series 7 brian lee

Question 1

Suitability chart

Answer 1

Growth (cap appreciation)
large cap
small cap(agressive)
diversity(international stocks)

moderate- balance equity

income
corp bonds
preferred stock
blue chips
reits

conservative
bills bonds notes
bond ladder

Question 2

Stabilizing bids must not be made

Answer 2

at a price higher than the public offering price (POP).

Question 3

rule 5130 classifies a ristricted person as

Answer 3

member firms
employees of member firms
any person owning 10% or more of member firm
portfolio managers
finders and fiduciaries acting on behalf of managing underwriter

Question 4

Whether a first-year firm or not, retail communications for investment companies (including mutual funds, variable contracts, and unit investment trusts) that include
a ranking or a comparison that is generally not published or is the creation of the investment company or the member must be filed with FINRA at least

Answer 4

10 business days before first use (pre-filing).

Question 5

EXEMPT ISSUERS AND SECURITIES

Answer 5

Among the exemptions are the following issuers:
■ The U.S. government
■ U.S. municipalities and territories
■ Nonprofit religious, educational, and charitable organizations
■ Banks and savings and loans
■ Public utilities and common carriers whose activities are regulated as to rates and other items by a state or federal regulatory body

Commercial paper—maturity less than 270 days
■ Bankers’ acceptances—maturity less than 270 days
■ Securities acquired in private placements—restricted stock

Question 6

trust indenture.

Answer 6

series of promises between the issuer and the trustee

Question 7

rule 144 breakdown

Answer 7

RS(unregistered) held by nonafilliate(noninsider)
6 month
sell freely after

rs(unregis) held by affilate(insi)
6 month hold
volume limits after

control stock(registered)
held by affiliate(insider)
no hold
vol limits apply

Question 8

EPS

Answer 8

earnings available to common

/number of shares outstanding

Question 9

dividend payout ratio

Answer 9

annual divs per common share

/eps

Question 10

is responsible for setting the opening quote for issues listed on the NYSE.

Answer 10

designated market maker

Question 11

Tax consequences for options

Answer 11

same sp-p or sp+ pr

bullish is cost basis
bearish is sale proceeds

Question 12

leaps contract margin requirement is

Answer 12

100% of the premium

Question 13

An issuer will call the

Answer 13

higher coupon bonds before calling the lower coupon bonds.

the one with lower price is more likely to be called

Question 14

All of the following are minimum requirements for listing on the NYSE EXCEPT:

Answer 14

there is no minimum earnings per share requirement. However, there is a minimum earnings requirement.

Question 15

The author received royalties as a result of an active trade or business, therefore the payments are considered

Answer 15

earned income

Question 16

To determine the parity price of the common

Answer 16

1000/conversion price

current price/conversion ratio after

Question 17

interest earned on GNMA is taxable at

Answer 17

federal, state, and local levels.

Question 18

In a competitive bidding situation, each underwriter submits a sealed written bid. Once the bid has been awarded, the bonds are repriced to give the underwriters a profit when selling them to the public. The yield at which the bonds are sold is called

Answer 18

reoffering yield

Question 19

To note that a sell order is long, a broker/dealer must either have

Answer 19

the stock in its possession or have reasonable assurance that the customer owns the stock and will deliver it promptly.

Question 20

Which of the following are qualified plans?
Payroll deduction.
Deferred compensation.
Defined benefit.
Defined contribution.

Answer 20

Defined benefit.

Defined contribution.

Question 21

taxes and the 529 and cordevel

Answer 21

both are after tax so the contributions are not tax deductable.

Question 22

All of the following may be used to service special tax bond issues

Answer 22

such as gasoline, cigarettes, liquor, and business licenses

Question 23

closed end shares trade where

Answer 23

exchanges and otc

Question 24

The Bond Buyer’s Revenue Index is an

Answer 24

average yield of 25 revenue bonds with 30 years to maturity.

Question 25

A price spread same thing as

Answer 25

vertical spread

Question 26

what cannot be altered according to msrb

Answer 26

the rules regarding the content of confirmations.

Question 27

net revenue pledge order of what is paid

Answer 27

operations and maintenance are paid first, with debt service following

Question 28

gross revenue pledge order what is paid

Answer 28

debt service and then operations and maintenance

Question 29

The POP for a mutual fund as quoted in the financial press reflects:

Answer 29

the maximum sales charge the fund distributor collects.

Question 30

tax equiv yield

Answer 30

taxable yield) x (100% - tax bracket)

Question 31

Typically, general obligation bonds are not sold short because:

Answer 31

thin markets may make it difficult to cover a short municipal position.

Question 32

``` All of the following would flow through as a loss to limited partners EXCEPT: A) depletion. B) accelerated depreciation. C) interest payments on recourse debt. D) principal repayment on recourse debt. ```

Answer 32

interest payments deductable principal is not

Question 33

In both exchange and OTC markets, traders can sell short

Answer 33

any time without any consequence

Question 34

The Act of 1934 created the SEC 33 is for

Answer 34

required the registration of broker/dealers, empowered the Federal Reserve to control the extension of credit on securities transactions, and created rules dealing with secondary market trading. new issues, prospectus

Question 35

re-filing with FINRA is not required if

Answer 35

If unaltered and used as it was originally intended

Question 36

The Code of Arbitration Procedure would be mandatory to settle disputes between:

Answer 36

Disputes between anyone in the industry, including registered clearing corporations, must go to arbitration, with the exception of statutory discrimination claims,

Question 37

The Trust Indenture Act of 1939 is applicable to corporate debt issues that are

Answer 37

nonexempt, are over $50 million to be issued within 12 months, are offered interstate, and have maturities of 9 months or more.

Question 38

If a book author receives royalty payments from a publisher, the payments will be taxable as which of the following types of income?

Answer 38

Earned income

Question 39

The interest on municipal debt is largely exempt from

Answer 39

taxation, but not capital gains. Municipal bond investors who buy low and sell high will have capital gains to report.

Question 40

some issuers establish a sinking fund account to

Answer 40

accumulate funds to pay off term bonds at or before the established maturity date

Question 41

highly rated or lowly rated issuers establish sinking funds

Answer 41

low do it so its more marketable

Question 42

statutory debt limit protects

Answer 42

taxpayers from excessive taxes and can make a bond safer

Question 43

limited tax goes

Answer 43

bond securued by a specific tax. limited to what tax can be used

Question 44

voter approval for goes are revs

Answer 44

goes

Question 45

trust indentures required?

Answer 45

no munis are exempt. enhances marketability.

Question 46

interest taxable for IDRS or IDBS

Answer 46

yes because the act reserves tax exemption for public purpose if used for non public purpose it may be subject to alternative minimum tax

Question 47

AMT

Answer 47

Congress enacted the AMT to make certain that high-income taxpayers do not escape paying taxes. Certain items receive favorable tax treatment. These items must be added back into taxable income for the AMT. These tax preference items include: certain costs associated with DPPs, such as research and development costs and IDCs; ■ local tax and interest on investments that do not generate income; ■ tax-exempt interest on private purpose, nonessential government service municipal bonds; and ■ incentive stock options exceeding their FMV.

Question 48

PHAS or NHAS only

Answer 48

issues backed in full by us gov. also called section 8 bonds

Question 49

bans

Answer 49

are sold as interim financing that will eventually be converted to long-term funding through a sale of bonds.

Question 50

tans

Answer 50

is often used in place of BANs and TANs for up to 270 days, though maturities are most often 30, 60, and 90 days