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SIE Exam

Terms in this set (196)

When an investor is deciding whether to buy puts or sell the stock short, buying the puts offers all of the following advantages EXCEPT?

a. the same of greater profit potential versus selling the stock short
b. time value dissipates
c. smaller capital required
d. limited loss potential
b. time value dissipates
A corporation may issue refund bonds to accomplish any of the following EXCEPT:

a. to increase the capitalization of the company
b. to retire an existing bond issue
c. to reduce its interest costs
d. to take advantage of a substantial drop in interest rates
a. to increase the capitalization of the company
When a registered person with a member firm participates in outside private securities transactions without obtaining approval of the firm, it is referred to as

a. market manipulation
b. selling away
c. churning
d. selling short
b. selling away

market manipulation- false of misleading appearance of active trading in security
selling away- RR engaged in sale of private securities transactions not approved nor recorded on regular books or records or BD
churning- excessive trading in size and frequency in customer's account for purpose of generating commissions
selling short- investment strategy by bearish investors who believe market price is going to go down
When existing shareholders are given the opportunity to subscribe to additional shares that are offered by the corporation, this is called a(n)

a. secondary offering
b. preemptive rights offering
c. equity option
d. stock dividend
b. preemptive rights offering

secondary offering- sale of new of closely held shares of company that has already made IPO
preemptive rights offering- existing shareholders have opportunity to subscribe to additional shares
equity option- amount of ownership a stockholder has in relation to corporation
stock dividend- portion of earnings of corporation that's distributed to common & preferred shareholders
According to anti-money laundering regulations, which of the following must be reported to federal authorities?

a. cash and wire transfer combined that total $10,000 per week
b. cash deposits of more than $10,000 per day
c. cash deposits of more than $10,000 per day
d. wire transfers that total $10,000 per week
c. cash deposits of more than $10,000 per day
Which of the following would determine the current value of a variable annuity's accumulation units?

a. the number of purchased units multiplied by the assumed interest rate of the annuity
b. the holder's life expectancy determines the value
c. the holder's anticipated date of annuitization
d. the underlying securities' value as seen in the variable annuity's separate account
d. the underlying securities' value as seen in the variable annuity's separate account

accumulation unit- used to determine the contract owner's interest in separate account
annuity unit- determines amount of each payment to the annuitant
A customer does not submit payment for the securities he purchased on a timely basis. What happens in this situation?

a. All future customer transactions require pre-approval of the RR's supervising principal
b. For a period of 90 days, the member firm must ensure that no margin purchases are allowed in the customer's account
c. the customer's account is frozen for 30 days. no transactions are permitted
d. there are no consequences to the customer's in response to the late payment
b. For a period of 90 days, the member firm must ensure that no margin purchases are allowed in the customer's account
The Statement of Additional Information must be delivered

a. within 10 days of opening a new customer account
b. when the prospectus is sent to clients or prospective clients
c. at the request of a client or prospective client
d. at least once a year to each client
c. at the request of a client or prospective client
If an investor is looking for information about a particular mutual fund, the BEST source of that information will be the

a. fund's accounting documents such as the balance sheet and income statement
b. fund's prospectus, which contains investment strategy, management style/structure, sales load and fee structure, and more
c. investment manager of the fund who can provide a specific listing of all investments in the fund at any given point in time during a trading day
d. SEC, which keeps detailed files and reports on the fund, all of which are available to the public
b. fund's prospectus, which contains investment strategy, management style/structure, sales load and fee structure, and more
In order for a firm to effectively enforce an anti-money laundering program, which of the following would be most important

a. not allowing cash deposits
b. filing a SAR report on time
c. knowing its customers
d. reviewing accounts for churning
c. knowing its customers
The Investment Company Act of 1940 requires that certain transactions use "forward pricing" (the valuation of mutual fund share prices as of the next computation). Which of the following transactions does NOT require "forward pricing"?

a. shares are purchased directly from the principal underwriter by individual investors
b. shares are sold on behalf of an investor by the investor's broker-dealer through a wire order
c. share are redeemed directly to the fund by a customer
d. ETF shares are purchased by a customer in the secondary market
d. ETF shares are purchased by a customer in the secondary market

investors who purchase ETFs in the secondary market pay the market price at the time of purchase, so forward pricing is not used.
ETF- funds that have a portfolio of securities that mirrors a specific index or industry sector. these securities trade like common stock
All of the following are considered to be "custodial property" that can be given by a donor to a minor under the Uniform Gifts to Minors Act or the newer Uniform Transfer to Minors Act except:

a. bearer bonds
b. a life insurance policy
c. an annuity contract
d. a futures contract
d. a futures contract

