Exam 1: Investment and Bond Market

Giant Investments mass mails a single-page, glossy flyer that lists the types of mutual funds it offers, along with a general explanation of what the investment objective of each type of fund is. The flyer also prominently provides Giant's contact information. Given these facts:

GoForBroke Broker-Dealers has distributed a list of ten mutual funds that it suggests are top-notch funds worthy of recommendation by GoForBroke's agents. Coincidentally, all the funds on this list also happen to be those that execute the majority of their trades through GoForBroke. Is GoForBroke in violation of any FINRA rules?

The Securities Exchange Act of 1934: I. regulates the market for new issues. II. delineates the registration requirements for investment advisers. III. regulates secondary market activities. IV. requires that officers and some other employees of member firms submit their fingerprints to the U.S. attorney general's office.

The Securities Act of 1933 did what?

The essential difference between a 401(k) plan and a 403(b) plan is that:

Mary is interested in buying shares of the Lambchops Corporation, which sells over-the-counter. The market maker with the best bid price--$3.15--is Veggie Investments. The market maker with the best ask price--$3.27-is Carnivor Investments. Mary conducts trades in NYSE-listed stocks through her broker, Omnivor and Associates. Given this scenario, which of the following statements is true?

Big of HiGrow Corporation needs more money to support the exceptional growth rate that his firm is enjoying. He meets with BigFee Investment Banker, who agrees to handle the IPO for HiGrow. As part of the process, BigFee's staff works with HiGrow's accountants to prepare the registration statement that is filed with the SEC. After the issue has been sold to the public, Mr. Sharp, a CPA who has invested in the stock of HiGrow, discovers that there are some accounting irregularities in the financial statements provided in HiGrow's prospectus. Who can be sued for the misleading statements? I. Mr. Big II. Big Fee Investment Banker III. HiGrow's accountants IV. HiGrow's attorneys

Which of the following are duties of the specialist on an exchange floor? I. executing limit orders if/when the limit price specified is reached II. minimizing any imbalance in supply and demand for the stock(s) that the specialist is assigned III. determining an opening price for each assigned stock every day IV. serving as an auctioneer for the shares of the assigned stocks

Which of the following securities always sell at a discount from their face values? I. Treasury bills II. Treasury notes III. industrial revenue bonds IV. bankers acceptances

Which of the following is not an advantage that an exchange traded fund (ETF) has over a traditional mutual fund?

Which of the following statements regarding insider trading penalties is true?

Private placements may be sold to whom?

Which of the following stock funds would you expect to be the least risky?

Which of the following statements regarding the "rights of accumulation" is true?

Your client, Mr. Whiff, knows nothing about investment companies, and you are educating him about the advantages of investing through one, rather than investing in individual stocks and bonds. Which of the following statements could get you in trouble?

Which of the following would not be a characteristic associated with stocks in which a growth fund might invest?

After having been divorced for several years, Mrs. Blended has remarried a man with three children of his own. She has set up a revocable trust in which she deposited funds that she inherited when her mother died, so that the monies will go uncontested to her two biological children in the event of her own death. These two adult children are the only beneficiaries of the trust. Mrs. Blended has no plans to touch any of the money in the trust unless circumstances demand it in the future. The trust is invested in a mutual fund that paid $500 in dividend income and distributed $3,000 in long-term capital gain income to the trust this year. Which of the following statements is true regarding the tax treatment of these distributions?

NASDAQ market makers provide investors with assurance that:

Donald is the owner and CEO of Just Ducky Broker-Dealers. His wife, Ms. Daisy handles all the ministerial duties for the firm. The firm has three other employees. Huey is the municipal bond specialist and handles client trades in municipal securities only; Dewey handles only mutual fund sales for clients; Louie handles all aspects of client trading in stocks, corporate bonds, and options. Which of the following statements regarding the minimum FINRA registration requirements for these individuals is true?

The stock of Southwest Airlines (LUV) is selling for $11.77 in mid-September. An October put on the stock is selling for $1.45 and gives the owner the right to sell the stock for $13.00 prior to its expiration. In this example, the option premium is: