question

The purpose of depreciation is to: A) Spread the cost of an asset over the recovery period of the asset B) Increase the cash flow of a corporation C) Reduce taxes D) Increase net income

answer

A) Spread the cost of an asset over the recovery period of the asset

question

The exchanges requires customers to exercise their listed equity option positions with member firms no later than: A) 2:30 p.m. Eastern Time on the business day prior to the expiration date of the option B) 3:30 p.m. Eastern Time on the business day prior to the expiration date of the option C) 4:30 p.m. Eastern Time on the business day prior to the expiration date of the option D) 5:30 p.m. Eastern Time on the business day prior to the expiration date of the option

answer

D) 5:30 p.m. Eastern Time on the business day prior to the expiration date of the option

question

A customer owns an Eastman Kodak October 50 listed call option. Eastman Kodak has declared a $1.00 cash dividend. When Eastman Kodak sells ex-dividend, which of the following will reflect the price and the number of shares of the Eastman Kodak October 50 option? Strike Number Price of shares A) $49 100 B) $50 95 C) $50 100 D) $50 105

answer

C) $50 100

question

Which of the following transactions would require a customer to be considered a pattern day trader? A) 3 day trades executed in one week B) 3 day trades executed in one day C) 4 day trades executed in one week D) 10 day trades executed in one month

answer

C) 4 day trades executed in one week

question

An investor writes a Treasury bond call option contract. He would be considered covered by a deposit of: A) A basket of bonds B) Specific T-bonds C) One hundred shares of the underlying stock D) The required margin

answer

B) Specific T-bonds

question

The securities that are deposited in an escrow account for an advanced refunding are: A) Revenue bonds B) General obligation bonds C) Federal agency bonds D) Treasury bonds

answer

D) Treasury bonds

question

On a when issued municipal bond transaction, the interim confirmation would show which of the following? A) Settlement date B) Final money amount C) Accrued interest amount D) Capacity in which the broker-dealer acted

answer

D) Capacity in which the broker-dealer acted

question

Mr. Smith holds a portfolio of blue chip stocks which have appreciated in value. To generate additional current income from his holdings, Mr. Smith would: A) Write covered puts B) Write covered calls C) Buy puts D) Buy calls

answer

B) Write covered calls

question

All of the following will be found in the Official Notice of Sale Except: A) Call provision B) The name of the bond counsel writing the legal opinion C) The date, time, and place of sale where the bidding procedure will take place D) The bond rating

answer

D) The bond rating

question

A municipal dealer gives another dealer a firm quote of par for a block of municipal bonds. The dealer that gave quote: A) Must do the trade at par B) Must give the other dealer ten minutes to accept the quote C) Has given a nominal quote to the other dealer D) Has given a subject quote

answer

A) Must do the trade at par

question

When doing a municipal bond swap, to avoid the wash rule you should alter all of the following EXCEPT: A) Issuer B) Maturity C) Rating D) Coupon

answer

C) Rating

question

The conditions of an Eastern account provides that a syndicate members: A) Have no liability if they have sold their allotted commitment B) Have a liability in proportion to their participation even if they have sold their allotted commitment C) Have the same percentage liability as all other members of the syndicate D) Belong to the New York Stock Exchange

answer

B) Have a liability in proportion to their participation even if they have sold their allotted commitment

question

A company has $50,000,000 par value convertible bonds outstanding. The coupon rate is 8%. The bonds are currently selling at 96. What is the current yield? A) 7.0% B) 7.5% C) 8.0% D) 8.3%

answer

D) 8.3%

question

Which of the following is an indicator of the demand for municipal bonds in the primary market? A) The Wilshire Index B) The Visible Supply C) The Placement Ratio D) The bond Buyers Index

answer

C) The Placement Ratio

question

The managing underwriter of a new municipal issue has an obligation to provide: I. An Official Statement to all selling members II. An Official Statement to all purchasers of the issue III. The name of all the syndicate members to all purchasers of the issue A) I and II only B) I and III only C) II and III only D) I, II, and III only

answer

A) I and II only

question

An investor is convinced that a stock will decline in value. If the investor wishes to act on that conviction, which investment strategy will allow him to take advantage of a decline with the smallest amount of cash outlay? A) The investor should sell the stock short B) The investor should buy a call C) The investor should buy a put D) The investor should sell a put

