A broker-dealer is permitted to accept payment for a new issue from a new customer when the: - ANSWER registration is effective
Which of the following actions is required when a firm receives cash in excess of $10,000
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A broker-dealer is permitted to accept payment for a new issue from a new customer when the: - ANSWER registration is effective
Which of the following actions is required when a firm receives cash in excess of $10,000 from one customer in one business day? - ANSWER File a Currency Transaction Report (CTR)
A transaction in which a writer covers a position by purchasing on option is called? - ANSWER a closing purchase
A customer has a cash balance in her account together with long positions in several securities. She has made no securities transactions in the account during the past 18 months. How often must the firm send her an account statement? - ANSWER Quarterly
To offer its shareholders a privilege to obtain its shares at a fixed price, which of the following products does a corporation issue? - ANSWER Rights
Which of the following responses describes an advantage of index funds? - ANSWER Lower management fees due to passive management of the fund
Blue-sky laws are regulated by which of the following entities? - ANSWER State securities regulators
Company ABC announces a 20% stock dividend for its common shareholders. If a customer holds 1,000 shares at $50.00, what is the new price and number of shares following the payment of the stock dividend? - ANSWER 1,200 shares at $41.67
An associated person who is not a registered representative is permitted to engage in which of the following activities? - ANSWER Provide account opening forms to a new customer
Which of the following security types provides investors with a stated maturity date, a floating interest rate, and an option to put the security back to a financial intermediary on a daily weekly basis? - ANSWER Variable rate demand note
The primary purpose of a syndicate desk in the context of an equity offering is to: - ANSWER Build an order book and allocate the stock
At the time of issuance, which of the following securities normally has the longest period to expiration? - ANSWER Warrants
All of the following risks apply to both foreign and domestic debt instruments except: - ANSWER Exchange
A savings account at a bank is guaranteed by which of the following entities? - ANSWER FDIC
Which of the following stakeholders has first claim priority in a Chapter 11 proceeding? - ANSWER Secured debt holders
Broker-dealer ABC seeks to underwrite a municipal securities offering by a local town in which the mayor is currently seeking re-election. A municipal finance professor who resides in the town and works for ABC contributed $200 to the mayor's re-election campaign 13 months ago. If the employee wants to support the campaign further without impacting the municipal securities business of the firm., he is permitted to make an additional contribution of up to what amount? - ANSWER $50
Upon expiration, all in-the-money S&P 100 index call options are settled by the delivery of which of the following? - ANSWER Cash
Which of the following statements is true about treasury stock? - ANSWER It is issued stock that has been subsequently required by the corporation.
What is the cost basis of an inherited mutual fund? - ANSWER The net asset value (NAV) of the shares when the owner dies
At issue, which of the following debt securities mature in one year or less? - ANSWER Money market instruments
Which of the following investment risks is the greatest risk in a variable life insurance policy? - ANSWER Market risk
Under normal circumstances, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? - ANSWER 13 months
Under SEC Regulation S-P (Consumer Privacy). which of the following information must a firm include in its customer privacy and opt-out notices? - ANSWER The policies to protect the security of nonpublic information
In the over-the-counter market, the term "spread" refers to the difference between the: - ANSWER Bid and asked prices
Regular way settlement on Treasury bonds is: - ANSWER Next business day
If a market maker posts a quote of 10.00 - 10.10 [25x10], which of the following actions is the market maker willing to take? - ANSWER Buy 2,500 shares at $10.00 and sell 1,000 shares at $10.10
A customer is an officer of a company that is involved in some significant changes. All of the following items are examples of corporate affairs that could be considered inside information if the customer shares them with his registered representative except: - ANSWER declare stock dividend
FinCen accomplishes its mission to safeguard the financial system from the abuses of financial crime, including terrorist financing and money laundering, by enforcing: - ANSWER the Bank Secrecy Act
A registered representative (RR) wants to participate in a private securities transaction. Which of the following actions must the RR take? - ANSWER Send written notice to his supervisor outlining the activity and compensation structure
A customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling at what price per share at expiration? - ANSWER $38
Which of the following From U4 reportable events results in a statutory disqualification? - ANSWER A felony conviction for a driving under the influence (DUI) charge
The lsat transaction in XYZ 5.50s 2030 was at 102. This bond is selling at: - ANSWER a premium
Which of the following outcomes are possible for the writer of a covered call option? - ANSWER Profit limited and loss limited
The call provision of a bond stipulates which of the following factors? - ANSWER Call date and call price
Which of the following products is adversely impacted if the issuer's credit rating is downgraded? - ANSWER Exchange-trade notes (ETNs)
Direct participation programs (DPPs) provide: - ANSWER exposure to non-correlated assets with steady returns.
