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Series 7 Top-off Exam flashcards
1
Q

If more than 10% of a bond’s proceeds go to private entities

A

it is considered a private activity bond and is not automatically granted tax exemption

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2
Q

For both U.S. Treasury notes and Ginnie Maes quotes are

A

quotes are as a percentage of par, in 32nds

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3
Q

calculate conversion price

A

conversion price/100+stock dividend

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4
Q

yield shown on bond confirmation

yield shown for discount
yield shown for pre

A bond confirmation for a bond called under an in-whole call provision will show

the event of an in-part call

A

dis-ytm
prem-ytc

ytc

lower of ytc and ytm

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5
Q

Under federal law, contributions made into Section 529 plans are considered______ and are deductable or not?

earnings generated each year are_____ and on withdrawal are _______

A

gifts

not

tax deferred

tax free

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6
Q

CMO

risks

what needs to be signed

A

issued in 1000 denominations

mortgages back these and these are relatively safe. Susceptibility to interest rate movements and the resulting change in mortgage repayment rate makes these carry risks.

prepayment risks(if rates fall)(refinancing)(trance risk)
extended maturity risk(if rates rise)

customer needs to sign suitability statement

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7
Q

CMOS and tax

A

taxable at all levels

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8
Q

According to the Dow theory, reversal of a primary bullish trend must be confirmed by:

A

the Dow Jones Industrial Average and Transportation Average.

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9
Q

Once a variable annuity has been annuitized:

A

each annuity unit’s value varies with time, but the number of annuity units is fixed.

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10
Q

When must a new options customer-who has not yet traded options-receive the Options Clearing Corporation’s current disclosure document?

A

At or before the time the account receives approval for options trading.

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11
Q

exempt transactions regulations/ rules

A

Regulation A+- small and medium corporate offerings
Reg D- private placements
Rule 147- securities offered and sold exclusivley intrastate
reg s- offeres and sales made outside us.

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12
Q

TANs, RANs, GANs, and BANs are issued by municipalities seeking:

A

short-term financing.

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13
Q

A buy stop order is placed

a sell stop order is placed

A

above a resistance level

below the resistance level

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14
Q

IRA contributions and taxes

A

contributions are tax deductable so if a portion is not, then it is not taxed. but the remaining balance withdrawn is taxed as ordinary income

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15
Q

All of the following events will affect the NAV per share of a mutual fund EXCEPT

A

Redemption of shares

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16
Q

if you want a dividend, you must purchase

A

2 days before record date(day before ex div date)

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17
Q

LEAPS and listed options on the same side of the market, on the same underlying security, must be

A

aggregated and remain within position limits.

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18
Q

Western Vs Eastern

A

Western- divided, each underwriter responsible only for its own underwriting allocation

Eastern- responsible for an equal percentage of unsold

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19
Q

As on exchanges, short sales on the Nasdaq Stock Market can occur

A

at any time

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20
Q

vertical spread

A

Dif SP same exp

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21
Q

horizontal spread

A

sam sp dif exp

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22
Q

settlements

A

corp muni ex opt= T+3
US GOV/ opt pre= t+1
Reg t = T +4

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23
Q

Recapture of deductions is a concern

A

when accelerated, but not straight-line depreciation is used.

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24
Q

Premiums on options will only affect the stock’s cost basis or sales proceeds if

A

the option is exercised, or if (on the same day) a customer buys stock and buys a put.

for covered call its just sp

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25
Q

parity

A

market price/common shares

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26
Q

class c shares appropriate for investors

A

who have short time horizons because they become very expensive over a long period of time

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27
Q

which orders reduce dividends

A

BLSS

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28
Q

a stop order is designed to

A

is designed to protect a profit or prevent a loss if the stock begins to move in the wrong direction.

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29
Q

A sell stop order

A

protects a profit or limits a loss in a long stock position and is entered at a price below the current market.

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30
Q

quick ratio(acid test)

A

(Current assets - inventory) / current liabilities.

