Test 6

Question 1

During a period of RISING interest rates, an individual who invests in mortgage backed securities is MOST concerned with:

Answer 1

Opportunity risk

Question 2

State or Blue Sky Laws may require a Registered person to do what?

Answer 2

File an app, pass an exam, and pay a fee

Question 3

An employee of a broker dealer is NOT permitted to purchase an:

Answer 3

Equity IPO

Question 4

What is an investment that can be purchased on margin?

Answer 4

Closed end fund shares

Question 5

The guidelines regarding brokerage employees opening personal accounts with other brokerage firms do not apply if the transactions in the account involve which of the following securities?

Answer 5

Mutual funds

Question 6

Treasury Bonds are subject to federal taxes, but

Answer 6

Exempt from state taxes

Question 7

If a bind has a basis of 6.35 and a coupon rate of 6.15%, the biggest f is selling at a

Answer 7

Discount

Question 8

Common stock and preferred stock are similar in that

Answer 8

The dividends for both must be declared by the board of directors

Question 9

While saving for her retirement, a variable annuity owner investing $1000 a month will buy a

Answer 9

Varying number of accumulation units

Question 10

What stock would he considered a defensive stock?

Answer 10

Utility stock

Question 11

If an investor wants to build a portfolio that maintains a stable value, she should purchase bonds with

Answer 11

Short maturities

Question 12

What investment has the most inflation risk?

Answer 12

Bonds

Question 13

What is a part of a financial institutions AML program?

Answer 13

Maintaining a record of wire transfers in excess of $3,000

Question 14

If the bid price for a stock is 20.50 and the ask price is 20.60, a client who enters a market order to sell the stock will most likely receive:

Answer 14

$20.50 minus a commission

Question 15

What is subject to a capital call?

Answer 15

DPP’s

Question 16

The primary purpose of the NASAA is to

Answer 16

Create rules, laws, and exam requirements for states

Question 17

What is true for the writers (sellers) of put options?

Answer 17

They have the obligation to buy 100 shares of stock.

Question 18

Investors in mortgage backed securities are MOST concerned with prepayment risk if interest rates are

Answer 18

Falling

Question 19

For how long must prospectuses continue to be delivered on an IPO of a company that will not be listed?

Answer 19

For 90 days in the aftermarket

Question 20

A 75 year old individual has contributed $40,000 to a qualified plan that currently has a value of $100,000. If she decides to take a lump sum of the total value, she is taxed on:

Answer 20

$100,000

Question 21

Which of the following option positions obligates the investor to sell shares if exercised against

Answer 21

Short a call

Question 22

What strategy is a portfolio manager of a mutual fund employing when call options are being sold on stock that’s held in a portfolio?

Answer 22

A neutral strategy that’s considered a conservative means of generating income when prices are stable