Test 5 Flashcards
The growth in the value of a variable annuity is:
Allowed to accumulate on a tax-deferred basis
The US Govt does NOT guarantee the payment of interest and principal for which security?
FHLMC (Freddie Mac) Securities
Is a C - Corporation a type of direct participation program?
No - the only DPP’s are S corps, general partnerships, and limited partnerships.
What amount may a customer contribute each year to a 529 college savings plan without incurring any taxes?
An amount equal to the annual gift tax exclusion
The 5% markup policy applies to:
Securities quoted on the NASDAQ
What is true for the writers (sellers) of call options?
They have the obligation to sell 100 shares of stock
When warrants are issued, the exercise price is:
Higher than the current market price of the stock
A portfolio of debt instruments will he most stable when:
The bonds have short maturities
A town has started the construction of public sewers. This is likely paid by a:
Special assessment bond
A BD executed but does not process transactions. If the firm processing the transaction does not know the identity of the customers. This is known as a:
Omnibus account
An increase in what will cause an increase in the expense ratio for an investment company?
Management fees
A customer has a variable annuity and wants to transfer from the XYZ growth separate account to the ABC growth separate account. To do this, who should the customer contact?
The insurance company that sponsors her account
Discretionary accounts require
Written authorization from the customer
A client purchased 1,500 shares of stock from a BD, a registered market maker in this stock. The BD acted in a:
Principal capacity and charged a markup
When purchasing mutual fund shares, the ability to receive cumulative quantity discounts is referred to as:
Rights of accumulation
If a customer wants to open an account to trade options, the account must be approved:
Prior to the time the initial order is accepted
The federal reserve has been buying bonds in the marketplace. This is in response to:
Increasing unemployment
What is the maximum loss for an individual who purchases an option?
100% of the premium.
If an investor expects a sharp increase in a stocks price, which of the following will be the most profitable?
Exercise rights
Preferred shares have the right to vote??
No, they do not.
Is the prime rate a leading or lagging economic indicator?
Lagging
A quote of 5.90 - 5.75 is a quote for what security?
Treasury bills
Should preferred dividends be satisfied before or after common dividends?
Before
Does a stock dividend increase or decreases the amount of shares a holder will own?
Increase
What is the maximum contribution that can be made to a 529 plan without being subject to gift tax?
$160,000 from a married couple if no additional contributions are made for the next 5 years.
What is found in a funds summary prospectus?
Fee table
A customer owns shares of restricted stock and now intends to sell them. If the proper forms are filed with the SEC, the customer may sell these shares when?
Over a 90 day period.
The purpose of a depository facility is to:
Hold securities in book entry form
The Bond Buyer Index is based on which security?
Municipal bonds
What risk affects bonds primarily when interest rates decline?
Call risk
A B/D’s anti money laundering compliance program must be approved how?
In writing by a member of senior management
