Question 1

Which of the following is true about treasury bonds?

Accepted Answer

A) have no default risk. 
B) have no interest-rate risk. 
C) have no prepayment risk. 
D) are totally risk-free. 
A) have no default risk. 
B) have no interest-rate risk. 
C) have no prepayment risk. 
D) are totally risk-free. A

Question 2

Ari Gaunt was affiliated with Savvy Investments and was terminated after some of the female representatives associated with Savvy filed sexual harassment complaints against him. Mr. Gaunt believes that he is still due money for some transactions he executed prior to his termination; Savvy believes otherwise. Under FINRA's Code of Arbitration:

Accepted Answer

A) Ari may either sue Savvy in a civil court of law or submit his claim to arbitration. 
B) if Ari submits his claim for arbitration and is unhappy with the panel's decision, he can then sue Savvy in a civil court of law. 
C) Ari has six years to submit his claim to arbitration. 
D) both B and C are true statements. 
A) Ari may either sue Savvy in a civil court of law or submit his claim to arbitration. 
B) if Ari submits his claim for arbitration and is unhappy with the panel's decision, he can then sue Savvy in a civil court of law. 
C) Ari has six years to submit his claim to arbitration. 
D) both B and C are true statements. C

Question 3

Under current tax laws, which of the following distributions received from a mutual fund qualify for preferential tax treatment?
I. short-term capital gains
II. long-term capital gains
III. qualifying dividends
IV. non-qualifying dividends

Accepted Answer

A) III only 
B) II and III only 
C) I, II, and III only 
D) I, II, III, and IV 
A) III only 
B) II and III only 
C) I, II, and III only 
D) I, II, III, and IV B

Question 4

Cross wanders into your office with a $35,000 check that he has received from his recently-deceased wife's insurance company and wants you to advise him how to invest it, since that is your job, as he puts it. You ask him to fill out a standard investor profile questionnaire, but he refuses to do so. You offer to fill it out for him, based on his answers to your verbal questions, but he still refuses and calls you a "nibby-nose." Based on this, you can:

Accepted Answer

A) allocate the $35,000 any way you choose since you have an uncooperative client. 
B) advise him to invest the money in a money market mutual fund instead of holding it as cash. 
C) advise him to invest the money in an S&P 500 Index fund. 
D) The advice provided in either Choice B or Choice C would be appropriate. 
A) allocate the $35,000 any way you choose since you have an uncooperative client. 
B) advise him to invest the money in a money market mutual fund instead of holding it as cash. 
C) advise him to invest the money in an S&P 500 Index fund. 
D) The advice provided in either Choice B or Choice C would be appropriate.

Question 5

The Securities Exchange Commission consists of:

Accepted Answer

A) 6 members, elected by member firms. 
B) 5 members, appointed by the President of the U.S., with Senate approval 
C) 7 members, appointed by FINRA. 
D) 5 members, appointed by the Secretary of Treasury of the U.S. 
A) 6 members, elected by member firms. 
B) 5 members, appointed by the President of the U.S., with Senate approval 
C) 7 members, appointed by FINRA. 
D) 5 members, appointed by the Secretary of Treasury of the U.S.

Question 6

Annie Vestor owns shares of the URMoney Mutual Fund. Annie lives on the west coast in Seattle, Washington. URMoney reported a net asset value per share of $10.10 on October 9th. On October 10th, its reported net asset value per share was $10.20. Upon arriving home at 12 P.M. (her time) on October 9th, Annie logged into the URMoney website and entered an order to redeem 500 shares of her holdings in the fund. This order will be transacted at:

Accepted Answer

A) the net asset value of the fund at the end of the trading day on October 11th. 
B) $10.20 
C) $10.10 
D) The price at which this order will be transacted cannot be estimated based on the information provided. 
A) the net asset value of the fund at the end of the trading day on October 11th. 
B) $10.20 
C) $10.10 
D) The price at which this order will be transacted cannot be estimated based on the information provided.

Question 7

Fast Lane met an early death at the age of 42. Mr. Lane had been making contributions to a variable annuity contract for several years, and at the time of his death, his contributions totaled $25,000.Although the value of the contract had at one time reached $40,000, earnings included, a downturn in the market has resulted in a contract value of only $23,000.How much will Mr. Lane's beneficiaries receive as the death benefit associated with this contract under these circumstances?

