Practice Test 3

Question 1

Reg NMS requires market centers to accept automated executions that do not _____ against any class of users in the system

Answer 1

Discriminate

Question 2

Options advertising includes

Answer 2

Options website
Magazine inserts on options investments
TV commercials

Question 3

Primary criteria for a person to be appointed to an arbitration panel is to be ______

Answer 3

Disinterested

Question 4

Even if a client wants to post something and the rep edits it, it will be considered _____ communication

Answer 4

Retail

Question 5

SEC Rule 10b-18 allows an issue to buy its shares in the open market at the HIGHEST ________ or the last reported sale price, whichever is HIGHER

Answer 5

Independent bid

Question 6

In a weekly auction of treasury bills, ______ are always filled

Answer 6

Non-competitive bids

Question 7

In a ________ , the issuer is responsible for printing the ____ and ____ and for the ____ of securities

Answer 7

new corporate offering
prospectus
certificates
Registration

Question 8

Penalty tax applied if it taking required minimum distribution from a qualified retirement plan

Answer 8

25%

Question 9

If a working couple is covered by qualified pension plans, when it comes to IRA contributions, are they permitted and tax deductible?

Answer 9

Permitted the contribution amount is not deductible

Question 10

Why are listed stock options not marginable?

Answer 10

Only 9 month max life

Question 11

Accounts that follow the prudent investor rule

Answer 11

Trust account
Custodial account
Pension account

Question 12

_____ is a settlement type for foreign currency option trading

Answer 12

Cash

Question 13

If someone sends stock certicstes and forgets to sign one of the certificates, they can send a ____

Answer 13

Stock power

Question 14

Spoofing is the placement of ____ quotes to create a new NBBO

Answer 14

Fake

Question 15

Circuit breaker on domestic equities reduce price volatility is initiated when the standard and poor 500 index falls by _____%

Answer 15

7

Question 16

Equity REIT’s invest in (3) not industrial parks

Answer 16

Apartments
Office buildings
Shopping malls

Question 17

If a mutual fund is not redeemed within 7 business days of the purchase any sales charge earned is _____ and ______ to the fund sponsor

Answer 17

Forfeited, paid back

Question 18

Principal difference between other structured products and an ETN is

Answer 18

Liquidity risk

Question 19

To ease a temporary cash flow shortage, municipalities issue either _____ or ______

Answer 19

TAN’s or RAN’s

Question 20

Feasibility study prepared in connection with a new muni bond is performed by the

Answer 20

Independent consultant

Question 21

New issue muni bonds being called is referred to as ______

Answer 21

Redemption

Question 22

Treasury receipts give a rate of return that cannot be affected by ______ risk

Answer 22

Reinvestment

Question 23

CMO TAC’s have the same level of prepayment risk but a higher level of extension risk than a _____

Answer 23

Planned amortization class

Question 24

Pension funds seeking safety of principal and maximum income would purchase ______, _______, and would sell ____

Answer 24

Government securities
Agency securities
Sell covered treasury bond calls

Question 25

______ is the rate charged from the banks to broker dealers on loans where securities are collateral

Answer 25

Broker loan rate

Question 26

If a 45 year old wants income and growth- _____ would be good for his portfolio

Answer 26

Equity income funds

Question 27

If an investor expects interest rates to rise in the future, ____ are best to invest in because as they mature the proceeds are reinvested at higher interest rates

Answer 27

Money markets

Question 28

If a customer selling shares of stocks wishes to use specific identification instead of FIFO for cost basis reporting the BD effecting the trade must be notified of this no later than the _____ date

Answer 28

Settlement

Question 28

Treasury stock is _____ shares which are ______ outstanding

Answer 28

Issued, no longer

Question 29

When purchasing penny stocks for an established customer, a broker dealer must provide the customer with the current market ____ and ____ whenever they exist

Answer 29

bid, offer

Question 30

Mutual fund investment adviser contracts must be renewed _____

Answer 30

Annually

Question 31

A financial ratio used to analyze municipal revenue bond offerings is the

Answer 31

Debt service coverage ratio

Question 32

____ are suitable for young investors who are in low tax brackets and don’t have much to invest and are willing to take moderate risk

Answer 32

B Shares in a value fund

Question 33

A public offering is called a follow on offering if it is a stock offering and the issuer has previously conducted a ____ of the stock

