1
Q
Municipal bond confirmations must include (6)
A
- Dated date for new issues
- whether the securities are registered or book entry
- if the securities are subject to federal taxation or subject to Alternative Minimum tax (AMT)
- if the securities have been called or pre-refunded
- if the bonds are original issue discount
- if the securities are not in normal units
2
Q
Process of retiring outstanding bonds and issuing new ones is called _____
A
Refunding
3
Q
Refunded bonds are said to be ___ , meaning that they are removed from the balance sheet
A
Defeased
4
Q
Municipal bonds are subject to ____ risk
A
Credit
5
Q
Bonds subject to an in whole call must disclose ______
A
Yield to worst
6
Q
The proceeds of ______ bonds are placed in escrow
A
Refunding
7
Q
What distinguishes a crossover refunding from a traditional advance refunding?
A
How the refunding proceeds are used to pay interest
8
Q
If homeowners prepay mortgages faster than expected, and the excess monies is used to call in outstanding bonds rather than continue to pay interest on them, this results in an ______ call
A
Extraordinary optional call
9
Q
Bonds in a current refunding are retired within _____ days of issuance of the refunding bonds
A
90
10
Q
Under MSRB rules, pricing of callable municipal premium bonds quoted on a yield basis is based upon ______
A
Yield to worst
11
Q
When an issuer uses the proceeds from a bond refunding to retire the old debt right away (within 90 days of the new bonds), it is called ____ refunding. If the old debt remains outstanding longer than 90 days after the new bonds are issued it is called _____ refunding
A
Current, advance
12
Q
Process of retiring callable bonds by using the proceeds from newly issued bonds is known as _____
A
Refunding
13
Q
Which call covenant must be considered when computing the dollar price of a premium bond quoted on a yield basis?
A
In whole call
14
Q
Refunded bonds may be cancelled out by the escrow account for accounting purposes in what kind of refunding?
A
Advance refunding
15
Q
What kind of refunding sees proceeds of the refunding issue being used to pay for interest on the refunding bonds, rather than refunded bonds?
A
Crossover refunding
16
Q
Which callable municipal bonds quoted on a yield basis would be priced to the near term “in whole” call date
A
Premium bonds
17
Q
What association insures municipal bonds?
A
MBIA- municipal bonds issuance association
18
Q
When an issuer uses the proceeds from the refunding bonds to retire the old debt right away (within 90 days)- it is called a _____ refunding
A
Current
19
Q
A refunding where the refunded bonds will be outstanding for a period longer than 90 days, it is called an ____ refunding or a ____ refunding
A
Advance, pre-refunding
20
Q
What kind of municipal bond is typically safest?
A
GO Bonds
21
Q
What kind of debt is issued by municipalities that have overlapping geographic boundaries?
A
Overlapping debt
22
Q
What kind of debt is the short and long term general obligation debt, less cash, and cash equivalents
A
Net direct debt
23
Q
Does statutory debt limit have anything to do with revenue bonds?
A
No- deals with GO bonds only
24
Q
Revenue bonds are issued to fund a _____
A
Specific project
25
GO bonds are issued to fund a _____ budget
Municipality’s
26
What is typically riskier- revenue bonds or GO bonds?
Revenue
27
What kind of bonds have an equal claim to tax collections or revenues as other outstanding obligations of that issuer?
Parity bonds
28
_____ are backed by the lease payments made by a municipality and they allow a municipality to continue issuing debt even after reaching its debt limit
Certificates of Participation
29
____ are taxable municipal bonds that are created to fund private activities that don’t qualify for a federal tax exemption
Private Activity Bonds
30
Private activity bonds offer higher rates than other tax exempt municipal bonds because they are taxable at the ____ level
Federal
31
Bonds with interest rates that are adjusted by a predetermined index are known as _____ securities
Floating rate
SOFR is an example of this
32
What is the most commonly used type of variable rate bond?
Auction rate securities
33
_______are used to fund imports and exports
Bankers acceptances
34
Bonds backed by user fees are ___ bonds
Revenue
35
BAN’s are used to meet ___ term needs
Short
36
Revenue bonds typically have an _____ covenant
Additional bond
37
What bonds are subject to statutory debt limits?
