Question 1

Bubba buys municipal bonds with a $100,000 principal amount at 89 on margin. His account has no cash or securities. What is his minimum required deposit?

Accepted Answer

A) $5,080 
B) $13,350 
C) $22,500 
D) $50,000 
A) $5,080 
B) $13,350 
C) $22,500 
D) $50,000

Question 2

Bubba buys one XYZ June 40 call for $1,000 and sells one XYZ March 40 call for $600. Subsequently, the June call is closed for $1,200 and the March call for $900. What is Bubba's net result?

Accepted Answer

A) $100 loss 
B) $100 profit 
C) $200 loss 
D) $200 profit 
A) $100 loss 
B) $100 profit 
C) $200 loss 
D) $200 profit

Question 3

Which of the following are not flat rate taxes?

Accepted Answer

A) excise tax 
B) gasoline tax 
C) gift tax 
D) general income tax 
A) excise tax 
B) gasoline tax 
C) gift tax 
D) general income tax

Question 4

Customers who engage in increased activity of wiring money from their account could indicate which of the following activities?

Accepted Answer

A) Interpositioning 
B) Churning 
C) Crossing 
D) Money laundering 
A) Interpositioning 
B) Churning 
C) Crossing 
D) Money laundering

Question 5

Which of the following is the least important method of money control exercised by the Federal Reserve?

Accepted Answer

A) reserve requirements 
B) open market operations 
C) discount rate 
D) Regulation T 
A) reserve requirements 
B) open market operations 
C) discount rate 
D) Regulation T

Question 6

Which of the following is identified as a funded debt instrument?

Accepted Answer

A) US treasury bond 
B) Series EE savings bond 
C) corporate bond 
D) Fannie Mae bond 
A) US treasury bond 
B) Series EE savings bond 
C) corporate bond 
D) Fannie Mae bond

Question 7

The FINRA Conduct Rules permit a transaction made "seller's option" to be delivered earlier than the expiration of the contract if:

Accepted Answer

A) the buyer is given one day notice in writing 
B) the seller is located in New York City 
C) the client requests it 
D) the buyer is a non-clearing member 
A) the buyer is given one day notice in writing 
B) the seller is located in New York City 
C) the client requests it 
D) the buyer is a non-clearing member

Question 8

Convertible preferred stock has all of the following characteristics except:

Accepted Answer

A) a lower dividend rate than non-convertible preferred 
B) a dilution of earnings if converted into common stock 
C) a requirement for shareholders to always accept the call price when called 
D) required dividend payments to shareholders before any dividends are paid to holders of common stock 
A) a lower dividend rate than non-convertible preferred 
B) a dilution of earnings if converted into common stock 
C) a requirement for shareholders to always accept the call price when called 
D) required dividend payments to shareholders before any dividends are paid to holders of common stock

Question 9

Which of the following is not an attribute of US treasury bills?

Accepted Answer

A) an unusually high degree of liquidity 
B) always sells at a discount to face value 
C) is most often issued with three-month, six-month, and one-year maturities 
D) interest is exempt from federal income taxes 
A) an unusually high degree of liquidity 
B) always sells at a discount to face value 
C) is most often issued with three-month, six-month, and one-year maturities 
D) interest is exempt from federal income taxes

Question 10

A mutual fund characterized by a modest sales charge and an investment in a fixed portfolio of municipal securities is a:

Accepted Answer

A) face-amount certificate company 
B) unit investment trust company 
C) management company 
D) open-end or closed-end company 
A) face-amount certificate company 
B) unit investment trust company 
C) management company 
D) open-end or closed-end company

Question 11

In order to determine the amount of estate tax due, if any, the assets of a decedent's estate are valued as of the date of death. A second evaluation is then made:

Accepted Answer

A) three months after the date of death 
B) six months after the date of death 
C) one year after the date of death 
D) at any time up to six months after the date of death 
A) three months after the date of death 
B) six months after the date of death 
C) one year after the date of death 
D) at any time up to six months after the date of death

Question 12

Which of the following is not found in the final prospectus?