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31
Q

Near-term call

A

The near-term call would mean that no matter how attractive the bond’s other features, the client may not have very long to enjoy them.

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32
Q

A control relationship exists if

A

someone represents both an issuer and municipal securities dealer.

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33
Q

Who signs the agreement among underwriters for a municipal bond issue?

A

All members of the underwriting syndicate.

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34
Q

If trading is halted in a listed stock, what happens to the trading in the stock’s listed options

A

Options trading is always halted when the trading of the underlying security is halted. Options rely primarily on the underlying market value for premium determination.

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35
Q

Scale in a municipal bond underwriting refers to

A

yields by maturity

The scale, sometimes referred to as the re-offering scale, is a listing by maturity of the price or yields at which a new issue will be offered. A typical scale has earlier maturities with lower yields and later maturities with higher yields.

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36
Q

The debt limit is the maximum amount of debt a municipality

A

can have outstanding

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37
Q

The dated date has what effect on marketability.

A

none, The dated date is the date on which interest begins to accrue.

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38
Q

The bond buyer

includes

A

is published every business day and serves as an authoritative source of information on primary market municipal bonds.

placement(acceptance ratio)
30 day visible supply
Revdex(indexes)

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39
Q

Which municipal publication provides the most up-to-the-minute information relevant to the secondary municipal bond market?

A

Thomson Muni Market Monitor

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40
Q

does accrual days include settlement date

A

no

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41
Q

overbought vs oversold

A

decline=oversold

rising=overbought

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42
Q

SMA to stock

SMA to cash

A

double

dollar for dollar

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43
Q

Yield based options settle

A

in cash

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44
Q

discretion and approval with finra and principles

A

the principal does not have to approve every order. they just need to check to make sure no churning is happening.

discretion does require principal approval but not finra approrval

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45
Q

The call provisions of a municipal issue would be detailed most completely in the

A

bond resolution
The bond resolution is the document that authorizes the issuance of a municipal bond. The resolution also describes the proposed issue’s features and the issuer’s responsibilities to its bondholders.

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46
Q

Section 8 bonds

A

are municipal revenue bonds backed by the U.S. government issued to help finance low and moderate income public housing. They are also known as Public, (PHA) or New, (NHA) housing authority bonds.

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47
Q

When a partial withdrawal is made from an annuity

A

the earnings are considered to be taken out first for tax purposes (or LIFO). Therefore, ordinary income taxes will apply

When contributions are made with after-tax dollars, these already taxed dollars are considered the investor’s cost basis and are not taxed when withdrawn. The earnings in excess of the cost basis are taxed as ordinary income when withdrawn.

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48
Q

non qualified

qualified

A

after tax

pre tax

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49
Q

unit investment trust has board of directors or board of trustees

A

trustees

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50
Q

An investor may meet a Regulation T margin call either by

A

cash equal to the call.

listed marginable securities with a loan value equal to the call.

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51
Q

how are dividends and interest credited to sma

A

dollar for dollar

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52
Q

5% markup policy applies to

A

markups, markdowns, and commissions.

principal and agency transactions

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53
Q

when do we add non recourse debt to cb

A

only when its a real estate partnership

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54
Q

real estate property tax

A

take assessed value without 3 zeros and multiply by mills

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55
Q

Sell order tickets must be:

A

marked as ether long or short

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56
Q

When assets are pooled into financial instruments such as Collateralized Mortgage Obligations (CMOs) to better facilitate selling them to the general public, the process is known as:

A

securitization

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57
Q

Which of the different sharing arrangements for limited partnerships between the general partners (GPs) and the limited partners (LPs) is generally considered the most common

A

functional allocation

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58
Q

A working interest in an oil and gas partnership entitles the holder to

A

a portion of the revenue.

responsibility for part of the expense of extraction.

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59
Q

Who insures general obligation bonds?

A

National Public Finance Guarantee Corp. and AMBAC.

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60
Q

Market timing is normally associated with which of the following portfolio management styles?