UGMA- gifts of cash or securities
UTMA- custodial property: any type of asset including real estate and tangible and intangible personal property. future contract specifically excluded from coverage in most states
A corporate bond called at 108 1/8 would pay the bondholder.

a. $1,084.50
b. $1,081.25 plus accrued interest
c. $1,081.25 minus accrued interest
d. 1,000 plus accrued interest of $1.25
b. $1,081.25 plus accrued interest

108 x 10= $1,080
1/8= 0.125 x 10= $1.25
= $1,081.25
investor would be entitled to accrued interest
All of the following information is required from an individual customer when completing a new account report form EXCEPT

a. the customer's residential street address
b. the customer's employer's name and address
c. verification of the identity of the customer
d. the source of funds the customer deposits when opening the account
d. the source of funds the customer deposits when opening the account

required:
customer name
residential address
email address
telephone number
annual income, net worth, and bank references
occupation, name, and address of employer
whether person is citizen
date of birth
social security or tax id
government issued photo id
identity of associated person's rr
trusted contact person
When a member firm receives a sell long order for a customer account, the member must have reasonable assurance that the customer will deliver the securities within

a. 2 business days
b. 2 calendar days
c. 4 business days
d. 4 calendar days
a. 2 business days
Which of the following entities or systems is used to settle the majority of equity transactions, corporate bond transactions, and municipal bond transactions in the United States?

a. The New York Stock Exchange (NYSE)
b. The National Association of Securities Dealers Automated Quotations (NASDAQ)
c. The Continuous Net Settlement (CNS) System offered by the Depository Trust & Clearing Corporation (DTCC)
d. The Order Audit Trail System (OATS), established by the Financial Industry Regulatory Authority (FINRA)
c. The Continuous Net Settlement (CNS) System offered by the Depository Trust & Clearing Corporation (DTCC)

NYSE- physical exchange where listed securities transactions take place
NASDAQ- electronic exchange where transactions take place
FINRA OATS system- used to provide a means of recreating the chain of events tied to orders that are received & executed by member firms
A broker should disclose all of the following characteristics of a Section 529 Prepaid Tuition Plan to clients who are the parents of a college bound child and who are trying to make advance provision for the costs of college EXCEPT:

a. these plans fo not have investment risks
b. these plans do provide hedge against increases in tuition costs
c. contributions to these plans are tax deductible for federal income tax purposes
d. these plans typically charge enrollment and administrative fees
c. contributions to these plans are tax deductible for federal income tax purposes
An investor decides to exchange her fund for another fund within the same family of funds. As a result, she realizes. gain. How is this gain treated for tax purposes?

a. as long as the fund falls within the same family of funds, the investor need not report the gain
b. regardless of whether the fund falls within the same family of funds or not, the investor must report the income from the gain for the year during which the gain was realized
c. as long as the investor completes Form 1035, the gain does not need to be reported
d. if the investor takes the gain as a distribution of cash, then the investor can report the gain as a dividend
b. regardless of whether the fund falls within the same family of funds or not, the investor must report the income from the gain for the year during which the gain was realized

The IRS doesn't consider the switch to be a conversion, it considers it to be a sale and purchase and would therefore be taxable in the year the exchange occurred. The gain is reported as a capital gain
Which of the following is CORRECT about a JTWROS Account (Joint Tenants with Rights of Survivorship)?

a. securities transactions may be placed by any individual listed on the account
b. the account must be limited to two individuals only
c. these accounts are generally taxed at a higher rate than individual accounts
d. if one fo the account owners dies, the surviving member(s) of the account will receive all of the assets of the account unless the deceased individual's will states otherwise
a. securities transactions may be placed by any individual listed on the account
The separate account of a Variable Annuity will fluctuate in value with which of the following?

a. market value of securities in the account
b. fixed value of bonds in the account
c. the separate account does not fluctuate in value but is a set amount
d. the s&p 500 index
a. market value of securities in the account

has market risk
When an individual passes a licensing examination required by FINRA, that individual will then be required to complete the Regulatory Element of Continuing Education

a. within 1 year of initial registration and every year thereafter
b. within 2 years of initial registration and every 3 years thereafter
c. within 3 years of initial registration and every 3 years thereafter
d. within 4 years of initial registration and every 4 years thereafter
b. within 2 years of initial registration and every 3 years thereafter
A corporation that issued several types of securities is being liquidated. Investors who own which of the following securities will have the most junior claim to company assets?

a. common stock
b. convertible bonds
c. preferred stock
d. collateral bonds
a. common stock
Which of the following statements is TRUE regarding an SEC Regulation A+ Offering?