Accepted Answer

A) a statement as to possible stabilization by the manager 
B) the public offering price 
C) a copy of the underwriting agreement 
D) a statement that the SEC neither approves nor disapproves of the issue 
A) a statement as to possible stabilization by the manager 
B) the public offering price 
C) a copy of the underwriting agreement 
D) a statement that the SEC neither approves nor disapproves of the issue

Question 13

Bubba buys $100,000 of US Treasury 10½s of 31 on margin. If the current market price is 92.16, what is Bubba's minimum deposit requirement?

Accepted Answer

A) $4,625 
B) $5,550 
C) $10,000 
D) $25,000 
A) $4,625 
B) $5,550 
C) $10,000 
D) $25,000

Question 14

What is the importance of the "at risk" rule?

Accepted Answer

A) it limits deductions to the amount at risk 
B) it limits liability to the amount at risk 
C) deductions for interest may not exceed investment income 
D) it prevents carry forward of disallowed interest deductions 
A) it limits deductions to the amount at risk 
B) it limits liability to the amount at risk 
C) deductions for interest may not exceed investment income 
D) it prevents carry forward of disallowed interest deductions

Question 15

What does the bond buyer placement ratio represent?

Accepted Answer

A) the amount of municipal bonds held by banks and insurance companies as a percentage of municipal bonds outstanding 
B) the amount of municipal bonds distributed weekly as a percentage of each week's new issue accounts of more than $1 million 
C) the amount of municipal bonds offered in the daily Blue List as a percentage of the day's new issue amounts of more than $1 million 
D) the par value amount of municipal bonds offered in the Blue List as a percentage of the 30-day visible supply for competitive and negotiated issues 
A) the amount of municipal bonds held by banks and insurance companies as a percentage of municipal bonds outstanding 
B) the amount of municipal bonds distributed weekly as a percentage of each week's new issue accounts of more than $1 million 
C) the amount of municipal bonds offered in the daily Blue List as a percentage of the day's new issue amounts of more than $1 million 
D) the par value amount of municipal bonds offered in the Blue List as a percentage of the 30-day visible supply for competitive and negotiated issues

Question 16

Municipal bond brokers generally conduct the following:

Accepted Answer

A) trade for dealer banks 
B) trade for non-bank dealers 
C) trade for their own account 
D) both A and B 
A) trade for dealer banks 
B) trade for non-bank dealers 
C) trade for their own account 
D) both A and B

Question 17

What Federal Reserve Board regulation governs the extension of securities-related credit by banks?

Accepted Answer

A) Regulation G 
B) Regulation T 
C) Regulation U 
D) Regulation X 
A) Regulation G 
B) Regulation T 
C) Regulation U 
D) Regulation X

Question 18

Which of the following statements is not true about exchange traded options?

Accepted Answer

A) they are adjusted for stock dividends 
B) they are adjusted for stock splits 
C) they are adjusted for cash dividends 
D) they are adjusted for reverse splits 
A) they are adjusted for stock dividends 
B) they are adjusted for stock splits 
C) they are adjusted for cash dividends 
D) they are adjusted for reverse splits

Question 19

The preferred stock of Greatest Technology Corporation has a $100 par and is convertible into four shares of common stock. The preferred is trading at 104.50. The preferred is callable at 101. If the common stock price is presently 27.89, which of the following actions would be a successful arbitrage:

Accepted Answer

A) purchase 400 shares of common stock and sell 100 shares of preferred stock as "short exempt" (that is, the sale is exempt from the uptick rule) 
B) purchase the preferred stock and sell an appropriate amount of the common stock "short exempt" 
C) purchase both the common and the preferred stocks as a hedge against further market risk 
D) purchase the preferred stock and let it be called, which is inevitable at these market prices 
A) purchase 400 shares of common stock and sell 100 shares of preferred stock as "short exempt" (that is, the sale is exempt from the uptick rule) 
B) purchase the preferred stock and sell an appropriate amount of the common stock "short exempt" 
C) purchase both the common and the preferred stocks as a hedge against further market risk 
D) purchase the preferred stock and let it be called, which is inevitable at these market prices

