sie Flashcards
study
A bond in US Dollars offered in the UK is called?
a) euro dollar Bond
B) euro dollar
c) American depository receipt
d) Banker acceptance
a) euro dollar Bond-
when apple issues a bond in London or Germany and is denominated in the U.S currency, ppl who buy it have currency risk, it’s a way for me as a company to issue bonds without having to register with the SEC because its in another country
2) a retired customer who lives on income from his Investments is interested in investing in MSB mortgage-backed Securities incurs which of the following risk if rates fall
a) the customers will have the greater return of principal
B) the mortgage holder will default and result in lost principle
c) properties will decline meaning a lower market price
d) prepayment risk
D) prepayment risk
MBS, flow-through income from ppl paying their mortgage, if rates drop people will refinance, extension risk is if they don’t refinance and your stuck in this mortgage as rates are going up
The customer owns a callable corporate bond that matures in 20 years rising interest rates affect?
A) interest paid by the bond
B) Market price
C) YTC
D) YTM
B) Market price
- rates go up market price goes down, long term bonds move more than short term bonds
4) A broker-dealer is acting in a principal transition in which two words are associated
A) Markup
B) Commission
C) broker
D) Dealer
A) Markup-
A(agent) B(Broker) C (Commission)
P(principal) D(Dealer) M(markup)
If a customer owns cumulative preferred stock, which statement is true?
A) ability to convert and get dividends
B) ability to convert an accumulate as a stock goes up
C) owed missed dividends for this year
D) owed missed dividends for all years
D- owed missed dividends for all years -
this means that if they miss a dividend, previous years, or other ones they still owe that, even if you’re in a new year. regular preferred doesn’t owe that
6) msrb rules prohibit a Securities dealer from engaging in which activity when dealing with investment companies?
A) selling revenue bonds
B) soliciting Muni business from an investment company based on shares of sales of the mutual fund
C) entering into a presale order for an investment company for new issues
D) hiring officer without notifying the Investment Company
B) soliciting Muni business from an investment
company based on shares of sales of the mutual fund-
Big no no, your the sales trader and you call up the mutual fund or investment company and say “Hey give me some business and I’ll get some clients to invest in you” that’s quid pro quo
7) a registered representative who is in possession of material nonpublic info can disclose to who?
a) the officer in the compliance Department
B) an attorney who has clients that will benefit
C) research department so they can prepare an accurate report
D) institutional customers who own stock
A)- the officer in the Compliance Department.
you can tell your compliance department or supervisor, but you can’t tell anyone else, material non-public info is NOT to be shared, saying info is not the crime, its if they ACT on it
8) in a custodial account taxes are paid by:
A) Donor
B) Minor
C) Custodian
D) Parents
minor pay the taxes, it’s the minors money so they pay
9) a retail customer instructs RR to sell 1,000 shares of ABC today at the best possible price. According to Industry rules, the RR will:
A) require the order in writing
B) refuse order until power of attorney received
C) enter the orders as GTC (good till canceled)
D) use RR’s best judgment
D) use RR’s best judgment
10) a 49-year-old who makes 75k a year wants to invest in Ira but wants to make an after-tax contribution and take advantage of the catch up provision. What can she do?
A) she can only open a traditional IRA and must be 59 1/2
B) she should open a traditional IRA and can use catch up
C) she should open Roth IRA and cannot use catch up
D) she should open Roth IRA and can use catch up
C) she should open Roth IRA and cannot use catch up.
-she can use roth because its after-tax but she has to be 50 to use the catch-up provision
a customer buys 10k of treasury notes on Friday March 12th when does it settle
A) Friday March 12th at 4:00 p.m. Eastern
B) Monday March 15th
C) Tuesday March 16th
D) Friday March 19th
B) Monday March 15th
- everything is T+2 expect treasuries and options
12) in a system of statutory voting, the common shareholders has as many votes of each vacancy on the board of directors as?
A) shares owned by the shareholder
B) the number of board positions vacated
C) the number of directors present at the meeting
D) the number of proxies available for voting by board
A) shares owned by the shareholder
13) interest rate risk in purchasing power risk is most closely associated with
A) money market funds
B) common stock
C) long-term bonds
D) Dpps
C) long-term bonds
- have purchasing power, inflation and reinvestment risk
14) a customer owns ABC common stock and ask the RR to keep an eye on it for him. Soon, after bad news comes out, and the customer is out of the country cannot be reached. What is okay for RR to do?
A) sell the stock
B) sell short against the Box
C) call customer spouse and listen to instructions
D) do nothing
D) do nothing
-cant do shit until the person calls you back
a stock whose performance mirrors the economic cycle is referred to as?