a. a prospectus must be delivered
b. the offering may not exceed $75 million
c. a registration statement must be filed with the SEC
d. a maximum of 35 accredited investors may purchase the securities
b. the offering may not exceed $75 million
After taking the information from a new client for the opening of a new account, an RR submits this information to his BOM. The BOM when reviewing the new account information notes that the only address listed is that of a P.O. Box. Under what circumstances can the account be approved?

a. the new client is a personal friend of the RR who will be in charge of overseeing the new account
b. the new client agrees to provide a real address of a home or business, when thought he insists that all correspondence be sent to the P.O. box
c. the new client submits a written statement stating that for convenience purposes, he only uses a P.O. Box for all correspondence
d. the new client tells the RR and the BOM that he has not yet established a place of residence in the area and that the P.O. Box is the only fixed address he can give
b. the new client agrees to provide a real address of a home or business, when thought he insists that all correspondence be sent to the P.O. box
When a registered representative is determining suitability for a customer, all of the following are included in this determination EXCEPT the

a. customer's net worth
b. historic performance of a fund
c. customer's risk tolerance
d. customer's retirement or education goals
b. historic performance of a fund

suitability rules are aka "know your customer" rules & relates to the customer not the prospective fund
Which of the following is NOT a function performed by the designated market maker of a stock?

a. Each day, the designated market maker opens the market in their respective security
b. the designated market marker ensures that a fair and orderly market exists and is maintained in their respective security
c. "not-held" orders are taken and processed by the designated market maker
d. the "designated market maker's book" is updated and maintained by the designated market maker
c. "not-held" orders are taken and processed by the designated market maker

"not-held" orders are handled by "floor brokers"
Which of the following entities provides a physical and electronic location where listed options transactions are performed during trading hours in the US?

a. The Options Clearing Corporation (OCC)
b. The Securities and Exchange Commission (SEC)
c. The Chicago Board Options Exchange (CBOE)
d. The Financial Industry Regulatory Authority (FINRA)
c. The Chicago Board Options Exchange (CBOE)

CBOE- largest US options exchange facilitating majority of listed option transactions during trading hours in US
OCC- responsible for accepting, guaranteeing, and clearing the exercise of listed option contracts and majority of option activity in US
SEC- regulatory commission for financial purposes is US
FINRA- SRO charged with majority of regulatory duties within US
A warrant that is issued with a debenture

a. allows the holder a long-term ability to exercise and buy specific number of shares of common stock
b. allows the holder a short-term ability to exercise and buy a specified number of share of common stock
c. pays interest in relation to debenture until the warrant is exercised
d. pays dividends in relation to the stock to which it converts prior to exercise
a. allows the holder a long-term ability to exercise and buy specific number of shares of common stock

normally good until company no longer exists
Which of the following could be used to meet a Reg T call on an initial transaction in a customer's margin account?
I. a cash deposit equal to the amount of the call
II. an escrow receipt with a value that is equal to the amount of the call
III. listed securities which have a loan value that is equal to the amount of the call
IV. listed securities which have a market value that is equal to the amount of the call

a. I & III
b. II & III
c. II & IV
d. I & IV
a. I & III

If securities are deposited, they would have to have a LOAN VALUE equal to margin purchase specified or two times (2x) the Reg T Cash Requirement
Securities have loan value of 50% of their market value. cash deposit to call would also work, but not an escrow receipt
The Securities Act of 1933 regulates

a. the exchange markets
b. registration of securities before the securities are sold to the public
c. issuance of municipal bonds
d. the fees charged by mutual fund companies
b. registration of securities before the securities are sold to the public

1934 Act- exchange markets
issuance of municipal bonds- does not require registration
Investment Company Act of 1940- fees charged by mutual fund companies
All of the following are required prior to when an employee of a member firm wants to open an investment account at another member firm EXCEPT:

a. the employee must notify in writing the employing member firm
b. the employing firm must advise the employee of approval or disapproval of the request
c. the employee must notify in writing the executing firm before the account is opened
d. duplicate confirms and statements must be provided to the employing firm
d. duplicate confirms and statements must be provided to the employing firm

AFTER approval, duplicate confirms and statements are requested
Of the following statements which are true about market orders made "at the opening"?

