Exam 1: Investment and Bond Market

and Mrs. R. Retired are planning on traveling extensively throughout the U.S. in their new motor home now that they have reached their golden years. Under FINRA rules, upon written instructions from Mr. and Mrs. R. Retired, their broker is required to hold their mail for a maximum of:

Your client is trying to choose between a variable annuity and a fixed annuity. You can tell him that: I. the fixed annuity will make guaranteed monthly payments, but has more purchasing power risk than a variable annuity. II. he can expect higher monthly payments from his fixed annuity during a bear market than he would get from a variable annuity. III. the earnings on both variable and fixed annuities grow tax-deferred.

Which of the following is not considered to be a "security" as defined by the Securities Exchange Act of 1934?

Eddie and Edith open a JTWROS account with you. This means that: I. You can accept a buy or sell order from either Eddie or Edith. II. Any check that is drafted upon a request to withdraw funds can be written to either Eddie or Edith, or both. III. If either Eddie or Edith die, the account assets will pass to that individual's estate, based on his or her percentage ownership of the account. IV. Correspondence concerning the account can be sent to either Eddie or Edith.

Under the rules of ERISA, all private-employer sponsored retirement plans must:

Giant Investments filed a registration statement with the SEC for a new fund it wanted to introduce and has received word that the registration statement is now effective. Based on this, Jack, a registered representative with Giant Investments, can tell a client that:

Ralph has a traditional IRA from which he has yet to make any withdrawals. Ralph will be turning 70 ½ in June, 2011.According to the required minimum distribution rule associated with traditional IRAs, Ralph is required to start withdrawing funds from this account:

Which of the following statements regarding CMOs is false?

Upon receiving approval via a majority vote of its shareholders, a mutual fund is permitted to:

The Slippery Fund is a high-yield bond fund, which means it invests a substantial amount of its money in:

In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. A month later, you notice that the stock is selling for $55 and decide to sell it. What is the tax consequence of this sale to you?

Which of the following statements regarding a Coverdell Education Savings Plan (ESA) are true? I. There are income limitations regarding those who may contribute to an ESA. II. There is a maximum annual aggregate amount that can be contributed to a single beneficiary's account. III. Contributions to an ESA are tax deductible. IV. The monies must be used prior to the beneficiary's 30th birthday for education-related expenses in order to avoid paying both taxes and a penalty.

A warrant differs from a standard call option in that:

Sarah Slick is kicking herself for having bought the stock of Bounce, Inc.at a higher price than she needed to have paid. She bought it at $50 a share on November 20^th and watched its price drop during December. Ms. Slick is confident that Bounce's stock price will bounce back (pun intended), but she decides that in the meantime, she will sell her shares and use the realized capital loss to offset some of the capital Gains she has realized on other investments during the year. Thus, on December 30th, she sells her shares of Bounce for $40 a share. During the first couple weeks of the new year, Sarah observes Bounce's price creeping upward, and she buys the same number of shares she previously sold for $45 a share on January 18^th. Given this scenario, which of the following statements is true?

Which of the following statements regarding callable bonds is false?

Which of the following would not have to register as an investment adviser or an investment adviser representative under the Investment Advisers Act of 1940? I. an insurance agent who sells only whole life and term life policies II. a commodity futures broker III. a bank employee who sells the bank's customers only CDs and other bank securities that are FDIC-insured IV. a person that is registered as a broker-dealer with the SEC that also provides investment advice to its customers for additional compensation

Which of the following statements regarding profit-sharing plans is false?

Which of the following activities are prohibited by FINRA when a representative is selling shares of a mutual fund? I. recommending that a client purchase shares of a mutual fund prior to its ex-dividend date, so that the client will receive the dividends when they are distributed unless this recommendation is justified by the specific circumstances of the client II. telling a client that a mutual fund that has only a contingent deferred sales charge is a no load fund III. telling a client that the interest he earns on a municipal bond fund will be free from federal taxation IV. refraining from placing the customer's order promptly in order to profit himself as a result of having done so

Shortfall placed a market order to buy 100 shares of Google (GOOG) with GetErDone Broker-Dealers. The market order was executed at $530 a share. In accordance with Regulation T:

Dottie is a newly-minted, registered representative and is doing some cold calling to line up appointments with prospects. When doing so, Dottie: I. must not call anyone on her firm's do-not-call list. II. must not call anyone on the FTC's national do-not-call-list. III. must not call anyone before 7 a.m. or after 7 p.m., based on the time zone of the person being called. IV. must provide the person called with her name, the name and contact information of her firm, and the purpose of her call.