1
Q
Even though you are the economic owner once you buy a security, you are not recorded as the new owner until the trade ____
A
Settles
2
Q
Adjustable rate preferred stock is also known as ____ or _____ rate preferred
A
Variable, floating rate
3
Q
Risk of adjustable rate/ variable rate deferred is the amount of the dividend that may ____ or ___ with market interest rates
A
Rise, fall
4
Q
Adjustable rate securities follow market rates, and will remain relatively stable, providing ____
A
Preservation of Capital
5
Q
Sinking fund is used to set money aside to _____ callable securities
A
Retire
6
Q
Common stock is not callable but ___ stock is
A
Preferred
7
Q
________ preferred stock allows for more dividends if company has _____ earnings
A
Participating, Strong
8
Q
Current yield equation
A
Current yield =
annual interest in dollars / bond’s market price
9
Q
Bond yield relationship- low to high (bottom)
A
Yield to Call
Yield to Maturity
Current
Nominal (coupon)
10
Q
Variable rate bonds/ adjustable rate bonds have floating rates that are periodically ___ to a market index
A
Reset
11
Q
High coupon and short term bonds are ____ volatile
A
Less
12
Q
Low coupon and long term bonds are ___ volatile
A
More
13
Q
Fully registered bonds are kept track of by the ____
A
Registrar
14
Q
Secured bond types
A
Mortgage, equipment, collateral
15
Q
Unsecured bond types
A
Debentures, subordinated debentures, high yield bonds, convertible debentures, guaranteed bonds
16
Q
Privatized gov agency debt is subject to ___ tax and ___ tax
A
Federal, state
17
Q
Municipal debt is subject to ___ tax only
A
State and local
18
Q
____ means to reduce debt
A
Amortizing
19
Q
In a variable annuity- People buy units in a separate account, often a ___ to fund their future retirement needs
A
UIT
20
Q
ETF’s are more ___ than mutual funds and do not ____
A
Liquid, cost as much
21
Q
ETF’s have low management fees and have no ___ and ___ sales charge
A
Front end and back end
22
Q
True or False: ETF’s and CEF’s can be bought and sold at any time of the trading day
A
True
23
Q
REIT’s can be ___ end and ___ end
A
Closed, open
24
Q
Is a partnership taxable?
A
No
25
Losses in a partnership ____ be offset by earned or portfolio income
Cannot
26
Are BDC’s closed end or open end?
Closed end
27
BDC’s invest in things that are struggling and may have __ risk and they use leverage, which has ___ risk. They also have ___ risk
Default, interest rate, market
28
______ orders are given over to a trader to fill the order at whatever time and price the trader thinks is best
Market not held
29
______ orders require that the entire order be filled or else canceled, but can still be worked during the day- but had to fill the order in its ___
All of None, Entirety
30
TRACE reports trades in ____
OTC Debt Securities
31
____ settlement is the same day
Cash
32
DVP services are typically used for ___
Mutual funds
33
____ allows for delivery with the understanding of payment upon securities being received
DVP- delivery vs payment
34
Accrued interest is paid by the ___ to the ___ at settlement
Buyer, seller
35
Covered put is ___ + ____
Short stock + short put
36
True or False: Accounts of employees of other firms and finra employees is related to the spouse of associated person, child who lives in the same household or is a dependent of the associated person, any other related person whose account the associated person has control, and any other person they have control over and support
True
37
Fiduciary accounts can only be ___ accounts
Cash
38
UGMA transfers when
Become legal age of majority
39
UTMA transfers when
Designated age and can be before majority
40
For Roth and traditional IRA’s, you can contribute ___ and age 50 and over can contribute ____
7000, 8000
41
Traditional IRA’s contributions may be ___ and Roth’s are not
Tax deductible
42
For traditional IRA’s, contributions are taxed at normal rates and withdrawals are ___
Tax free
43
Earnings in traditional IRA’s are ___ until ____
Tax deferred, withdrawal
44
Earnings in Roth ira’s may grow ____ and are generally ___
Tax deferred, tax free
45
Negotiation underwriting is when the issuer chooses the ___
Underwriter
46
Competitive bid underwriting is when the issuer solicits bids from ___
Multiple firms
47
Which report is required to be filed annually and which is required to be filed quarterly to the SEC
10K (audited), 10Q (unaudited)
48
What must be filed with the SEC when someone acquired more than 5% of an issuers voting stock?
Schedule 13D
49
Threshold list must be updated __
Daily
50
If a stock has a beta of 1.2, how much more volatile is it?
20%
51
If a stock has a beta of 2.0, what percent is it?