GO Bonds
38
A ____ who needs cash will ____ some of its inventory overnight to another dealer and is subject to interest rate risk. This is called a ____
Dealer, sell, Overnight repurchase agreement
39
Average daily rate change by member banks for overnight loans of reserves is known as the ____
Federal funds rate
40
A double barreled bond is a ____ bond that possesses the characteristics of a ___ bond
Revenue, GO
41
Normal priority of the flow of funds for a revenue bond NET revenue pledge as found in the trust indenture is
Operation and maintenance
Debt service
Debt service reserve
Operation and maintenance reserve
42
All bond counsels have a ____
Legal opinion
43
____ legal opinion means that the bond counsel determines that they have found no problems with the issue
Unqualified
44
Every bond contract has (2)
Bond resolution
Security agreement
45
Underwriters will typically form a ___ which is a group of different municipal dealers, to help in marketing the bonds
Syndicate
46
A ______ must address what specific kinds of financial information and operating data will be provided, what financial statements will be filled, the accounting principles to be applied, and the date by which the annual financial information will be provided each year
continuing disclosure agreement
47
Municipal sales can be made before the bonds being ready for delivery. This is known as being made on a _____ basis
When-issued
48
For municipal bonds, the underwriter must deliver the official statement within ___ business days to any investor who requests it
1
49
Total takedown is made up of the _____ takedown plus the ____
Additional, concession
50
Oversubscription order priority
Presale orders
Group net orders
Designated orders
Member orders
51
Competitive bids are for what kind of bonds?
GO Bonds
52
Negotiated bids are for what kind of bonds?
Revenue bonds
53
____ are intermediate and long term unsecured corporate debt
Debentures
54
____ is when a trader buys the lower- priced security and simultaneously sells the equivalent higher priced security to lock in a profit
Arbitrage
55
STRIPS have been stripped of their interest payments, making them ______ coupon treasury bonds
Zero
56
T Notes are intermediate term securities and maturities typically range from ___ to ___ years
2-10
57
A ____ may be backed by a pool of debt assets, including corporate bonds, bank loans, asset-backed securities, and mortgage backed securities
Collateralized debt obligation
58
Non qualified retirement plans include ____ and ____ plans
IRA’s, deferred compensation
59
Employees must be offered an employer sponsored retirement plan if they have worked more than ___ hours and has been with the company for more than ____ months
1000, 12
60
With ___ vesting, employees are 100% vested after 3 years
Cliff vesting
61
With ___ vesting, employer contributions vest 20% per year of service after the first year, with 100% vesting after ___ years
Graded, 6
62
Employees are always ___% vested in their contributions
100%
63
Most common type of defined contribution plan is a ____
401K
64
Examples of withdrawing funds from defined contribution plans without penalty can occur in these instances:
- payment of medical expenses
- withdrawals occur in 5 substantially equal periodic payments
- death or permanent disability
- distribution is made to an employee after separation from service, as long as the separation occurred during or after the calendar year in which the employee reached age 55
- a person who has a child (including adoption) can withdraw up to $5,000 from their 401K or IRA without penalty but this must be used within 1 yr of the date of birth or adoption, and the $5000 limit applies separately to each parent
65
Sales and _____ of stocks, bonds, mutual funds, and any other securities within retirement accounts ____ subject to taxation.
Purchases, Are not
66
What plans are a good choice for companies with inconsistent earnings?
Profit-sharing plans
67
Contributions in profit sharing plans are based on ____ and the max contribution deductible to an employer is ___ of income
Income, 25%
68
What kind of retirement plans are similar to 401K’s but are designed specifically for state and local government employees?
457
69
If an individual is participating in another qualified retirement plan, such as a 401K, they can open an ____ and make contributions up to ____, but their contributions may not be tax-deductible. The deduction amount will depend on the individual’s ____ level
IRA, the limit, Income
70
For traditional IRA’s, tax penalty can be avoided if withdrawal is for
- qualified education expenses
- payment of medical expenses
- permanent disability
- first time home purchase
- payment of health insurance premiums by an unemployed or self employed person who has received federal or state aid for 3 consecutive months
- withdrawals occur in substantially equal periodic payments continuously for 5 yrs
- a person who has a child (including adoption) can withdraw draw up to $5,000
71
Failure to take a RMD results in a ___% penalty
25%
72
_____ annuities are not considered to be annuities- but ____ products
Fixed, Insurance
73
Variable annuities must be sold with a _____
Prospectus
74
What are the 2 phases of a variable annuity?