answer

C) The investor should buy a put

question

Your client owns a portfolio of blue chip equity securities and would like to increase the overall rate of return through the use of options. The most conservative strategy to achieve this objective is to: A) Write covered calls B) Buys calls C) Write covered puts D) Buy puts

answer

A) Write covered calls

question

The city of Phoenix, Arizona has established an advertisement stating that it is willing to accept bids for the sale of $20,000,000 Sewer Revenue Bonds. The advertisement is called: A) An Official Statement B) An indenture C) An Official Notice of Sale D) A tombstone ad

answer

C) An Official Notice of Sale

question

When referring to call option contracts, the term open interest would mean: A) The number of contracts that have not been closed put though a sale or by expiration B) Only the number of contracts with the same expiration date that have not been closed out C) Only the number of contracts with the same exercise price that have not been closed out D) The total number of contracts of the same series that were traded on a given day

answer

A) The number of contracts that have not been closed put though a sale or by expiration

question

A put option may be written in a cash account if the investor: A) Is long the underlying security in the account B) Is short the underlying security in the account C) Has cash in the account equal to the exercise price D) Is long a call option on the same underlying security

answer

C) Has cash in the account equal to the exercise price

question

On a municipal revenue issue, money put aside for the betterment and improvement of the facility would be placed in the: A) Sinking Fund B) Renewal and replacement fund C) Operating and maintenance fund D) Debt service fund

answer

B) Renewal and replacement fund

question

A call is purchased in February and exercised in June. The following April the stock is sold. Which two of the following statements are correct? I. The resulting gain or loss is short term II. The resulting gain of loss is long-term III. The cost basis of the stock is the same as the strike price IV. The cost basis of the stock is the call premium plus the strike price A) I and III B) I and IV C) II and III D) II and IV

answer

B) I and IV

question

All of the following statements about municipal revenue bonds are true EXCEPT: A) There is no debt limitation set by the issuing municipality B) The maturity of the revenue bond usually coincides with useful life of the facility being built C) They can be issued by states, political subdivisions, interstate authorities, and intrastate authorities D) The interest and principal are paid from the revenue received from the facility

answer

B) The maturity of the revenue bond usually coincides with useful life of the facility being built

question

The Federal Intermediate Credit Bank (FICB) makes: A) Agricultural loans to farmers B) Loans to finance residential mortgages C) Business loans to veterans D) Loans to railroads

answer

A) Agricultural loans to farmers

question

When a manager of a municipal underwriting syndicate determines the priority of orders to be allocated, the orders would include all of the following EXCEPT: A) Group net B) Designated C) Member takedown D) Opening purchase

answer

D) Opening purchase

question

Three bonds all have the same coupon rate of 6%. Bond A has a five year maturity. Bond B has a one year maturity. Bond C has a six month maturity. If interest rates change, which bond would have the greatest dollar change in price? A) Bond A B) Bond B C) Bond C D) All of the bonds would change equally in price

answer

A) Bond A

question

Municipal bond unit investment trusts have all of the following characteristics EXCEPT: A) Investors can buy units in the fund, usually in multiples of $1,000 B) The certificates have coupons attached and are in bearer form C) Investors can redeem the unit's at any time through the fund's trustee D) The value of the unit will decline if interest rates rise

answer

B) The certificates have coupons attached and are in bearer form

question

A customer's initial trade in a margin account is the short sale of 500 shares of DEF stock at $20. After making the required deposit, the credit balance in the account is: A) $ 5,000 B) $10,000 C) $15,000 D) $20,000

answer

C) $15,000

question

The American Telephone Company announced in an ad in the Wall Street Journal that it intends to call for redemption all of its outstanding 10% callable bonds at 103 1/4 plus accrued interest. The market price of the bond was 102 3/4 at the time of the announcement. All of the following are TRUE about this redemption EXCEPT: A) The company's outstanding debt will be reduced B) The company's interest expense will be reduced C) Dividends to the stockholders will be increased D) Investors redeeming the bonds receive a premium to the market price

answer

C) Dividends to the stockholders will be increased

question

An easing of money and credit in the economy would be the probable result of which two of the following? I. An increase in reserve requirement II. An increase in the discount rate III. A decrease in the discount rate IV. A decrease in reserve requirements A) I and II B) I and III C) II and IV D) III and IV

answer

D) III and IV

question

A municipal bond issue with an inverted yield scale would have: A) Lower yields on the shorter maturities than on the longer maturities B) Higher yields on the shorter maturities than on the longer maturities C) Yields the same on all maturities D) Prices higher on the shorter maturities than the longer maturities

