Practice Test Series 65

Document Content and Description Below

Practice Test Series 65 what is the equation for operating margin? - ANS - net profit / revenue what type of risk does beta calculate? - ANS - systematic risk, risk of a single security compared to... the market as a whole what type of risk is eliminated if you always hold a bond until maturity? - ANS - interest rate risk can preferred stock ever be called back by a company? - ANS - yes do you have voting rights if you hold an ADR? - ANS - no what are some things that fundamental analysts look for? - ANS - fiscal policy, money supply, industry analysis, monetary policy, interest rates, and the economic environment. what type of risk does a zero coupon bond not have? - ANS - reinvestment risk what should be associated with OTC markets? - ANS - massive market, trades government securities etc does a corporation have to pay a production tax? - ANS - no what is an Alien Corporation? - ANS - incorporated in a country other than the United States what is a Foreign Corporation? - ANS - conducts business outside of the state of its incorporation what are examples of penalty free withdrawals from a traditional IRA? - ANS - medical bills, tuition expenses, first time home purchase, disability, beneficiary of deceased who previously held IRA when can a short sale take place? - ANS - Only on an up-tick or zero-uptick price movement when you inherit a security what is your cost basis? - ANS - when the death occurs the fair value of the security is your cost basis, and it is always a long term gain what is a way to combat the probate court process? - ANS - setting up a trust to determine a fair price to charge as a commission what should be considered? - ANS - the type of security, current market price and conditions, size of the purchase, amount of time and expense involved, and the nature of the member's business when people are getting old what should you estimate their time horizon to be? - ANS - reasonably long because life expectancies are high do individuals have balance sheets? - ANS - yes what is the difference between a market maker and a specialist? - ANS - A specialist works on the floor of an exchange like the NYSE to maintain an orderly market in assigned stocks, when a market maker does the same thing in OTC markets can you convert a 401(k) directly into a roth IRA? - ANS - no, it must be in a traditional ira first what is an example of a non qualified retirement plan? - ANS - plan 457 (government employees) how long do IAs have to maintain books? - ANS - Five years from the end of the fiscal year during which the last entry was recorded an IA would be exempt from registering if he had under how many clients int he last 12 months? - ANS - 15 is the education of financial planners found on part 1 or part 2 of the form adv? - ANS - part 2 what is the schedule H? - ANS - requires registered investment advisors to fully disclose the terms of their wrap fee programs if a firm automatically deducts fees out of a customer account what must they do? - ANS - 1. have written authorization that it is alright to automatically take fees out 2. the custodian agrees to send the client statements at least quarterly 3. a copy of the bill and the manner in which the fee was calculated is provided to the client and custodian at the same time. is the administrator allowed to aid in selecting the appropriate court in which to process a criminal trial? - ANS - no this is left up to the judicial system if in an initial meeting the IA does not provide the client with part 2 of the form adv what are they required to do? - ANS - give the client 5 days to cancel without penalty what 3 conditions must be met for an IA to pay commissions to solicitors for bringing in business? - ANS - 1. the investment advisor must be registered under the Advisors Act 2. there must be a written agreement 3. and cash referral fees cannot be paid to a solicitor that is subject to statutory disqualification when does an administrator not have jurisdiction over a newsletter? - ANS - when an offer is made in a newspaper with more than two-thirds of its circulation outside the administrator's state how long until registration is effective after you file? - ANS - 30 days, unless the party is notified what will high inflation do to interest rates? - ANS - interest rates will increase if the duration is long on a bond will it be more sensitive or less sensitive to interest rate changes? - ANS - more sensitive which index tracks the largest amount of bonds? - ANS - Lehman Aggregate Bond Index what index is considered to be the broadest measure of the activity and movement of the overall stock market? - ANS - wiltshire 5000 what index tracks the stocks on the NYSE? - ANS - S&P500 [Show More]

Last updated: 2 years ago

Preview 1 out of 9 pages