Exam 2: Investment and Securities

A market-maker has purchased a particular stock over a period of time for prices as high as $9 per share and as low as $3 per share. The average cost is approximately $6 per share. The current NASDAQ quote for the stock is 5 to 5.25. According to the FINRA Conduct Rules, the dealer's offering price to the public should be based upon:

Crossover is best defined as:

Which of the following sources provides news of prospective municipal securities sales to underwriters?

Which of the following would not normally be a function of an investment banker?

In early September, Bubba buys 100 shares of XYZ for $83 per share and simultaneously writes one XYZ March 90 call for $4. What is the price for XYZ stock at which Bubba will breakeven?

A typical money market instrument carries which of the following?

A CMO is issued that has three tranches. One has an average life of 2 years. A second has an average life of 10 years. The third has an average life of 30 years. Initially, interest payments are distributed in this order:

Which of the following are direct obligations of the US government?

Hypothecation usually refers to which of the following?

Under the Investment Company Act of 1940, what is the minimum net worth of a registered investment company?

Bubba opens a new account with a broker/dealer and asks for a copy of the firm's financial statement. If the firm has not been subject to a formal audit by an independent public accountant for quite some time, what should it do in response to the request?

Which of the following rights does an ADR holder not have?

Bubba sells 100 shares of XYZ short at $58 and buys 1 XYZ Mar 60 Call at $3. What is the customer's maximum loss?

An offering price of 102 plus accrued interest applies to which of the following securities?

The amount for which the securities of a close-end investment company are selling above net asset value is know as:

The net asset value of a mutual fund was $9.72 last month. This month it is calculated at $9.85. What is the change in value called?

A buy-in of a customer's sale transaction is mandated if the securities have not been received by the broker/dealer within how many business days following the settlement date:

How often must Investment companies issue financial statements to shareholders?

XYZ Corporation earned $2 per share last year and is selling at $20 per share. If it earns $3 per share this year and its price/earnings ratio stays the same, its price will be:

Bubba buys one XYZ November 65 call at $3 and one XYZ November 65 put at $2. XYZ is trading at $72. The put expires and the call is closed at its intrinsic value. What is the resulting profit?