Exam 1: Investment and Bond Market

Which of the following persons is not subject to the fingerprinting requirements of the Securities Exchange Act of 1934? I. a registered transfer agent of a securities exchange II. a firm that engages only in the sale of mutual fund shares III. a receptionist at a brokerage firm who answers phones and directs calls to the agents employed by the firm IV. a market maker in the over-the-counter market

Tex Payor bought shares of the Stocks4U Mutual Fund on February 26^th.During the year, the fund sold some of the stocks in which it was invested, generating long-term capital gain income for the fund. Tex received a distribution of some of these gains at the end of the year, based on his proportionate ownership of the fund. Which of the following statements is true regarding the tax consequences of this distribution to Tex?

Newbie has recently become licensed as a registered representative and is disappointed to discover no clients standing in line at the door to her office at Savvy Investments. She decides she simply must take on a second job in order to pay the rent. The fitness club to which she belongs is advertising for a weekend receptionist, and the club manager has told her the job is hers if she wants it. Given this scenario, Ms. Newbie:

Connie Serve placed an order to purchase five, $1,000 Treasury bonds in the secondary market on Tuesday, October 12^th.Connie will be required to pay for this purchase on which day?

Joan is a customer of GetErDone Broker-Dealers. Her twin sister, Jean, has accompanied her to GetErDone's office and has gathered some information regarding opening an account with the firm, giving it her contact information at the same time. Under Regulation S-P, which of the following statements regarding GetErDone's handling of Joan's and Jean's personal information is true?

Steve Sharp sees a quote for a mutual fund that indicates the fund has a net asset value (NAV) of $26.60 and a public offering price (POP) of $28.00. Based on this, Mr. Sharp quickly ascertains that this fund must have:

Main Street Capital Corporation (MAIN) is registered as a non-diversified investment company under the Investment Company Act of 1940.Based on this, which of the following statements regarding MAIN are true? I. MAIN may not invest more than 5% of its investment monies in any single issuer. II. The net asset value of MAIN's shares is likely to fluctuate more than that of a diversified investment company. III. MAIN's returns are more likely to be affected by any single, specific economic occurrence or regulatory change.

Which of the following correctly describe differences between a profit-sharing plan and a money purchase plan? I. An employer can elect to make no contribution to a profit-sharing plan in a bad year, but the employer must make contributions to a money purchase plan, regardless. II. Only employers make contributions to profit-sharing plans whereas both employers and employees can contribute to a money purchase plan. III. A profit-sharing plan is a defined benefit plan whereas a money purchase plan is a defined contribution plan.

Which of the following would not constitute a "public appearance," as defined by FINRA?

The stock of eBay, Inc. (EBAY) currently has a beta of 1.67. Based on this, which of the following statements are necessarily true? I. If the market is up 5%, an investor can expect the returns on eBay to increase by 1.67 times this amount, or 8.35%. II. eBay would be a particularly good investment for an investor with a short investment horizon. III. The returns on eBay are more volatile than the returns on the market in general. IV. eBay has more unsystematic risk than the market in general.

Clem Shyster is a registered representative with a family of mutual funds. A married couple in their 50s sought his advice about how they should best invest an $80,000 profit that they had received when they sold a rental property they owned for a number of years. Their investment profile indicated to Clem that their main investment objective was capital appreciation and that they were willing to accept moderate levels of risk. Clem advised them to invest $10,000 in eight different growth funds, each of which had a 7% front-end load. Has Clem violated any securities laws with his recommendation?

MoeMoney Investments is a diversified management company. This means that:

Which of the following portfolios best represents a suitable asset allocation for a risk-averse investor? I. Cash/money market fund: 20%; government bonds: 10%; investment-grade bonds: 15%; foreign stocks: 10%; blue-chip stocks: 25%; high-yield bonds: 10%; small cap stocks: 10% II. Cash/money market fund: 30%; government bonds: 20%; investment-grade bonds: 15%; foreign stocks: 3%; blue-chip stocks: 25%; high-yield bonds: 0%; small cap stocks: 7% III. Cash/money market fund: 10%; government bonds: 5%; investment- grade bonds: 10%; foreign stocks: 15%; blue-chip stocks: 25%; high-yield bonds: 10%; small cap stocks: 25%

Investor has purchased 100 shares of the common stock of the Everyman Corporation. As such, which of the following is not a right that Mr. Investor has?

Which of the following describes a difference between a unit investment trust (UIT) and a mutual fund?

The stock of Nutrisystem, Inc. (NTRI) is selling for $17.70 when Miss Piggy places a limit order to buy the stock at $17.65. During the period the order is open, NTRI falls to $17.60 and then increases to $17.67.Which of the following statements is most likely to be true in this scenario?

George Geek is 30 years old, single, and earns $103,000 a year as a software engineer for a small, start-up IT company. George's company does not itself offer a retirement plan, and George is considering his options. The current contribution limits for both the traditional IRA and Roth IRA plans is the lesser of $5,000 or 100% of earned income. Which of the following statements applies to George's situation?

The American Funds family of funds offers numerous funds to investors. Among these are a U.S. government bond fund, a high-yield corporate bond fund, a diversified emerging markets fund, and a large stock growth fund. Of these four, the one that would expose the investor to the most social and political risk is its:

The Federal Reserve announces that it plans to buy $3.89 billion in Treasury securities on the open market. All else equal, which of the following is a likely result of this Fed action?

As her college graduation present, Jennifer's grandmother gave her 200 shares of the stock of IBM. Her grandmother had purchased the shares for $54 a share in October 2002, and the stock was selling for $132 a share on the day of Jennifer's graduation eight years later. Eight months after her graduation, Jennifer decides to sell the shares to get money to help with the down payment on a condo she is purchasing. If IBM is selling for $125 on the day of the sale, what are the tax consequences of this sale for Jennifer?