Simulated Final Exam Questions Flashcards
Are non-accredited investors permitted to purchase a private placement?
They’re not always allowed to purchase a private placement. Only up to 10 non-credited investors in a 12-month period are allowed to purchase a private placement
The registration of a broker dealer in a state will automatically constitute the registration of an agent if the person is a what?
Partner, director, officer or other person’s occupying similar status
Who establishes rules and membership requirements for finra?
Board of governors
Which investments are exempt from the anti-fraud provisions of the uniform securities act?
Non security investments
Under registration by coordination, do the state and federal registration statements have to be filed at the same time?
No
Registration by coordination may not be used if…?
The federal registration statement has already been declared effective
What are features of arbitration?
Binding results, agreement among parties as to forum and 30 days to pay
Sarah is an IAR properly registered in state A and working for federally registered investment advisor. Twice a month Sarah meets with clients and state B at the federal covered advisor’s office. What is true about Sarah’s registration requirements?
Because she has a place of business in state B she must register there.
If finra finds that a member has violated the rules regarding Fair advertising, finra may require the member to file the proposed ads how many days prior to its first use?
10
The amount of the bond that a broker dealer is required to post is determined by who?
The administrator
The strategy of diversification is used to combat which risk?
Non-systematic
What is a means of financing foreign trade?
Bankers acceptance
Maximum duration of a right is how many days?
45
In order for an investor to be suitable to purchase a CMO they should be least concerned with what?
Liquidity
An advantage of variable annuities over mutual funds would be?
The investor receives tax advantages
The holder of an ADR has the same rights as a regular stockholder except for what?
Preemptive rights
What would require the approval of stockholders pursuant to SEC rule 145?
A company exchanges its shares for all shares of another company AND a company offers its shares in exchange for the assets of another company
An annuitant is interested in the largest monthly payment from her annuity now that she has retired. Which payout option will give her the greatest monthly payment?
Life only / straight life
A fixed annuity guarantees what?
Income for life, rate of return, protection from investment risk
He assumed interest rate will affect what?
The amount of the annuity payment and the value of the annuity unit
An investor May roll over their ira once a year and has how many days to get the money into a qualified account?
60 days
One of your clients inquires about the composition of the Dow Jones industrial average. You would respond that it is which type of index?
Large cap
A financial planner works as an independent contractor in the capacity of a registered representative for a broker dealer. The broker dealer does not supervise his advisory activities but is aware that he is charging an hourly fee to construct a financial plan. According to the investment advisors act of 1940 what is true?
The financial planner is considered an investment advisor since the broker dealer is not supervising his financial planning accounts
As for annuity contracts, what’s the withdrawal difference between lump sum, random withdrawals and annuitized contracts?
Lump sum and random withdrawals may be taxed and an extra 10%, if the annuitant is less than 59 and a half years old. BUT annuitized contracts of investors who are less than 59 and a half years old are not subject to 10% tax penalty nor are withdrawals due to death or disability
Increase in the PPI would be best described as?
Cost push inflation
Does commercial paper have to be sold to money market funds to be exempt from registration?
No
What is a benefit of investing in mutual funds?
The NAV of mutual funds is often insured by government agencies
Both the week and the semi-strong views of the efficient market hypothesis believes what?
That unknown inside information is not reflected in asset prices and could be used to earn a profit
The weak view of the efficient market hypothesis believes what?
That prices in the market place reflect only past information regarding a security
The semi-strong view of the efficient market hypothesis believes what?
That prices reflect all past and current publicly available information regarding a security
The strong view of the efficient market hypothesis believes what?
That past, present and even non-public information is already reflected in a securities price
An investor in their late seventies dies with 250,000 in their traditional IRA. They have name their 35-year-old son as the beneficiary on the account. What is true as it relates to the minimum required distributions from the account?
It will be based on the life expectancy of the son
If investors have priced in the expectation for generally increasing prices in the marketplace, the yield curve most likely to reflect that expectation would be?
Ascending
To find a corresponding price for a given yield, you would look in what?
A basis book
Which policy believes that lower taxes will encourage economic activity and help the economy grow resulting in a higher overall level tax collection?
Supply side economic policy
Which risk only relates to fixed income securities?
Credit risk
The odd lot theory believes what?
It believes that the smaller investor buys and sells at the wrong time. If there’s a large number of odd lot by orders the investor would become bearish. If there’s a large number of odd lots sell orders the investor will become bullish
What kind of investments can be found in the Capital market
Long-term financing vehicles
Which act concerns itself with the registration of broker dealers and their required net capital?
Securities exchange act of 1934
What tells the investor how sensitive the bonds price is to a small change in interest rates?
Duration
When an agent switches firms what notifications are required?
The agent, the former firm and the new firm is required to notify the administrator
Under the Act who can issue an injunction?
The court
Are warrants involved with preferred stock?
No they’re only involved with common stock
A market order to buy should be executed at what price?
The lowest offer price available
A market order to sell should be executed at what price?
The highest bid price available
What is persistent during a period of stagflation?
High unemployment and high inflation and high interest rates
Insurance company securities and insurance holding companies exempt under the USA?
Insurance company securities are exempt but not insurance holding companies. Common carrier securities are exempt such as airlines, railroads and trucking
An investors recourse will be lost if they do not accept a firms bonafide offer of rescission in how many days?
30
A bank may borrow money from the Federal reserve board and may pay the what?
Discount rate
A value investor typically buys stocks with what kind of ratios?
Low PE ratios and low price to book ratios
What is the only way to sell unregistered non-exempt securities lawfully?
It is through an exempt transaction such as a private placement
The investment policy statement of a qualified retirement plan is best described as?
A written document that describes the plans investment objectives and guidelines
Regulation T is controlled by who?
The Federal reserve board controls the extension of credit for securities purchases under regulation T