Accumulation phase
Distribution phase
75
As the customer contributes more to a variable annuity, they purchase more _____
Accumulation units
76
The ___ shrink or grow in value depending on the performance of the separate sub account investments chosen in a variable annuity
Units
77
A ____ is an additional benefit such as a guaranteed minimum growth rate or insurance against a market downturn
Rider
78
If the owner of an annuity dies, and the annuity is inherited and loses money, the ___ will receive the total invested money and will be responsible for paying ___ on any earnings
Beneficiary, income taxes
79
A ____ period will allow customers to cancel an annuity policy within. Specified time frame at no charge but the duration of the period can be ___ days or more depending on state law
Free-look, 10
80
A ___ must approve a customer’s application for a _____ annuity
Registered principal, deferred
81
Owners of variable annuity contracts have the right to vote based on both the management of the separate account and the management of the ___ it contains
Mutual fund
82
If an owner chooses to annuitize a contract, payment will be divided between an earnings portion that is taxed as _____ and the remainder contributions as a ___ return of capital
ordinary income, Tax-free
83
Withdrawals from ___ retirement plan or variable insurance product are never subject to ____ taxes, but are only treated as ____
ANY, Capital gains, ordinary income
84
Annotation’s tax effect is a monthly blended payment of ___ principal and ___ earnings
Tax free, taxable
85
Lump sum withdrawals tax effect in an annuity is a ____ blended payment of ___ principal and ___ earnings
Single, Tax-free, taxable
86
Random withdrawal’s tax effect in an annuity is when taxable earnings are distributed ___, then tax free principal ___
First, last
LIFO
87
_____ include profits realized from the sale of stocks, options, bonds, mutual funds, or real estate
Capital gains
88
The tax rate on an unrealized capital gain is ___%
0
89
Withdrawals from tax deferred accounts such as annuities, traditional IRA’s, and 401K plans are taxed as _____ income
Ordinary
90
Qualified dividends are taxed at ______
An individuals capital gains rate
91
Nonqualified dividends are taxed at a taxpayers _____
ordinary income rate
92
Stock splits do not result in a ___ gain or loss and are not ____ when received
Capital gain, taxable
93
When a company merges with another company and it gives its shareholders stock in a new company in exchange for the stock they currently hold- is this a taxable event?
No
94
When convertible preferred stock or bonds is converted to common stock, is this a taxable event?
No
95
If a long position expires- the premium is considered to be a ____
Capital loss
96
If a short position expires, the premium is considered to be a ____
Capital gain
97
Premiums can be ___ which means they are subtracted from cost basis
Amortized
98
Discounts can be ____ which means they are added to cost basis
Accreted
99
For new issue _____ municipal bonds, the discount must be accreted over the life of the bond. The annual accretion amount is considered to be _____
zero coupon, non-taxable
100
Banks can deduct ___% of their carrying costs if the money is invested in ____
80%, bank qualified municipal bonds
101
Capital gains on the sale of mutual funds shares are done in 3 different ways:
FIFO, average cost, specific identification
102
Automatic reinvestment in mutual funds occur at ___ and does not incur sales charges but is subject to ____
NAV, taxation
103
Switching a fund in a fund family is considered to be a ___ event
Taxable
104
Contributions to an annuity are made with ___ dollars
After tax
105
Exchanging a life insurance contract for an annuity is ___
Tax free
106
Exchanging an annuity for a life insurance contract is ____
Taxable
107
Life insurance premiums are paid with ____ tax dollars and the earnings in the account can grow _____
After, tax-deferred
108
All taxes for retirement plans are levied at _____ income rates- NEVER capital gains
Ordinary
109
If an individual is willing to pay all taxes ___, a traditional IRA can be converted into a Roth
Up front
110
REIT’s are generally exempt from ___ taxation
Corporate
111
In REIT’s, at least ___% of income must be related to real estate
75%
112
Order tickets must contain (4)
Security name
Order size
Duration of the order
If the order is discretionary
113
Marking the ___ is prohibited and includes ______ at the open, just to affect the stocks opening price
Open, false trades
114
Marking the ___ is providing and includes _____ trades at close, just to affect the stocks closing price
Close, false reporting
115
All OTC EQUITY transactions must be reported within ___ seconds of execution
10
116
All BOND transactions must be reported within ___ of execution
15 minutes
117
Exchange listed securities traded over the counter may be displayed and reported on Finra’s ___
ADF- alternative display facility
118
The ___ collects and disseminates quotations and trade reports and compares trades
ADF
119
___ are not traded on exchanges and take place directly between broker dealers, banks, mutual funds, and other market makers
Bonds
120
What is the automated system that reports trades in OTC debt securities?
TRACE
121
The ___ is where member firms hold all securities positions
DTC
122
Once a trade is executed is must go through a process known as ___ and ____
Clearing and settlement
123
Clearing of corporate security trades is handled by the ____
National Securities Clearing Corporation (NSCC)
124
When options trades occur, they are reported to the ___
OCC
125
DVP transactions are typically used by ____
Mutual funds
126
If a transaction is clearly erroneous, it can be declared ___
Null and void
127
Signature guarantees are also known as ____
Medallions
128
In addition to confirmations sent between broker dealers to confirm a trade, a confirmation must also be sent to _____ no later than the _________
The customer who placed the order, completion of the transaction
129
MSRB requires additional disclosure for municipal bond transactions:
- name of issuer, interest rate, maturity date, and if the bond is callable
- if the bond is a limited tax GO bond
- if a revenue bond, the source of the revenue
- the yield and dollar price of the transaction
130
When the owner sells a bond, they are entitled to the interest that accrued since the last ____ was made
Semi annual interest payment
131
Which position if exercised would mean buying the stock at a higher price than the current market price?
