Test 4 Flashcards
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?
Establish an account in Penelope’s or Terry’s name that contains only Penelope’s monies and securities
With regard to sales breakpoints any schedule changes must be communicated to existing shareholders within what period of time?
Within 1 year
The holder of a call option on a T-Bond will profit under all of the following circumstances
Yields on t-bonds decrease
Prices of t-bonds increase
An investment based security that is closely tied to a current fashion or trend may primarily carry
Social and political risk
If a common stockholder received a dividend this year which of the following would also be paid a dividend?
Cumulative preferred
Convertible preferred
Participating preferred
The date the board of directors authorized a dividend is the
Declaration date
Stimulating the economy through spending policies is known as
Keynesianism
A registered representative would be required to notify a FINRA member firm about all of the following
Starting a consulting practice
Receiving referral fees from another registered representative
Becoming a real estate agent as a side business
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
An amount up to 3 times the profit gained or loss avoided
Which of the following issues equipment trust certificates?
A Regional airline
Which of the following statements regarding limit orders is true?
A limit may never be executed
Which of the following may register as an investment company and variable contracts limited principal after passing the series 26 exam?
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
Which of the following is Not part of a corporations capital structure?
Accounts payable
The market price of ABC stock is $17.25. The ABC June 20 call
Is out of the money
MSRB rules do not permit
Nominal quotes distributed as bids
Nominal quotes distributed as offers
Which of the following is True regarding warrants?
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
Companies are required to notify FINRA of corporate actions such as dividends stock splits or rights offering and rights offerings within what time period?
10 days prior to the record date
Sam was having difficulty selling his investments due to a lack of demand in the secondary market. What does that say about his investments?
They have a high liquidity risk
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?
A statement of possible compensation
A description of each proposed transaction
The persons proposed role in the transactions
All of the following are true concerning preferred stock
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
Which of the following represents the order in which market orders are filled?
Priority precedence and parity
A registered representative must obtain written verification of an investors net worth for which of the following instruments?
A direct participation program
Which of the following industries is least defensive?
Automobile production
Which of the following is true of restricted stocks?
The purchase must be paid for in its entirety
A domestic company is exporting goods to Europe. Which of the following option strategies would it use?
Buy euro puts
Business continuity plans are required to address all of the following
Customer communications
Data backup and recovery
Regulatory reporting
Standards for the customer identification program CIP require all of the following
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
