Practice Test 5

Question 1

Yields and bond prices go in the ____ direction

Answer 1

Opposite

Question 2

Standards for options advertising that is NOT preceded by deliver of the options disclosure doc allows making reference to the OCC, using a corporate logo, and referring to a specific _____

Answer 2

Options exchange

Question 3

Upon request, a dealer in a competitive municipal syndicate must disclose order _____

Answer 3

Priority provisions

Question 4

Firm 144 has an amount that can be sold ___ times a year

Answer 4

4

Question 5

Max permitted offering under Reg A is

Answer 5

75Mil

Question 6

True or False: Red herring can only be sent to customers who have expressed an indication of interest or who are likely purchasers

Answer 6

True

Question 7

A new issue muni bond investor looking for info about an issuers financial condition would examine the ______

Answer 7

Official statement

Question 8

If you are above age 59 1/2 and you withdraw from a retirement plan/ annuity, any amount withdrawn ABOVE the _____ is taxable

Answer 8

Cost basis

Question 9

Shortest maturity of T Bills is

Answer 9

4 weeks

Question 10

Longest maturity for T Bills is

Answer 10

52 weeks

Question 11

When a bond increases in value due to market demand it is termed

Answer 11

Appreciation

Question 12

Monetary environment is

Answer 12

Current money supply levels, interest rate levels, and economic policies

Question 13

Defensive industries include

Answer 13

Pharmaceuticals
Food produce
Electric power

Question 14

CAPM stands for

Answer 14

Capital asset pricing model

Question 15

Speculators in foreign currencies are subject to what kinds of risk

Answer 15

Political, market, exchange rate risks

Question 16

To meet the customer’s needs for the large cash down payment in 5 years and reduce taxable income, the best recommendation is to open a ____ account and invest in mutual funds holding high yielding common and preferred stocks

Answer 16

Cash

Question 17

An investor who has long term investments in the horizon, no liquidity and is risk adverse causes a rep to be concerned about ______ of principal

Answer 17

Safety

Question 18

Investments that give both growth and income include investments in

Answer 18

Stocks and bonds

Question 19

Constant ratio investment plans ______ a fixed percentage of a _______ assets in _____

Answer 19

maintain, portfolio’s, Equities

Question 20

Dividends received from foreign investments, gain of the sale of a capital asset, and interest received from domestic investments are all included as _____ of a corporation

Answer 20

Taxable income

Question 21

Total amount of time that a wash sale rule is in effect is ___ days

Answer 21

61

Question 22

A written financial statement is required from a customer who wishes to purchase a ____ interest

Answer 22

Direct participation

Question 23

True or False: Warrants trade separately from the stock of the company

Answer 23

True

Question 24

Greater the leverage in a long margin account, the greater the percentage increase in equity as market prices _____

Answer 24

Rise

Question 25

To open a discretionary account, you need a manager sig, signed trading authorization, and completed _____

Answer 25

Customer new account form

Question 26

Branch office managers, municipal securities principal’s and general principal’s can approve the ____ under MSRB rules

Answer 26

Account opening

Question 27

Once a member firm processes orders, the ticket record must contain _____, _____, _____

Answer 27

Receipt, entry, execution

Question 28

LEAPS are available on individual ____

Answer 28

Equity securities

Question 29

LEAPS are available on indexes and can be _____ at _____

Answer 29

Traded at any time

Question 30

Comparisons and dont know notices are sent from ____ to ____

Answer 30

Dealer to dealer

Question 31

An approximate market value with no bid or offer would define ____ quotes

Answer 31

Nominal

Question 32

Essential difference between Open end funds and Closed end funds are ______

Answer 32

Capitalization

Question 33

Commercial paper is assigned ___ ratings due to the fact that it has a high rating

Answer 33

Prime

Question 34

Proceeds to GO Bonds are used to serve the _____ population

Answer 34

General

Question 35

Special bonds are secured by taxes that are other than ____, which are property taxes

Answer 35

Ad valorem

Question 36

A firm can keep the account records for ___ years after death

Answer 36

6

Question 37

Member takedown orders represent sales to the syndicate member’s own customers for their own account. These orders are given ___ priority

Answer 37

Last

Question 38

ERISA regulations apply to ____ designation and ______ requirements, vesting requirements, and _____

Answer 38

Beneficiary, participation, 401K plans

Question 39

A customer died and you’ll need these from the estate: ____, _____, _____

Answer 39

Death certificate, inheritance tax waiver, testamentary letter

Question 40

True or False: Before purchasing penny stocks for a client, a BD must receive a copy of suitability, write a report, and receive written acknowledgement from the customer

Answer 40

True

Question 41

When a rep breaks a clients trade request into smaller transactions in order to increase his commission fees, it is known as _____ and is not allowed

Answer 41

Trade shredding

Question 42

If an annuitant dies during the accumulation period, the beneficiary will receive the money contributed to the account and _____

Answer 42

Any earnings to date

Question 43

Which indexes are part of the Bond Buyer Indexes ____, _____, ______

Answer 43

Muni bond index (40) 11 bond index 20 bond index

Question 44

If someone is debating enrolling in a music school but also might find a tour instead what should they invest in

Answer 44

Laddered bonds

Question 45

Cross over point for a limited partnership is when taxable income begins to ____ deductible losses

Answer 45

Exceed

Question 46

Auto loans, credit card debt, and mortgages are inside ___ investments

Answer 46

CDO (collateralized debt obligation)

Question 47

Qualified private activity bond interest is excluded from income for regular tax but is added back as a preference item on the ____

Answer 47

AMT

Question 48

In the event of an 5% drop in the S&P 500 Index, ____ will occur

Answer 48

Nothing

Question 49

When taxing withdrawals taken from a nonqualified annuity before it reaches annotation, the IRS applies the ____ treatment

Answer 49

LIFO

Question 50

In a rights offering, _____ rights are offered

Answer 50

Subscription rights

Question 51

Hearing panel’s decision can be appealed to the

Answer 51

National adjudicators council

Question 52

Hearing panels can be appealed and ____ can’t

Answer 52

Arbitration

Question 53

Provisions of penny stocks rule only apply to _____ securities

Answer 53

OTC Pink Sheet

Question 54

Strong KYC programs help to have an effective ___ program

Answer 54

AML

Question 55

Even in input error, customers are still offered the correct _____ price

Answer 55

Stock

Question 56

Gray market is unlisted securities that are _____ in the ____ market that are traded OTC

Answer 56

Not quoted, Pink OTC Market

Question 57

Quotes found in the ADF are primarily bids and offers from _____

Answer 57

ECN’s

Question 58

An unlimited marital exclusion applies to spouses when 1 party ____

Answer 58

Dies

Question 59

Maximum maturity of an equity LEAP is

Answer 59

28 months

Question 60

Index LEAPS mature in

Answer 60

39 months

Question 61

Short selling is not permitted in ____ accounts

Answer 61

Trust

Question 62

Balloon maturity has one maturity and contains a ____ amount of the principal

Answer 62

Disproportionately large