Test 7 Flashcards
What investment is most suitable for a person who is interested in aggressive growth?
Common stock
A mother wants to gift money to her son. If she doesn’t want the son to be able to use the money for living expenses, what account is the most beneficial?
Trust account
A registered person of a B/D has an existing account at another firm and has followed the proper procedures to open the account. The current responsibility of the registered person is to:
Ensure that her employing firms guidelines are being followed when trading securities
A reverse stock split created a
Smaller number of shares
What are the systematic risks?
Market, interest rate, inflation
A B/D must maintain customer accounts records for how long after an account is closed?
Six years
A type of order that becomes a market order when a round lot trades at or through a particular price is called a:
Stop order
If an investor purchased a security and receives part of his original investment back, this is considered a:
Return of capital
Which circumstance has a required tax payment?
Realized gain
What is most likely to occur if a company’s assets are increasing?
Shareholders equity increases
A customer has placed a market order with a broker-dealer. The B/D must:
Execute at the most reasonable price available
What organization enforces municipal securities regulations for B/D’s?
FINRA (or SEC)
A municipality borrowing for a short term period to finance a capital project would issue:
Bond anticipation notes (BANs)
The value of the conversion feature on a convertible bond is determined by:
The stock price
What must happen concerning the opening of a cash account?
A principal of the firm must sign the new account form