Accepted Answer

A) nothing, since the contract now has a value that is less than Mr. Lane's total contributions 
B) the average of what its value once was and what it is today: $31,500 
C) $25,000 
D) $23,000 
A) nothing, since the contract now has a value that is less than Mr. Lane's total contributions 
B) the average of what its value once was and what it is today: $31,500 
C) $25,000 
D) $23,000

Question 8

Joel has a 28-year-old client who has been promoted to the elevated position of senior software engineer with a large, well-known, software company at her relatively young age. She has come to Joel for investment advice, explaining to him that she is risk-averse, having been influenced by parents who grew up in a foreign country and had little, prior to immigrating to America and working hard to achieve their dreams for themselves and their children. She has $50,000 that she wants him to invest for her, and her primary goal is to be able to have enough
Money, beyond what she expects to have in her employer's retirement program, to return to her home country and help others achieve their dreams. Joel explains to her that she may have to invest in riskier securities in order to achieve her goal, but his client is adamant that she wants her portfolio to be invested to target growth with the least risk exposure possible. Given the facts:

Accepted Answer

A) Joel should divide his client's monies among growth, aggressive growth, and foreign stock funds. Regardless of what she says, she has a long investment horizon and can afford to take on more risk. 
B) Joel should invest his client's monies in a fund that specializes in stocks of his client's home country to avoid the exchange rate risk that she will be exposed to when she returns. 
C) Joel should invest his client's monies in a U.S. government bond fund since she is risk-averse. 
D) Joel should invest his client's monies in a growth fund to target her growth objective. 
A) Joel should divide his client's monies among growth, aggressive growth, and foreign stock funds. Regardless of what she says, she has a long investment horizon and can afford to take on more risk. 
B) Joel should invest his client's monies in a fund that specializes in stocks of his client's home country to avoid the exchange rate risk that she will be exposed to when she returns. 
C) Joel should invest his client's monies in a U.S. government bond fund since she is risk-averse. 
D) Joel should invest his client's monies in a growth fund to target her growth objective.

Question 9

The compensation records that FINRA member firms are required to maintain must include which of the following?
I. the names of the persons that have provided the compensation
II. names of the associated persons receiving the compensation
III. the amount of cash received
IV. the nature and value (if known) of any non-cash compensation received

Accepted Answer

A) I and III only 
B) II and III only 
C) II, III, and IV only 
D) I, II, III, and IV 
A) I and III only 
B) II and III only 
C) II, III, and IV only 
D) I, II, III, and IV

Question 10

Cliff places an order to sell 500 shares of the stock of Gap, Inc. (GPS) via his broker's website. Cliff does not currently own any shares of GPS. This order is:

Accepted Answer

A) illegal, and the broker's website will reject it. 
B) an example of a stop loss order. 
C) referred to as a short sale. 
D) indicating that Cliff expects the price of Gap, Inc. to rise. 
A) illegal, and the broker's website will reject it. 
B) an example of a stop loss order. 
C) referred to as a short sale. 
D) indicating that Cliff expects the price of Gap, Inc. to rise.

Question 11

On which of the following items do mutual fund shareholders get to vote?
I. any change in the investment objective of the fund
II. the election of a new investment adviser
III. the renewal of the fund's 12b-1 fee
IV. the purchase or sale of real estate by the fund

Accepted Answer

A) I, II, III, and IV 
B) I, II, and IV only 
C) I, II, and III only 
D) I, III, and IV only 
A) I, II, III, and IV 
B) I, II, and IV only 
C) I, II, and III only 
D) I, III, and IV only

Question 12

GoForBroke Investments has registered with the SEC to be a market maker in certain NASDAQ-listed securities. In order to be able to enter bid and ask quotes for the securities in which it is going to make a market, GoForBroke must subscribe to which level of NASDAQ?

Accepted Answer

A) Level I 
B) Level II 
C) Level III 
D) Level IV 
A) Level I 
B) Level II 
C) Level III 
D) Level IV

Question 13

Private placements are exempt from the registration requirements of the Securities Act of 1933 under the rules contained in:

Accepted Answer

A) Regulation A. 
B) Regulation D. 
C) Regulation E. 
D) the Securities Exchange Act of 1934. 
A) Regulation A. 
B) Regulation D. 
C) Regulation E. 
D) the Securities Exchange Act of 1934.

Question 14

You have a client, Richie Rich, who is in the 39.6% marginal tax bracket, and one of his investment goals is to minimize his payments to the IRS. Which of the following instruments would serve this purpose?