Answer 33

Public offering

Question 34

Violations are handled under the code of _____

Answer 34

Procedure

Question 35

Qualified ____ purpose municipal bond interest is considered _______

Answer 35

Private, Tax preference

Question 36

The KYC will allow for an account to open if you decline to provide a

Answer 36

Trusted contact person

Question 37

If your only investment is a DPP, and your only income is your job, if the DPP loses money, you ___ deduct the loss on your taxes because wages are not passive income

Answer 37

Cannot

Question 38

In an inflationary environment, ____ has a higher inventory than ____

Answer 38

FIFO LIFO

Question 39

When holders of convertible bonds decide to convert, the equity of existing stockholders will be _____

Answer 39

Diluted

Question 40

Semi annual statements sent from brokerage firms include the balance sheet and ____

Answer 40

Net capital computation

Question 41

Broker dealer executed a large purchase transaction for an institutional customer and the institution directs that the securities be shipped to its custodian bank who is authorized to pay on settlement. This is known as _____

Answer 41

Delivery versus payment transaction

Question 42

True or False: With a prime brokerage account, you get a consolidated account statement

Answer 42

True

Question 43

A CD that changes the rate of interest based on the prevailing market interest rate is known as _____

Answer 43

Step up/step down CD

Question 44

Capacity of agency or principal broker dealer name accrued interest (ABC) All appear on a _______

Answer 44

Bond trade confirmation

Question 45

(CRY) Commission, redemption date, and yield basis must be disclosed in a _________

Answer 45

municipal agency confirmation

Question 46

Not held orders do not require pre approval by the ____

Answer 46

Branch manager

Question 47

DPP’s provide

Answer 47

Management

Question 48

Structured products are considered to be

Answer 48

Less liquid

Question 49

Shelf registration is good for ___ years

Answer 49

3

Question 50

Reg way trades of US Gov bonds settle in

Answer 50

T+1

Question 51

If a registered person leaves the securities industry they can go ____ years until having to retake their exams

Answer 51

5

Question 52

Short straddle expects

Answer 52

Price stability

Question 53

In a bond contract- the issuer may have the right to call in the entire issue at preset dates and prices, and will only do so if it is advantageous to ____

Answer 53

The issuer

Question 54

Even in JTIC, if the person dies, it does not go straight to the wife, but does so if she is in their ___

Answer 54

Will

Question 55

TAC’s have the same level of ___ risk but a higher level of ___ risk than a PAC

Answer 55

Prepayment, extension

Question 56

Long zero coupon bonds are still ___

Answer 56

Volatile

Question 57

When purchasing penny stocks for an established customer, a broker dealer must provide the customer with the current market ____ and ____ whenever they exist

Answer 57

Bid and offer

Question 58

When calculating ____- qualified private purpose muni bond interest is considered to be a _____ item

Answer 58

AMT, Tax preference

Question 59

Equity if existing stockholders will be diluted if _____ bonds decide to convert

Answer 59

Convertible

Question 60

Decimal equivalent of a basis point is

Answer 60

0.0001

Question 61

A customer instructs a representative to “buy 500 shares of ADP whenever you think the price is right” This is the same as a _____ order

Answer 61

Not held order

Question 62

Muni bond trade confirmations include (ABC)

Answer 62

Agency or principal capacity Broker dealer name Accrued interest

Question 63

Minimum maintenance margin for long stock positions is ____%

Answer 63

25

Question 64

Correct order in which syndicate orders will be honored if offering is oversubscribed

Answer 64

Presale Group Designated Member

Question 65

Treasury strips do not provide ____

Answer 65

Current income

Question 66

Under rule 425, a shelf offering can cover a period of ____ years until having

Answer 66

3 years

Question 67

In an inflationary environment, LIFO assumption will result in an inventory that is valued ____ than if using a FIFO assumption

Answer 67

Lower

Question 68

What kind of municipal bond gives an 80% tax deduction on interest to banks that purchase it?

Answer 68

Bank qualified

Question 69

Laddering works to reduce ___ risk

Answer 69

Interest rate

Question 70

Minimum price at which an open end fund charge can be purchased is

Answer 70

NAV

Question 71

If you leave the securities industry, you can remain outside the industry before retaking the exams for ___ years

Answer 71

5