Second Mock Exam

Question 1

True or false: Bankruptcy is cause for denial of BD registration

Answer 1

False

Question 2

Crimes that are cause for BD registration denial

Answer 2

Convicted of a securities related misdemeanor or any felony in past 10 years

Question 3

True or false: Using initials RIA is prohibited

Answer 3

True

Question 4

True or false: Unit investment trusts have fixed interest rates

Answer 4

True

Question 5

Two most common forms of discounted cash flow used in valuation of common stock

Answer 5

Dividend discount model and dividend growth model

Question 6

Beta is a measure of

Answer 6

A stock’s volatility relative to the overall market

Question 7

Offers a security for sale

Answer 7

Prospectus

Question 8

True or false: Stock dividend distributed to current shareholders consistitutes an offer

Answer 8

False

Question 9

Buy a put when you want to…

Answer 9

Limit the potential downside risk once you’ve bought a stock

Question 10

How often an open-ended investment company must compute its NAV

Answer 10

No less frequently than once a day

Question 11

When discretionary authorization must be received by BD

Answer 11

Before exercising discretion

Question 12

When margin account agreement must be received

Answer 12

Promptly after first trade in the account

Question 13

When discretionary authorization must be received by IA

Answer 13

Within 10 days after initial discretionary trade

Question 14

When an options account agreement must be received

Answer 14

Within 15 days after the customer’s account has been approved

Question 15

Private placements are exempt if they are offered to not more than ___ general public investors

Answer 15

10

Question 16

True or false: Transactions involving issuers and underwriters are exempt

Answer 16

True

Question 17

Sale of preorganization certificates is exempt if

Answer 17

There is no payment/commission and no more than 10 subscribers. Number of offers is unlimited.

Question 18

POD account

Answer 18

Totten trust

Question 19

Working capital formula

Answer 19

Current assets - current liabilities

Question 20

To be required to file a Form 13F,

Answer 20

An institutional manager must have discretion over a portfolio of at least $100 million 13(f) securities

Question 21

Hedge funds are organized as

Answer 21

Partnerships

Question 22

To avoid tax liability, you can do this with an early qualified pension plan withdrawal.

Answer 22

Roll over the funds into an IRA within 60 days (ie another qualified plan)

Question 23

Number of days agent has to appeal disciplinary findings

Answer 23

60

Question 24

Section 404(c) of ERISA

Answer 24

Plan must offer at least 3 different investment choices

Question 25

Need to calculate discounted xash flow estimation of the value of a bond

Answer 25

Discount rate, future cash flow, number of interest payments. Parity price is only relevant to convertible bonds.

Question 26

Characteristic specific to universal life insurance

Answer 26

Policy may be overfunded

Question 27

To be eligible to cast a vote as a stockholder,

Answer 27

Ownership must be established by record date

Question 28

Price earnings ratio is used by technical or fundamental analysts?

Answer 28

Fundamental

Question 29

Plan where you can withdraw funds before 59.5 with no 10% penalty

Answer 29

457

Question 30

Requires publicly traded corps to issue annual reports

Answer 30

Securities Exchange Act of 1934

Question 31

When an IA must register with SEC

Answer 31

Reasonably believes will have AUM of at least $100 million within first 120 days of registering

Question 32

Buying an inverse ETF that tracks S&P 500 at a time when the market outlook is ___ would be appropriate

Answer 32

Bearish

Question 33

Common use of stop order

Answer 33

To protect profit in long position and prevent loss in short position

Question 34

Educational seminar for seniors held at upscale location

Answer 34

Free lunch

Question 35

No active secondary market

Answer 35

Forwards

Question 36

True or false: Unaffiliated solicitor must be registered as an IA

Answer 36

False

Question 37

Capital needs analysis

Answer 37

Help determine proper amount of life insurance that will provide for family’s needs

Question 38

Government should spend money to move economy into expansion

Answer 38

Keynesian

Question 39

Maturity on US Treasury note

Answer 39

2-10 years

Question 40

Asset classes

Answer 40

Equity, debt, cash, real estate, commodities

Question 41

True or false: business continuity plan is partially based on firm’s annual net income

Answer 41

False