A

Tactical asset allocation.

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61
Q

Covered call writing normally occurs in a

A

stable market

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62
Q

Members of a syndicate receive notice of their share of the offering through the:

A

syndicate letter

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63
Q

Which of the following types of retirement plans would be most beneficial to a young employee of a corporation

A

defined contribution plan

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64
Q

bans tans gans rans pay interest and principal at

A

maturity

these are short term in nature

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65
Q

The bond resolution includes all covenants between the:

A

issuer and the trustee acting for the bondholders.

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66
Q

Yield quotes on CMOs are based on the

A

tranches expected life

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67
Q

As the price of the VIX (volatility market index) rises investors should expect:

A

call and put premiums to rise

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68
Q

A recession is defined as a drop in GDP for:

A

2 consecutive quarters

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69
Q

You have just received a statement of claim from the Director of Arbitration. One of your customers is claiming that your failure to follow his instructions led to a loss of $36,000. Under FINRA rules, you must respond within:

A

45 days

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70
Q

The most current information on new releases of municipal bonds can be found in

A

the bond buyer

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71
Q

Depletion allowances in oil and gas programs are based on the amount of oil

A

sold

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72
Q

In a municipal underwriting, the order period is the time in which the syndicate:

A

manager accepts and allocates orders without considering time of submission.

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73
Q

Capital gains distributed by a mutual fund to shareholders are reported and taxable for the year:

A

accrued

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74
Q

which entity guarantees a listed yield-based option

A

occ

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75
Q

All listed options trades with resulting gains or losses are treated

A

capital gains or losses

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76
Q

In an undivided syndicate, liability for unsold securities rests with the:

A

syndicate members on a pro rata basis.

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77
Q

are REITs redeemable

A

no

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78
Q

Which of the following order types are available to customers for use in NYSE equity markets?

A

Immediate or cancel

order cancels others

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79
Q

When a bond issue is prerefunded which yeild is used

A

yield to call

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80
Q

A head and shoulders bottom formation is an indication of:

a head and shoulders top formation is indication

A

the reversal of a downtrend.

reversal of upward trend

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81
Q

If a 42-year-old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding:

A

accumulation units

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82
Q

short term interest rates or long term more volatile

A

short term.

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83
Q

federal funds rate volatile

A

yes because it changes daily

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84
Q

price volatility. long term or short term more volatile

A

long term

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85
Q

are nondiscrimination rules applicable in non qualified plans

do they need to deal with erisa requirements

A

no

no

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86
Q

what if a non qualified plan is funded by something that is tax deferred

A

this is okay and the employee contributions can be tax deferred in invested in something like an annuity

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87
Q

As a general rule, the interest income from U.S. government and agency securities is subject to federal taxation only; it is generally exempt from state and local taxation. However what is fully taxable

A

the interest income from mortgage-backed securities is fully taxable.

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88
Q

With the exception of ____, all agency securities are obligations of the U.S. government.

A

ginnie mae

indirect

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89
Q

When making a noncharitable gift of securities, the donor’s cost basis

A

is passed to recipient

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90
Q

Income bonds pay interest only

A

if earnings are sufficient and declared by the board of directors.

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91
Q

75 basis points is

A

.75% and 7.50

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92
Q

Treasury STRIPS

A

U.S. government securities that are deposited with a trustee and against which certificates are sold representing principal payments only on the securities

These are zero-coupon bonds issued by the U.S. government and are subject to annual taxation on the per-year accreted amount.

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93
Q

tax rules if put is exercised

A

However, the tax rules require that, if exercised, the cost basis of stock purchased or sales proceeds of stock sold, is adjusted to the breakeven point of the option.

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94
Q

If an investor buys a LEAPS contract on issuance and allows it to expire unexercised, what is the investor’s tax consequence at expiration?

A

A LEAPS contract has an expiration of more than one year. Upon expiration, the buyer incurs a long-term capital loss equal to the amount of the premium paid.

