Practice Test 7

Question 1

Marketable securities include

Answer 1

Highly liquid short term financial instruments
Stocks
Bonds
Preferred shares
ETF’s
Money market instruments,
Options
Hedge funds

Question 2

Can you sell naked calls in a discretionary account?

Answer 2

Yes

Question 3

Can an investment company sell calls against securities in its portfolio?

Answer 3

Yes

Question 4

Can custodians sell calls against securities in a custodial account?

Answer 4

Yes

Question 5

If an officer of a company has been invited by a large mutual fund company to give a talk to the fund company’s analysts about its plans and products and accidentally discloses material public information that could impact stock price- what would be true?

Answer 5

• Officer is the tipper
• Analysts are tippee’s
• Company must make an immediate public disclosure of the info to avoid insider trading liability
• This is Reg FD

Question 6

A short seller is prohibited from covering short sales with offered securities purchased from an underwriter participating in the offering if the short sale occurred ____ days prior to the pricing of the offered securities

Answer 6

5

Question 7

True or False: Preliminary prospectus may first be sent to a customer once the registration statement has been filed with the SEC

Answer 7

True

Question 8

The max that can be contributed to a 529 without incurring gift tax liability is ___ times the annual gift tax exclusion amount

Answer 8

5

Question 9

Section 1035 allows a like for like exchange and for ____ annuities to be traded for _____, but it can’t be done the other way around

Answer 9

Life insurance, variable

Question 10

Parent and minor joint accounts ____ be opened

Answer 10

Cannot

Question 11

Unrealized gains and losses on securities positions held by a customer at a brokerage firm would be found on the ______ account statement

Answer 11

Periodic

Question 12

If a member suspects suspicious account, a max hold of ____ can be enacted. Initial holds to investigate are ____ days

Answer 12

55, 15

Question 13

A consolidated market is one where trading PRICES are _____

Answer 13

Stable

Question 14

Large cap growth stocks pay dividends for income and also offer long term _____ potential

Answer 14

Growth

Question 15

Preferred stock is marketable and provides _____

Answer 15

Income

Question 16

Customers who actively trade their listed stock portfolios should have a strong understanding of ____ risk

Answer 16

Timing

Question 17

If one asset class greatly outperforms another, the portfolio must be ____

Answer 17

Rebalanced

Question 18

OEX (index) OPTION contracts, when exercised, settle in cash and ____ the ______ amount on the contract

Answer 18

Pay, In the money

Question 19

Performance on exercise of foreign currency option contracts is guaranteed by the _____

Answer 19

OCC

Question 20

Yield to worst means that municipal discount bonds quoted on a yield basis must be priced to ______

Answer 20

Maturity

Question 21

Over the counter dealers are also known as _____

Answer 21

Market makers

Question 22

Under Reg SHO, a threshold security is one that if sold short and not delivered within 13 business days if the trade, ____ is required

Answer 22

Buy in

Question 23

UIT Securities are ____ with the sponsor

Answer 23

Redeemable

Question 24

Auction rate securities are ____ term investments

Answer 24

Long

Question 25

Auction rate securities are reset ____ or ____

Answer 25

Weekly or monthly

Question 26

Auction rate securities are available from ______ and _____ issuers and are long term debt issues (CAM)

Answer 26

Corporate, Municipal Corporate “Auction” Muni

Question 27

When a municipality is at its constitutional debt limit, voter approval would be required for a municipality to float a _______ bond

Answer 27

GO

Question 28

Fannie Mae bonds are subject to ____ and ____ tax

Answer 28

State, local

Question 29

Buy and hold strategies are considered to be a _____ approach

Answer 29

Passive

Question 30

True or False: A fiduciary is a trusted party who LEGALLY has to act in the best interest of another party.

Answer 30

True

Question 31

Stated rate of interest that an issuer promises to pay bond holders is the ______

Answer 31

Coupon rate

Question 32

If ___ bonds default on its issue, the bond holders may sue to force a tax levy

Answer 32

GO

Question 33

Value of accumulation units, number of accumulation units, and surrender charge all ____ during the period of an annuity. The number of annuity units ____ vary

Answer 33

Vary, Do Not

Question 34

12b-1 fees are used to pay for a fund’s _____ AND _____ costs

Answer 34

Marketing , distribution

Question 35

Common stock is also seen to be the best _____ vehicle

Answer 35

Growth

Question 36

Best account to avoid probate and leave assets to someone after you pass, is a ___ account

Answer 36

Payable on Death

Question 37

ADR’s are issued by a _____ bank

Answer 37

Depositary

Question 38

When proceeds from new refunding bonds are put in escrow and are sufficient to pay off the older refunding bonds, this is called _____

Answer 38

Defeasement

Question 39

Ad valorem taxes are property taxes that are based on the ____ of the asset being taxed

Answer 39

Value

Question 40

You receive certificates for bearer bonds, partially registered bonds, and fully registered bonds but not ____ bonds

Answer 40

Book entry

Question 41

To start the account transfer process from one firm to another, the customer must complete and sign the ____ at the _____ firm

Answer 41

TIF (Transfer Initiation Form), RECEIVING

Question 42

Speculative securities can be found in the OTCQX (established US international companies), OTCQB (development stage US and international), and ____ market

Answer 42

Pink OTC

Question 43

Yield quotes for collateralized mortgage obligations are based upon ___ life of the ___

Answer 43

Expected, tranche

Question 44

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

Answer 44

Rising

Question 45

Partnership investments that are not known at the time of the offering are known as a _____ limited partnership

Answer 45

Blind pool

Question 46

Renumeration earned, time of transaction, and identity of the other party must be provided as part of ____ disclosure in agency transactions

Answer 46

Confirmation

Question 47

ETN’s have no principal protection, underlying securities, or ____ payments

Answer 47

Coupon

Question 48

Cost to purchase a warrant on the secondary market is known as a ____

Answer 48

Premium

Question 49

What do these mean: BAN TAN RAN TRAN

Answer 49

BAN- bond anticipation note TAN- tax anticipation note RAN- revenue anticipation note TRAN- tax and revenue anticipation note