answer

B) Higher yields on the shorter maturities than on the longer maturities

question

Which of the following would increase most in price if interest rates decline? A) Short-term bonds selling at a discount B) Long-term bonds selling at a discount C) Short-term bonds selling at a premium D) Long-term bonds selling at a premium

answer

B) Long-term bonds selling at a discount

question

In the Interbank Market, foreign currency transactions: A) May settle on a spot or forward basis B) Occur on exchange throughout the world C) Are regulated by the SEC D) Are reported on the Nasdaq system

answer

A) May settle on a spot or forward basis

question

According to MSRB rule, each broker-dealer engaging in municipal securities activities must have a municipal securities principal promptly review and/or approve in writing: I. Each customer account for trading in municipal securities II. Every transaction for municipal securities III. All written customer complaints IV. All advertising and other written correspondence pertaining to municipal securities activities A) I and II only B) III and Iv only C) I, III, and IV D) I, II, III and IV

answer

D) I, II, III and IV

question

An investor owns $100,000 face value of a T-bond and writes a covered T-bond call. At expiration, if interest rates have risen, the: A) Call most likely will expire B) Call will be exercised and the writer will deliver $100,000 to the holder C) Call will be exercised and the writer will deliver the bonds to the holder D) OCC will close out the position

answer

A) Call most likely will expire

question

A husband and wife have a joint account. If the husband instructed his RR to sell securities and send a check, the check could be made payable to: A) The husband only B) The wife only C) Either the husband or the wife D) The husband and the wife jointly

answer

D) The husband and the wife jointly

question

All of the following are fixed by the exchange on which an option contract trades EXCEPT: A) The strike price B) The expiration date C) The premium D) The contract size

answer

C) The premium

question

An investor purchases 100 shares of XYZ at 60 and also writes an XYZ 65 call @ 3 If the call is exercised when the market price of XYZ is 70, what is the investor's profit? A) $700 B) $800 C) $1,000 D) $1,200

answer

B) $800

question

The FRB initial margin requirement is 50%. A customer opening a new margin account with the purchase of 100 shares of XYZ at $15 per share would have to deposit: A) $375 B) $750 C) $1,500 D) $2,000

answer

C) $1,500

question

Which of the following municipal issues would most likely be brought to market as a negotiated issue? A) General Obligation Bond B) Special Tax Bond C) School District Bond D) Industrial Development Revenue Bond

answer

D) Industrial Development Revenue Bond

question

When purchasing a new issue of stock in a cash account when must payment be made under Reg T? A) On settlement date B) Two business days after the trade date C) When the securities are delivered D) Two business days after the settlement date

answer

D) Two business days after the settlement date

question

All of the following would create a conflict of interest for a general partner EXCEPT if the general partner: A) Accepts a payment not to compete with the program B) Holds partnership monies in his personal bank account C) Sells property that he owns to the partnership D) Lends money to the partnership at a prevailing interest rates

answer

D) Lends money to the partnership at a prevailing interest rates

question

ABC Corporation has filed a registration statement with the SEC. A registered representative would be prohibited from doing all of the following EXCEPT: A) Sending a research report about ABC to prospective clients B) Sending a preliminary prospectus to clients to obtain indications of interest C) Accepting orders from clients D) Accepting money from clients to buy the securities

answer

B) Sending a preliminary prospectus to

question

Which of the following is an example of a stabilizing bid by the syndicate manager of a new issue? Public Bid Offering price A) $15 $15 B) $21 $21.13 C) $25 $25.25 D) $35 $35.25

answer

A) $15 $15

question

On Tuesday May 1st, XYX Corporation's Board of Directors announce a dividend payable on Friday, May 25th to stockholders of record on Monday, May 14th.The ex-dividend date would be: A) Wednesday, May 23rd B) Thursday, May 10th C) Monday, May 14th D) Tuesday, May 1st

answer

B) Thursday, May 10th

question

An investor is looking for an investment that will generate deductions but also provide the potential for future cash flow. All of the following would be appropriate investments EXCEPT: A) Raw land program B) Existing properties real estate program C) Oil and gas drilling program D) Oil and gas exploratory programs

answer

A) Raw land program

question

A doctor, who is covered under a corporate pension plan, retires. The doctor can roll over the distribution received from the pension plan into the IRA, with no tax consequence, within: A) 30 days B) 60 days C) 90 days D) 1 year