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95
Q

for interest rate options if manager beleives rate falls do what?

if he beleives rates rise do what

A

fall- buy puts write calls

rise- buy calls write puts

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96
Q

holders of yield-based call options profit if

A

rates rise. Prices of debt securities fall if rates rise.

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97
Q

index options settle in

Exercise settlement value is based

settlement is when

A

cash

on the closing index value on the day exercise instructions are tendered.

next day

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98
Q

If a covered call writer is exercised, the cost basis for tax purposes is

A

purchase price of the stock

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99
Q

Closing sales or purchases treated as capital gain or loss or ordinary income

A

capital gain or loss

100
Q

short sales and margin requirements

A

For every $1 decrease in market value in a short account, $1.50 of SMA is created.

101
Q

mv for long

A

DR/.75

102
Q

mv for short

A

CR/1.3

103
Q

Reg 2 for short below 5$ per share

A

The industry requirement to short stocks below $5 per share is 100% of market value or $2.50 per share (whichever is greater).

104
Q

things that don’t effect sma in long

A

interest charges
fall in long mv
stock div or split

105
Q

effect on sma

A 
3 ds
Dividends interest
deposit of marginable securities
deposit of cash
sale of securites
rise in mv

all increase

purcahse of securities and withdrawal of cash decrease

106
Q

How much would SMA’s price increase if marginable securities deposited in long account

A

50% of amount of securites

107
Q

when is equity effected

A

Equity is only affected by changes in market prices and never by sales of securities in the account.

108
Q

SMA is a line of credit with one restriction

A

it may not be used if account equity would fall below minimum maintenance.

109
Q

cash dividends effect on sma

A

Cash dividends and interest are considered nonrequired deposits to a margin account and are credited in full to SMA

110
Q

dividends and the orders

A

Unless the customer has given DNR, (do not reduce) instructions, open buy limit orders and open sell stop orders are reduced on the ex-dividend date by the amount of the dividend.

111
Q

nasdaq level 1

A

is available to registered representatives through a variety of public vendors. Level 1 displays the inside market only, the highest bids and the lowest asks for securities included in the system, and other basic information such as last sale and volume. Normal market price fluctuations prevent a registered representative from guaranteeing a Level 1 price to a client.

112
Q

nasdaq level 2

A

is available to approved subscribers only. Level 2 provides the current quote and quote size available from each market maker in a security in the system. To list a quote on Level 2, a market maker must guarantee that the quote is firm for at least 100 shares.

113
Q

nasdaq level 3

A

provides subscribers with all the services of Levels 1 and 2 and allows registered market makers to input and update their quotes on any securities in which they make a market.

114
Q

Unless the order is specified as AON or FOK

A

it may be partially filled

115
Q

An official notice of sale is the issuer’s method of inviting

A

competitive bids

116
Q

MSRB rules require only that municipal securities dealers effect trades for customers at prices

A

that are fair and reasonable in current market conditions.

117
Q

According to MSRB rules, if a customer purchases a municipal bond from your firm, the confirmation must disclose

A

whether your firm acted as agent or principal.

your firm’s address.

118
Q

Dealers can publish quotations only for

A

bona fide bids or offers

119
Q

Scale in a municipal bond underwriting refers to

A

yields by maturity.

120
Q

Term bonds, or dollar bonds, are quoted

A

as a percentage of par. All other municipals are quoted in basis.

121
Q

The only information the underwriter must furnish to the issuer for a municipal GO is

A

The dollar amount.

The coupon rate.

122
Q

the MSRB does not regulate

A

issuers

Rather, it regulates the underwriting of municipal securities and subsequent secondary market trading. Disclosure requirements for issuers are mandated by the SEC.

123
Q

Members of the syndicate buy the bonds at the

nonmembers buy at

A

offering price minus the takedown,

offering price minus a concession. The basis price is the yield to maturity.

