Question 1

Although a corporation has no earnings in a particular year, it is obligated to pay interest on all its outstanding debt except the following:

Accepted Answer

A) convertible subordinated debentures 
B) collateral trust bonds 
C) adjustment bonds 
D) equipment trust certificates 
A) convertible subordinated debentures 
B) collateral trust bonds 
C) adjustment bonds 
D) equipment trust certificates

Question 2

The price an investor pays for a listed option is called the

Accepted Answer

A) strike price 
B) spread 
C) premium 
D) exercise price 
A) strike price 
B) spread 
C) premium 
D) exercise price

Question 3

Which of the following pairs of corporation characteristics are easiest for a partnership to avoid?

Accepted Answer

A) business objective and centralized management 
B) continuity of life of the business and limited liability 
C) two or more associates and free transferability of assets 
D) continuity of life of the business and transferability of assets 
A) business objective and centralized management 
B) continuity of life of the business and limited liability 
C) two or more associates and free transferability of assets 
D) continuity of life of the business and transferability of assets

Question 4

When pricing callable municipal bonds, the "price to call" is based upon which of the following?

Accepted Answer

A) in-whole calls 
B) partial calls 
C) sinking fund calls 
D) catastrophe calls 
A) in-whole calls 
B) partial calls 
C) sinking fund calls 
D) catastrophe calls

Question 5

In stabilizing a new issue, the manager may make a "syndicate penalty bid". This means that:

Accepted Answer

A) the underwriter will be penalized his profit on any securities repurchased from his clients 
B) all stock purchased will be returned to the issuing corporation 
C) the manager will charge the syndicate the value of the shares 
D) any shares repurchased are added to the treasury stock of the issuing corporation 
A) the underwriter will be penalized his profit on any securities repurchased from his clients 
B) all stock purchased will be returned to the issuing corporation 
C) the manager will charge the syndicate the value of the shares 
D) any shares repurchased are added to the treasury stock of the issuing corporation

Question 6

After an extended period of backing and filling, a stock moves up sharply through a resistance level on heavy volume. A technical analyst would likely call this a:

Accepted Answer

A) buy-in 
B) technical rally 
C) buying climax 
D) breakout 
A) buy-in 
B) technical rally 
C) buying climax 
D) breakout

Question 7

Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm's research report on that stock?

Accepted Answer

A) if it is accompanied by a red herring 
B) if he has permission of his employer 
C) if his firm is not the managing underwriter 
D) under no circumstances 
A) if it is accompanied by a red herring 
B) if he has permission of his employer 
C) if his firm is not the managing underwriter 
D) under no circumstances

Question 8

Bubba buys a municipal bond at 102 and holds it ten years to maturity. For tax purposes, how is that premium treated?

Accepted Answer

A) recorded as a long-term capital loss 
B) an ordinary loss taken as a deduction from taxable income 
C) amortized over the life of the bond resulting in no loss at maturity 
D) carried forward as a premium loss applied against profits realized on future municipal securities 
A) recorded as a long-term capital loss 
B) an ordinary loss taken as a deduction from taxable income 
C) amortized over the life of the bond resulting in no loss at maturity 
D) carried forward as a premium loss applied against profits realized on future municipal securities

Question 9

A leveraged company is best described as one that has a small portion of its capitalization represented by:

Accepted Answer

A) common stock 
B) preferred stock 
C) debentures 
D) convertible bonds 
A) common stock 
B) preferred stock 
C) debentures 
D) convertible bonds

Question 10

Bubba holds 200 shares of common stock in a utility company and receives rights to subscribe to an additional 100 shares at $20. The utility company is raising $40 million of new capital. How many shares of common stock for the utility company were outstanding prior to the rights offering?

Accepted Answer

A) 2,000,000 
B) 4,000,000 
C) 1,000,000 
D) 40,000,000 
A) 2,000,000 
B) 4,000,000 
C) 1,000,000 
D) 40,000,000

Question 11

Which of the following must be true in order for an offering to qualify as an intrastate offering under Rule 147?

Accepted Answer

A) 80% of the proceeds of the offering must be used in that state 
B) 80% of the corporation's assets must be located in that state 
C) 80% of the corporation's revenue must be earned in that state 
D) all of the above are required 
A) 80% of the proceeds of the offering must be used in that state 
B) 80% of the corporation's assets must be located in that state 
C) 80% of the corporation's revenue must be earned in that state 
D) all of the above are required

Question 12

Which of the following statements about the custodian for an open-end mutual fund is correct?

Accepted Answer

A) the custodian performs all management, supervisory, or investment functions 
B) the custodian may perform an essential clerical service for the fund and its shareholders 
C) the custodian takes part in the sale of fund shares 
D) the custodian affords protection against decline in value of fund shares 
A) the custodian performs all management, supervisory, or investment functions 
B) the custodian may perform an essential clerical service for the fund and its shareholders 
C) the custodian takes part in the sale of fund shares 
D) the custodian affords protection against decline in value of fund shares

Question 13

Creditors whose claims are not settled upon dissolution of a limited partnership may seek recourse from:

Accepted Answer

A) the general partner's profits 
B) the general partner's personal assets 
C) the partnership's income 
D) the personal assets of the limited partners 
A) the general partner's profits 
B) the general partner's personal assets 
C) the partnership's income 
D) the personal assets of the limited partners

Question 14

Bubba opens an account at a broker/dealer with instructions to "transfer and ship". This means that:

Accepted Answer

A) all correspondence to Bubba must be sent registered mail 
B) each trade report must note Bubba's certificate registration instructions 
C) securities purchased must be registered in Bubba's name and then delivered to him 
D) transactions for Bubba will be transferred to another broker for processing 
A) all correspondence to Bubba must be sent registered mail 
B) each trade report must note Bubba's certificate registration instructions 
C) securities purchased must be registered in Bubba's name and then delivered to him 
D) transactions for Bubba will be transferred to another broker for processing

Question 15

Maintaining a fair and orderly market and acting as a broker's broker are dual functions of the:

Accepted Answer

A) competitive trader 
B) odd-lot dealer 
C) specialist 
D) two-dollar broker 
A) competitive trader 
B) odd-lot dealer 
C) specialist 
D) two-dollar broker

Question 16

In a triple net lease, which of the following is the tenant not responsible for paying?