answer

B) 60 days

question

Which of the following would most likely have a mandatory sinking fund? A) Serial issue B) Balloon issue C) Term issue D) Convertible issue

answer

C) Term issue

question

When a broker-dealer is not acting for its own account but is making securities transactions for the account of others, the firm is acting as a(n): A) Broker B) Principal C) Underwriter D) Dealer

answer

A) Broker

question

When interest rates decrease, which two of the following are TRUE regarding the value of Treasury Bond options? I. Call options increase II. Call options decrease III. Put options increase IV. Put options decrease A) I and III B) I and IV C) II and III D) II and IV

answer

B) I and IV

question

When a sale takes place in a long margin account, which of the following occurs? I. The market value of the account will be reduced II. The equity of the account will be increased III. The loan value of the account will be reduced IV. The debit balance will be reduced A) I and II only B) II and IV only C) I, III,, and IV only D) II, III, and IV only

answer

C) I, III,, and IV only

question

A customer purchases $10,000 of stock on margin. Before depositing the required amount, the stock raises to a market value of $12,000. How much will the customer be required to deposit? A) $4,000 B) $5,000 C) $6,000 D) $7,000

answer

B) $5,000

question

An investor writes an XYZ Aug 90 put at 4.50. If the put is exercised when XYZ is trading at 84.50, the investor would have: I. A cost basis of 84.50 II. A cost basis of 85.50 III. A loss of $100 if the stock is sold at the current market price IV. A gain of $100 if the stock is sold at the current market price A) I and III B) I and IV C) II and III D) II and IV

answer

C) II and III

question

All of the following are TRUE regarding dividends EXCEPT: A) A growth company normally has a low dividend payout ratio B) A stock dividend creates a current tax liability when received C) A blue chip company has a long history of paying dividends D) The market price of a preferred stock is influenced by its dividend payout

answer

B) A stock dividend creates a current tax liability when received

question

The fluctuations in the value of a variable annuity will correspond with the fluctuations in the: A) Dow Jones Industrial Average B) Value of the index or average on which the payout is based C) Value of the securities held in the separate account of the annuity D) Cost of the living index

answer

C) Value of the securities held in the separate account of the annuity

question

Where would a listing of allocation of bonds for a new municipal issue be found? A) Notice of Sale B) Underwriting Agreement C) Account Summary Report D) Official Statement

answer

C) Account Summary Report

question

All of the following are typical characteristics of a 401(k) plan EXCEPT: A) Employee contributions are fully and immediately vested B) Employers must match employee contributions C) An employe's taxable income is reduced by employee contributions D) Employee contribution grow on a tax-deferred basis

answer

B) Employers must match employee contributions

question

An investor would purchase an oil and gas limited partnership for all the following reasons EXCEPT: A) The oil depletion allowance B) Intangible drilling costs C) Tax incentives D) Recapture provision

answer

D) Recapture provision

question

Relative to a convertible bond, which of the following would produce a desirable arbitrage situation? A) Stock at parity with the bond B) Stock at a premium to parity and the bond is trading at par C) Stock at a discount to parity and the bond is trading at par D) Yield on the bond equals the yield on the stock

answer

B) Stock at a premium to parity and the bond is trading at par

question

The manager of a new issue municipal syndicate wants to allocate securities in a different manner than specified in the syndicate agreement. He may do this if he: A) Notifies the SEC B) Amends the syndicate agreement C) Is prepared to justify the change to the syndicate members D) Assume any losses incurred by the syndicate members

answer

C) Is prepared to justify the change to the syndicate members

question

The federal tax exemption of municipal bonds was established by: A) The Internal Revenue Service B) The U.S. Treasury Department C) An Act of Congress D) Supreme Court decisions

answer

D) Supreme Court decisions

question

All of the following would be found in a municipal revenue bond resolution EXCEPT: A) Restrictions on the sale of additional bonds B) Rate covenants C) Sinking fund provisions D) The yield-to-maturity of the bonds

answer

D) The yield-to-maturity of the bonds

question

A syndicate manager in the sale of a new municipal bond issue would normally allocate bonds in which of the following orders of priority? I. Member orders II. Orders for the benefit of the syndicate account III. Designated orders A) I, II, and III B) III, II, and I C) II, III, and I D) III, I, and II

answer

C) II, III, and I

question

An investor purchases a 20-year 5% bond at par value which will yield 5 3/4% if called at the first call date in five years. The yield-to-maturity on bond is: A) 5% B) More than 5% C) Between 5% and 5 3/4% D) 5 3/4%

