Question 1

A group net order is one that benefits municipal syndicate members:

Accepted Answer

A) equally 
B) according to their percentage participation in the account 
C) according to the number of designated orders they've received 
D) according to the number of presale orders they've received 
A) equally 
B) according to their percentage participation in the account 
C) according to the number of designated orders they've received 
D) according to the number of presale orders they've received

Question 2

An issuer is most likely to request an investment letter from the purchaser in connection with which of the offerings?

Accepted Answer

A) a hot issue 
B) a mutual fund 
C) a private placement 
D) an exempt security 
A) a hot issue 
B) a mutual fund 
C) a private placement 
D) an exempt security

Question 3

Which of the following is not in the subscription agreement for a limited partnership offering?

Accepted Answer

A) identification of the limited partners 
B) qualification of the limited partners for the subscription 
C) granting of power of attorney to the limited partners 
D) a record of sales of the partnership interests 
A) identification of the limited partners 
B) qualification of the limited partners for the subscription 
C) granting of power of attorney to the limited partners 
D) a record of sales of the partnership interests

Question 4

Bubba Securities, Inc. offers 3,000,000 shares of Top Notch Manufacturing Corporation common stock at $27 per share. The next day an advertisement appears in the Wall Street Journal announcing the offering and listing the names of some of the underwriting firms. This ad is commonly referred to as a:

Accepted Answer

A) public offering 
B) tombstone ad 
C) sales directive 
D) syndicate announcement 
A) public offering 
B) tombstone ad 
C) sales directive 
D) syndicate announcement

Question 5

A registered bond with "Happy Birthday" scrawled across the face of the certificate is delivered to a broker/dealer in satisfaction of sale by another member firm. Assuming it is accompanied by an authentic assignment, power of substitution form, and tax stamps (if appropriate), this is good delivery only if:

Accepted Answer

A) the certificate is validated by the transfer agent 
B) the certificate is validated by the registered owner 
C) the marking did not cover the name of the registered owner or the principal amount of the bond 
D) this is not a good delivery under any circumstances 
A) the certificate is validated by the transfer agent 
B) the certificate is validated by the registered owner 
C) the marking did not cover the name of the registered owner or the principal amount of the bond 
D) this is not a good delivery under any circumstances

Question 6

What rate of return takes into consideration appreciation or depreciation in market value relating to the par value of a debt security?

Accepted Answer

A) current yield 
B) yield to maturity 
C) nominal yield 
D) basis yield 
A) current yield 
B) yield to maturity 
C) nominal yield 
D) basis yield

Question 7

Bubba maintains an individual cash account as well as a joint account with his wife, Bubbette. While Bubba is out of town on a fishing trip, Bubbette calls the brokerage firm with an order to buy 100 shares of Great Company, Inc., at the market value for Bubba individual account. It is a stock Bubba has previously informed the brokerage he wanted to buy at the "right price". What does the brokerage do?

Accepted Answer

A) refuse to accept the order unless Bubba has provided a signed trading authorization in favor of Bubbette 
B) execute the order as requested 
C) enter the order only after receipt of written instructions to do so from Bubba 
D) buy the stock in the joint account and, after verification from Bubba, journal the security to his individual account 
A) refuse to accept the order unless Bubba has provided a signed trading authorization in favor of Bubbette 
B) execute the order as requested 
C) enter the order only after receipt of written instructions to do so from Bubba 
D) buy the stock in the joint account and, after verification from Bubba, journal the security to his individual account

Question 8

In regard to discretionary accounts, which of the following statements is correct?

Accepted Answer

A) the customer must approve each transaction in writing before the order is entered 
B) the customer must grant written authorization to the member firm to exercise discretion in the account 
C) the account must be accepted in writing by an officer of the member firm 
D) both B and C 
A) the customer must approve each transaction in writing before the order is entered 
B) the customer must grant written authorization to the member firm to exercise discretion in the account 
C) the account must be accepted in writing by an officer of the member firm 
D) both B and C

Question 9

A management group may serve an investment company as its:

Accepted Answer

A) underwriter 
B) custodian 
C) investment advisor 
D) both A and C 
A) underwriter 
B) custodian 
C) investment advisor 
D) both A and C

Question 10

In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. If the option expires without being exercised, how is the premium expense treated by Bubba?