Sell a put
132
When a corporation is formed, a _____ authorizes that a fixed number of common shares may be issued
Corporate charter
133
Dividends pay ____ and are declared by the _____
Quarterly, board of directors
134
Stock dividends are defined as any stock distribution that involves less than ____% of the outstanding shares
25
135
Shareholders may have the right to keep their proportional share in the company/ avoid dilution if the company chooses to issues more shares. This is called _____
Preemptive rights
136
Because adjustable rate securities follow market rates and remain relatively stable, they typically provide ______
Preservation of Capital
137
If a preferred stock is callable, the issuer has the right to redeem the shares ______ a set date
After a set date
138
If a company has strong earnings, a special divided may be declared and _____ shareholders would receive this dividend
Participating preferred
139
There is a ___ relationship between preferred stock prices and interest rate movements. As rates rise, prices of existing preferred shares will ____
Inverse, fall
140
Rights are exercised ___ the market price
Below
141
Warrants are exercised ___ the market price
Above
142
The ___ provides current price quotes
CQS
143
Once a trade occurs in an exchange-listed security, it is reported to the ____
CTS- Consolidated Tape System
144
Almost all corporate bonds, money market securities, government bonds, and municipal bonds trade ____
OTC
145
Most OTC trading of exchange listed securities is conducted via _____
ECN’s
146
____ participants tend to be institutions making large transactions that do not want their quotations to be public, so that they do not influence the price of the security
Dark pool
147
The after hours market is much less ____, order flow is ____, and order execution is much more difficult and can be _____
Liquid, limited, more costly
148
There is much greater _____ along with ____ spreads in the after hours market
Price volatility, wider
149
Market not held orders means that the trader is given discretion to fill the order at whatever ___ and ___ the trader thinks best
Time, price
150
___ order instructs the trader to fill the entire order immediately. Cancelled if not filled
Fill or kill
151
_____ order requires that the entire order be filled or else canceled. Will remain open until filled
All or none
152
A ____ order requires that any portion of the order is filled immediately and the balance will be canceled. Can be filled partially
Immediate or cancel
153
A ___ order is to be filed immediately at the prevailing market price
Market
154
A ___ order specifies a price at which to buy or sell and will be executed at that price or better
Limit
155
In a ___ order, if the market price hits or passes through the price specified on a stop order, the stop order turns into a market order and a market order is elected
Stop
156
A ____ order acts as a trigger and if the market hits or passes through the price specified on a stop order, a limit order is selected
Stop limit
157
____ are securities that trade a basket of stocks like an exchange fund but trade on the stock market like an individual stock
ETF’s
158
Like an equity option, a ____ can be traded at any time of day at the prevailing market price at the time of the trade
ETF’s
159
If long treasuries and values fall when market interest rates rise- ____ to hedge
Put calls
160
If short treasuries and values rise when market interest rates fall- ____ to hedge
Buy puts
161
Long Call + Long put position is a
Long straddle
162
Short Call + short put position is a
Short straddle
163
Customers can open a numbered account but they must have their identity on the ___ form, which is kept on file at the broker dealer
Account
164
To open an account for an employee at another firm, the associated person must notify the executing firm (where the account will be opened) in ___ that they are an associated person of another firm
Writing
165
To open an account for an employee at another firm, the associated person must have ___ from their employer
Written consent
166
To open an account for an employee at another firm, the executing firm must send ____ trade confirmations and statements to the employer ____
Duplicate, upon written request
167
If the trade was incorrectly executed, the original trade will be ___ and ___ in the correct amount
Cancelled, rebilled
168
If a trade price is incorrectly reported- the customer must pay the ___ at which the trade was executed
Actual price
169
If the client incorrectly gave the trade instructions- they are ___ to __ the trade
Obligated, accept
170
Securities are delivered to the customer’s ______
Address of record
171
Securities are typically registered in the customer’s name, but kept for safekeeping by ____
The brokerage firm
172
If member suspects financial exploitation of an elder, it may place an initial ___ day hold but can go up to a total of ___ days if given the additional ___ days from a state or federal investigation
15, 55, 30
173
Each member firm must maintain ____ bond coverage on all employees to insure against loss due to employee theft or misappropriation of funds or securities
Fidelity
174
FINRA maintains jurisdiction over an associated person for ___ years after a form U5 is processed- meaning that the person can still be subject to FINRA disciplinary proceedings or arbitration for the person’s actions before leaving the industry
2
175
No associated person may accept any comp from anyone other than their employee unless all these conditions apply: firm agrees to this, payments are made through the employing firm, firm follows ____ compensation rules, firm maintains records of all compensation received from issuers or sponsors
SEC
176
Firms must report complaints to FINRA if complaints involve allegations of theft, forgery, or misappropriation of funds, and if claims damages of over $______ when filed against an associated person or $_______ when filed against the member firm
$15,000, $25,000
177
Customer complaints records must be maintained at the office of supervisory jurisdiction for a minimum of ___ years. MSRB requires a retention of ___ years
4, 6
178
FINRA offers the option to have dispute heard by a single person, and both sides must agree to the use of one- but can withdraw at any time- this is called _____
Mediation
179
Arbitration decisions cannot be appealed unless alleged ____ is involved
Criminal behavior
180
Private securities transactions can occur if the firm is given prior ____ and approves it in ____
Written notice, writing
181
A firm can only charge customers for investment advice if the firm is also a ______
Registered investment adviser
182
How many years should customer complaints be retained for?