124
Q

he true interest cost (TIC) is different from the net interest cost (NIC) because it

A

reflects the time value of money

125
Q

When a member of the syndicate sells a bond they are entitled

A

to the total takedown

126
Q

Remember that the concession would only go to

A

those who are not members of the syndicate but are part of the selling group instead.

127
Q

Interest on funds borrowed to purchase municipal bonds

deductible or not

A

not tax deductible

128
Q

MSRB rules require that when a call date has been fixed by a prerefunding, what is shown

A

resulting yield to call

129
Q

Sales to retail investors, trading between institutions, trading between dealers, and trading on behalf of other brokers all occur in the

A

secondary market

130
Q

Bidding on new issues and establishing underwriting spreads have to do with the

A

primary market

131
Q

The syndicate letter lists

A

the terms under which members will conduct the sale of the bonds.

132
Q

the order period is

A

a short period of time following the award of a municipal issue to the winning syndicate. During the order period, orders for an issue of municipal bonds are allocated in accordance with the priority defined in the syndicate letter, not on a first come-first served basis.

133
Q

who is not permitted to write calls against their own stock.

A

Corporations are not permitted to write calls against their own stock.

134
Q

The formula to calculate the value of one right before the ex-date is follow

A

CMV − subscription price / Number of rights to purchase 1 share + 1

135
Q

The capitalization structure of an open-end investment company can include:

A

common stock only

136
Q

The tax treatment for LEAPS writers at expiration is unique.

A

Although investors may have held the contract for more than 12 months, LEAPS writers must report short-term capi- tal gains at expiration. LEAPS buyers will report long-term losses and gains if the contact is held for more than 12 months.

137
Q

Which of the following could an analyst use to establish the rate of return on a direct participation program

A

Present value.

Internal rate of return.

138
Q

Under Rule 144, after holding the fully paid restricted shares for 6 months, the affiliate can begin selling.

A

the higher of

ether 1% of total shares or the

the average weekly trading volume in the stock over the past four weeks on all exchanges
or as reported through Nasdaq.

139
Q

FINRA requires prior written notification be made, and prior written consent be received before any employee can open a brokerage account with other members or financial institutions. Exceptions include

A

accounts where the only activity will be in 529 plans, mutual funds, or variable annuities.

140
Q

The call premium on a municipal bond trading above par is best described as the difference between:

A

par and the call price.

141
Q

Declining inflation means what for interest rates

A

ir goes down

prices go up

142
Q

Balanced funds

A

Balanced funds, also known as hybrid funds, invest in stocks for appreciation and bonds for income.

suitable for investor who seeks a conservative balance between stocks and bonds

143
Q

In a new municipal bond offering talk about the sequence with PGDM

A

A presale order is entered before the date that the syndicate wins the bid

A group order is placed after the bid is awarded.

The next highest priority for orders received during the order period is assigned to desig- nated orders.

A member firm enters such an order for its own inventory or related accounts, such as for a dealer-sponsored unit investment trust (UIT).

144
Q

All of the following are fixed option contract terms EXCEPT the:

A

premium

145
Q

If either side is displeased with a Code of Procedure decision, an appeal must be made within

A

25 days of decision date

146
Q

is the maximum political contribution allowed under MSRB rules for those eligible to vote in the municipality issuing debt on a negotiated basis.

A

$250 is the maximum political contribution allowed under MSRB rules for those eligible to vote in the municipality issuing debt on a negotiated basis.

147
Q

working capital=

A

current assets- current liabilities

148
Q

For tax purposes, cash dividends are taxable to stockholders as of the:

A

payable date

149
Q

Which of the following statements regarding fixed municipal unit trusts are TRUE?
The trust is managed.

A

trust not managed and portfolio can’t be traded

150
Q

The interest that municipal securities pay is:

A

Interest paid on securities issued by municipalities is generally exempt from taxation at the federal level. It may also be exempt from state and local taxation if the purchaser resides in the issuing state.

