Section Overviews

Question 1

In a dispute between a registered representative and his employer, the dispute typically must be settled by:

Answer 1

Arbitration

Question 2

The gift rule does not apply to…

Answer 2

personal gifts such as the birth of a child or a wedding gift, provided these gifts are not related to the business between the recipient and the broker- dealer

Question 3

Upon the written request by the employing member firm, duplicate account statements must be sent if an employee of a member firm…

Answer 3

opens an account at another member, investment adviser, bank, or other financial institution.

Question 4

Member firm duplicate statement rules do not apply to…

Answer 4

employees of banks, investment advisers, or other financial institutions

Question 5

A member firm is required to send duplicate account statements to FINRA if…

Answer 5

the customer is an employee of FINRA

Question 6

A RR who has not completed the Continuing Education Regulatory Element training within 120 days of his registration anniversary will…

Answer 6

be placed in inactive status and any activity that requires registration, including receipt of commissions, will be prohibited

Question 7

Any person may give a gift of _____ without incurring a gift tax

Answer 7

$14,000 per person, per year

Question 8

Dividends paid on stock held by individuals for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date are taxed as…

Answer 8

Long-term capital gains (maximum 20%)

Question 9

Securities exempt from registration with the SEC:

Answer 9

US Govt. Agency securities
Municipal securities
Securities issued by banks
Short-term corporate debt; not exceeding 270 days
Securities issued by Small Business Investment Companies

Question 10

Holding period for restricted stock:

Answer 10

6 months

Question 11

Current Yield =

Answer 11

Annual Interest / Current Market Price

Question 12

Conversion Ratio

Answer 12

Par / Conversion Price

Question 13

A secondary market exists for:

a) Dealer-placed commercial paper
b) Federal funds
c) Repurchase agreements
d) U.S. savings bonds

Answer 13

a) Dealer-placed commercial paper

Question 14

ABC Corporation bonds are convertible at $50. If the bonds are selling in the market for 90 ($900) and the common stock is selling for $43, which TWO of the following statements are TRUE?

a) The stock is selling at a discount to parity with the bond
b) The stock is selling at a premium to parity with the bond
c) Liquidating the stock after converting the bond would be currently profitable
d) Liquidating the stock after converting the bond would not be currently profitable

Answer 14

a & c

Question 15

Federal Farm Credit Banks notes are:

Answer 15

Issued at a discount and are not interest bearing

Question 16

A mill equals…

Answer 16

0.001 or $1 per $1,000 assessed value

Question 17

BABs are a type of municipal bond that pays…

Answer 17

taxable interest but the Treasury will reimburse 35% of the interest paid on the bonds to the issuer, which reduces the cost of borrowing

Question 18

The MSRB regulates the yield that must be disclosed on a client’s confirmation

Answer 18

be the lower of yield to call and yield to maturity

Question 19

Which of the following parties states that a municipality may legally issue bonds?

a) FINRA
b) The MSRB
c) The SEC
d) The bond counsel

Answer 19

d) The bond counsel

Question 20

In a limited partnership, a general partner’s minimum participation in profits and losses is:

Answer 20

1%