4 years
183
What records must be kept for 3 years (6)
- Retail communications
- Correspondence
- Institutional communications
- Advertising
- Customer orders
- Any other records not listed below
184
Records of customer account information must be kept for how many years?
6
185
In offerings of new municipal issues, broker dealers are required to disclose or send what two things to customers?
- Final official statement (if prepared)
- Additional disclosures in negotiated offerings
186
The ____ rule prohibits any person from tendering securities ins tender offer unless that person is ___ the security
Short tender, long
187
Financial institutions such as banks, insurance companies, or mutual funds with assets over $5Mil are considered to be _____
Accredited investors
188
Rule 144A allows a ____ to trade unregistered securities with other ____
Qualified Investment Buyer (QIB), QIB
189
A Qualified Investment Buyer (QIB) has at least _______ of investment securities
$100,000,000
190
Reg ___ allows companies that want to issue securities outside the US to be able to do so
Reg S
191
When a large shareholder wants to sell a large number of shares to the public, the sale may be handled by an underwriter in a manner similar to a primary offering and is known as a _______
Secondary offering
192
A ____ is a group of broker dealers handling the sale of an IPO
syndicate
193
In a ___ commitment, the underwriter must be able to sell a minimum amount of the offering and if that amount is sold, the underwriter will continue to try to sell the remainder of the offering on a best-efforts basis
Mini-max
194
For exchange traded security IPO’s, the delivery of the prospectus is required ___ days after the offering date
25
195
For follow on offerings of exchange traded securities, when it comes to the delivery of the prospectus, there is ____ after the offering date
No requirement
196
For OTC securities IPO’s, the delivery of prospectus is required for ____ days after the offering date
90
197
For OTC securities follow on offerings, the delivery of a prospectus is required for ___ days after the offering date
40
198
Prospectus’ must be given for new issues only and after an issue is no longer considered to be new, the ___ assumes that there is enough information available in the market for investors to make informed decisions
SEC
199
Spread is divided into 3 components
Management fee
Underwriting fee
Concession
200
When an underwriter may sell more shares than will be issued at the public offering, this is known as _____ or ____
Over allotment, Greenshoe
201
For municipal securities, under MSRB rules, if a written customer complaint is made, a copy of the MSRB’s ____ must be provided
Investor brochure
202
What does the FDIC not insure
Stocks, bonds, mutual funds, investments backed by the US Govt, insurance and annuity products
203
What % of Board of Directors must be disinterested?
40%
204
Systematic and non systematic difference
You can hedge against systematic and you can diversify against non systematic
205
____ orders are reduced on ex date
Sell limit
206
An inverse ETF might be suitable for an investor who wants to _____
Hedge
207
A corporate bond is typically quoted on a ______ of ____
Percentage, par value
208
All trading on the NYSE will be halted by the SEC for the rest of the day because of market wide circuit breaker if the S&P 500 drops by more than ______ at _____ during the day (Level 3 Halt)
20%, any time
209
Dealers typically quote GNMA pass through securities on a _______ differential to equivalent maturity ______
basis point, US Government Bonds
210
A corporation will call its debt when interest rates are _____
Falling
211
In an underwriting, which of the following is earned by a syndicate member who sells its allotment of shares directly to the public?
Underwriting fee and selling concession
212
Coverdells beneficiaries can only be changed to a ____
Family member
213
What has a lower level of credit risk- GO Bonds or Treasury Bonds
Treasury
214
ADR is a ____ security held in ____ branches of _____ banks
Foreign, foreign, US
215
What is an example of a low risk DPP? Purchasing a _____
Purchasing an existing apartment complex
216
TRACE reports trades of what kinds of bonds (3)
Corporate, government, agency
217
Bonds quoted on a percentage of par basis are generally ____ bonds
Term
218
The use of index options to hedge the portfolio reduces ____ risk
Systematic
219
What kinds of accounts are less strict with suitability requirements?
Institutional
220
ADRs are receipts for shares of foreign stock held in foreign branches of a ____ bank
US
221
What level of a halt results in a 13% drop in the S&P 500?