151
Q

The breakeven point for covered call writing

A

the cost of stock purchased less the premium

152
Q

control relationships and discretionary accounts

A

without the customer’s consent, the broker/dealer cannot effect transactions in the customer’s account for municipal securities in which a control relationship exists between the broker/dealer and the issuer. To effect such transactions, the broker/dealer must make full disclosure of the relationship and obtain the customers consent, but termination of the relationship is not required.

153
Q

A recourse note means that

A

the limited partner agrees to pay the note no matter what happens. This means that this is included in tax basis

154
Q

Upon receiving a customer request for a copy of the signed predispute arbitration agreement, the member firm has

A

10 days to supply it

155
Q

If selling-group members liquidate into the stabilizing bid, they may be required to return

A

the concession they were originally paid

156
Q

OTC trading practices in corporate securities are supervised by

A

SEC and FINRA

157
Q

Even in a discretionary account, a registered representative may not exercise discretion when a control relationship exists between the issuer and the dealer without

A

first receiving the customer’s permission.

158
Q

may be used to pay the debt service on a general obligation bond.

A

General revenues of a city municipality such as real estate taxes or licensing fees

159
Q

The locate requirement is applicable to

A

all short sales of equity securities.

160
Q

when selling a bond at a lower yield what happens.

A

capital gain because as yields decrease price increases. so he’s selling at a higher price.

161
Q

Debt service is

A

Debt service is the total of interest and principal payable by the issuer plus any amount required to be deposited into a sinking or surplus fund.

162
Q

The Trust Indenture Act of 1939 is applicable to

A

corporate debt issues that are nonexempt

offering over $50 million to be issued within 12 months

are offered interstate

have maturities of 9 months or more.

163
Q

purpose of the Trust Indenture Act of 1939

A

This act was passed to protect bondholders and requires that issuers of these bonds appoint a trustee to ensure that promises (covenants) between the issuer and the trustee who acts solely for the benefit of the bondholders are carried out. The document is filed at the office of a custodian so that investors may review it if they choose.

kind of like a bunch of promises between issuer and trustee for benefit of bondholder

164
Q

A corporation buys back its stock on the open market to do what

A

use it for stock options.

use it for future acquisitions.

increase earnings per share.

reduces total dividends paid

165
Q

private placements and advertisements

A

in order to solicit or advertise private securities offerings, all purchasers of the advertised securities must be accredited investors or the business must reasonably believe that the investors are accredited investors at the time of the sale.

166
Q

Whenever a bond trade settles on a payment date(1rst)

A

it trades flat (with no interest)

167
Q

TRACE

A

is the FINRA-approved trade reporting system for corporate and government agency bonds trading in the OTC secondary market.

168
Q

trace eligible

A

asset backed securities (ABS)

corporate bonds

CMOS

169
Q

Investment banks or bankers

A

assist corporations in raising capital
assist municipalities in raising capital

do not accept deposits
do not make loans to individuals

170
Q

Which of the following permits the highest annual contributions

A

A SEP IRA.

171
Q

municipal bond rating service would consider all of the following when evaluating a revenue bond

A

debt service coverage ratio,
feasibility studies,
and projected operating revenues

172
Q

A corporation issues rights to existing shareholders to

A

allow them to purchase enough stock, within a short period and at less than current market price, to maintain their proportionate interest in the company. Rights need not be exercised but may be traded in the secondary market.

173
Q

rights or warrants used to sweeten debenture

A

warrants

174
Q

who issues commercial paper

A

Corporations.
broker dealers
Finance companies

175
Q

A taxpayer’s most advantageous tax benefit is:

A

tax credit

176
Q

when you see it asking about mv in margin think

A

dr/.75

cr/1.3

177
Q

margin call applies

A

on initial purchase

178
Q

position-trading firm

A

Position trading is simply trading as principal, or dealer, for a firm’s own account.

The opposite role is that of a broker, or an agent, purchasing or selling securities in the secondary market for customers.