Accepted Answer

A) as a $600 capital loss 
B) as a $600 capital gain 
C) $600 is added to his acquisition cost for the stock 
D) $600 is held in abeyance until the stock is eventually sold 
A) as a $600 capital loss 
B) as a $600 capital gain 
C) $600 is added to his acquisition cost for the stock 
D) $600 is held in abeyance until the stock is eventually sold

Question 11

Service charges by a FINRA dealer for transfer and safekeeping of customer securities held in street name:

Accepted Answer

A) may not be levied under FINRA Conduct Rules 
B) may not be levied unless there is no trading in the account for more than six months 
C) may be levied only if the security has a value of less than $5,000 
D) may be levied only if the charge if fair, reasonable, and non-discriminatory 
A) may not be levied under FINRA Conduct Rules 
B) may not be levied unless there is no trading in the account for more than six months 
C) may be levied only if the security has a value of less than $5,000 
D) may be levied only if the charge if fair, reasonable, and non-discriminatory

Question 12

A tax shelter specifically designed for small employers is:

Accepted Answer

A) an IRA 
B) a SIMPLE 
C) a subsidized deferral plan 
D) a Shelter Island plan 
A) an IRA 
B) a SIMPLE 
C) a subsidized deferral plan 
D) a Shelter Island plan

Question 13

With the Regulation T requirement at 50%, a firm wishes to impose house rules that require a minimum equity of 40%. Which of the following is true?

Accepted Answer

A) this cannot be implemented because the level is below Reg T 
B) this cannot be implemented since maintenance requirements are only 25% of equity for long positions 
C) this is permissible 
D) this action must be approved by the FRB and FINRA 
A) this cannot be implemented because the level is below Reg T 
B) this cannot be implemented since maintenance requirements are only 25% of equity for long positions 
C) this is permissible 
D) this action must be approved by the FRB and FINRA

Question 14

Bubba is eligible for a Roth IRA. He may convert his SEP-IRA to a Roth IRA:

Accepted Answer

A) without restriction 
B) only after the two-year holding period 
C) after a 90-day holding period 
D) not ever 
A) without restriction 
B) only after the two-year holding period 
C) after a 90-day holding period 
D) not ever

Question 15

The initial Federal Reserve Bank margin requirement is set at 60% and Bubba purchases 100 shares of XYZ at $100 per share. He deposits $6,000 of the $10,000 purchase price in his account. If XYZ increases in value to $150 per share, how much excess equity would Bubba have in his account?

Accepted Answer

A) $1,000 
B) $1,500 
C) $2,000 
D) $3,000 
A) $1,000 
B) $1,500 
C) $2,000 
D) $3,000

Question 16

Regulation T is set at 50%. Bubba's account contains long positions in the following securities with the prices listed
100 ABC $30
200 XYZ $70
200 QBB $40
200 KKK $25
Total market value = $30,000
Debit balance in the account = $12,000
Net equity balance of the account = $18,000
What is the buying power in Bubba's account?

Accepted Answer

A) $3,000 
B) $6,000 
C) $11,000 
D) $0 
A) $3,000 
B) $6,000 
C) $11,000 
D) $0

Question 17

A new stock offering by Bubba Corporation provides details that state between 1,000,000 and 1,500,000 shares will be sold depending upon market conditions. This offering is a:

Accepted Answer

A) best efforts 
B) standby 
C) mini-max 
D) market potential 
A) best efforts 
B) standby 
C) mini-max 
D) market potential

Question 18

A mutual fund with an 8% load and a 1% redemption fee carries a current quote of $6.25 - $6.79. If an investor has tendered his shares for redemption on that basis, the per share price he will receive is approximately:

Accepted Answer

A) $6.79 
B) $6.72 
C) $6.25 
D) $6.19 
A) $6.79 
B) $6.72 
C) $6.25 
D) $6.19

Question 19

What percentage load is associated with a mutual fund quoted 16.60-18.04?

Accepted Answer

A) 8.7% 
B) 9% 
C) 8% 
D) cannot be determined from this information 
A) 8.7% 
B) 9% 
C) 8% 
D) cannot be determined from this information

Question 20

The Bubba Fund is a load mutual fund that offers a reinvestment plan. What does this mean?

