NAME

Question types


Start with


Question limit

of 56 available terms

Advertisement Upgrade to remove ads
Print test

5 Written questions

5 Matching questions

  1. To determine the yield on a municipal bond, all of the following are needed, EXCEPT:

    Coupon
    Dated date
    Maturity
    Settlement date
  2. EASY MONEY
  3. All of the following are TRUE about "stopping stock" on the NYSE, EXCEPT that it:

    Is permitted only for public orders
    Requires permission of an exchange official
    Is done by the specialist
    Will guarantee a price for the order
  4. (#70)
    The following dividend information for New York Stock Exchange listed common stocks is reported in The Wall Street Journal:

    Quarterly Dividend Record Date Payable Date
    Cummings Corporation 50 cents 4/10 5/15
    Federal Corporation 85 cents 4/13 5/25
    General Electric Corp. 95 cents 4/8 5/21

    Based on the information stated above, a buyer of Cummings Corporation on May 10th:

    Would be entitled to receive the 50 cents quarterly dividend
    Would not be entitled to receive the 50 cents quarterly dividend
    Would be entitled to receive the 50 cents quarterly dividend if the trade was made for "cash"
    None of the above
  5. PASS-THROUGH SECURITIES
  1. a B.
    The dated date is only used to calculate accrued interest on a new issue. When pricing a bond (determining the yield when price is known or determining the price when yield is known), the coupon, settlement date, and maturity are required.
  2. b Securities that pool debt obligations and pass through the principal and interest payments made by debtors to the security holders. To create a mortgage pass-through, a group of mortgages are collected to form a pool. Interests in the pool are then sold to investors in the form of pass-through certificates. Each certificate represents an undivided interest in the pool.
  3. c A buyer of Cummings Corporation would not be entitled to receive the 50-cent quarterly dividend because the purchase was made on May 10th. This was after the stock had sold ex-dividend (without the dividend). The ex-dividend date is not given but the record date is April 10th. Stocks sell ex-dividend on the 2nd business day preceding the record date. This would be two business days prior to April 10th, which is more than one month before the customer bought the stock. Even if the purchase was made "for cash" which requires a same-day payment, it would still be one month too late for the buyer to receive the dividend.
  4. d A period during which there is an ample supply of money available for loan purposes.
  5. e B.
    Stopping stock is done by the specialist to guarantee a price for a public order. The specialist does not need the permission of an exchange official to do so.

5 Multiple choice questions

  1. A.
    The premium paid on a municipal bond must be amortized over the life of the bond. If held to maturity, the cost basis is reduced to par value and there is no loss.
  2. A.
    Since the investor purchased Swiss francs, the investor is predicting that the price of the Swiss franc will rise. The investor also bought a put for protection in case the value declined. This strategy will be profitable if the U.S. dollar weakens and the spot price of the Swiss franc rises above 61.50 (cost of the Swiss francs plus the premium for the put).
  3. D.
    Corporations may exclude a portion of the dividends received from investments in the common and preferred stocks of other corporations.
  4. D.
    Of the choices given, Ba is the most speculative. The highest Moody's rating is Aaa.
  5. B.
    Three- and six-month T-bills are auctioned weekly. All T-bills are auctioned on a discount yield basis with noncompetitive tenders awarded first and receiving the highest yield of the accepted competitive tenders.

5 True/False questions

  1. A customer sells short 100 shares of XYZ at 34. The customer wishes to protect herself against a loss. Which of the following would prevent a loss on the short position?

    Buy stop at 34
    Purchase of an XYZ 30 call at 5
    Buy limit at 32
    The customer will be exposed to the possibility of loss no matter which of these additional positions or orders is used
    D.
    None of the choices listed would guarantee that there would be no loss on the position. A buy stop becomes a market order once triggered and does not guarantee a specific price. A buy limit does not guarantee execution. The purchase of the call would not totally prevent a loss since it would reduce the investor's sale proceeds to $29 and the strike price of the call only guarantees a purchase price of $30 (resulting in a one point loss if exercised).

          

  2. Which of the following would qualify for a sales breakpoint on large purchases of mutual fund shares?

    A partnership formed to buy the securities
    A husband and wife who are joint tenants with rights of survivorship
    A joint account formed between two unrelated individuals
    An investment club coordinated by a registered representative
    B.
    Three- and six-month T-bills are auctioned weekly. All T-bills are auctioned on a discount yield basis with noncompetitive tenders awarded first and receiving the highest yield of the accepted competitive tenders.

          

  3. In periods of "easy money" when interest rates are declining, yield curves would tend to:

    Slope upward from the shorter to the longer maturities
    Slope downward from the shorter to the longer maturities
    Remain flat
    Do none of the above
    B.
    When a cash dividend is paid, current assets (cash) and current liabilities (dividends payable) are decreased. Since both are reduced proportionately, working capital (current assets minus current liabilities) remains the same.

          

  4. Which of the following insure municipal bonds?

    FDIC
    SIPC
    MBIAC
    AMBAC

    I and II only
    II, III, and IV only
    III and IV only
    I, II, III, and IV
    D.
    Of the choices given, Ba is the most speculative. The highest Moody's rating is Aaa.

          

  5. Which of the following persons may purchase a new issue from a member firm according to the New Issue Rule?

    The brother-in-law of a person associated with a member firm
    The uncle of a person associated with a member firm
    A buy-side trader employed by a mutual fund
    The owner of a broker-dealer firm
    A.
    GNMA pass-through certificates are guaranteed by the U.S. government. Interest and principal payments are received monthly. The interest is subject to federal, state, and local taxes. GNMAs are secured by residential, not commercial mortgages.

          

Create Set