund?2

It is set by the board of directors It is the day after the record date

A mutual fund prospectus must be updated every

13 months

In order to charge the maximum allowable sales charge of 8.5%, the mutual fund company must offer all of the following except

Conversion privileges

A mutual fund prospectus is important in all of the following except

It must be presented to all purchasers after the sales presentation

A syndicate may enter a stabilizing bid

At or below the offering price

Corporations may do all of the following except

Issue preferred stock only

A company doing a preemptive right offering would most likely use what type of underwriting agreement?

Standby

XYZ has just gone public and is quoted on the Nasdaq Capital Market. Any investor who buys XYZ must get a prospectus for how long?

90 days

A red herring given to a client during the cooling off period, will contain all of the following except

Proceeds to the company

A member of the selling group assisting in the distribution of securities in an undivided syndicate is

Not liable for a percentage of the unsold securities

Which of the following may not trade on the floor of the NYSE?

Allied member

Which of the following is most likely to trade in a round lot of 10 shares?

Preferred stock

ABC Technologies, a very volatile stock, closes at $180 per share. Your customer has placed an order to sell 500 ABC at 165 stop limit 160 GTC. After the close, the company announces bad earnings and the stock opens at 145. What happened to the customer’s order?

It has been elected and has become a limit order

In which type of account does the nominal owner of the account enter all orders for the beneficial owner of the account?

Custodial account

To open a guardian account, the firm must obtain

Declaration papers

The nominal owner of the UGMA account is the

Custodian

Which of the following is Not required in the account title for a custodial account?

The minor’s social security number

A customer calls in asking about how to put money aside for his children. He wants to open a custodial account for his two children, Bobby and Sue. What should you recommend?

Open two accounts, one for each child with he or his wife as custodians for both or for either

The initial margin requirement for municipal bonds is set by which of the following?

NYSE

Your customer buys $100,000 principal amount of New York Bridge and Tunnel revenue bonds at 54 in her margin account. She must deposit

$8,100

Which of the following is true if a client uses an SMA to withdraw $2,500 from his margin account?

The SMA is reduced and the debit balance is increased

Which of the following are features of a 401K plan? 2

Employee’s contributions are excluded from their gross income The employer may match a certain percentage of the employee’s contributions

The penalty for an excess contribution to a Keogh plan is

10%

An investor has deposited $100,000 into a qualified retirement account over a 10 year period. The value of the account has grown to $175,000 and the investor plans to retire and take a lump sum withdrawal. He will pay

Ordinary income taxes on the whole $175,000

Which of the following plans is non funded?

Deferred compensation plan

An investor has failed to pay for a security by the expiration of the fourth business day. Which of the following are true?3

She may keep any gain in the account as a result of the trade She is responsible for any loss as a result of the trade The account will not be allowed to transact business the regular way for 90 days

A customer who purchased 1,000 shares of XYZ on margin two months ago and has not executed any order since

Must have received a statement for the last two months and must receive one this month as well

As it relates to securities held in street name, which of the following are true?2

The corporation will send proxies to the broker dealer A shareholder who attends the annual meeting will have his proxies voided

All of the following are reasons to reject delivery except

The customer has determined that the investment is unsuitable

ABC declares a $.12 dividend to shareholders of record as of Tuesday January 15th. The stock will go ex dividend on

Friday January 11th

The brokerage firm may charge a fee for which of the following?4

The safekeeping of securities The collection of dividends Lack of activity in the account The clipping of coupons

A security has been delivered late to the buying member after the record date for a dividend distribution. Which of the following are true?3

The buyer will be owed the dividend The buying member will send a due bill The selling member will receive the dividend

Which of the following is true?

A broker dealer may charge an additional fee to customers who buy and sell odd lots

While investing in a DPP, an asset is sold at a price above its depreciated basis and all tax credits have been used up. This is known as which of the following?

Crossover

A limited partner may do all of the following except

Advise the general partner

``` List the following in order from the least important to the most important factors when considering investing in a DPP. 1 Tax considerations 2 Profitability 3 Liquidity 4 safety ```

Liquidity Safety Tax considerations Profitability

An investor gets advance notice of a research report being issued and enters an order to purchase the security that is the subject of the research report. This is known as

Trading ahead

A firm has been taken to arbitration by a customer. The disputed amount is $47,400. Which of the following is true?

There will not be a hearing and the decision may not be appealed

FINRA has taken disciplinary action against a member. The decision of the Department of Enforcement becomes final in

45 days

A FINRA member has failed to receive a stock certificate in good form from the selling Finra firm. Which Finra bylaw defines good delivery?

Uniform Practice Code

Which act gave the NASD (now Part of FINRA) the authority to regulate the OTC market?

The Maloney Act of 1938

A syndicate has published a tombstone ad prior to an issue becoming effective. Which of the following must appear in the tombstone?4

A statement that the registration has not yet become effective A statement that the tombstone ad is not an offer to sell the securities Contact information A no commitment statement