answer

A) 5%

question

Various tranches of a long-term speculative bond issue are called by the issuer. The effect on the remaining outstanding bonds is likely to be: A) Improved quality B) Decreased quality C) Making them eligible for investment by banks D)Increased interest payments

answer

A) Improved quality

question

Which of the following settlement dates does not concern to standard industry procedures? A) Preferred stock settling in 3 business days B) Government securities settling next business day C) Municipal bonds settling in 3 business days D) Options settling in 3 business days

answer

D) Options settling in 3 business days

question

A block of bonds is offered firm by Dealer A to Dealer B for one hour with a five minute recall. Dealer A calls Dealer B and says "fill or kill." Dealer B: A) Has five minutes to take the bonds B) Must take the bonds if he does not call Dealer A back with in five minutes C) Has one hour to take the bonds D) Must take the bonds if he does not call Dealer A back within one hour

answer

A) Has five minutes to take the bonds

question

The MSRB does all of the following EXCEPT: A) Regulate municipal securities dealers B) Regulate municipal securities salesmen C) Regulate municipal securities advertising D) Regulate municipal securities issuers

answer

D) Regulate municipal securities issuers

question

Term bond quotes are based on: A) Yield-to-maturity B) Current yield C) Nominal yield D) Dollar price

answer

D) Dollar price

question

All of the following securities which are exempt from state and local taxes EXCEPT the: A) U.S. Government B) Federal Home loan Bank C) Commonwealth of Puerto Rico D) State of Hawaii

answer

D) State of Hawaii

question

A municipal broker-dealer would be acting as a principal in which of the following scenarios? I. Selling bonds from inventory to an individual II. Selling binds from inventory to a broker's broker III. Buying bonds from another broker-dealer for inventory IV. Buying 500 bonds to fill an insurance company's order for 250 bonds A) I and III only B) II and III only C) I, II, and III only D) I, II, III and IV only

answer

D) I, II, III and IV only

question

A woman wishes to open an account at a municipal securities firm. She identifies herself as the spouse of a trader at another municipal securities firm. Which if the following is(are) correct? I. The rep must follow all instructions from the trader's employer II. The MSRB must be notified III. The carrying broker-dealer must send written notification of each transaction to the trader's employer A) I only B) II only C) I and III only D) I, II and III only

answer

C) I and III only

question

All of the following are TRUE about discretionary accounts EXCEPT: A) Account must be approved by a Principal B) Orders must be reviewed on the day they are entered C) Written power of attorney signed by the customer must be kept on file by the firm D) Orders must be confirmed with the customer before being entered

answer

D) Orders must be confirmed with the customer before being entered

question

All of the following are taken into consideration when determining the markup on a municipal securities transaction EXCEPT: A) The dollar amount of the trade B) The best judgment of the dealer C) The fact that the dealer is entitled to make a profit D) The financial condition of the customer

answer

D) The financial condition of the customer

question

A municipal bond with a 6% coupon is priced to a 7% basis. If the bond's yield-to-maturity increased by 40 basis points: A) The yield-to-maturity would be 5.60% B) The yield-to-maturity would be 6.40% C) The yield-to-maturity would be 6.60% D) The yield-to-maturity would be 7.40%

answer

D) The yield-to-maturity would be 7.40%

question

A customer sells a Brunswick April 20 straddle and receives a premium of $800. The put side of the straddle expires unexercised but the call exercised. The customer is uncovered on the call and must purchase the stock in the market to effect delivery to the buyer of the call. The current market price of Brunswick Corporation is $29. The net result to the customer will be a: A) $100 loss B) $100 profit C) $2,100 profit D) $2,100 loss

answer

A) $100 loss

question

The subscription agreement for a limited partnership would specify all of the following EXCEPT: A) Suitability standards B) Priority provision upon liquidation C) To whom the check must be made payable D) Who must sign the agreement

answer

B) Priority provision upon liquidation

question

Advertisements regarding options: I. Must be submitted to the exchange 15 days prior to initial use II. Must be submitted to the exchange 10 days prior to initial use III. Must be kept on file by the member firm for six years IV. Must be kept on file by the member firm for three years A) I and III B) I and IV C) II and III D) II and IV

answer

D) II and IV

question

A brokerage firm is holding $600,000 of securities for a customer. The securities are registered in the name of the customer. If the firm was being liquidated by SIPC, the customer would: A) Be insured for $500,000 of securities B) Receive the entire $600,000 of securities C) Be insured for $250,000 of securities D) Lose the entire $600,000