100% more volatile
52
Marginable securities include
Stocks, bonds, ETF’s, CEF’s, Mutual funds after 30 days
53
Non Marginable securities include
Penny stocks, UIT’s, money markets, IPO’s (have to wait until they are), and OTC stocks
54
Exempt Securities
Govt Securities
Muni Securities
Agency Debt (GNMA, FNMA)
Nonprofit issues
Money markets
Fixed insurance (variable insurance)
Annuities
55
Non-Exempt Securities
Corp issued stock
Corp issued bonds
Variable annuities
Preferred stocks
UIT’s
ETF
CEF
Mutual Funds
56
Working capital equation
Current assets- current liabilities
57
Current ratio equation
Current assets/ current liabilities
58
Quick ratio (acid)
Quick assets/ current liabilities
59
Corp bonds and muni bonds settle
T+2
60
Gov Bonds settle
T+1
61
OID is another name for _____ bonds
Zero coupon
62
Bonds that default, trade ____
Flat
63
If a bond is trading at a discount to par, yield to worst is the ____
Yield to maturity
64
Nominal rate is also known as as the ___ rate and the ____ rate of return
Coupon, stated
65
When purchasing a bond at a premium, ______ is the lowest yield and most likely yield because interest rates have gone down
yield to call
66
A registered rep is opening both cash and margin accounts, for a corporation. Which docs would he need? 2 answers
Corporations charter and bylaws
Names of natural persons
authorized to trade on the account
67
In designing a customers portfolio, their ____ for investing is the most decisive factor in suitable recommendations
Motivation
68
Even if a customer declines info, you can still ____
Open an account
69
A customer asks you to exercise discretion over the account- you must do what 3 things?
Obtain written authorization from the customer
Have the principal initial each order promptly (can be before or after execution)
Obtain evidence of written acceptance of the account by a registered principal of the firm
70
When opening an options account- a rep must be provided with the ____
ODD - options disclosure doc (not options risk disclosure)
71
Why are potential future higher education needs of customers very young children classified as non financial considerations?
They cannot be expressed as sum of money or cash flow
72
If a customer calls a firm and turns in an order to buy 500 stock and to use the best judgement to pay at the right time of the order, this order is only
Good for the day entered during regular trading hours
73
Income statements are delivered how often
Monthly
74
Account statements are sent how often
Quarterly
75
Penny stock statements are sent
Monthly
76
Margin trading in a ___ account requires documentation
Fiduciary
77
Discretionary is authority, or ___
POA (power of attorney)
78
True or False: Income statement shows monthly income and can help determine and show you what you can contribute, invest, etc, monthly
True
79
A __ form does not have capital gains on it
W2
80
Even if something is unsuitable but the customer wants you to execute, you have to do so and have to mark it as _______. The ___ does not need to put this in writing
Unsolicited, customer
81
Long term is over a year and a ____ can be considered to be under a year
Constraint
82
Full POA means you can
Take money out and make withdrawals
83
Limited POA means you cant do what?
Take money out and make withdrawals
84
An existing customer must sign a _____ doc to establish a discretionary account
Trade authorization
85
The ___ and ____ are the only ones who need to know who a numbered account belongs to
Branch Manager, registrar
86
Operationally, do numbered accounts function the same as all other accounts at a broker dealer?
Yes
87
Marrying a put means holding a long stock position and buying a _____ to protect it (protected put)
Long put
88
All options trading is ___ term
Short
89
Purchasing a ____ interrupts the holding period of a long stock position
Puts
90
When a ___ dividend is declared to shareholders, ____ assets (working capital) will ____
Cash, current, decline
91
Bond equivalent yield is annual percentage of a bond that does not make _____ payments
Annual
92
Covered calls are used to generate ______
Additional income
93
Covered calls don’t participate past the _____ price
Strike
94
Long 100 call @62.50
Short 65 call @1.50
This is an example of a:
Covered call
95
In options, total money out is also the ___ and money in is also known as the ____
Cost basis, sales proceeds
96
Leap options have a ___ year life
3
97
___ outperform inflation and ____ keeps the pace of inflation
Stocks, TIPS
98
Easiest way to avoid selection risk/ unsystematic risk is to invest in a
Mutual fund
99
Fannie Mae and Freddie Mac pay how often
Every 6 months
100
Distributions from coverdell and 529’s are not ____
Taxable
101
____ IRA’s allow for the largest possible contribution amount for employees or small business
Sep IRA’s
102
Simple IRA’s requiring matching of ____
Employee salary
103
You need a written financial statement if you wish to purchase a _____
Direct participation program interest
104
Underwriting commitments include
All or none
Stand by
Best efforts
Firm
105
Is short selling allowed in trust accounts?
