Practice Test 10

Question 1

Only ____ and ____ are redeemable

Answer 1

UIT’s and Mutual Funds

Question 2

Will it trigger a ban if a non Mutual Fund Professional such as a registered rep gives a political contribution to any amount to an elected officials campaign in which they are or aren’t entitled to vote?

Answer 2

It won’t trigger a ban

Question 3

Municipalities financial advisors prohibited from acting as _______ in bond offerings?

Answer 3

Underwriters

Question 4

Under MSRB rules, what all can be changed by mutual agreement between municipal dealers?

Answer 4

Place of delivery
Form of delivery
Time of delivery

Question 5

If a registered rep has a written script that will be used to make unsolicited telephone calls to potential retain customers- who will it need to be approved by before use

Answer 5

General principal

Question 6

If a registered rep appears as a spontaneous, unscripted, live presentation to potential investors, FINRA describes this as being a _________. These ____ require principal approval (unless firm requires this)

Answer 6

Public appearance, don’t

Question 7

Stabilization rules for new issues are set forth under which act?

Answer 7

Securities Exchange Act of 1934

Question 8

Non competitive bids placed at Treasury Auctions ____ have priority over competitive bids

Answer 8

Do

Question 9

Selling concession in a municipal offering is the discount given to

Answer 9

Selling group members

Question 10

If an earning individual, who is not covered by another retirement plan, has made annual contributions to an individual Retirement Account, and the individual changes jobs at the same salary and has been included in that company’s qualified retirement plan, annual contributions to the IRA can continue and are an ____ to income each year

Answer 10

Adjustment

Question 11

In variable annuity contracts- there is a ______ of a minimum growth rate in the separate account if a higher annual fee is paid for in that rider

Answer 11

Guarantee

Question 12

A customer, age 60 is looking for an investment that will provide life long income at retirement- the best recommendation would be for the customer to purchase a ______ and annuitize the separate account at retirement

Answer 12

Variable annuity

Question 13

True or False: A husband and a wife have a joint account and the wife calls the rep with instructions to liquidate their 509 share position- the rep should accept and execute as given because any one of the owners can enter trades in the account and can also authorize that checks be drawn to the account

Answer 13

True

Question 14

An extended period where there is no discernible trend in prices is termed

Answer 14

Consolidation

Question 15

If the Fed is worried about increasing inflation due to extremely rapid economic expansion- they are MOST likely to

Answer 15

Increase reserve requirements

Question 16

A potential client is 81 years old and has asked his rep for recommendations of speculative “dot com” stocks. The customer has a broadly diversified bond and high dividend paying stock portfolio that provides retirement income, in addition to the customer receiving social security. The customer is concerned that his purchasing power is decreasing and wishes to allocate an increased portion of his portfolio to aggressive growth stocks. The best recommendation would be to

Answer 16

allocate a portion of the customer’s portfolio to “dot com” stocks that will not reduce the customer’s retirement income below the amount needed for comfortable living

Question 17

An individual in a high tax bracket who is risk adverse has a best investment recommendation of investing in

Answer 17

Municipal bonds

Question 18

Use of multiple asset classes when constructing a portfolio reduces _____ risk

Answer 18

Market (capital) risk

Question 19

Each of these taxes are concerns to investors in ADR’s-

Answer 19

Federal, states foreign

Question 20

Regarding dividend and capital gain distributions made by mutual funds- the payments are taxable ______ they are distributed

Answer 20

The year

Question 21

The discount on market discount corporate and government bonds ____ accreted annually

Answer 21

May be

Question 22

Preferred stock market valuation is based primarily upon ___ term market interest rate levels

Answer 22

Long

Question 23

When it comes to the effect of a repurchase of treasury stock, outstanding shares are reduced and earnings per share are _____

Answer 23

Increased

Question 24

The NYSE stops the trading of a company’s stock, pending release of an important news announcement. The trading of the option will be halted by the

Answer 24

Exchange where the option trades

Question 25

What is standardized for listed option contracts (SEC)?

Answer 25

Strike price Contract size Expiration

Question 26

REIT’s are similar to ___

Answer 26

CEF (closed end investment companies)

Question 27

REIT’s must invest at least ___% of their assets in real estate related activities to qualify for conduit tax treatment

Answer 27

75%

Question 28

Who can invest in a hedge fund?