answer

B) Receive the entire $600,000 of securities

question

Which of the following securities would provide an investor with protection against purchasing power risk? A) Treasury Bills B) Treasury Notes C) TIPS D) STRIPS

answer

C) TIPS

question

When a municipality is allocating funds for a net revenue issue, the first priority will be satisfying the: A) Operation and maintenance of the facility B) Debt service C) Reserve for retirement of the bonds D) Surplus for expansion of the facility

answer

A) Operation and maintenance of the facility

question

All of the following are true regarding the role of a transfer agent EXCEPT that the transfer agent: A) Keeps a record of each stockholder's name and shares owned B) Issues and cancels stocks certificates C) Resolves problems due to mutilated certificate D) Makes sure that outstanding shares do not exceed authorized shares

answer

D) Makes sure that outstanding shares do not exceed authorized shares

question

Which best describes the Revenue Bond Index? A) Average yield on a list of bonds with 30 years maturities B) Average yield on a list of 11 bonds C) Average yield on a list of 20 bonds D) Average yield on a list of new revenue issues

answer

A) Average yield on a list of bonds with 30 years maturities

question

MSRB rules state that a dealer must try to obtain all the following information from a customer EXCEPT the customer's: A) Financial condition B) Investment history C) Investment objective D) Date of birth

answer

D) Date of birth

question

A sales breakpoint of a mutual fund is: A) The minimum dollar amount of a purchase of a mutual fund where a volume discount is given B) The minimum share amount of a purchase of a mutual fund where a volume discount is given C) The point at which a letter of intent can be obtained D) The point at which a letter of intent can be backdated

answer

A) The minimum dollar amount of a purchase of a mutual fund where a volume discount is given

question

All of the following statements are true about closed-end investment companies EXCEPT that the: A) Number of outstanding shares is constant B) Shares are sold at the current market price C) Shares may not sell below the current net asset value D) Shares may be listed on the NYSE

answer

C) Shares may not sell below the current net asset value

question

An investor buys $10,000 par value of 8% Treasury bonds due July 1, 2014. For tax purposes, the interest earned on these bonds is: I. Subject to federal income tax II. Exempt from federal income tax III. Subject to state income tax IV. Exempt from state income tax A) I and III B) I and IV C) II and III D) II and IV

answer

B) I and IV

question

Which of the following would not require a majority vote of a mutual fund's shares? I. Changing the fund from open-end to closed-end II. Changing the investment objectives of the fund III. Increasing the capital gain distribution paid by the fund IV. Decreasing the dividend paid by the fund A) I and II only B) I and III only C) III an IV only D) I, II, III, and IV

answer

C) III an IV only

question

Which of the following rates is set by the Federal Reserve Board? A) Broker loan rate B) Federal funds rate C) Discount rate D) Prime rate

answer

C) Discount rate

question

Which of the following statements is true regarding a custodian account? A) Margin transaction are permitted B) Taxes are a liability of the minor C) The minor and the custodian must both endorse all certificates D) A custodian may give a registered representative discretion over the account

answer

B) Taxes are a liability of the minor

question

Federal funds are: I. Excess reserves loaned by commercial banks to other commercial banks II. A lagging money market indicator III. A leading money market indicator A) I only B) II only C) I and II only D) I and III only

answer

D) I and III only

question

A MIG rating applies to a: A) Convertible bond B) Pre-refunded utility bond C) ADR D) BAN

answer

D) BAN

question

Which of the following may be reasons for a revenue bond issue to be called? I. A change in the tax status of the issuer II. Surplus funds are available III. Interest rates rise dramatically IV. Destruction of the facility by fire A) III and IV only B) II, III, and IV only C) I, II, and IV only D) I, II, III and IV

answer

C) I, II, and IV only

question

The State of North Carolina is offering $50,000,000 5 1/2% sewer improvement bonds The bonds are: I. Exempt from the margin requirements of Regulation T II. Exempt from the Securities Act of 1933 III. Exempt from the Trust Indenture Act of 1933 A) I only B) I and II only C) II and III only D) I, II, and III

answer

D) I, II, and III

question

When comparing long-term bonds and short-term bonds, all of the following are true EXCEPT: A) Long-term bonds generally have higher yields B) Fluctuations in the dollar price of long-term bonds are usually greater than short-term bonds when the general level of interest rates change C) Long-term bonds generally provide greater liquidity than short-term bonds D) There is more purchasing power risk with long-term bonds when compared to short-term bonds