Accepted Answer

A) taxes 
B) financing charges 
C) insurance premiums 
D) maintenance 
A) taxes 
B) financing charges 
C) insurance premiums 
D) maintenance

Question 17

A company earns $6 per share and pays out 20% in common stock dividends. What does the stock yield if it sells at $30 per share?

Accepted Answer

A) 10% 
B) 4% 
C) 2.5% 
D) 6% 
A) 10% 
B) 4% 
C) 2.5% 
D) 6%

Question 18

Which of the following registered investment companies normally sells with an appropriate commission added to the contract price?

Accepted Answer

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

Question 19

Bubba buys 100 shares of XYZ stock at $40 per share and sells a listed July XYZ call at 45 for a $2 premium. What is his loss potential?

Accepted Answer

A) $3,800 
B) $4,000 
C) $4,200 
D) $4,500 
A) $3,800 
B) $4,000 
C) $4,200 
D) $4,500

Question 20

What is represented by the net investment income of an open-end investment company?

Accepted Answer

A) net profits from the investment company operation 
B) net gains on sales of portfolio securities 
C) dividends, interest, and net gains on sales of securities 
D) net income from dividend and interest paid on securities in the fund portfolio 
A) net profits from the investment company operation 
B) net gains on sales of portfolio securities 
C) dividends, interest, and net gains on sales of securities 
D) net income from dividend and interest paid on securities in the fund portfolio

Although a corporation has no earnings in a particular year, it is obligated to pay interest on all its outstanding debt except the following:

The price an investor pays for a listed option is called the

Which of the following pairs of corporation characteristics are easiest for a partnership to avoid?

When pricing callable municipal bonds, the "price to call" is based upon which of the following?

In stabilizing a new issue, the manager may make a "syndicate penalty bid". This means that:

After an extended period of backing and filling, a stock moves up sharply through a resistance level on heavy volume. A technical analyst would likely call this a:

Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm's research report on that stock?

Bubba buys a municipal bond at 102 and holds it ten years to maturity. For tax purposes, how is that premium treated?

A leveraged company is best described as one that has a small portion of its capitalization represented by:

Bubba holds 200 shares of common stock in a utility company and receives rights to subscribe to an additional 100 shares at $20. The utility company is raising $40 million of new capital. How many shares of common stock for the utility company were outstanding prior to the rights offering?

Which of the following must be true in order for an offering to qualify as an intrastate offering under Rule 147?

Which of the following statements about the custodian for an open-end mutual fund is correct?

Creditors whose claims are not settled upon dissolution of a limited partnership may seek recourse from:

Bubba opens an account at a broker/dealer with instructions to "transfer and ship". This means that:

Maintaining a fair and orderly market and acting as a broker's broker are dual functions of the:

In a triple net lease, which of the following is the tenant not responsible for paying?

A company earns $6 per share and pays out 20% in common stock dividends. What does the stock yield if it sells at $30 per share?

Which of the following registered investment companies normally sells with an appropriate commission added to the contract price?

Bubba buys 100 shares of XYZ stock at $40 per share and sells a listed July XYZ call at 45 for a $2 premium. What is his loss potential?

What is represented by the net investment income of an open-end investment company?

Investment and Bond Market

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Uniform Securities Act USA and State Registration Requirements

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Exam 2: Investment and Securities

Although a corporation has no earnings in a particular year, it is obligated to pay interest on all its outstanding debt except the following:

The price an investor pays for a listed option is called the

Which of the following pairs of corporation characteristics are easiest for a partnership to avoid?

When pricing callable municipal bonds, the "price to call" is based upon which of the following?

In stabilizing a new issue, the manager may make a "syndicate penalty bid". This means that:

After an extended period of backing and filling, a stock moves up sharply through a resistance level on heavy volume. A technical analyst would likely call this a:

Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm's research report on that stock?

Bubba buys a municipal bond at 102 and holds it ten years to maturity. For tax purposes, how is that premium treated?

A leveraged company is best described as one that has a small portion of its capitalization represented by:

Bubba holds 200 shares of common stock in a utility company and receives rights to subscribe to an additional 100 shares at $20. The utility company is raising $40 million of new capital. How many shares of common stock for the utility company were outstanding prior to the rights offering?

Which of the following must be true in order for an offering to qualify as an intrastate offering under Rule 147?

Which of the following statements about the custodian for an open-end mutual fund is correct?

Creditors whose claims are not settled upon dissolution of a limited partnership may seek recourse from:

Bubba opens an account at a broker/dealer with instructions to "transfer and ship". This means that:

Maintaining a fair and orderly market and acting as a broker's broker are dual functions of the:

In a triple net lease, which of the following is the tenant not responsible for paying?

A company earns $6 per share and pays out 20% in common stock dividends. What does the stock yield if it sells at $30 per share?

Which of the following registered investment companies normally sells with an appropriate commission added to the contract price?

Bubba buys 100 shares of XYZ stock at $40 per share and sells a listed July XYZ call at 45 for a $2 premium. What is his loss potential?

What is represented by the net investment income of an open-end investment company?

Investment and Bond Market

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

Filters