179
Q

Good Delivery Clearing Rule

A

When one BD delivers stock to another BD, single round lots and odd lots are cleared separately. However, odd-lot certificates can be used to clear round lot trades provided the odd-lot certificates add up to single round lots (100 shares).

180
Q

revenue bonds and debt limitations

A

hey are not subject to the statutory debt limitations of the issuing jurisdiction.

181
Q

The priority of filling municipal orders is established by

A

the managing underwriter in the release terms letter sent to the syndicate once the bid is won. This letter is an amendment to the agreement among underwriters. The priority is also disclosed in the official statement.

182
Q

A customer purchases a 6% municipal bond in the secondary market on a 7% basis. The effective after-tax yield is

A

because its discount its going to be in between

183
Q

When a reverse split takes place

A

the number of outstanding shares is reduced. Because the split has no effect on earnings of the company, dividing those earnings by fewer shares will cause an increase to the earnings per share.

184
Q

BE for multiple options

A

CAL PSH

185
Q

If the securities are advertised in private placement

A

purchasers must be accredited or the company must reasonably believe they are.

if non accredited then can’t advertise.

186
Q

Limit orders and stop orders are entered on book order as ether

A

Gtc or day orders

Time frame orders will be gtc

187
Q

Margin and reg t

A

U need to apply the 50% to marginsblr securities only

Remember that options aren’t and mutual funds have to wait 30 days

188
Q

When buying options and margin

A

100% must be deposited

Leaps are an exception(over 9 month maturities and can be bought on margin)

189
Q

Long term rates in yield options and projection

A

Buy calls if you expect rates to rise in future

190
Q

Net overall debt of muni is

A

Net direct debt+overlapping debt

191
Q

Nh order

A

Customer agrees that floor broker can decide best time and price when to execute trade. Not placed with specialist

192
Q

1 mill=

A

.001

193
Q

Moody’s investment grade used for

A

Short term revenue anticipation notes

194
Q

Primary tax benefit for income and gas program is

A

Depletion

195
Q

In functional allocation talk about who picks up what drilling costs

A

General gets tangible

Limited gets intangible

196
Q

Corporate
Muni
Gov

Use what days

A

Corp muni use 30 day

Gov uses actual days

197
Q

Syndicate member getw

A

Total takedown which is concession and add takedown

198
Q

Official statement

A

Responsibility of issuer

Identifies purpose
The source which interest and principal paid
Information regarding issuers background and credit worthiness

199
Q

Control relationship exists when

A

Broker dealer controls, or is in control with the issuer of the security

200
Q

Pacs

Tacs

A

Reduced prepayment and extension risk
Lower yields than tacs

Tacs are protected against prepayment but not extension risk

201
Q

CMOs might look at historical data where

A

PSA

202
Q

In competitive bid who is the winning bid

A

One with the lowest bet interest cost. With premiums over par

203
Q

Do Warrents give holder voting rights

Or ownership

A

No

204
Q

Standard leaps contract

A

100 shares

205
Q

What is not included on notice of sale

A

Bond rating and underwriters name

206
Q

75 5 10 tear

A

75 % invested in securities issued by companies other than the investment company

No more than 5% in any one company

No more than 10% of outside corporations voting securities owned by the investment company

207
Q

an exchange

A

an auction market in which securities listed on that exchange are traded. No minimum price is set for securities. Rather, the highest bid and the lowest offer prevail.

208
Q

Regulation T applies only

A

non exempt securities

209
Q

Dividends from American Depositary Receipts (ADRs) held by U.S. investors are declared in

A

the foreign currency but paid in U.S. dollars

210
Q

he amount paid into a defined contribution plan is set by the:

A

trust agreement

211
Q

visible supply does not include

A

short term notes

212
Q

Unless the customer instructs you otherwise, not-held orders must be executed

A

on the day received

213
Q

5% markup applies in primary or secondary

A

secondary

214
Q

a growth and income portfolio invests in

A

blue-chip stocks and growth stocks

215
Q

customer confirm or official statement needs location of trust indenture

A

official statement

216
Q

When must a new options customer return a signed option agreement

A

within 15 days of account approval

217
Q

Margin requirements on exempt securities (U.S. government securities and municipal securities) are set by:

A

the dea

218
Q

When determining a position limit, a member firm aggregates which of the following customer positions?