answer

C) Long-term bonds generally provide greater liquidity than short-term bonds

question

All of the following are TRUE concerning private activity bonds EXCEPT: A) The interest on these bonds might not be tax-exempt for some investors B) The interest on these bonds might be subject to the alternative minimum tax C) The possibility that the bonds might be subject to taxation would be reflected in the yield at which the bond trades D) These types of municipal bonds are generally GOs

answer

D) These types of municipal bonds are generally GOs

question

An investor purchases an ABC Jan 40 call @4 and sells an ABC April 30 call @9 This is an example of a: A) Variable hedge B) Vertical spread C) Horizontal spread D) Diagonal spread

answer

D) Diagonal spread

question

An announcement in the financial section of the newspaper states that the money supply (M1) has dropped for the week. This means that: A) Demand deposits and currency in circulation in the banking system have declined B) Savings deposits and currency in circulation in the banking system have declined C) Stock transactions have declined D) U.S. government bond sales have declined

answer

A) Demand deposits and currency in circulation in the banking system have declined

question

The 5% policy applies to which of the following? A) Shares of a mutual fund purchased with a sales charge B) A registered secondary distribution requiring a prospectus C) Securities found on Nasdaq D) Municipal securites

answer

C) Securities found on Nasdaq

question

Regarding cash dividends, which of the following statements is correct? A) A cash dividend becomes a current liability when it is declared B) The amount of the dividend may never exceed the current earnings of the corporation C) Cash dividends must be paid if the earnings for the year exceed the amount of the stated dividend D) Dividend income may be offset by capital losses

answer

A) A cash dividend becomes a current liability when it is declared

question

An investor who has owned XYZ stock for two years buys an XYZ October put. This will: A) Have no effect on his holding position B) End the holding period and cause any gain or loss to be short-term C) Require the client to pay tax immediately D) End the holding period and cause any loss to be long-term and any gain to be short-term

answer

A) Have no effect on his holding position

question

All of the following statements apply to long-term (brokered) CDs EXCEPT: A) They may have limited liquidity B) Investors may be subject to interest rate risk C) They may be callable D) The total amount of the investment is FDIC insured

answer

D) The total amount of the investment is FDIC insured

question

A customer's combined long and short margin account appears as shown below: Long Market Value =$30,000 Short Market Value =$18,000 Debit Balance =$ 8,000 Credit Balance =$15,000 What is the customer's combined equity? A) $15,000 B) $19,000 C) $22,000 D) $35,000

answer

B) $19,000

question

A 10% New York City GO bond matures in 20 years. The bond is callable in 8 years at 103. All of the following are true regarding this bond EXCEPT: A) The investor has 8 years of call protection B) The issuer must pay investor a 3-point call premium to exercise the call privilege on the bonds C) The investor will receive more for the bond if it is call versus holding the bond to maturity D) The investor may exercise the call provision any time after the 8th year

answer

D) The investor may exercise the call provision any time after the 8th year

question

An increase in which of the following would cause an increase in the expense ratio for an investment company? A) Redemption B) Management fees C) NAV D) Shareholder

answer

B) Management fees

question

When a corporation goes bankrupt, which of the following creditors would be the last to be paid? A) Internal Revenue Service B) Debenture Holders C) Preferred stockholders D) Common stockholders

answer

B) Debenture Holders

question

What effect will the declaration of a cash dividend have on a company's balance sheet? I. Cash will be reduced II. Dividends Payable will increase III. Net Working Capital will remain the same IV. Retained Earnings is reduced A) I and III only B) II and IV only C) I, II, and IV only D) I, II, III, and IV only

answer

B) II and IV only

question

Margin requirements established by the FRB can be: A) Increased by broker-dealers in the form of in-house rules B) Decreased by broker-dealers in the form of in-house rules C) Disregarded by institutional investors D) Replaced by SRO rules

answer

A) Increased by broker-dealers in the form of in-house rules

question

When preparing a bid for a new municipal issue, the underwriting syndicate would first determine the: A) NIC B) Reoffering yields C) Bid price D) Coupon rates

answer

B) Reoffering yields

question

Which of the following statements are correct regarding a bull call spread? I. It involves buying the lower exercise price and selling the higher exercise price II. It involves selling the lower exercise price and buying the higher exercise price III. It is entered as a debit spread IV. It is entered as a credit spread A) I and III B) I and IV C) II and III D) II and IV