Question 20

According to FINRA Conduct Rules, a party judged guilty of a rule infraction by the District Business Conduct Committee may then appeal to:

Accepted Answer

A) the SEC 
B) the FINRA Board of Governors 
C) the public court system 
D) the FINRA Board of Arbitration 
A) the SEC 
B) the FINRA Board of Governors 
C) the public court system 
D) the FINRA Board of Arbitration

Bubba buys municipal bonds with a $100,000 principal amount at 89 on margin. His account has no cash or securities. What is his minimum required deposit?

Bubba buys one XYZ June 40 call for $1,000 and sells one XYZ March 40 call for $600. Subsequently, the June call is closed for $1,200 and the March call for $900. What is Bubba's net result?

Which of the following are not flat rate taxes?

Customers who engage in increased activity of wiring money from their account could indicate which of the following activities?

Which of the following is the least important method of money control exercised by the Federal Reserve?

Which of the following is identified as a funded debt instrument?

The FINRA Conduct Rules permit a transaction made "seller's option" to be delivered earlier than the expiration of the contract if:

Convertible preferred stock has all of the following characteristics except:

Which of the following is not an attribute of US treasury bills?

A mutual fund characterized by a modest sales charge and an investment in a fixed portfolio of municipal securities is a:

In order to determine the amount of estate tax due, if any, the assets of a decedent's estate are valued as of the date of death. A second evaluation is then made:

Which of the following is not found in the final prospectus?

Bubba buys $100,000 of US Treasury 10½s of 31 on margin. If the current market price is 92.16, what is Bubba's minimum deposit requirement?

What is the importance of the "at risk" rule?

What does the bond buyer placement ratio represent?

Municipal bond brokers generally conduct the following:

What Federal Reserve Board regulation governs the extension of securities-related credit by banks?

Which of the following statements is not true about exchange traded options?

According to FINRA Conduct Rules, a party judged guilty of a rule infraction by the District Business Conduct Committee may then appeal to:

Investment and Bond Market

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

Filters

Exam 2: Investment and Securities

Bubba buys municipal bonds with a $100,000 principal amount at 89 on margin. His account has no cash or securities. What is his minimum required deposit?

Bubba buys one XYZ June 40 call for $1,000 and sells one XYZ March 40 call for $600. Subsequently, the June call is closed for $1,200 and the March call for $900. What is Bubba's net result?

Which of the following are not flat rate taxes?

Customers who engage in increased activity of wiring money from their account could indicate which of the following activities?

Which of the following is the least important method of money control exercised by the Federal Reserve?

Which of the following is identified as a funded debt instrument?

The FINRA Conduct Rules permit a transaction made "seller's option" to be delivered earlier than the expiration of the contract if:

Convertible preferred stock has all of the following characteristics except:

Which of the following is not an attribute of US treasury bills?

A mutual fund characterized by a modest sales charge and an investment in a fixed portfolio of municipal securities is a:

In order to determine the amount of estate tax due, if any, the assets of a decedent's estate are valued as of the date of death. A second evaluation is then made:

Which of the following is not found in the final prospectus?

Bubba buys $100,000 of US Treasury 10½s of 31 on margin. If the current market price is 92.16, what is Bubba's minimum deposit requirement?

What is the importance of the "at risk" rule?

What does the bond buyer placement ratio represent?

Municipal bond brokers generally conduct the following:

What Federal Reserve Board regulation governs the extension of securities-related credit by banks?

Which of the following statements is not true about exchange traded options?

According to FINRA Conduct Rules, a party judged guilty of a rule infraction by the District Business Conduct Committee may then appeal to:

Investment and Bond Market

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

Filters