Test 4

Question 1

An individual who is considering the purchase of closed-end fund shares would pay:

Answer 1

A market price as determined by the supply and demand for the shares

Question 2

A stocks price has risen due to an overall market increase. This increase in price is considered:

Answer 2

An UNREALIZED capital gain

Question 3

A corp has raised money to use for expansion within the next 6 months. Which of the following securities should the corp invest the funds until they are used?

Answer 3

High quality commercial paper

Question 4

Where is a FINRA member required to place a link for FINRA’s BrokerCheck website?

Answer 4

On the first landing page of the BD’s publicly available website.

Question 5

Can ETF’s be sold short?

Answer 5

Typically, yes.

Question 6

Which preferred stock must be paid all of the dividends in arrears (missing) before the dividend can be paid on its common shares?

Answer 6

Cumulative preferred

Question 7

What is the rate that’s charged when a member bank borrows from the Federal Reserve?

Answer 7

Discount rate

Question 8

A corps shareholders must vote for:

Answer 8

Stock splits

Question 9

An investor rolled over $900,000 from a 401k plan to an IRA. She’s concerned the market will fall dramatically. About what risk is the investor most concerned?

Answer 9

Systematic risk

Question 10

A stock power is a document that’s used to:

Answer 10

Assign a certificate to a new owner

Question 11

Which organization provides clearing for equity securites?

Answer 11

National Securities Clearing Corp (NSCC)

Question 12

What is the primary disclosure doc for a municipal offering?

Answer 12

Official statement

Question 13

What is a characteristic of a closed end fund?

Answer 13

Bought and sold on an exchange

Question 14

During a deflationary period, interest rates:

Answer 14

Decrease, causing bond prices to rise

Question 15

What type of account can an uncovered call writing strategy be executed?

Answer 15

Margin

Question 16

What is true about penny stocks and blue chip stocks?

Answer 16

Penny stocks are less liquid

Question 17

A bond is selling at a premium. This indicates that:

Answer 17

Interest rates have decreased since the bond was issued

Question 18

The day-to-day business activities of a UIT are the responsibility of the:

Answer 18

Trustee

Question 19

The beneficiary of a section 529 plan may make qualified withdrawals from the plan for:

Answer 19

Paying the tuition for an out of state college

Question 20

If a client placed an open GTC order for a stock listed on the NYSE, it will:

Answer 20

Remain active until executed or cancelled, but must be renewed according to exchange rules

Question 21

For an IDB, the primary source that backs the bond is:

Answer 21

The leasing corporation only

Question 22

What is considered a coincident economic indicator?

Answer 22

The industrial production index

Question 23

What is true about REITS?

Answer 23

They are required to distribute the same percentage of taxable income as exchange traded REITS.

Question 24

What’s the current yield for a bond that’s priced at par and offers a $40 semiannual interest payment?

Answer 24

8%

Question 25

What is true about custodian accounts?

Answer 25

A donor may give gifts of cash and securities

Question 26

What is used as a disclosure document for a private placement?

Answer 26

Offering memorandum

Question 27

What has the greatest amount of capital risk?

Answer 27

Equity options