answer

A) I and III

question

All of the following are TRUE of FNMA bonds EXCEPT they: A) Can be issued in registered form B) Can be issued in book entry form C) Are a direct obligation of the U.S. government D) Are generally a low-risk investment

answer

C) Are a direct obligation of the U.S. government

question

Regarding a head and shoulder chart pattern, a technical analyst feels that: A) A top formation is bullish B) A bottom formation is bearish C) It signifies that a trend is reversing D) It signifies that a trend is continuing

answer

C) It signifies that a trend is reversing

question

Corporations repurchase their own stock in the open market to: I. Increase the number of voting shares that the corporation holds II. Increase earnings per share III. Have stock available for stock options plans for key employees IV. Make the stock more marketable A) I only B) II and III only C) II, III, and IV only D) I, II, III, and IV

answer

B) II and III only

question

The Federal Reserve Board was given the authority to set margin requirements according to the provisions of the: A) Securities Act of 1933 B) Securities Exchange Act of 1934 C) Securities Investors Protection Act of 1970 D) Investment Company Act of 1940

answer

B) Securities Exchange Act of 1934

question

The purchase price of a no-load fund is determined by: A) The net asset value plus a sales charge B) The net asset value plus a commission C) The net asset value as computed at the end of the business day D) The supply and demand for the fund

answer

C) The net asset value as computed at the end of the business day

question

A correspondence used in detailing the terms of a municipal syndicate is called the: A) Offering Notice B) Bond Buyer New Issue Worksheet C) Syndicate Agreement D) Official Notice of Sale

answer

C) Syndicate Agreement

question

A corporation has raised money to use for expansion of its plant within the next six months. In which of the following securities should the corporation invest the funds until they are utilized? A) Commercial paper B) Long-term municipal zero-coupon bonds C) U.S. Treasury bonds D) High-quality preferred stocks

answer

A) Commercial paper

question

Which of the following are true concerning stop orders? I. A buy stop can be placed above an area of resistance II. A sell stop can be placed below an area of support III. All stop orders must be executed at a specific price or better IV. Floor brokers may execute stop orders whenever they wish A) I and II only B) II and III only C) III and IV only D) I, II, And IV only

answer

A) I and II only

question

As far as stop-limit orders are concerned: A) The activating round-lot sale is also the execution price B) The order will become a market order as soon as it is activated C) The order can be activated but many or may not be executed D) The customer is guaranteed an execution at the limited price after the order is activated

answer

C) The order can be activated but many or may not be executed

question

A mutual fund investor who redeems shares will receive the: A) Bid price of the previous day's close B) Current offering price C) Next computed bid price on the day the shares are redeemed D) Next computed asked price on the day the shares are redeemed

answer

C) Next computed bid price on the day the shares are redeemed

question

A registered representative finds the most of his customers are reluctant to buy stocks due to extreme market volatility. Until the volatility subsides, which of the following would NOT be suitable strategy to recommend to these nervous clients? A) Invest in money market funds B) Invest in Treasury securities C) Offer to reimburse customers who lose money ins stocks D) Invest in CDs

answer

C) Offer to reimburse customers who lose money ins stocks

question

When examining an earning report for National Corporation, a registered representative sees that earnings per share is reported on both a primary and fully diluted basis. This indicates that: I. The company has convertible bonds or convertible preferred stock outstanding II. The company has cumulative and participated preferred stock outstanding III. Earnings per share is calculated using current shares outstanding and also assuming that all convertible securities were converted IV. Earnings per share is calculated on a pretax and after-tax basis A) I and III only B) II and IV only C) I, III, and IV only D) I, II, III, and IV

answer

A) I and III only

question

When a market maker gives a quote for a stock without qualification, the quote is a: A) Subject quote for 100 shares B) Workout quote for 100 shares C) Nominal quote for 100 shares D) Firm quote for 100 shares

answer

D) Firm quote for 100 shares

question

The advance-decline theory states that: A) A bull exists if the Dow industrials and transportations make new highs B) A bear market exists if more put options have been purchased by investors than call options C) It is bullish if more stocks go up than go down during the day D) A large number of shares sold short is bullish

answer

C) It is bullish if more stocks go up than go down during the day

question

All of the following takes pace during the cooling-off period EXCEPT: A) The due diligence meeting B) The issuance of a red herring C) Stabilizing the issue D) Blue-Skying the issue

answer

C) Stabilizing the issue

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