Level 2
222
For a Level 2 Halt, if there is a drop prior to ____ PM EST, it will result in a ____ minute cross market trading halt. There won’t be a halt if it occurs at or ___ this time
3:25 PM, 15 mins, after
223
A level 1 halt results in a ___% drop in the S&P 500 prior to ____ PM EST, and results in a ___ minute cross market cross market trading halt
7%, 3:25PM EST, 15 mins
224
EPIC acronym
American EXPORTERS buy PUTS, American IMPORTERS buy CALLS
225
A ____ call provides protections against the ___ of foreign currency
Long, rise
226
When you ____ currency, it does not provide protections against against foreign currency
Short
227
Fully hedge a long stock- buy a ____
ML: Premium Paid
MG: Unlimited
Put
228
Fully hedge a short position, buy a ____
ML: Prem Paid
MG: Initial Stock Price-Premium
Call
229
Capital Losses and gains on securities aren’t recognized until securities are _____
Sold
230
Are government bonds primary or secondary market?
Primary
231
American style settlement is _____
T+1
232
European style settlement is ____
T+2
233
A _____ and a ____ will increase “open interest”
Open purchase, open sale
234
IRA’s allow ____ transfers a year and ____ rollover per year is allowed
Unlimited, 1
235
A CMO Z tranche receives payments when?
After all other tranches
236
An introducing broker dealer must resolve any _____
Customer complaints
237
When it comes to the trading of government and agency bonds, the trading market is ______ with _____ spreads
Very active, narrow spreads
238
A broker dealer can loan money to a customer who wishes to purchase a newly issued exchange listed security after ___ days have elapsed from the ____ of the offering
30, completion
239
What is the penalty imposed for excess contributions to an IRA?
6%
240
A sharp RISE in interest rates would have the greatest effect on the market price of ______
Public utility stocks
241
One of the benefits in the tax code is that when assets are inherited after someone dies, the inheritor gets a ____ if the assets have appreciated in value
Stepped up cost basis
242
Market makers, municipal securities dealers, and government security dealers are examples of _____ but ____ are not
Secondary market, registered rep
243
Interval funds offer ___ yields and permit their shareholders to sell their shares only at specific time periods or intervals
Higher
244
Interval funds are good for those with a ____ time horizon
Longer
245
In a new issue underwriting, the ___ fee is typically the smallest
Management fee
246
If an investor wants to purchase a stock, and dollar cost average by investing on a monthly basis, the investor should invest __ each month, buying ______ as the market price allows when the purchase is made
The same amount, as many shares
247
US Bonds and Book Entry Bonds are currently issued as ____ entry bonds
Book entry
248
A sinking fund is money set aside to pay ___
Principal on a bond
249
When customer securities are used as collateral for a loan that is not for the customer’s account, this is known as _______
Re-hypothecation
250
A registered rep enters an order for a customer and later notices that the wrong account number has been entered on the order ticket- the proper procedure is for the branch office manager to approve a change of ______ on the existing order ticket
Account number
251
For trust accounts, a copy of the trust agreement must be obtained before ____
Any transactions are allowed
252
A strangle means that both contracts are _______
Out of the money
253
Member firms must report an associated person who is subject to disciplinary action taken by the firm involving suspension, termination, or finesse in excess of ____, nothing less than that
$2,500
254
If a registered rep is employed by a BD that is a subsidiary of a publicly traded company, they registered rep may accept ______ orders for the parent company’s _____
unsolicited, common stock
255
If a registered rep has been contacted by a local TV station to participate in a roundtable about demoralizing, this is defined by FINRA to be a _____
Public appearance
256
For the past 5 yrs, an individual who was not covered by another retirement plan has made annual contributions to an IRA. The person changed jobs at the same salary and has been included in the new company’s qualified retirement plan. Annual contributions to the IRA _____, but whether they are tax deductible will depend on the person’s ____
Can continue, income level
257
To profit from the VIX going down, you should _____
Buy VIX Puts
VIX (volatility index options)
258
Issuers of Eurobonds can include ____
US corporations
259
_____ is when someone sells securities or security services outside of their BD
Selling away
260
_____ is offset to buyer’s interest income received
Accrued interest
261
Minimum maintenance margins for Reg T are set by _____
FINRA
262
ADR’s are traded on exchange but holders cannot ____
Vote
263
Preferred stock market valuation is based primarily upon ____ market interest rate levels
Long term
264
Market sentiment of someone who purchases a call spread is ______
Bullish
265
____ suitability states if there is a reasonable basis to believe that a series of recommended strategies are not excessive
Quantitative
266
Customer ID Program is part of the ____ Act
USA Patriot Act
267
Penny stocks receive statements how often?
Monthly
268
If a customer exercises a call, they are _____ the stock
Buying
269
Hedges limit ______ potential
Loss
270
What equation is this
Operating income/ annual interest cost + principal repayments
Debt service coverage ratio
271
Class C
Class B
Class A
A- long term
C- short term and biggest 12b1 fees
B shares- no up front but more expensive than a shares with fees and expenses
272
Coupon rates ___ change over the life of the bond
Don’t
273
Treasury strips do not have ____ risk
Reinvestment
274
“And interest” means it trades with interest. Treasury ___ do not trade with interest, but treasury ___ and ____ do, and so do ______ bonds
Bills, bonds, notes, municipal bonds
275
Are official statements required by SEC Act of 1933?