Accepted Answer

A) U.S. Treasury bills 
B) general obligation bonds 
C) an investment-grade corporate bond 
D) Both Selections A and B would serve to minimize his payments to the IRS. 
A) U.S. Treasury bills 
B) general obligation bonds 
C) an investment-grade corporate bond 
D) Both Selections A and B would serve to minimize his payments to the IRS.

Question 15

Under FINRA Rule 2830, a member firm and its associates are prohibited from selling shares of a mutual fund if the service fees disclosed in the fund prospectus exceed:

Accepted Answer

A) 0.25% of the fund's average annual net assets. 
B) 0.50% of the fund's average annual net assets. 
C) 0.75% of the fund's average annual net assets. 
D) 1.00% of the fund's average annual net assets. 
A) 0.25% of the fund's average annual net assets. 
B) 0.50% of the fund's average annual net assets. 
C) 0.75% of the fund's average annual net assets. 
D) 1.00% of the fund's average annual net assets.

Question 16

After three warnings, Honest Investments was forced to terminate Sly Conman, one of its representatives, for making inaccurate statements when offering its mutual fund products to customers. Given this scenario:

Accepted Answer

A) Honest must provide FINRA with an electronic notification of the termination within 48 hours and provide a written copy of the submitted form to Mr. Conman within 30 days of the filing. 
B) Honest must provide FINRA with an electronic notification of the termination within 30 days and provide a written copy of the submitted form to Mr. Conman within that same period of time. 
C) Honest must provide FINRA with an electronic notification of the termination within 48 hours and provide a written copy of the submitted form to Mr. Conman within 10 business days. 
D) Honest must provide FINRA with an electronic notification of the termination within 48 hours and mail a written copy of the submitted form to both FINRA and Mr. Conman within 14 days. 
A) Honest must provide FINRA with an electronic notification of the termination within 48 hours and provide a written copy of the submitted form to Mr. Conman within 30 days of the filing. 
B) Honest must provide FINRA with an electronic notification of the termination within 30 days and provide a written copy of the submitted form to Mr. Conman within that same period of time. 
C) Honest must provide FINRA with an electronic notification of the termination within 48 hours and provide a written copy of the submitted form to Mr. Conman within 10 business days. 
D) Honest must provide FINRA with an electronic notification of the termination within 48 hours and mail a written copy of the submitted form to both FINRA and Mr. Conman within 14 days.

Question 17

Doc purchased shares of the MedTech Fund at its net asset value of $9.66 a share at the beginning of the year. The fund distributed dividends of $0.12 a share and capital gains of $0.10 a share during the year. The net asset value at the end of the year was $12.00. The fund's total return was:

Accepted Answer

A) 21.3%. 
B) 26.5%. 
C) 25.5%. 
D) 10.1%. 
A) 21.3%. 
B) 26.5%. 
C) 25.5%. 
D) 10.1%.

Question 18

Anna Lyst observes that the beta of a certain stock is 0.8. This means that:

Accepted Answer

A) if the S&P 500 Index loses 10%, this stock can be expected to lose 8%. 
B) the stock is 80% more volatile than the S&P 500 Index. 
C) if the S&P 500 Index is up 10%, this stock can be expected to lose 8%. 
D) the stock is riskier than the overall market. 
A) if the S&P 500 Index loses 10%, this stock can be expected to lose 8%. 
B) the stock is 80% more volatile than the S&P 500 Index. 
C) if the S&P 500 Index is up 10%, this stock can be expected to lose 8%. 
D) the stock is riskier than the overall market.

Question 19

A load mutual fund offers reduced load charges when an investor invests over $25,000 in the fund. Which of the following can combine their funds in order to meet that breakpoint and get the reduced sales charge?
I. Mr. and Mrs. Smith
II. Mrs. Smith and her 8-year-old daughter, Susie
III. Mr. Smith and his brother, Darwin
IV. The Smithereen Investment Club, of which Mr. and Mrs. Smith are co-chairpersons

Accepted Answer

A) I only 
B) I and II only 
C) I, II, and IV only 
D) I, II, and III only 
A) I only 
B) I and II only 
C) I, II, and IV only 
D) I, II, and III only

Question 20

Which of the following statements regarding the required distribution of income by a regulated investment company are true?

