Practice Test 2

Question 1

The widening of yield spreads is a ____ indicator for the economy

Answer 1

Negative

Question 2

The narrowing of yield spreads is a ____ indicator for the economy

Answer 2

Positive

Question 3

Options sales literature shows that performance must be accompanied or preceded by the latest _______

Answer 3

Options disclosure document

Question 4

Office of thrift supervision deals with ___ and ____

Answer 4

Savings and loans

Question 5

For a customer to open a new account to buy IPO’s, they most sign a _____

Answer 5

Representation letter

Question 6

Speaking engagement records must be held for __ years

Answer 6

3

Question 7

True or False: Underwriting syndicate group members share in both seeking responsibility for the new issue and liability for any unsold portion of the issue.

Answer 7

True

Question 8

Distributions from traditional 401K are taxable at

Answer 8

Ordinary income tax rates

Question 9

If a non spouse inherits an IRA, the beneficiary must

Answer 9

Roll the account over into an INHERITED account and deplete it over the next 10 years

Question 10

Annuity unit determines

Answer 10

The amount of payout

Question 11

Internet cookies from other firms websites is not considered to be ____ about a customer account

Answer 11

Personal informaifon

Question 12

To open a partnership account, you have to use the SNN or Tax ID of the ____

Answer 12

Partnership

Question 13

Nasdaq operates between

Answer 13

930am-4pm

Question 14

Mutual funds are obligated to distribute capital gains to their shareholders ___ a year, which are taxable, and ETF’s are not under this obligation, so capital gains taxes occur when _________

Answer 14

Once, the shares are sold

Question 15

Under Subchapter M, ____ % must be ______ to the mutual fund shareholders

Answer 15

90%, distributed

Question 16

Variable annuities are non fixed ____

Answer 16

UIT’s

Question 17

Commercial paper is quoted on a _____

Answer 17

yield basis

Question 18

Repo rates are paid by the ____ of the securities

Seller or buyer? Which one

Answer 18

Seller

Question 19

Floating rate tranches are ___ susceptible to interest rate risk

Answer 19

Least

Question 20

Interest income from a collateralized mortgage abomination is subject to ____, ___ and , ____ tax

Answer 20

federal, state, local

Question 21

When a callable corporate bond is trading at a premium to a retail client, the ___ must be disclosed

Answer 21

Yield to worst

Question 22

Not cyclical means that something is

Answer 22

Essential

Question 23

A major change in the corporations capital structure has the greatest impact on a company’s ____ coefficient

Answer 23

Alpha

Question 24

Odd lot theory

Answer 24

Odd lot investors tend to buy or sell at the wrong time

Question 25

Private placements are least ____

Answer 25

Liquid

Question 26

When the investment performance of each asset class varies from the anticipated rate of return the portfolio must be ____ by liquidating portions of of overlapping clssses and investing the proceeds in underperforming classes

Answer 26

Rebalanced

Question 27

____ rules allow for a taxpayer to specify which shares are being sold

Answer 27

IRS

Question 28

Original discount corporate bonds can be ____ over the life of the bond

Answer 28

Accreted

Question 29

In a discretionary account, each order ticket must be reviewed by a principal and principal review must be done ____

Answer 29

Frequently

Question 30

You can’t recommend a specific security in retail if there is no ___ for the recommendation

Answer 30

Reasonable basis

Question 31

Sharing in customer loss or profit is not always ____

Answer 31

An improper activity

Question 32

_____ does not affect the payout amount made each month to an annuitant

Answer 32

Tax rate

Question 33

When a placement ratio for new securities decreases it means that municipal dealers have a harder time selling securities on the ____ market than originally expected

Answer 33

Secondary

Question 34

Firms supervisory procedures must record the names, titles, registration status, locations, and responsibilities of ____

Answer 34

Supervisory personnel at every location

Question 35

Home equity is not included in a clients ____

Answer 35

Liquid net worth

Question 36

Inside market is the best ___ and best ____

Answer 36

Bid, ask

Question 37

8K CAN BE FILED to satisfy a reg ___ requirement if material non public info is accidentally revealed

Answer 37

Reg FD

Question 38

LULD

Answer 38

Limit up limit down

Question 39

NBBO

Answer 39

National best bid and offer

Question 40

Under LULD rules a stock’s price is limit down when the NBBO price equals

Answer 40

It’s lower price band

Question 41

Person who gives gifts is responsible for

Answer 41

Paying the taxes

Question 42

A municipality can issue new bonds at a lower rate and use the earnings to buy back the old bonds at the first legal call date to take advantage of a ____ interest rate

Answer 42

Lower

Question 43

To open a limited partnership account, ___ sig is the only one needed

Answer 43

General partners

Question 44

To determine if limits have been violated, the OCC would combine

Answer 44

Long calls and short puts

Question 45

True or False: Arbitrage is buying in one market and selling in another

Answer 45

True

Question 46

If a customer sells short a security that is on the threshold list and the member firm fails to deliver the security on settlement, the security must be bought in no later than ___ settlement days from the trade date

Answer 46

13

Question 47

In SHO, you can borrow and deliver by ____

Answer 47

Settlement

Question 48

If a customer decides to transfer his account from broker dealer A to broker dealer B, ___ must retain the customers existing account records

Answer 48

Broker dealer A must keep record for 6 years

Question 49

Good delivery are round multiples of

Answer 49

100

Question 50

For municipal bonds, interest payments are ___ tax free but ____ are federally taxable

Answer 50

federally, capital gains

Question 51

A transfer form with POA in a stock certificate refers to

Answer 51

Stock power

Question 52

Due bill is required when stock is purchased in a regular way trade prior to the ex date and the trade settles after the ___ date

Answer 52

Record

Question 53

Customer trade confirmations must be provided to customers

Answer 53

At or before the settlement date of the transaction

Question 54

Commercial paper matured in a pre set date and a ___

Answer 54

Pre set price

Question 55

Commercial paper is considered to be _____ debt

Answer 55

Unsecured

Question 56

Interest charged under the repurchase agreement is a ____ rate paid by the ____ of the securities to the _____

Answer 56

Repo, seller, buyer

Question 57

Technical analyst notices that the market has been rising for several days but on steadily declining volume. What conclusion is the analyst to make

Answer 57

Market is overbought and a downturn may be imminent

Question 58

Original issue discount bonds ____ accreted over the life of the bond

Answer 58

Must be

Question 59

In a notice to your member firm for participating in a private securities transaction- you have to provide details of the proposed transaction, proposed role in the transaction, and whether you will receive any ______ as part of your participation

Answer 59

Compensation

Question 60

Variable life policies can hold ____ that can be borrowed

Answer 60

Cash value

Question 61

Variable life insurance is Fixed annual insurance, so the sale of the product requires the delivery of a ____

Answer 61

Prospectus

Question 62

Examples of ____ include termination of employment, fine, and censure

Answer 62

Code of procedure

Question 63

If a municipal OID bond is purchased at issue and is held to maturity, how will the appreciation on the value of the bond be taxed annually?

Answer 63

Bondholder will need to report the accreted interest on their taxes, but it will be tax exempt

Question 64

What offers ready marketability for shares?

Answer 64

Listed REITs

Question 65

Listed ___ offers diversification of investments

Answer 65

REIT’s

Question 66

Variable annuities are exempt or non exempt?

Answer 66

Non exempt

Question 67

A trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person is defined as an _____

Answer 67

Accredited investor