No
106
Bond backed solely by the full faith and credit of the issuer is a
Debenture
107
Fidelity bonds are maintained by firms to protect against loss due to
Embezzlement and fraud
108
Who can approve an opening of an account under MSRB Rules
General securities sales supervisor
Municipal securities principal
General principal
109
Warrants can be used to make _____ securities offerings _____
Corp senior, More attractive to investors
110
If a registered rep is a member at a country club and and wants to refer prospective clients to you for a small fee, is it prohibited?
Yes
111
What raises new funds for a corporation?
Sell additional common shares through a rights offering
112
To set up a limited partnership as a legal activity in a state, what should be filed?
Certificate of Limited Partnership
113
Spinning off is a subsidiary to distribute shares as a separate operating company and ___ is a government ordered split up
Break up
114
If there is an error in execution- customer must be paid the currently offered ___
Stock price
115
Partnerships are taxed by each person taking profits and loss and is in their ___
Personal returns
116
Income bonds are not a ___ form of income and ____
Reliable, repayment
117
True or False: Treasury securities are safer than AA rated bonds
True
118
Laddered bonds provide _______ for anyone who needs ____ in the near future
fixed income, Continuous cash flow
119
Max Loss of a Long Put
Premium
120
Max Gain of a Short Put
Premium
121
Strips don’t pay _____ but the investor does receive ____ at maturity
Interest, Par value
122
Municipal fund security examples include
529’s
123
In a _______, a ______ explains the issuers duties to the bond holders
negotiated bid, Trust indenture
124
An offer of IPO shares made to an officer of a publicly held company is _____ if the purpose of the offer is to get investment banking business from that company
Prohibited
125
Orders placed ___ the current market are reduced for cash dividends on ex dividend date
Below
126
Mutual funds that have an _____ reinvestment provision will typically reinvest dividends at ___ and capital gains at the ____
automatic, NAV, NAV
127
Emerging markets are susceptible to what kind of risk?
Political
128
You can’t give non cash comp to who?
Members family
129
Reinvested dividends and capital gains tend to ___ the ___
Increase the cost basis
130
If you selectively disclose info about the company during a public offering road show, you are exempt from
Reg FD
131
Book value per share is same as the ______ per share
net tangible asset
132
What kind of transaction sells stock at the direction of the customer and uses the proceeds to buy another stock for that customer?
Proceeds transaction
133
What’s an example of dark pool liquidity?
Hidden price quotes
Hedge funds or Mutual funds
Anonymous bulk order
134
What is used to pay debt on a GO Bond?
Property taxes
135
Blue sky laws require registration from _____, ______, and _____
Sales reps, broker dealers, non exempt issues
136
A quote from 6.85-6.95 is worth how many dollars in price per 1,000 bond
$1
137
Price a customer pays for a share of an ____ end mutual fund is
Open, NAV PLUS shareholder fees that is imposed at purchase
138
Zero coupon bonds and _____ are good for people wanting to start a college fund for a child
Laddered treasury notes
139
A fund that distributes at least 90% of its net investment income to shareholders is termed a _____ fund
Regulated
140
You cannot tender if you are ____ more than you are ____
Short, long
141
In CMO’s, _____ is taxable and ____ is not taxable
Interest, principal
142
____ coupons are likely to be called, and ____ coupons are not likely to be called
Low, high
143
What term is synonymous with the potential loss?
Deposit
144
Basis point is ____ of a percent? So it is _____
1/100th
.01
145
In a cash account- you must deposit ___ of its value
100%
146
Alpha is the ____ over beta
Excess return
147
Beta is a measure of volatility that is ____ to the market
Comparable
148
___ is the act of increasing natural growth and ___ is the reduction of loan principal over series of payments
Accretion, amortization
149
All or none orders can sit indefinitely and immediate or cancel orders allow for ___ execution
Partial
150
____ orders state that it must be executed in it’s entirety immediately or cancelled
Fill or kill
S7
flashcards
Decks in class (32)
# Cards
-
Tranches9
-
Retirement3
-
Options33
-
Practice Test 267
-
Practice Test 160
-
Practice Test 372
-
Practice Test 459
-
Practice Test 562
-
Practice Test 639
-
Practice Test 749
-
Practice Test 856
-
Practice Test 948
-
Practice Test 1071
-
Practice Math Problems65
-
Practice Suitability Questions21
-
Product Suitability Summaries59
-
Product Suitability 242
-
Refining150
-
Bounce Back 2.0137
-
Bounce Back 3.0180
-
Bounce Back 4.0362
-
Lists55
-
Redemption142
-
Redemption 2119
-
Redemption 3119
-
Redemption 472
-
Redemption 5118
-
Redemption 6186
-
Redemption 790
-
Redemption 880
-
Redemption 995
-
Redemption 10137