Accepted Answer

A) Both short-term and long-term capital gains earned by the company can be distributed only once a year. 
B) Under current tax laws, qualifying dividends distributed to the company's investors are taxable to those investors at a preferential rate-i.e., either 0% or 15%, depending on the investor's marginal tax rate. 
C) If an investor in the investment company has elected to reinvest his dividend and capital income in the company rather than receiving a check, then the investor is not required to pay taxes on the reinvested funds. 
D) Both A and B are true statements. 
A) Both short-term and long-term capital gains earned by the company can be distributed only once a year. 
B) Under current tax laws, qualifying dividends distributed to the company's investors are taxable to those investors at a preferential rate-i.e., either 0% or 15%, depending on the investor's marginal tax rate. 
C) If an investor in the investment company has elected to reinvest his dividend and capital income in the company rather than receiving a check, then the investor is not required to pay taxes on the reinvested funds. 
D) Both A and B are true statements.

Which of the following is true about treasury bonds?

Under current tax laws, which of the following distributions received from a mutual fund qualify for preferential tax treatment? I. short-term capital gains II. long-term capital gains III. qualifying dividends IV. non-qualifying dividends

The Securities Exchange Commission consists of:

Cliff places an order to sell 500 shares of the stock of Gap, Inc. (GPS) via his broker's website. Cliff does not currently own any shares of GPS. This order is:

On which of the following items do mutual fund shareholders get to vote? I. any change in the investment objective of the fund II. the election of a new investment adviser III. the renewal of the fund's 12b-1 fee IV. the purchase or sale of real estate by the fund

GoForBroke Investments has registered with the SEC to be a market maker in certain NASDAQ-listed securities. In order to be able to enter bid and ask quotes for the securities in which it is going to make a market, GoForBroke must subscribe to which level of NASDAQ?

Private placements are exempt from the registration requirements of the Securities Act of 1933 under the rules contained in:

You have a client, Richie Rich, who is in the 39.6% marginal tax bracket, and one of his investment goals is to minimize his payments to the IRS. Which of the following instruments would serve this purpose?

Under FINRA Rule 2830, a member firm and its associates are prohibited from selling shares of a mutual fund if the service fees disclosed in the fund prospectus exceed:

After three warnings, Honest Investments was forced to terminate Sly Conman, one of its representatives, for making inaccurate statements when offering its mutual fund products to customers. Given this scenario:

Doc purchased shares of the MedTech Fund at its net asset value of $9.66 a share at the beginning of the year. The fund distributed dividends of $0.12 a share and capital gains of $0.10 a share during the year. The net asset value at the end of the year was $12.00. The fund's total return was:

Anna Lyst observes that the beta of a certain stock is 0.8. This means that:

Which of the following statements regarding the required distribution of income by a regulated investment company are true?

Investment and Securities

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Uniform Securities Act USA and State Registration Requirements

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Exam 1: Investment and Bond Market

Which of the following is true about treasury bonds?

Under current tax laws, which of the following distributions received from a mutual fund qualify for preferential tax treatment? I. short-term capital gains II. long-term capital gains III. qualifying dividends IV. non-qualifying dividends

The Securities Exchange Commission consists of:

Cliff places an order to sell 500 shares of the stock of Gap, Inc. (GPS) via his broker's website. Cliff does not currently own any shares of GPS. This order is:

On which of the following items do mutual fund shareholders get to vote? I. any change in the investment objective of the fund II. the election of a new investment adviser III. the renewal of the fund's 12b-1 fee IV. the purchase or sale of real estate by the fund

GoForBroke Investments has registered with the SEC to be a market maker in certain NASDAQ-listed securities. In order to be able to enter bid and ask quotes for the securities in which it is going to make a market, GoForBroke must subscribe to which level of NASDAQ?

Private placements are exempt from the registration requirements of the Securities Act of 1933 under the rules contained in:

You have a client, Richie Rich, who is in the 39.6% marginal tax bracket, and one of his investment goals is to minimize his payments to the IRS. Which of the following instruments would serve this purpose?

Under FINRA Rule 2830, a member firm and its associates are prohibited from selling shares of a mutual fund if the service fees disclosed in the fund prospectus exceed:

After three warnings, Honest Investments was forced to terminate Sly Conman, one of its representatives, for making inaccurate statements when offering its mutual fund products to customers. Given this scenario:

Doc purchased shares of the MedTech Fund at its net asset value of $9.66 a share at the beginning of the year. The fund distributed dividends of $0.12 a share and capital gains of $0.10 a share during the year. The net asset value at the end of the year was $12.00. The fund's total return was:

Anna Lyst observes that the beta of a certain stock is 0.8. This means that:

Which of the following statements regarding the required distribution of income by a regulated investment company are true?

Investment and Securities

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

Filters