Accepted Answer

A) purchasers of fund shares must agree to make regular investments over a period of years 
B) income, dividend, and capital gain distributions may be automatically used to purchase new shares of the fund 
C) holders of fund shares are permitted to regularly purchase additional shares at the bid price 
D) no federal income taxes are paid on dividends and capital gain distributions from the fund 
A) purchasers of fund shares must agree to make regular investments over a period of years 
B) income, dividend, and capital gain distributions may be automatically used to purchase new shares of the fund 
C) holders of fund shares are permitted to regularly purchase additional shares at the bid price 
D) no federal income taxes are paid on dividends and capital gain distributions from the fund

A group net order is one that benefits municipal syndicate members:

An issuer is most likely to request an investment letter from the purchaser in connection with which of the offerings?

Which of the following is not in the subscription agreement for a limited partnership offering?

Bubba Securities, Inc. offers 3,000,000 shares of Top Notch Manufacturing Corporation common stock at $27 per share. The next day an advertisement appears in the Wall Street Journal announcing the offering and listing the names of some of the underwriting firms. This ad is commonly referred to as a:

What rate of return takes into consideration appreciation or depreciation in market value relating to the par value of a debt security?

In regard to discretionary accounts, which of the following statements is correct?

A management group may serve an investment company as its:

In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. If the option expires without being exercised, how is the premium expense treated by Bubba?

Service charges by a FINRA dealer for transfer and safekeeping of customer securities held in street name:

A tax shelter specifically designed for small employers is:

With the Regulation T requirement at 50%, a firm wishes to impose house rules that require a minimum equity of 40%. Which of the following is true?

Bubba is eligible for a Roth IRA. He may convert his SEP-IRA to a Roth IRA:

The initial Federal Reserve Bank margin requirement is set at 60% and Bubba purchases 100 shares of XYZ at $100 per share. He deposits $6,000 of the $10,000 purchase price in his account. If XYZ increases in value to $150 per share, how much excess equity would Bubba have in his account?

A new stock offering by Bubba Corporation provides details that state between 1,000,000 and 1,500,000 shares will be sold depending upon market conditions. This offering is a:

A mutual fund with an 8% load and a 1% redemption fee carries a current quote of $6.25 - $6.79. If an investor has tendered his shares for redemption on that basis, the per share price he will receive is approximately:

What percentage load is associated with a mutual fund quoted 16.60-18.04?

The Bubba Fund is a load mutual fund that offers a reinvestment plan. What does this mean?

Investment and Bond Market

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

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Exam 2: Investment and Securities

A group net order is one that benefits municipal syndicate members:

An issuer is most likely to request an investment letter from the purchaser in connection with which of the offerings?

Which of the following is not in the subscription agreement for a limited partnership offering?

What rate of return takes into consideration appreciation or depreciation in market value relating to the par value of a debt security?

In regard to discretionary accounts, which of the following statements is correct?

A management group may serve an investment company as its:

In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. If the option expires without being exercised, how is the premium expense treated by Bubba?

Service charges by a FINRA dealer for transfer and safekeeping of customer securities held in street name:

A tax shelter specifically designed for small employers is:

With the Regulation T requirement at 50%, a firm wishes to impose house rules that require a minimum equity of 40%. Which of the following is true?

Bubba is eligible for a Roth IRA. He may convert his SEP-IRA to a Roth IRA:

The initial Federal Reserve Bank margin requirement is set at 60% and Bubba purchases 100 shares of XYZ at $100 per share. He deposits $6,000 of the $10,000 purchase price in his account. If XYZ increases in value to $150 per share, how much excess equity would Bubba have in his account?

A new stock offering by Bubba Corporation provides details that state between 1,000,000 and 1,500,000 shares will be sold depending upon market conditions. This offering is a:

A mutual fund with an 8% load and a 1% redemption fee carries a current quote of $6.25 - $6.79. If an investor has tendered his shares for redemption on that basis, the per share price he will receive is approximately:

What percentage load is associated with a mutual fund quoted 16.60-18.04?

The Bubba Fund is a load mutual fund that offers a reinvestment plan. What does this mean?

Investment and Bond Market

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

Filters