Question 1

A call option is in the money when the market value of the underlying stock is:

Accepted Answer

A) lower than the strike price of the option 
B) the same as the strike price of the option 
C) higher than the strike price of the option 
D) higher than the strike price plus the premium 
A) lower than the strike price of the option 
B) the same as the strike price of the option 
C) higher than the strike price of the option 
D) higher than the strike price plus the premium

Question 2

Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40. What conversion ratio does Bubba determine?

Accepted Answer

A) 40 
B) 30 
C) 25 
D) 15 
A) 40 
B) 30 
C) 25 
D) 15

Question 3

Who is responsible for verifying that limited partners meet net worth and income requirements?

Accepted Answer

A) the limited partners 
B) the general partner 
C) the sponsor 
D) the registered representative 
A) the limited partners 
B) the general partner 
C) the sponsor 
D) the registered representative

Question 4

Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account. He may do so by depositing stocks with a market value of:

Accepted Answer

A) $9,333 
B) $5,714 
C) $4,000 
D) $2,800 
A) $9,333 
B) $5,714 
C) $4,000 
D) $2,800

Question 5

As a general rule, when a partnership is terminated, in what order are assets distributed?

Accepted Answer

A) general creditors, secured lenders, limited partners, general partners 
B) secured lenders, limited partners, general creditors, general partners 
C) secured lenders, general creditors, limited partners, general partners 
D) general creditors, general partners, limited partners, secured lenders 
A) general creditors, secured lenders, limited partners, general partners 
B) secured lenders, limited partners, general creditors, general partners 
C) secured lenders, general creditors, limited partners, general partners 
D) general creditors, general partners, limited partners, secured lenders

Question 6

Under Rule 415 a corporation may file a single registration statement with the SEC covering its anticipated financing need for the next:

Accepted Answer

A) one year 
B) two years 
C) three years 
D) five years 
A) one year 
B) two years 
C) three years 
D) five years

Question 7

Bubba's margin account has $1,000 of SMA. If he buys $20,000 of listed securities, how much fully paid margin stock must he deposit to respond to a Reg T requirement of 50%?

Accepted Answer

A) $20,000 
B) $9,000 
C) 10,000 
D) $18,000 
A) $20,000 
B) $9,000 
C) 10,000 
D) $18,000

Question 8

Bubba is buying a Federal Home Loan Bank issue that is offered at 95.22. How much will he pay to purchase one bond?

Accepted Answer

A) $95.22 
B) $951.63 
C) $952.20 
D) $956.88 
A) $95.22 
B) $951.63 
C) $952.20 
D) $956.88

Question 9

A four-letter symbol assigned to an issue is characteristic of an equity security that is:

Accepted Answer

A) authorized for inclusion in the NASDAQ system 
B) listed on the NYSE 
C) admitted to unlisted trading privileges on a regional stock exchange 
D) trading in less than 100-share units on the American Stock Exchange 
A) authorized for inclusion in the NASDAQ system 
B) listed on the NYSE 
C) admitted to unlisted trading privileges on a regional stock exchange 
D) trading in less than 100-share units on the American Stock Exchange

Question 10

Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?

Accepted Answer

A) 5.00 
B) 98.96 
C) 100.00 
D) 105.10 
A) 5.00 
B) 98.96 
C) 100.00 
D) 105.10

Question 11

Which of the following is not true about brokerage accounts?

Accepted Answer

A) in a community property state a married woman must open a brokerage account with her husband 
B) stock purchased in a custodian account may not be purchased on margin or held in bearer form 
C) numbered accounts are permissible provided there is a record kept on file at the brokerage firm attesting to the actual ownership 
D) if a fiduciary intends to buy stocks in a margin account the trust agreement authorizing the margin transactions must be kept on file at the brokerage firm 
A) in a community property state a married woman must open a brokerage account with her husband 
B) stock purchased in a custodian account may not be purchased on margin or held in bearer form 
C) numbered accounts are permissible provided there is a record kept on file at the brokerage firm attesting to the actual ownership 
D) if a fiduciary intends to buy stocks in a margin account the trust agreement authorizing the margin transactions must be kept on file at the brokerage firm

Question 12

Which of the following would not be subject to the holding period restrictions under Rule 144?

Accepted Answer

A) restricted stock acquired via investment letter 
B) restricted stock acquired via stock options plan 
C) restricted stock acquired via private placement 
D) restricted stock acquired via open market purchase 
A) restricted stock acquired via investment letter 
B) restricted stock acquired via stock options plan 
C) restricted stock acquired via private placement 
D) restricted stock acquired via open market purchase

Question 13

An excerpt from a recent tombstone ad reveals bonds offered publicly at 101. Why were they priced at a premium?

Accepted Answer

A) to enable investors to establish a tax loss when the bonds are redeemed at maturity 
B) to reflect prevailing credit ratings and market conditions for the issuer 
C) to provide the issuer with a larger deduction from pre-tax earnings for higher than usual interest payments 
D) to comply with SEC rules mandating such pricing for debt issues maturing in the year 2000 and thereafter 
A) to enable investors to establish a tax loss when the bonds are redeemed at maturity 
B) to reflect prevailing credit ratings and market conditions for the issuer 
C) to provide the issuer with a larger deduction from pre-tax earnings for higher than usual interest payments 
D) to comply with SEC rules mandating such pricing for debt issues maturing in the year 2000 and thereafter

Question 14

Who obtains and pays the municipal bond attorney rendering a legal opinion about the validity of the bond issue?

