Exam 1: Investment and Bond Market

Under FINRA's rules regarding proper supervision, member firms must: I. have clear written procedures to supervise the activities of its principals, registered representatives, and other associated persons. II. designate as an office of supervisory jurisdiction (OSJ) any office of the member that engages in maintaining custody of the funds and/or securities of the member's customers. III. prohibit the use of any electronic communication method, including personal electronic devices, for business-related communications unless the use of the devices can be properly supervised and the communications retained. IV. regularly evaluate the effectiveness of its supervisory policies.

Regulation D: I. enables smaller firms to raise capital more quickly and more cheaply. II. exempts the issuing firm from all disclosure requirements as long as the issue is being sold to no more than five investors. III. has restrictions regarding the resale of the securities being sold.

Tex Payor bought 1,500 shares of the Bonds4U Mutual Fund, a no load fund, on June 12^th for $28 a share and sold the shares the following year on June 11^th for $40 a share. This will result in which of the following tax consequences for Tex?

Nat Informed places a market order to buy 200 shares of Abercrombie & Fitch (ANF) on Thursday, September 16^th.When will Nat be required to pay for this Transaction?

Which of the following would qualify as accredited investors for a Regulation D offering? I. your 45-year-old, spinster aunt who has earned in excess of $200,000 annually over the last ten years as a pediatric surgeon II. your Uncle Miserly, who is reputed to have a net worth of $1.2 million III. Tiny Brokers, a small broker-dealer with a single office in the state of Kentucky IV. a trust containing assets that are valued between $3.5 and $4 million

Which of the following securities is not exempt from registration requirements?

Cashout recently sold some mutual fund shares that he owned. The sale resulted in long-term capital gain income of $6,000. He also sold some shares of a stock he had purchased during the year and realized a short-term capital gain on the sale of $2,000. The sale of another individual stock resulted in a short-term capital loss of $3,500. Mr. Cashout also had some bonds that he had bought at a premium mature, resulting in a long-term capital loss of $500. What is Mr. Cashout's net capital gain or loss from these transactions?

Which of the following is not one of the rules stipulated by the Securities Exchange Act of 1934?

Jill worked as a registered representative with GoForBroke Broker-Dealers for 8 years. She is married to Jack, whose job made it necessary for them to relocate to Thailand for 3 years. They have now returned, and Jill would like to begin working as a registered representative with GoForBroke again after her 3-year hiatus. Given this scenario:

The MaxCharge fund has a 5% front-end load and a 12b-1 fee that is 0.25% of its average net assets. Under these conditions, any rear-end load it may have is limited to:

Which of the following persons would not fall under the definition of "investment adviser," under federal guidelines?

Which of the following correctly describes how the holding period of a security is calculated when determining whether its sale will result in a short-term or a long-term capital gain?

Your 53-year-old client, Ms. Antsy, just inherited $80,000 from her aunt and has decided to retire immediately. She wants to invest in something that will allow her to begin making withdrawals immediately, and she wants to be certain that she will continue to receive payments at least until she turns 62 ½ and begins drawing social security. You should recommend Ms. Antsy invest in:

A fund's 12b-1 fees may not be used to pay which of the following?

You have just become a licensed registered representative with Fine, Howard, Fine and Associates, a broker-dealer.(Congratulations!) You have had a brokerage account with Anon Brokerage for the past ten years. In this instance, you are required to:

SuperDOT is:

A fund's transfer agent is responsible for: I. calculating and distributing the capital gain and dividend income of the fund. II. mailing shareholder account statements. III. paying fund expenses.

Mandatory guidelines for the prospectuses of which of the following are dictated by the Investment Company Act of 1940? I. mutual funds II. closed-end investment companies III. unit investment trusts IV. variable contracts

In 2008, Mr. Conservative bought a 1-year Treasury bill that was yielding 1.63%.The average annual rate of inflation in 2008 was 3.85%.In this case:

Which of the following do not fall under the category of "advertisement," as defined by FINRA? I. scripts used in telemarketing the products of the member firm II. a website maintained by the member firm III. research reports that the member firm distributes to both its existing clients and its prospective clients IV. sales material that a member firm distributes only to its institutional clients