Question 1

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 D

Question 2

The Bubba Insurance Company is not incorporated. It consists of Bubba and his two brothers as general partners, who maintain an active securities account in the name of the company. If one of the partners should suddenly die, what course of actions should be undertaken by the registered representative at the brokerage?

Accepted Answer

A) freeze the account from further activity until a death certificate and new partnership agreement are furnished to the brokerage 
B) no special action is required because the death of a single partner does not terminate the partnership agreement 
C) distribute the assets in the account to the surviving partners 
D) execute sell orders but do not accept buy orders or distribute assets from the account until a new partnership agreement is provided to the brokerage 
A) freeze the account from further activity until a death certificate and new partnership agreement are furnished to the brokerage 
B) no special action is required because the death of a single partner does not terminate the partnership agreement 
C) distribute the assets in the account to the surviving partners 
D) execute sell orders but do not accept buy orders or distribute assets from the account until a new partnership agreement is provided to the brokerage D

Question 3

Which of the following is an acceptable deposit to answer an NYSE maintenance call?

Accepted Answer

A) US savings bond 
B) SMA 
C) US treasury notes 
D) all of the above 
A) US savings bond 
B) SMA 
C) US treasury notes 
D) all of the above C

Question 4

Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing. Under FINRA Conduct Rules, Bubba may:

Accepted Answer

A) not do so under any circumstance 
B) do so if he has a history of buying hot issues 
C) not do so for his own account, buy may purchase shares for his sister's account 
D) do so if his allotment is insubstantial and not disproportionate to public orders 
A) not do so under any circumstance 
B) do so if he has a history of buying hot issues 
C) not do so for his own account, buy may purchase shares for his sister's account 
D) do so if his allotment is insubstantial and not disproportionate to public orders

Question 5

Which of the following does not affect the public offering price of a new issue?

Accepted Answer

A) anticipated earnings of the issuer in the next year 
B) dividend projections for the next year 
C) the book value of the issuer 
D) the selling group's determination of value in the prevailing market conditions 
A) anticipated earnings of the issuer in the next year 
B) dividend projections for the next year 
C) the book value of the issuer 
D) the selling group's determination of value in the prevailing market conditions

Question 6

Bubba owns 200 shares of XYZ at $90, and wishes to hedge the position while generating income. What is the best recommendation?

Accepted Answer

A) sell calls 
B) sell puts 
C) buy calls 
D) buy puts 
A) sell calls 
B) sell puts 
C) buy calls 
D) buy puts

Question 7

Under what conditions may an FINRA member firm sell an IPO to an employee of another broker/dealer?

Accepted Answer

A) if the amount of the purchase is small and the transaction accords with the employee's normal investment practice 
B) if the member firm notifies the other broker/dealer of the transaction 
C) if the employing broker/dealer guarantees that resale of the securities acquired by its employee will be restricted for two years 
D) under no circumstances 
A) if the amount of the purchase is small and the transaction accords with the employee's normal investment practice 
B) if the member firm notifies the other broker/dealer of the transaction 
C) if the employing broker/dealer guarantees that resale of the securities acquired by its employee will be restricted for two years 
D) under no circumstances

Question 8

Book value of a corporation is also know as:

Accepted Answer

A) net tangible asset value per share 
B) intangible value 
C) par value 
D) dilution value 
A) net tangible asset value per share 
B) intangible value 
C) par value 
D) dilution value

Question 9

In mid-September, Bubba sells one XYZ February 50 call at $6. It subsequently expires without being exercised. How is the premium taxed?

Accepted Answer

A) Bubba's cost of the underlying stock is reduced 
B) the $600 premium is a capital gain 
C) the $600 premium constitutes ordinary income 
D) the $600 premium is rolled over into another XYZ call with the next longest expiration date. 
A) Bubba's cost of the underlying stock is reduced 
B) the $600 premium is a capital gain 
C) the $600 premium constitutes ordinary income 
D) the $600 premium is rolled over into another XYZ call with the next longest expiration date.

Question 10

Which are the primary considerations in evaluating the worth of a limited partnership?

Accepted Answer

A) the size of the tax deductions 
B) the cost of assets 
C) the adequacy of funding 
D) both B and C 
A) the size of the tax deductions 
B) the cost of assets 
C) the adequacy of funding 
D) both B and C

Question 11

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 12

The registration requirements of the federal securities acts are intended to protect the public interest by providing for a prospectus on new issues and its review by the SEC. Which of the following is the true of this process?