No, because they’re exempt
276
_____ income is taxable, unless it is tax-free municipal _____
Interest, interest income
277
Assigned means you have to ____
Buy
278
When it’s said that either party in a joint account can’t endorse a check, it means that both can’t ____
Sign the back
279
While you have to follow special procedures for an ___ or ___ of another firm, you don’t have to do so for an employee at your own
Employee, family member
280
Under Regulation A- issuers must provide which disclosure docs: copy of _____ or _______
Offering circular, private placement memorandum
281
Interest income derived from non-essential use private purpose revenue bonds is included in the _____. Industrial revenue bonds are an example
Alternative minimum tax computation.
282
Distributions after age 59 1/2 from non-tax qualified retirement plans are _____ tax free return of capital and ______ taxable income
Partial, partial
283
An individual aged 69, takes a withdrawal from his IRA and the amount withdrawn is subject to ____ income tax only
Regular
284
Bankers acceptances are a kind of ____ and is _____
Money market, exempt
285
Because they offer ____ interest payments throughout the life of a bond, _____ bonds are suitable for investors interested primarily in current income
Fixed, Corporate
286
If someone has an annuity and wants to start receiving the largest amount of monthly payment, they should go with _____
Straight life income
287
FINRA can’t ____ an employee, but a firm can
Terminate
288
Understand size of DOW, S&P, etc
289
If a registered person is planning on participating in a private securities transaction, prior to participating, the rep must provide a written notice to a member firm. What needs to be provided
- details of proposed transaction
- proposed role
- whether the two will receive any comp as part of the transition
290
Market orders are executed at the
Market price- best available price
291
Stop orders become a ___ at a trigger price
Market order
292
A limit order is an order to buy or sell at a _____
Specified price
293
Buy limit Orders state a ____ price at which an investor is willing to buy a specific securities
Minimum
294
Code of procedure by FINRA can take what kind of disciplinary actions (3)
Termination
Fine
Censure
295
Variable life policies are a kind of _____ insurance
Permanent
296
Nasdaq system (single book) trade of a Nasdaq listed stock, trade of an NYSE listed issue in the 3rd market, and the trade of an OTC issue in the second market are all kinds of trades reported through ACT’s _____
TRF’s - Trade Reporting Facilities
297
How long must a firm provide a copy of the prospectus to investors interested in purchasing a security from a company with an IPO that is listed on the Nasdaq?
25 days after it is first sold
298
An AIR is not necessarily the ______ amount paid out to the annuitant beyond _____
Actual dollar amount, the first payment
299
Taxation of stock dividends are typically not ___ at the time of ____
Taxed, distribution
300
Conversion of convertible preferred stock ____ shareholders equity
Dilutes
301
Payment of stock dividends does not ___ shareholder equity
Dilute
302
A nonprofit organization, trust, or institutional investor is an accredited investor if it has at least $_______ of assets and was NOT formed with the intent of buying the private placement
$5,000,000
303
There is ___of accredited investors that can purchase a private placement under Reg D
No limit
304
To be an accredited investor, (person) individual investors must either have a minimum income of $_______ for an individual or $____ for a married couple or a net worth test of $1,000,000
$200,000, $300,000
305
A long call spread involves buying a call option at a ____ strike price (_____ premium) and selling a call option at a ___ strike price (____ premium
Lower, higher
Higher, lower
Example
Buy 1 ABC Jan 30 Call @5
Sell 1 ABC Jan 50 Call @2
306
A short call spread involves selling a call option at a ____ strike price (_____ premium) and buying a call option at a ___ strike price (____ premium
Lower, higher
Higher, lower
Example
Sell 1 ABC Jan 40 Call
Buy 1 ABC Jan 50 Call
307
For Reg SP- a customer cannot opt out of sharing info with their ____ or ____
Firm, clearing broker dealer
308
True or False: example of a legal opinion- A bond counsel would examine legal and tax aspects of it appears that a title cannot be given on land which a proses facility is to be built
True
309
Office of comptroller, FDIC, and Federal reserve board all enforce ____ rules
MSRB rules
310
Covered call writing is an appropriate strategy in a _____ market
Stable
311
If a customer expects the market to fall, they can take a _____ position
Covered put
312
Deeper the ___ the more volatile the bonds ____
Discount, price movements
313
A bond issue where every bond has the same issue date, interest rate, and maturity is a ____ offering
Term bond
314
Bonds that mature at specified intervals over a pre-determined time period are known as as ____ bonds
Serial
315
Covered put strategy
Short stock + short put
316
Covered puts are moderately _____
Bearish
317
Covered calls are strategies in a ____ market
Stable
318
Covered calls are ____ or slightly ___
Neutral, bullish
319
Covered calls _____ gains in the event of potential loss but do not ____ gains
Limits gains, protect
320
CLN
Credit linked note
321
Debentures cannot be purchased on _____
Margin
322
Cost basis is the original purchase price plus all _____ dividends and ____
Reinvested, capital gains
323
Authorized shares is
Treasury shares + issued shares + outstanding shares
324
Money markets are _____ securities
Debt
325
Do income bonds pay interest?
