Test 4

Question 1

Terry has a client Penelope who wants Terry to maintain all monies and securities for her at his brokerage. For Terry to meet the requirements for such a custodian account he will need to do which of the following?

Answer 1

Establish an account in Penelope’s or Terry’s name that contains only Penelope’s monies and securities

Question 2

With regard to sales breakpoints any schedule changes must be communicated to existing shareholders within what period of time?

Answer 2

Within 1 year

Question 3

The holder of a call option on a T-Bond will profit under all of the following circumstances

Answer 3

Yields on t-bonds decrease

Prices of t-bonds increase

Question 4

An investment based security that is closely tied to a current fashion or trend may primarily carry

Answer 4

Social and political risk

Question 5

If a common stockholder received a dividend this year which of the following would also be paid a dividend?

Answer 5

Cumulative preferred
Convertible preferred
Participating preferred

Question 6

The date the board of directors authorized a dividend is the

Answer 6

Declaration date

Question 7

Stimulating the economy through spending policies is known as

Answer 7

Keynesianism

Question 8

A registered representative would be required to notify a FINRA member firm about all of the following

Answer 8

Starting a consulting practice

Receiving referral fees from another registered representative

Becoming a real estate agent as a side business

Question 9

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

Answer 9

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

Question 10

Which of the following issues equipment trust certificates?

Answer 10

A Regional airline

Question 11

Which of the following statements regarding limit orders is true?

Answer 11

A limit may never be executed

Question 12

Which of the following may register as an investment company and variable contracts limited principal after passing the series 26 exam?

Answer 12

Brokers whose activities are expressly limited to dealings of shares of open end investment companies

Brokers of closed end investment companies during the period of original issuance only

Brokers of variable contracts and insurance premium funding programs

Question 13

Which of the following is Not part of a corporations capital structure?

Answer 13

Accounts payable

Question 14

The market price of ABC stock is $17.25. The ABC June 20 call

Answer 14

Is out of the money

Question 15

MSRB rules do not permit

Answer 15

Nominal quotes distributed as bids

Nominal quotes distributed as offers

Question 16

Which of the following is True regarding warrants?

Answer 16

Warrants can trade separately from the common stock

Warrants have longer life than rights

Warrants typically have a long life perhaps even perpetual the subscription price is above the stocks current market value

Question 17

Companies are required to notify FINRA of corporate actions such as dividends stock splits or rights offering and rights offerings within what time period?

Answer 17

10 days prior to the record date

Question 18

Sam was having difficulty selling his investments due to a lack of demand in the secondary market. What does that say about his investments?

Answer 18

They have a high liquidity risk

Question 19

According to FINRA rules on private securities transactions an associated person entering into a series of private transactions without compensation must provide to the member firm all of the following?

Answer 19

A statement of possible compensation

A description of each proposed transaction

The persons proposed role in the transactions

Question 20

All of the following are true concerning preferred stock

Answer 20

Bond interest payments are considered senior to preferred stock dividend payments

Preferred stock certificates can be callable for a period of time throughout their ownership

Preferred stock dividends are always paid prior to common stock dividend being paid

Question 21

Which of the following represents the order in which market orders are filled?

Answer 21

Priority precedence and parity

Question 22

A registered representative must obtain written verification of an investors net worth for which of the following instruments?

Answer 22

A direct participation program

Question 23

Which of the following industries is least defensive?

Answer 23

Automobile production

Question 24

Which of the following is true of restricted stocks?

Answer 24

The purchase must be paid for in its entirety

Question 25

A domestic company is exporting goods to Europe. Which of the following option strategies would it use?

Answer 25

Buy euro puts

Question 26

Business continuity plans are required to address all of the following

Answer 26

Customer communications

Data backup and recovery

Regulatory reporting

Question 27

Standards for the customer identification program CIP require all of the following

Answer 27

Keep records of how identify was verified

Verifying the financial status and credit history of the customer

Comparing the identity to the government lists of known terrorists