Accepted Answer

A) It provides the SEC with adequate information on which to base approval for new issues 
B) It does not imply SEC approval of the issue 
C) It guarantees purchasers against an untrue statement of material fact or an omission of material fact 
D) It relieves participating underwriters from any further responsibility for checking essential facts before recommending purchase to the customers 
A) It provides the SEC with adequate information on which to base approval for new issues 
B) It does not imply SEC approval of the issue 
C) It guarantees purchasers against an untrue statement of material fact or an omission of material fact 
D) It relieves participating underwriters from any further responsibility for checking essential facts before recommending purchase to the customers

Question 13

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 14

In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. In April, Bubba exercises the put option and uses his stock for delivery. What is his resulting tax consequence?

Accepted Answer

A) a $600 capital loss 
B) neither profit nor loss 
C) cannot be determined without knowing the market price of XYZ upon exercise 
D) this is a wash sale and cannot be included in the investor's tax calculations 
A) a $600 capital loss 
B) neither profit nor loss 
C) cannot be determined without knowing the market price of XYZ upon exercise 
D) this is a wash sale and cannot be included in the investor's tax calculations

Question 15

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

Accepted Answer

A) $100,000 
B) $50,000 
C) $25,000 
D) $5,000 
A) $100,000 
B) $50,000 
C) $25,000 
D) $5,000

Question 16

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 17

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 18

A financial institution requesting a quote on a block of 100 bonds from a dealer in government securities receives a quote of 98.02 bid, 98.06 asked. What is the dollar amount the institution will receive if the financial institution sells these bonds to the dealer?''

Accepted Answer

A) $98,062.50 
B) $98,187.50 
C) $98,250.00 
D) $98,750.00 
A) $98,062.50 
B) $98,187.50 
C) $98,250.00 
D) $98,750.00

Question 19

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 20

The Bubba Corporation has 900,000 outstanding shares and holds 100,000 shares as treasury stock. At the end of the third quarter $450,000 is distributed as a dividend on the common. How much is the dividend per share?

Accepted Answer

A) $0.05 
B) $0.45 
C) $0.50 
D) None of the above 
A) $0.05 
B) $0.45 
C) $0.50 
D) None of the above

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

Which of the following is an acceptable deposit to answer an NYSE maintenance call?

Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing. Under FINRA Conduct Rules, Bubba may:

Which of the following does not affect the public offering price of a new issue?

Bubba owns 200 shares of XYZ at $90, and wishes to hedge the position while generating income. What is the best recommendation?

Under what conditions may an FINRA member firm sell an IPO to an employee of another broker/dealer?

Book value of a corporation is also know as:

In mid-September, Bubba sells one XYZ February 50 call at $6. It subsequently expires without being exercised. How is the premium taxed?

Which are the primary considerations in evaluating the worth of a limited partnership?

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

The registration requirements of the federal securities acts are intended to protect the public interest by providing for a prospectus on new issues and its review by the SEC. Which of the following is the true of this process?

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

In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. In April, Bubba exercises the put option and uses his stock for delivery. What is his resulting tax consequence?

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

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

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

A financial institution requesting a quote on a block of 100 bonds from a dealer in government securities receives a quote of 98.02 bid, 98.06 asked. What is the dollar amount the institution will receive if the financial institution sells these bonds to the dealer?''

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

The Bubba Corporation has 900,000 outstanding shares and holds 100,000 shares as treasury stock. At the end of the third quarter $450,000 is distributed as a dividend on the common. How much is the dividend per share?

Investment and Bond Market

Investment and Securities

Uniform Securities Act USA and State Registration Requirements

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Exam 3: Assorted Securities and Investments

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

Which of the following is an acceptable deposit to answer an NYSE maintenance call?

Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing. Under FINRA Conduct Rules, Bubba may:

Which of the following does not affect the public offering price of a new issue?

Bubba owns 200 shares of XYZ at $90, and wishes to hedge the position while generating income. What is the best recommendation?

Under what conditions may an FINRA member firm sell an IPO to an employee of another broker/dealer?

Book value of a corporation is also know as:

In mid-September, Bubba sells one XYZ February 50 call at $6. It subsequently expires without being exercised. How is the premium taxed?

Which are the primary considerations in evaluating the worth of a limited partnership?

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

The registration requirements of the federal securities acts are intended to protect the public interest by providing for a prospectus on new issues and its review by the SEC. Which of the following is the true of this process?

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

In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. In April, Bubba exercises the put option and uses his stock for delivery. What is his resulting tax consequence?

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

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

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

A financial institution requesting a quote on a block of 100 bonds from a dealer in government securities receives a quote of 98.02 bid, 98.06 asked. What is the dollar amount the institution will receive if the financial institution sells these bonds to the dealer?''

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

The Bubba Corporation has 900,000 outstanding shares and holds 100,000 shares as treasury stock. At the end of the third quarter $450,000 is distributed as a dividend on the common. How much is the dividend per share?

Investment and Bond Market

Investment and Securities

Uniform Securities Act USA and State Registration Requirements

Filters