Practice Test 9

Question 1

Index ETF’s are ___ managed

Answer 1

Passively

Question 2

Are Index ETF’s benchmarked?

Answer 2

Yes

Question 3

Are Index ETF’s marginable?

Answer 3

Yes

Question 4

Hypothecation means

Answer 4

Pledging securities as assets for a loan

Question 5

Can you trade options in trust accounts?

Answer 5

Yes

Question 6

Someone willing to take on a moderate level of risk while seeking capital growth, while also worrying about inflationary risk may invest in a ____ fund

Answer 6

Large cap

Stocks, unlike bonds, come without inflationary risk

Question 7

Communication sent to 30 retail clients and 10 institutional clients is still considered to be _____ communication

Answer 7

Retail

Question 8

Investors who accumulate a 5% or greater position in the common stock of one registered issuer are required to file a ____ notice with the SEC

Answer 8

13D

Question 9

Credit can be extended on new issues after ___ days have elapsed from the completion of the offering

Answer 9

30

Question 10

Commercial banks, broker dealers, and investment companies are all primary purchases of ____ securities

Answer 10

Treasury

Question 11

In a corporate underwriting, ____ is earned by the lead underwriter on each security sold

Answer 11

Management fee

Question 12

LGIPS permit investment of excess funds by ____ broker dealers

Answer 12

Municipal

Question 13

True or False: Student CANNOT contribute to a 403B

Answer 13

True

Question 14

Simple IRA’s are only available to smaller employers, and the employer must make a ____ contribution

Answer 14

Matching

Question 15

Simple IRA’s contributions are made by the employee, who gets a ___ reduction for the amount contributed

Answer 15

Salary

Question 16

Penalty imposed for excess contributions to an IRA is _____%

Answer 16

6

Question 17

As interest rates rise, _____ stocks are hit hard precisely because of their high leverage

Answer 17

Public utility

Question 18

What kind of municipal bonds are not safe for an individual who is seeking income that is free from federal income tax?

Answer 18

Double barreled bonds

Question 19

Fixed income securities price go up as interest rates fall- making ______ good for investing when interest rates fall

Answer 19

Long Term US Government Bonds

Question 20

A wealthy sophisticated investor with high risk tolerance who just turned extremely bullish would best profit by investing in the sale of _____

Answer 20

Leveraged inverse ETF’s

Question 21

When one inherits assets, the inheritor gets a stepped up cost basis if the assets have appreciated, so the gain on the position is not subject to ____ tax

Answer 21

Capital gains

Question 22

It is not considered a wash sale if 2 of the 3 factors are different:

Answer 22

Maturity, coupon rate, issuer

Question 23

Ultimate authority for determining the amount of the discount that must be accreted on market discount bonds is the ____

Answer 23

IRS

Question 24

Which type of real estate limited partnership offers an immediate depreciation benefit?

Answer 24

Existing housing

Question 25

To send a confirmation to a person holding a power of attorney designated by the customer, the customer must request the sending of the confirmation in _____

Answer 25

Writing

Question 26

_____ rule of NMS prevents a market maker on an exchange from executing a trade at an inferior price to that posted by another market at the moment

Answer 26

Trade through

Question 27

True or False: Market makers, dealers, and traders all make a secondary market in corporate bonds

Answer 27

True

Question 28

_____ are when the Fed would enter into a transaction involving a primary US Government Securities Dealer

Answer 28

Overnight purchases

Question 29

What are mill rate trends, collection ratios, and debt to assessed valuation ratios used to evaluate

Answer 29

GO Bonds

Question 30

Principal repayments are paid ____ to all tranches for both PAC’s and Plain Vanilla CMO’s

Answer 30

Pro-rata

Question 31

Process of adjusting a portfolio toward the original allocation is called ____

Answer 31

Rebalancing

Question 32

A security that provides a floating interest rate, a states nominal maturity date, and the option to deliver the security to the issuer in return for state face value plus accrued interest is known as a

Answer 32

Variable rate note obligation

Question 33

When a placement ratio is declining for several weeks, it’s an indication that underwriter’s inventories are ____

Answer 33

Increasing

Question 34

When an investor may wish to change investments within two years of purchase, ___ share class of mutual funds would be best

Answer 34

C shares

Question 35

AAA rated corporate bonds are most suitable for what kind of investor?

Answer 35

An investor seeking income Corporate bonds are income producing investments because they provide semi annual interest payments, but they do not provide tax benefit because they are taxed at all levels

Question 36

Highly rated corporate bonds are not good ____ vehicles, so they are not good for capital growth investments.

Answer 36

Growth

Question 37

In the event that an account holder dies, a transfer on death designation will avoid _____ court

Answer 37

Probate

Question 38

What can an individual of a joint account do independent of the other account holders

Answer 38

Make a trade

Question 39

All quotes distributed or published by a municipal securities dealer must reflect the dealer’s best judgement as to the security’s _______

Answer 39

Fair market value

Question 40

True or False: A broker dealer must conduct a suitability analysis before it can approve a customer account

Answer 40

True

Question 41

Broker dealers are required to report their computed net capital to customers how often?

Answer 41

Semi-annually

Question 42

Management fee’s are typically the smallest in ____ underwriting

Answer 42

New issue

Question 43

You can inherit legislative risks with variable annuities because congress can change the ____

Answer 43

Tax law

Question 44

Designated market makers cannot handle market not held orders but can handle these orders: _____, ______, ______

Answer 44

Market, limit, marketable limit

Question 45

Sinking fund is money set aside to pay ____ on a bond

Answer 45

Principal

Question 46

Price/ earnings ratio is a measure of _____

Answer 46

Valuation

Question 47

Contributions to a tax qualified retirement plan are deducted from ____ when calculating taxes

Answer 47

Earned income

Question 48

True or False: Transfer agents can keep track of ownership

Answer 48

Yes