A

options on same side (bullish or bearish)

219
Q

tax consequences if option exercises

A

draw chart

page 285

220
Q

There are few restrictions on who may be the first beneficiary of a Section 529 plan. However, if the beneficiary is redesignated, the new beneficiary must be

A

a close family member of the first bene

221
Q

Mutual fund performance statistics must show results for

A

1, 5, and 10 years, or the life of the fund, whichever is shorter.

222
Q

An insured municipal bond is purchased by your client in the secondary market. After the sale, MSRB rules would require you to:

A

make delivery of the certificates accompanied by evidence of insurance, either on the face of the certificates or in a separate document.

223
Q

An intrastate offering is exempt from:

A

federal registration

224
Q

settlements

A

451

225
Q

double barrled bond

A

bond that is backed by more than one municipal revenue source.

226
Q

any municipal securities dealer involved in the sale of a new issue must deliver a final official statement to every customer who has purchased the issue,

A

at or before settlement

227
Q

raw land for

A

appreciation potential

not considered a tax shelter

228
Q

for uneven split

A

figure it out online somehow #16 on phone

229
Q

what accounts need to be opened as cash accounts

A

retirement accounts and custodial accounts

230
Q

employer stock purchase programs tax and deductability

A

after tax and not deductable

231
Q

short interest indicator

A

high short interest is bullish

low short interest is bearish

232
Q

dilution occurs

A

through issuance of additional shares of common stock and the conversion of convertible securities

233
Q

G-23 in relation to BD or municipal securities dealer who serves as a financial advisor to a municipal issuer

A

can’t do it in ether a negotitated or competitive bid

234
Q

unit investment trust and management companys are considered

A

investment companies

235
Q

Nonpublic arbitrators are

A

any persons who have worked in the financial industry for any duration during their careers including persons associated with a mutual fund or a hedge fund, and persons associated with an investment adviser.

236
Q

leverged etfs and margin

A

the leveraged ETF may be purchased on margin.

Securities within the leveraged fund portfolio may be purchased on margin.

237
Q

Upon redemption of a bond, whatever current interest rates may be, the investor receives

A

par ($1,000) plus the final semiannual interest

238
Q

options agreement vs disclosure doc in terms of when its needed

A

The OCC Options Disclosure Document must be provided at or before the account approval.

options agreement

Customers do not have to complete (sign) the options agreement prior to entering an order, although, under exchange rules, the agreement must be signed and returned by the customer within 15 days of account approval.

239
Q

Which of the following statements regarding callable municipal bonds are TRUE in terms of call premiums

A

they tend to decrease over time

240
Q

T-bills, T-notes, and T-bonds are sold through

Agency securities are sold through

A

auction

selling groups

241
Q

exempt issues 1933

A

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

242
Q

An order confirmed for the entire underwriting syndicate’s benefit is called a:

A

group net order

243
Q 
GANs.
 B)
CLNs.
 C)
BANs.
 D)
TANs.
A

grant anticipation notes -are issued with the expectation of receiving grant money from the federal government.

Construction loan notes (CLNs) are issued to provide interim financing for the construc- tion of housing projects.

Bond anticipation notes (BANs) are sold as interim financing that will eventually be converted to long-term funding through a sale of bonds.

Tax-exempt commercial paper is often used in place of BANs and TANs for up to 270 days, though maturities are most often 30, 60, and 90 days.

244
Q

An early withdrawal from an IRA is taxed as

A

ordinary income +10% penalty

245
Q

you can declare a loss under the wash rule sale if options are bought after

A

30 days

246
Q

Dark pools

A

diminish market transparency for public retail customers

accommodate large-volume transactions for institutional traders

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