No
326
If a portfolio manager for a treasury bond fund is concerned that the value of bonds in the portfolio will fall, an option they should take to hedge would be to ______
BUY yield based calls
327
If a stockholder wishes to receive a common dividend, prior to trading the stock, they must sell the stock no earlier than the ____
Ex date
328
In ____ accounts there are no separate commission charges or additional charges for safekeeping
Wrap
329
RTRS info is found within _____
EMMA
330
Muni bonds purchased in the secondary market at a premium to par ____ be _____
Must be amortized
331
GNMA and FNMA are both considered to be ____ and are backed by the____
Pass through certificates, US Government
332
Sometimes money market securities accrue with ____
Interest
333
Money markets are considered to be ____
Liquid
334
When a customer buys a new stock issue from a syndicate member, the customer pays the
Public offering price
335
Treasury bonds trade with _____
Interest
336
_____ takedown is earned after a bid is won in a mini underwriting, and a syndicate member places an order with the manager for selling group member
Additional takedown
337
_____ takedown is the discount given by the manager to the syndicate members
Total
338
Tombstone announcements show the ______ to the issuer
Gross proceeds
339
There is no tax deduction made to a _____ contract
Variable annuity
340
Break even for a short stock /long call position is: _____ - _____
Stock price - call premium
341
Minimum margin of a day trading account is _____%
25
342
Preservation of capital safeguards the _____ investment amount and Safety of principal emphasizes minimizing risk to the ______ amount
Original, invested
343
Discount rate is what the Fed charges _____ and the _____ rate is what banks charge each other
Banks, Fed funds
344
If interest rates rise, preferred stock prices typically ____
Fall
345
Stock that has been issued, sold to the investing public, and then bought back by the issuing company is known as ____ stock
Treasury
346
Illegal aliens are required to provide ___ to open an account (3)
Passport number, tax ID number, telephone number
347
If a corporation wishes to raise funds to build a new manufacturing facility, to obtain financing, you can _____ rights to outstanding shares of _____
Issue, common stock
348
Cash dividends and product dividends are BOTH ____ to the recipient
Taxable
349
The greater the leverage in a long margin account, the greater the percentage increase in equity as market prices ____
Rise
350
Upon request by a purchasing customer, an underwriter in a municipal syndicate must provide the final official statement within _____ hours of the request
24
351
A customer cannot execute a not held order without knowing the time, price, and ___ (if they quickly hang up and aren’t able to be reached again)
Size
352
True or False: If Bill and Kasey are married and bill dies and passes his lifetime exclusion to her, then she dies, will it be subject to estate taxes if it’s value is higher than both of their combined lifetime exclusion amounts
True
353
DOW Covers how many stock
30
354
S&P has ___ and ____ indexes
500, 100
355
____ has the broader market and _____ has the narrowest
Wilshire, DOW
356
Max sales fund of MFund is
8.5%
357
Municipal bonds pay how often?
Semi annually
358
ETN’s track on an ____ and offer ____ and can be traded on ____
An index, diversification, exchange
359
529’s also include up to 10,000 dollars in annual expenses for elementary or secondary school
True
360
If money is removed from 529’s for something non education related, you are taxed at an ____ rates plus a ____ tax penalty
Ordinary income tax level, 10% tax penalty
361
You can transfer 529 to another states plan ___ free but has to do so within ____ days
Tax free, 60
362
529 prepaid tuition prepay for college tuition and do they lock in tuition price?
Yes
S7
flashcards
Decks in class (32)
# Cards
-
Tranches9
-
Retirement3
-
Options33
-
Practice Test 267
-
Practice Test 160
-
Practice Test 372
-
Practice Test 459
-
Practice Test 562
-
Practice Test 639
-
Practice Test 749
-
Practice Test 856
-
Practice Test 948
-
Practice Test 1071
-
Practice Math Problems65
-
Practice Suitability Questions21
-
Product Suitability Summaries59
-
Product Suitability 242
-
Refining150
-
Bounce Back 2.0137
-
Bounce Back 3.0180
-
Bounce Back 4.0362
-
Lists55
-
Redemption142
-
Redemption 2119
-
Redemption 3119
-
Redemption 472
-
Redemption 5118
-
Redemption 6186
-
Redemption 790
-
Redemption 880
-
Redemption 995
-
Redemption 10137