The computation of dollar prices and accrued interest on municipal bonds is normally on what calendar basis? - ANSWER 30/360
A member of a stock exchange responsible for providing liquidity on a security by being willing to buy and sell at all times is known as: - ANSWER a market maker.
Which of the following communications with public is considered misleading? - ANSWER Literature providing 10-year performance information to support predictions of future performance
Under industry regulations, an initial purchase of $3,000 of common stock in a margin account requires a cash deposit of: - ANSWER $2,000
When is interest on a Treasury notes paid? - ANSWER semiannually
UTMA accounts are opened under the tax ID of the: - ANSWER minor.
Which of the following investments are generally traded according to their average life rather than their stated maturity dates? - ANSWER Asset-backed securities
An investor owns 100 shares of XYZ common stock at the current market price of $50 per share. If XYZ conducts a 1-for-2 reverse stock split, the investor's post-split stock position will be: - ANSWER 50 shares at $100 per share.
Call protection is most valuable to a bond owner when bond prices are generally: - ANSWER rising.
In the event of a stock split, which of the following parties is required to maintain a record of the shareholders eligible to receive the additional shares? - ANSWER Transfer agent
Under the Securities Act of 1933, registration is required for which of the following securities? - ANSWER American Depository Receipts (ADRs)
A firm is a participant in a Public offering. To sell a substantial amount of the securities to its customers. the firm agrees to repurchase the shares at no less than the original sales price. Such agreements are: - ANSWER prohibited as fraudulent and manipulative.
Stability in the value of a debt portfolio is greatest when: - ANSWER maturities of the debt securities are short
Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? - ANSWER The same stock in a cash account without paying for the stock in full
Roth 401(k) and Roth individual retirement account (IRA) plans share which of the following statement features? - ANSWER Qualified distributions are excluded from federal income tax.
Under FINRA rules, noncash compensation connected with the sale of variable contracts includes all of the following items except: - ANSWER commissions.
Under a system of statutory voting, a common stockholder has as many votes for each vacancy on the board of directors as the number of: - ANSWER shares owned by the stockholder.
Which of the following statements is true about all U.S. government agency issues? - ANSWER They are exempt from the registration under the Securities Act of 1933
No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons? - ANSWER No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points
Which of the following comparisons best describes the essential difference between a primary distribution and a secondary distribution? - ANSWER A primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares.
A married couple who earned income that exceeded $300.000 in each of the prior two years and reasonably expects the same for the current year is: - ANSWER an accredited investor.
Which of the following considerations should a registered representative explain to a customer when recommending a 529 college savings plan? - ANSWER The potential deductibility of contributions from state taxes
A decline in the gross domestic product (GDP) must last for at least how many quarters to be considered a recession? - ANSWER 2 quarters
Which of the following statements is true regarding a customer account held as tenants in common? - ANSWER The ownership of the decedent's assets is governed by their will or state law.
A registered representative (RR) who wants to place a mutual fund advertisement must obtain written approval from which of the following parties? - ANSWER A registered principal of the RR's firm
Under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors? - ANSWER Qualified institutional buyers (QIBS)
The redemption value of an open-end investment company's shares is based on the: - ANSWER NAV computed after the order is received.
In a period of low inflation and economic recession, the Federal Reserve is expected to take which of the following actions? - ANSWER Buy bonds in the open market
Which of the following represents the effect of a stock split? - ANSWER The price per share of common stock decreases.
A company announces a tender offer to its shareholders with the intent to buy a maximum of 1 million shares of its outstanding stick at $10 per share and sets no minimum number of shares to be purchased. An investor wants to participate in this offer and tenders his 1,000 share position. At the close of the offer period, only 900,000 shares have been tendered. How many, if any, of the investor's shares will the company purchase? - ANSWER 1,000
Which of the following actions is required of a broker-dealer's anti-money laundering (AML) program? - ANSWER Designating an AML compliance officer
When selling a fixed amount of a base currency to purchase a counter currency, which of the following factors is primarily used to determine how much of the counter currency the customer will receive? - ANSWER The spot exchange rate
A registered representative is reviewing the following portfolio:
* 30% ABC Energy Company
* 30% XYZ Health Care Company
* 30% Exchange-traded fund (tracks the S&P 500)
* 10% Money market funds
Which of the following risks is inherent in this portfolio? - ANSWER Nonsystematic
Which of the following statements is true regarding the concept of an annuity contract? - ANSWER The kind of annuity selected partly determines the payment amounts to the
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