Question 1

Which of the following municipal bonds may be grouped under the classification of "revenue bonds"?

Accepted Answer

A) special tax 
B) new housing authority 
C) general obligation 
D) limited tax 
A) special tax 
B) new housing authority 
C) general obligation 
D) limited tax

Question 2

A company may pay a declared dividend in which of the following ways:

Accepted Answer

A) with stock in a subsidiary company 
B) with property 
C) with cash 
D) all of the above 
A) with stock in a subsidiary company 
B) with property 
C) with cash 
D) all of the above

Question 3

Upon opening a new account for a customer, a registered representative should:

Accepted Answer

A) inquire about age 
B) investigate the customer's credit rating 
C) determine what is suitable for the customer based upon his financial background 
D) all of the above 
A) inquire about age 
B) investigate the customer's credit rating 
C) determine what is suitable for the customer based upon his financial background 
D) all of the above

Question 4

Bubba has a short margin account with a short market value of $22,000, a credit balance of $42,000, and SMA of $500. What is the equity in Bubba's account?

Accepted Answer

A) $500 
B) $20,000 
C) $20,500 
D) $37,000 
A) $500 
B) $20,000 
C) $20,500 
D) $37,000

Question 5

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
Bubba wants to buy 100 shares of DUM at $30 per share and 100 shares of OUT at $120. How much additional money must be deposited?

Accepted Answer

A) $6,000 
B) $7,000 
C) $4,500 
D) $1,500 
A) $6,000 
B) $7,000 
C) $4,500 
D) $1,500

Question 6

To qualify as an intrastate offering under SEC Rule 147, which of the following is true of the issue?

Accepted Answer

A) it must be approved by the SEC 
B) it must be sold only to bona fide residents of one state 
C) it cannot exceed $1,500,000 in value 
D) it must consist of common stock only 
A) it must be approved by the SEC 
B) it must be sold only to bona fide residents of one state 
C) it cannot exceed $1,500,000 in value 
D) it must consist of common stock only

Question 7

A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering. How many rights will the corporation distribute to its shareholders?

Accepted Answer

A) one million 
B) six million 
C) ten million 
D) sixteen million 
A) one million 
B) six million 
C) ten million 
D) sixteen million

Question 8

In considering the fairness of a firm's markup, the FINRA considers:

Accepted Answer

A) dealer cost for the security 
B) financial condition of the client 
C) profitability of the member firm 
D) amount of the transaction 
A) dealer cost for the security 
B) financial condition of the client 
C) profitability of the member firm 
D) amount of the transaction

Question 9

If recaptured deductions are added to income, recaptured investment tax credits are added to:

Accepted Answer

A) income 
B) basis 
C) gains 
D) taxes 
A) income 
B) basis 
C) gains 
D) taxes

Question 10

If a customer fails to pay for securities purchased in a cash account, the member firm broker will do which of the following?

Accepted Answer

A) grant an extension for a bona fide reason 
B) place the securities temporarily in a general account 
C) purchase the securities for the firm's error account 
D) liquidate the securities or otherwise cancel the transaction 
A) grant an extension for a bona fide reason 
B) place the securities temporarily in a general account 
C) purchase the securities for the firm's error account 
D) liquidate the securities or otherwise cancel the transaction

Question 11

Bubba and his wife, Bubbette, maintain a joint account with a brokerage firm as "joint tenants in common". Bubbette calls a registered representative at the brokerage and places an order to sell 100 shares of XYZ, which is long in the account. Which of the following statements is correct about this order?

Accepted Answer

A) it may be entered 
B) it may be entered only after confirming with Bubba 
C) it must be approved by an officer of the brokerage prior to entry 
D) the order may not be accepted 
A) it may be entered 
B) it may be entered only after confirming with Bubba 
C) it must be approved by an officer of the brokerage prior to entry 
D) the order may not be accepted

Question 12

Which of the following does not appear in the official notice of sale?

Accepted Answer

A) method and place of settlement 
B) denominations and registration privileges 
C) an offering scale of serial maturates 
D) amount of good faith check required 
A) method and place of settlement 
B) denominations and registration privileges 
C) an offering scale of serial maturates 
D) amount of good faith check required

Question 13

Which of the following statements about mutual fund fees is accurate?

Accepted Answer

A) the management group receives a fee based upon the amount of assets in the fund 
B) the sponsor receives a management fee for buying and selling the fund's portfolio securities 
C) the management group receives part of the sales charge in addition to a management fee 
D) the custodian receives part of the management fee in addition to a fee for safekeeping of the fund's securities 
A) the management group receives a fee based upon the amount of assets in the fund 
B) the sponsor receives a management fee for buying and selling the fund's portfolio securities 
C) the management group receives part of the sales charge in addition to a management fee 
D) the custodian receives part of the management fee in addition to a fee for safekeeping of the fund's securities

Question 14

A bank or trust company that is acting as custodian for a mutual fund does which of the following?