A) cynical
B) defensive
C) defense
D) value
A) Cynical-
- moves with the economy, as the GDP is rising we would buy cynical and dump them when the market is going down
16) customer asks RR for a recommendation on 50K mutual fund for aggressive growth and wants to realize profits or cut losses in 6 months. What should RR say
A) by Nature, mutual funds are long -term Investments that should not be traded in short term
B) trade like common stock for a short-term
C) indicate and Prospects cap appreciation will ensure his objectives
D) nothing
A) by Nature, mutual funds are long -term Investments that should not be traded in short term
17) an ADR (American depository recipient) represents what?
A) a US security held by a US Bank in a non-us branch
B) a foreign security held in a foreign branch of US Bank
C) a non-negotiable CD XYZ security
D) a negotiable CD and predetermined security
B) A foreign security held in a foreign branch of US Bank
Which oil and gas program has the least risk?
A) exploratory
B) development
C) income
D) balanced
C) income
- selling oil from an already working oil drill, super safe
19) if the company decides to proceed with rights offering investors can do all except:
A) redeem back to issuer for cash
B) trade in the open market for intrinsic value
C) let the rights expire
D) gift to a nephew
A) redeem back to issuer for cash
- if you want to money sell the damn rights
the customer wants to sell short 1,000 shares of ABC which is true?
A) she can execute in either a cash or margin account
B) she must sell on a plus tick
C) she must execute in a margin account
D) she must have deposit the full amount due prior to entering the order.
C) she must execute in a margin account
- must deposit at least 50%
21) what date is the earliest on dividend timelines
A) the record date
B) the payment date
C) the Declaration date
D) the ex-dividend date
C) the Declaration date
- DERP (declaration, Ex, Record, payable) declaration is day we announce it, ex is the day you have to be known as record, which means u have to buy 2 days b4 because it takes 2 days to settle, if record date is 25th u have to buy by 23th)
A customer wants to establish act for the benefit of his grandchildren wants to control the distribution of the asset and direct how the account will be invested . what should RR Do
a) open UGMA ( uniform gift to minors Act ) account
B) a Coverdell ESA
C) a 529 plan
D) Trust account
D) Trust account
- you can set it up and they get it when they are 30, 40, you can be the trustee and they get it when they say you do and it can get invested any way you want
A preferred stock that reflects the value of the common stock is called:
a) adjustable rate
B) convertible
C) cumulative
D) participating
since it converts into stock it will match the price all the time
24) a customer wants to invest in municipal bonds and minimize price volatility which is most appropriate
A) a zero coupon
B) a variable rate demand obligation
C) a discount Bond
D) a dollar-priced denominated debenture
B) a variable rate demand obligation
- they adjust with the rate, if you have a 5% VRDO and rates go to 7% then VRDO go to 7%, alos has a demand obliagtion which means an embedded put option which mean you can sell it back to the issuer any time you want at par.
25) what is the current yield on a 8.5% US treasury bond trading at 101-25
decimal or dash means its a treasury which means in 32ths
25/32= .78125
8.5%/$101.781= 8.35%
A registered rep over here so that I research analyst is issuing a strong buy recommendation on a particular stock this afternoon. RR immediately buys the stock at another firm for his own account what is this called
A) churning( exessive buying)
B) free riding ( buy stock and sell it while not paying for it)
C) selling away ( when you do shit away from your broker dealer)
D) front running
D) front running
- trading ahead of a customer order
all the following statements about commercial paper are true except
A) it is exempt from registration
B) it represents a secured promising note
C) it issued at a discount from par
D) it is a negotiated money market
B) it represents a secured promising note-
it’s an unsecured promising note
Which statement is true regarding a customer who acts about selling short? (shorting a stock is when you borrow shares sell them and hopefully buy them back cheaper)
A) has limited risk
B) can only sell on a downtick
C) the stock must be located first before the trade
D) Securities must be listed and actively trades
C) the stock must be located first before the trade
- if you sell short you must get a borrow or a locate b4 you do it
29) In a deflationary economy the security with the least amount of protection?
A) common stock
B) preferred stock
C) an intermediate-term bond
D) a long-term bond
A) common stock
in deflation, the overall prices of goods and services decrease, which can negatively impact corporate profits and, consequently, the value of common stock. Unlike bonds (both intermediate-term and long-term) and preferred stock, common stockholders are the last in line to receive any remaining assets after all debts and obligations have been satisfied in the event of a company’s bankruptcy or liquidation.