Answer 28

Accredited investors

Question 29

Eurodollar bonds issuers include US corporations, and the bonds are issued ____ the US, and purchased by _____

Answer 29

Outside, foreign residents

Question 30

Eurodollars are issued in ___ form and are not subject for sale in the US

Answer 30

bearer

Question 31

GAN

Answer 31

Grant anticipation note

Question 32

For principal only tranches (PO), when interest tests rise, the price of the tranche ____

Answer 32

Falls

Question 33

If you sell a municipal bond and the proceeds from the sale were greater than the adjusted cost basis, you have incurred ____ that yiu must pay taxes on

Answer 33

Capital gains

Question 34

If an associated person receives compensation directly from the issuer of a variable annuity sold by their employing BD, a ___ of it must be maintained by the BROKER DEALER

Answer 34

Record

Question 35

With mutual fund A shares, the price that an investor pays is referred to as the ___

Answer 35

POP

Question 36

If a registered rep on active military duty is placed on inactive status, they ____ be required to complete the firm element or the regulatory element

Answer 36

Will not

Question 37

What is most suitable for an investor with both growth and income as objectives?

Answer 37

Convertible bonds

Question 38

Options offer leverage and potential for big gains and can offer ____ returns

Answer 38

Quick

Question 39

Durable powers of attorney can be either general or limited, and so can _____ powers of attorney

Answer 39

Non durable

Question 40

Requirement for a firm to have the CIP is part of the ________ Act

Answer 40

USA Patriot Act

Question 41

Under Reg FD (fair disclosure), what must an issuer do when they intentionally reveal material non public information to a holder of the security who might trade on the information?

Answer 41

Immediately disclose the information publicly

Question 42

________ rule prohibits a broker dealer from recommending a mutual fund more highly than another based on other business the mutual fund does with the broker dealer

Answer 42

Anti reciprocal rule

Question 43

Losses passed through to the partners in a DPP are considered passive losses which means that they may ONLY be _____ from passive income

Answer 43

Deducted

Question 44

Selling a no load fun at its NAV is ___ prohibited practice for mutual funds

Answer 44

Not a

Question 45

A bond issuer would decide to issue an _______ bond to _____ into the current lower interest rates

Answer 45

advance refunding, Lock

Question 46

ETN’s are a type of ____ security

Answer 46

Debt

Question 47

____ refers to transactions in an account that could be referred to as excessive in both frequency and dollar value

Answer 47

Churning

Question 48

_____ is a written promise that a broker dealer will deliver a dividend to another broker dealer once the dividend is received by the issuing company

Answer 48

Due bill

Question 49

The _____ is responsible for destroying a damaged stock certificate and issuing a new one

Answer 49

The transfer agent

Question 50

When it comes to ACATS, upon receipt of a TIR (tranfer initiation request), the carrying firm has ____ business day to VALIDATE the positions and another ____ days to COMPLETE the tranfer

Answer 50

1, 3

Question 51

Buy stop orders can be used to protect a profit on __ positions

Answer 51

Short

Question 52

Buy stop orders can be used to ____ loss on short positions

Answer 52

Limit

Question 53

Buy stop orders can be used to ____ stock if a resistance level is broken

Answer 53

Acquire

Question 54

Build America bonds get a federal tax credit equal to ___% of the stated interest rate on the issue

Answer 54

35

Question 55

Build America Bonds give municipal issuers access to the ____ corporate debt market

Answer 55

Conventional

Question 56

Build America Bonds have proceeds of bond issues that can only be used for ______

Answer 56

Infrastructure improvements

Question 57

Reports of corporate bond trades are made through

Answer 57

TRACE

Question 58

Percentage of par quote is also known as a ___ quote

Answer 58

Dollar

Question 59

Gift taxes were up to $____ a person in 2024

Answer 59

18,000

Question 60

Blind pool limited partnership is one where the _______ are unknown at the time the ____ is being formed

Answer 60

Partnership assets, Partnership

Question 61

Accrued interest is added to the amount that the ___ must pay, and is added to the amount that the ____ will receive

Answer 61

Buyer, seller

Question 62

Accrued interest is an addition to the interest income that _____ receive

Answer 62

Sellers

Question 63

Depletion allowances, intangible drilling costs, and interest payments on secured debt are included as deductible ___ losses on the income tax returns of limited partnership investors

Answer 63

Passive

Question 64

If a customer refuses to disclose significant financial information, no recommendations can be made, but ____ trades can still be made

Answer 64

Unsolicited

Question 65

Deferred compensation plans are considered to be ____ retirement plans

Answer 65

Non-qualified

Question 66

Option strategy when bearish on VIX Index is a ____ strategy

Answer 66

Long VIX put

Question 67

If a corporation has an unfunded pension liability, this means that the expected future value of fund assets is less than the projected _____

Answer 67

Benefit claims

Question 68

If the dealer notices errors and needs to correct them because they should not have been accepted as there were missing coupons- this can be done through the right of ____

Answer 68

Reclamation

Question 69

Economic theory that postulates that production and economic growth are stimulated by lower interest rates and can be managed by the Fed

Answer 69

Monetarist Theory

Question 70

Investor is more likely to put a bond with a tender option at par when interest rates are

Answer 70

Rising

Question 71

Pension plan is a type of ___ plan

Answer 71

Defined Benefit