Accepted Answer

A) guarantees investor losses on investments 
B) provides investment advice to the fund's managers 
C) redeem and issues fund shares 
D) physically protects the fund's assets 
A) guarantees investor losses on investments 
B) provides investment advice to the fund's managers 
C) redeem and issues fund shares 
D) physically protects the fund's assets

Question 15

When opening a brokerage account for a customer, a registered representative must determine the customer's:

Accepted Answer

A) investment objectives 
B) financial resources 
C) financial requirements 
D) all of the above 
A) investment objectives 
B) financial resources 
C) financial requirements 
D) all of the above

Question 16

Which of the following securities has the highest amount of market risk?

Accepted Answer

A) US treasury bills 
B) US treasury certificates 
C) US treasury notes 
D) savings bank deposits 
A) US treasury bills 
B) US treasury certificates 
C) US treasury notes 
D) savings bank deposits

Question 17

Which of the following best describes depreciation?

Accepted Answer

A) a tax credit available to investors in heavy equipment 
B) deductions from gross income to offset lower value of equipment 
C) return of principal from real estate investments 
D) capitalized and amortized maintenance costs 
E) tax credit available to investors in heavy equipment F)return of principal from real estate investors
G)capitalized an amortized maintenance costs 
A) a tax credit available to investors in heavy equipment 
B) deductions from gross income to offset lower value of equipment 
C) return of principal from real estate investments 
D) capitalized and amortized maintenance costs 
E) tax credit available to investors in heavy equipment F)return of principal from real estate investors
G)capitalized an amortized maintenance costs

Question 18

A basis point is:

Accepted Answer

A) 0.10% 
B) 0.01% 
C) 1.00% 
D) 0.001% 
A) 0.10% 
B) 0.01% 
C) 1.00% 
D) 0.001%

Question 19

Smart Guys Securities Corporation has given a workable bid to Better Guys Securities Corporation. If market conditions change, Smart Guys may:

Accepted Answer

A) not change the bid 
B) not change the bid unless first notifying the other dealer 
C) change the bid only with prior approval of the other dealer 
D) change the bid 
A) not change the bid 
B) not change the bid unless first notifying the other dealer 
C) change the bid only with prior approval of the other dealer 
D) change the bid

Question 20

A revenue bond is issued by a state agency. The state legislature is granted authority to apportion money to support the debt services if necessary, but is not legally obligated to do so. What type of bond is this?

Accepted Answer

A) limited tax 
B) double-barreled 
C) Series 8 
D) moral obligation 
A) limited tax 
B) double-barreled 
C) Series 8 
D) moral obligation

Which of the following municipal bonds may be grouped under the classification of "revenue bonds"?

A company may pay a declared dividend in which of the following ways:

Upon opening a new account for a customer, a registered representative should:

Bubba has a short margin account with a short market value of $22,000, a credit balance of $42,000, and SMA of $500. What is the equity in Bubba's account?

To qualify as an intrastate offering under SEC Rule 147, which of the following is true of the issue?

A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering. How many rights will the corporation distribute to its shareholders?

In considering the fairness of a firm's markup, the FINRA considers:

If recaptured deductions are added to income, recaptured investment tax credits are added to:

If a customer fails to pay for securities purchased in a cash account, the member firm broker will do which of the following?

Which of the following does not appear in the official notice of sale?

Which of the following statements about mutual fund fees is accurate?

A bank or trust company that is acting as custodian for a mutual fund does which of the following?

When opening a brokerage account for a customer, a registered representative must determine the customer's:

Which of the following securities has the highest amount of market risk?

Which of the following best describes depreciation?

A basis point is:

Smart Guys Securities Corporation has given a workable bid to Better Guys Securities Corporation. If market conditions change, Smart Guys may:

A revenue bond is issued by a state agency. The state legislature is granted authority to apportion money to support the debt services if necessary, but is not legally obligated to do so. What type of bond is this?

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

Which of the following municipal bonds may be grouped under the classification of "revenue bonds"?

A company may pay a declared dividend in which of the following ways:

Upon opening a new account for a customer, a registered representative should:

Bubba has a short margin account with a short market value of $22,000, a credit balance of $42,000, and SMA of $500. What is the equity in Bubba's account?

To qualify as an intrastate offering under SEC Rule 147, which of the following is true of the issue?

A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering. How many rights will the corporation distribute to its shareholders?

In considering the fairness of a firm's markup, the FINRA considers:

If recaptured deductions are added to income, recaptured investment tax credits are added to:

If a customer fails to pay for securities purchased in a cash account, the member firm broker will do which of the following?

Which of the following does not appear in the official notice of sale?

Which of the following statements about mutual fund fees is accurate?

A bank or trust company that is acting as custodian for a mutual fund does which of the following?

When opening a brokerage account for a customer, a registered representative must determine the customer's:

Which of the following securities has the highest amount of market risk?

Which of the following best describes depreciation?

A basis point is:

Smart Guys Securities Corporation has given a workable bid to Better Guys Securities Corporation. If market conditions change, Smart Guys may:

A revenue bond is issued by a state agency. The state legislature is granted authority to apportion money to support the debt services if necessary, but is not legally obligated to do so. What type of bond is this?

Investment and Bond Market

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

Filters