Test 1 Flashcards
All of the following apply to a red herring?
It’s given to investors before the prospectus is finalized
It helps to determine demand for a new issue
It’s also known as the preliminary prospectus
Which of the following statements is true when a bond is trading at a premium?
Nominal yield is the highest yield
The MSRBs anti money laundering rules require that a municipal broker dealers procedures contain
An employee training program
A designated independent party to test the procedures
Which of the following statements is correct with the respect to closed end investment companies?
They are listed and traded on exchanges
There exists a fixed number of outstanding shares
The issuing company does not redeem its own shares
What is the backing for a secured bond?
The pledge of collateral a mortgage or a lien
A customer purchased $15,000 worth of XYZ corporation over a period of time. Which of the following is true about his subsequent sale of $5,000 of XYZ stock?
The investor is allowed to specify which shares are being sold to minimize his capital gain
To properly evaluate the yield to maturity of a bond investment which of the following factors must be taken into account?
Annual interest paid in dollars
Number of years to maturity
Par value realized at maturity
price paid for bond
Of the following examples which would be exempt from liability under insider trading laws?
There are no exceptions from liability under insider trading laws
FINRAs main functions include all of the following?
Monitoring compliance with rule of ethical practice
Writing rules enforcing broker dealer behavior
Governing broker dealer and registers representative trading activity
A corporation pays stock dividend to?
Conserve cash
The cyclical and constantly fluctuating nature of interest rates has the most direct impact on
Market value of fixed income securities
Which of the following is true concerning physical safety of mutual fund holdings?
If certificates are held they must be surrenders in good order before shares can be redeemed
Physical safety of funds assets is the responsibility of the custodian
The shareholders needs to maintain share certificates since funds use book entry accounting
The manager of a bond fund has used the strategy of writing covered Tbond calls as a means of increasing the funds yield. Distributions to shareholders from this source of income will be treated for tax purposes as
Capital gains
For stock dividends which of the following dates is not chosen by the board of directors?
Ex dividend date
Which of the following is true of the registered persons on inactive status serving in active duty in the military?
They can continue to earn commissions
Which of the following would be a restricted person associated with an IPO?
The father in law of a registered representative
The maximum value of gift allowed by FINRA rules is
$100 per person per year
On a discount bond which of the following correctly states highest to lowest yield?
Yield to maturity, current yield, nominal yield
In a DDP a limited partners participation in the partnership does not take effect until?
The general partner approves the subscription agreement
The average investor has limited assets but by pooling funds with other investors in an investment company the investor can receive the advantages of increased
Professional management and diversification
Triple with Hong involves the expiration of which of the following four time a year?
Equity options
Equity option indexes
A ZZZ corporation analyst includes ABCs 6% debenture in the analyst newsletter. ZZZ Corp is currently underwriting an ABC stock offering. This is permissible
If the bonds are not convertible
If a member resigns from an SRO when will the resignation take effect?
30 days after receipt of formal resignation by the SRO
Which of the following statements about the balance of payments is true?
It is the sum of all transactions between a country and the rest of the world over a specified period of time.
An investors eldest child is about to graduate from high school and is not planning on attending any higher education program. What options does the investor have regarding the 529 plan which was established for this child?
The fund may be transferred to a sinking without penalty
John owns a contract that entitles him to buy 100 shares of ABC at a specified price prior to a fixed expiration date. John owns a
Call option
Which type of investment company issues debt instruments that offer the investor a predetermined rate of interest?
Face amount certificate
A redeemable security is
A security with no secondary trading
Which of the following candidate qualifications would FINRA take into consideration when waiving a qualification exam requirement?
The candidate has related experience in the securities industry and or investment banking
What type of risk is involved where an investor may sustain a loss of a security must be sold quickly?
Liquidity risk
In order to open a new corporate margin account all of the following are needed?
A new account form
A copy of the corporate charter
A corporate resolution
Under the uniform gifts minor act which of the following statements is correct concerning a custodian account between a parent and minor child?
Taxes on earned income from the account are the responsibility of the minor
A registered representative desires to open a new account for a customer. Information to open the account must be obtained
Before entering the first order