Accepted Answer

A) the purchaser of the bonds 
B) the underwriter 
C) the issuing municipality 
D) the municipality's financial adviser 
A) the purchaser of the bonds 
B) the underwriter 
C) the issuing municipality 
D) the municipality's financial adviser

Question 15

A short sale can be made in which of the following types of accounts?

Accepted Answer

A) special cash account 
B) a custodian account 
C) margin account 
D) special memorandum account 
A) special cash account 
B) a custodian account 
C) margin account 
D) special memorandum account

Question 16

When an index option is exercised, settlement is made by:

Accepted Answer

A) delivery of the underlying securities 
B) delivery of a futures contract 
C) cash 
D) any of the above 
A) delivery of the underlying securities 
B) delivery of a futures contract 
C) cash 
D) any of the above

Question 17

In a corporation's financial statements, earned surplus is also recognized as:

Accepted Answer

A) gross profit 
B) operating income after payment of interest expense 
C) earnings retained after payment of dividends to shareholders 
D) net income 
A) gross profit 
B) operating income after payment of interest expense 
C) earnings retained after payment of dividends to shareholders 
D) net income

Question 18

An advertisement for a CMO security by a member of FINRA should disclose which of the following?

Accepted Answer

A) the exact yield investor will earn 
B) the yield based upon the prevailing discount rate 
C) that the stated yield is an estimate that may vary passed upon prepayments and market factors 
D) that the yield may be greater than the stated percentage but never less 
A) the exact yield investor will earn 
B) the yield based upon the prevailing discount rate 
C) that the stated yield is an estimate that may vary passed upon prepayments and market factors 
D) that the yield may be greater than the stated percentage but never less

Question 19

A trust instrument drawn pursuant to the Trust Indenture Act of 1939 sets forth which of the following?

Accepted Answer

A) the rights of stockholders 
B) the duties of the trustee 
C) the obligations of the issuing corporation 
D) both B and C 
A) the rights of stockholders 
B) the duties of the trustee 
C) the obligations of the issuing corporation 
D) both B and C

Question 20

What expression is used to describe the application of income and revenues derived from the operation of a facility financed from proceeds of a revenue bond?

Accepted Answer

A) debt service 
B) flow of funds 
C) revenue funding 
D) disbursement of priorities 
A) debt service 
B) flow of funds 
C) revenue funding 
D) disbursement of priorities

A call option is in the money when the market value of the underlying stock is:

Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40. What conversion ratio does Bubba determine?

Who is responsible for verifying that limited partners meet net worth and income requirements?

Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account. He may do so by depositing stocks with a market value of:

As a general rule, when a partnership is terminated, in what order are assets distributed?

Under Rule 415 a corporation may file a single registration statement with the SEC covering its anticipated financing need for the next:

Bubba's margin account has $1,000 of SMA. If he buys $20,000 of listed securities, how much fully paid margin stock must he deposit to respond to a Reg T requirement of 50%?

Bubba is buying a Federal Home Loan Bank issue that is offered at 95.22. How much will he pay to purchase one bond?

A four-letter symbol assigned to an issue is characteristic of an equity security that is:

Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?

Which of the following is not true about brokerage accounts?

Which of the following would not be subject to the holding period restrictions under Rule 144?

An excerpt from a recent tombstone ad reveals bonds offered publicly at 101. Why were they priced at a premium?

Who obtains and pays the municipal bond attorney rendering a legal opinion about the validity of the bond issue?

A short sale can be made in which of the following types of accounts?

When an index option is exercised, settlement is made by:

In a corporation's financial statements, earned surplus is also recognized as:

An advertisement for a CMO security by a member of FINRA should disclose which of the following?

A trust instrument drawn pursuant to the Trust Indenture Act of 1939 sets forth which of the following?

What expression is used to describe the application of income and revenues derived from the operation of a facility financed from proceeds of a revenue bond?

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 call option is in the money when the market value of the underlying stock is:

Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40. What conversion ratio does Bubba determine?

Who is responsible for verifying that limited partners meet net worth and income requirements?

Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account. He may do so by depositing stocks with a market value of:

As a general rule, when a partnership is terminated, in what order are assets distributed?

Under Rule 415 a corporation may file a single registration statement with the SEC covering its anticipated financing need for the next:

Bubba's margin account has $1,000 of SMA. If he buys $20,000 of listed securities, how much fully paid margin stock must he deposit to respond to a Reg T requirement of 50%?

Bubba is buying a Federal Home Loan Bank issue that is offered at 95.22. How much will he pay to purchase one bond?

A four-letter symbol assigned to an issue is characteristic of an equity security that is:

Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?

Which of the following is not true about brokerage accounts?

Which of the following would not be subject to the holding period restrictions under Rule 144?

An excerpt from a recent tombstone ad reveals bonds offered publicly at 101. Why were they priced at a premium?

Who obtains and pays the municipal bond attorney rendering a legal opinion about the validity of the bond issue?

A short sale can be made in which of the following types of accounts?

When an index option is exercised, settlement is made by:

In a corporation's financial statements, earned surplus is also recognized as:

An advertisement for a CMO security by a member of FINRA should disclose which of the following?

A trust instrument drawn pursuant to the Trust Indenture Act of 1939 sets forth which of the following?

What expression is used to describe the application of income and revenues derived from the operation of a facility financed from proceeds of a revenue bond?

Investment and Bond Market

Assorted Securities and Investments

Uniform Securities Act USA and State Registration Requirements

Filters