Exam 1: Investment and Bond Market

Which of the following plans does not have the requirement that its participants must begin withdrawing funds from the plan by April 1st of the year after they turn 70 ½? I. SIMPLE IRA II. 401(k) III. Roth IRA IV. profit-sharing plan

A general decrease in price levels in the economy is referred to as:

Which of the following pieces of information may not be contained in a tombstone advertisement under SEC rules?

Noah Mete is interested in selling his shares of the Lambchops Corporation, which trades 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. Noah conducts trades in NYSE-listed stocks through his broker, Omnivor and Associates. Given this scenario, which of the following statements is true?

Which of the following activities are permitted during the "cooling off" period associated with a new offering? I. A preliminary prospectus may be provided to prospective investors. II. The security can be registered in any states in which it will be sold. III. The management of the issuing firm may give interviews in which they discuss the market for their products and future revenue expectations. IV. The underwriter of the issue may run a tombstone advertisement in the Wall Street Journal to announce the upcoming offering.

Your nephew has asked you to help him formulate a financial plan for his family. Scott is 27 years old and has been employed as an associate with a law firm for two years. Sarah, his wife, is 26 years old and works in the human resources department of a large corporation. The couple is childless now, but they plan to begin a family in a few years. Together, they have accumulated $10,000 in a savings account and recently inherited $40,000 cash. They expect to be able to start saving at least $5,000 annually since their incomes more than meet their current needs. They each have employer-provided health insurance and retirement plans. Both have excellent upward mobility potential in their careers. They currently pay taxes at the marginal rate of 15%. Scott tells you that although they regularly read some of the more popular financial investment magazines, neither feels particularly knowledgeable about the world of investments. Based on this information, which of the following statements is true?

Which of the following is not a characteristic of all auction stock exchanges in the U.S.?

Which of the following does not fall under the category of "sales literature," as defined by FINRA?

Which of the following is an example of a primary market transaction?

Which of the following bonds will experience the greatest percentage change in price for a given change in interest rates?

Tex Payor is an investor in the Invest4U Mutual Fund. The manager of the fund, fearing a substantial decline in the stock market, sold a lot of the fund's holdings to lock in profits. As a result, the fund earned a lot of long-term capital gain income. Which of the following statements is true regarding the tax treatment of this income?

An exchange-traded fund (ETF):

Which of the following statements regarding a letter of intent is true?

Which of the following describes a difference between a Roth IRA and a traditional IRA? I. Anyone with earned income can contribute to a traditional IRA, but not everyone with earned income can make contributions to a Roth IRA. II. The contributions made to a traditional IRA may be tax deductible, but the contributions made to a Roth IRA are never tax deductible. III. Contributions made to a Roth IRA may be withdrawn without penalty at any time whereas contributions to a traditional IRA may only be withdrawn without penalty when the contributor reaches 59 ½ or if the contributor meets some specific requirements (e.g., becomes disabled.) IV. When a contributor to a traditional IRA turns 70 ½, he must begin making mandatory withdrawals, but there are no mandatory withdrawals with a Roth IRA.

In mid-September, the stock of Oracle (ORCL) is selling for $25.60 a share. Ms. Hedge owns shares of Oracle and buys a put option on the stock with a strike price of $27 that expires in October for $2.20 per optioned share. Just prior to expiration, Oracle's stock is selling for $29. Ms. Hedge should: