Test 3

Question 1

Which of the following are issued with a specified fixed rate of interest?

Answer 1

US government bonds and notes

Question 2

Some securities are exempt from the registration and prospectus requirements of the securities act of 1933. All of the following securities are among this exempt class

Answer 2

Commercial paper that has a maturity not exceeding 270 days

A security issued by a nonprofit organization

Us government securities

Question 3

Which of the following is true regarding a nonqualified retirement plan?

Answer 3

Excess over cost basis is taxed

It can discriminate in offering its benefits and selecting participants

Tax on accumulation is deferred

Question 4

A customer has not paid for a stock transaction in 4 business days and has been refused an extension. The member firm

Answer 4

Must cancel or liquidate the order by immediately selling the securities

Question 5

The insider trading act of 1988 has set guidelines for imposing penalties including civil actions in a federal court. The maximum penalty a court can impose for insider trading violations is

Answer 5

An amount up to 3 times the profit gained or loss avoided

Question 6

Which of the following must be filled to establish a corporate margin account?

Answer 6

Corporate resolution

Question 7

As identified by the office of foreign assets control OFAC who is a specially designated national SDN?

Answer 7

A person who has been identified as a terrorist or narcotics trafficker

Question 8

All of the following are true regarding electronic communications networks

Answer 8

They are used for forth market trades

They facilitate trades between institutions

Transactions are executed without the broker

Question 9

Which of the following hedging positions best reduces risks?

Answer 9

Buy 100 shares of ABC stock and buy 1 ABC put

Question 10

Which of the following statements is true?

Answer 10

Covered options writers own the underlying shares

Question 11

Which of the following best describes a workable indication from a dealer?

Answer 11

An estimate

Question 12

Which of the following describes a market maker?

Answer 12

A broker dealer that assumes the risk of holding an inventory of shares of stock in order to facilitate the trading of that security

Question 13

The options position limit on XYZ stock is 200,000 contracts. Bob a high roller is short 150,000 XYZ Dec 50 puts. Which of the following trades would put Bob in violation of position limits?

Answer 13

Buy 60,000 XYZ Mar 60 calls

Question 14

An investor purchased 100 shares of an investment company and paid the market price plus a commission. What did the investor purchase?

Answer 14

Closed end investment company shares

Question 15

An options spread with the same expiration but different strike prices is called a

Answer 15

Vertical spread

Question 16

All of the following are considered conflicts of interest for the general partner in a limited partnership except

Answer 16

Accepting $20,000 for a covenant not to compete with the limited partnership

Question 17

The lowest yielding CMO tranche is the

Answer 17

PAC

Question 18

Which of the following is not correct regarding 529 plans?

Answer 18

Withdrawals are taxed as ordinary income

Question 19

How often must broker dealer report political contributions of their municipal finance professional to the SRO?

Answer 19

Quarterly

Question 20

which if the following is NOT concerning physical safety of mutual fund holdings?

Answer 20

Securities cannot exist as electronic records in computers

Question 21

Business continuity plans are required to address all of the following except

Answer 21

Protecting member profitability

Question 22

Preemptive rights allow a stockholder to

Answer 22

Maintain proportionate interest in the company

Question 23

The type of investment risk that impacts buying power and results in devaluation of assets is called

Answer 23

Inflation risks

Question 24

According to MSRB rules a certificate would be considered mutilated and not in s good delivery form if any of the following is not ascertainable except

Answer 24

The CUSIP number

Question 25

Which situation would cause the US exports to become less competitive that foreign exports

Answer 25

The US dollar strengthens when compared to foreign currencies

Question 26

Which of the following activities may a nonregisterd person perform?

Answer 26

Provide quotes

Question 27

The agreement among underwriters also known as the syndicate letter is a document that

Answer 27

Is an agreement between participating broker dealer who assume liability for any unsold shares and specified the underwriters responsibilities and participation percentages

Question 28

The term double barreled is used to refer to which of the following ?

Answer 28

Certain municipal bonds where a taxing authority guarantees debt service payment in the event that pledged revenues are insufficient

Question 29

Which of the following is true about treasury bills?

Answer 29

They are issued in book entry form

Question 30

The term for active stock that represents the number of shares owned by the public is

Answer 30

Outstanding stock

Question 31

A registered representative with oral authority from the customer can decide which of the following?

Answer 31

Time and price

Question 32

Which of the following settlements options will give the annuitant the highest periodic payment?

Answer 32

Straight life

Question 33

A financial institution has large portfolio of US treasury notes and is concerned that interest rates are about to increase. Rather than selling off the notes thereby creating portfolio volatility the institution could attempt to offset the portfolios unrealized losses by

Answer 33

Buying t note puts