a. their priority is at parity with limit orders on the book
b. their priority is above limit orders on the book
c. they are subordinate to limit orders
d. "at the opening" orders cannot be used for market orders
b. their priority is above limit orders on the book

market order at the opening always have precedence over limit orders on the NYSE
The Depository Trust & Clearing Corporation's (DTCC's) Continuous Net Settlement (CNS) System acts as central counterparty for clearance and settlement of broker-to-dealer transactions in

a. most equity, corporate bond, and municipal bond transactions in the US
b. mostly equity securities transactions, with little or not involvement in corporate and municipal debt transactions
c. mostly corporate and municipal debt transactions, with little or no involvement in equity securities transactions
d. equity options only, with no involvement in other equity or debt transactions
a. most equity, corporate bond, and municipal bond transactions in the US
All of the following are true about a registration statement EXCEPT:

a. it is filed with the SEC by the managing underwriter on behalf of the issuer
b. it describes the issuer's business
c. it describes the intended use of the proceeds
d. a copy is sent to prospective investors
d. a copy is sent to prospective investors

must be signed by principal executive officer, the principal financial officer, and a majority of board of directors
not sent to investors- they get a prospectus once registration is effective
The type of policy which advocates that the federal government uses taxation and increasing spending programs to foster a growing economy is called

a. fiscal policy
b. monetary policy
c. supply-side policy
d. trade policy
a. fiscal policy

monetary policy- decisions of the FRB with regard to money supply and extension of credit
supply-side policy- focus on tax cuts
trade policy- doesn't apply to this question
Chuck is being laid off of his position at his employer. He has a Qualified 401 (k) Plan with this employer, but because of the circumstances of his termination, he refuses to maintain any contact with former employer or the 401 (k) Plan that was provided by that employer. Because of this, the employer has instructed the provider of the 401 (k) Plan to distribute a check to Chuck for the total amount. Which of the following is TRUE regarding this scenario?

a. Since Chuck is being laid off, the check that is received can be deposited by Chuck into his checking account and used on a tax-free basis due to the circumstances under which Chuck lost unemployment
b. Chuck should seek to roll over the funds from the 401 (k) to another 401 (k) at a new employer or to a Traditional IRA within 60 days to avoid taxes and penalties
c. Because of the fact that this was a 401(k) Plan, Chuck must roll the funds into another 401 (k) Plan and is not permitted to roll the funds into an Individual Retirement Account (IRA)
d. If Chuck gets a check directly from his former employer, he will have no choice but to pay ordinary income taxes on the sum of the check, regardless of whether or not he intends to reinvest or roll over the funds to a new plan
b. Chuck should seek to roll over the funds from the 401 (k) to another 401 (k) at a new employer or to a Traditional IRA within 60 days to avoid taxes and penalties
Regarding FINRA rules, if an RR will be paid to find investors for a limited partnership that he is affiliated with, which of the following is TRUE?

a. the member firm must contact the limited partnership to notify it that the RR is employed by the member firm
b. no action is needed unless the RR is a limited partner
c. if the member firm approves of this activity it must record it and supervise it
d. if approved, FINRA has 10 business days to review the activity
c. if the member firm approves of this activity it must record it and supervise it

any "private securities transactions" done away from the member firm must inform BD before engaging in such activity and after approval, they must maintain records and supervise activity
What is the amount of interest payable per year on a $1,000 par value of 5% bond selling at 80 and redeemable at par in 10 years?

a. $10
b. $40
c. $45
d. $50
$50

annual interest= coupon rate (5%) x par ($1,000)= $50
A floor broker executing an order for a public customer asks the designated market maker to guarantee a price while giving the floor broker an opportunity to obtain a better price for the customer. This is known as

a. a stop order
b. stopping order
c. best efforts order
d. a limit order
b. stopping order

stopping order- a favor that a designated market maker can do for a floor broker
stop order- type of trigger order. price set above (buy stop) or below (sell stop) the current market price
limit order- order to buy or sell a security at a specified price or better
A customer opens an account at a member firm and gives the minimum amount of information necessary to open the account, refusing to answer several questions. The customer deposits multiple checks into the account over a period of a month, all of which are just below $5,000. Shortly thereafter, the customer liquidates the majority of the assets in the account with checks drawn over a period of several days, all of which are below $5,000. An Operations Professional or RR who notices this behavior should

a. file a CTR immediately if the various transfers exceeded $10,000 and report the customer to FINRA's Whistleblower Department
b. completely freeze the customer's account so that the customer cannot deposit, withdraw, or invest any assets
c. file a SAR, even though the amounts that are deposited or withdrawn never exceed $5,000 in any one transaction
d. personally take possession of the customer's assets into the firm's error account, since opening an account for this customer was clearly an error in judgement
c. file a SAR, even though the amounts that are deposited or withdrawn never exceed $5,000 in any one transaction
A "hedge fund" is a form of investment that involves:

a. investment in landscaping companies
b. pooled investment by multiple investors where no specific criteria must be met to participate
c. pooled investment by multiple investors where, due to high levels of risk, only high net worth investors are permitted to participate
d. investment in securities on both the upside and downside of the market with the goal of limiting risk and protecting an investor's assets
c. pooled investment by multiple investors where, due to high levels of risk, only high net worth investors are permitted to participate
An "exchange privilege" offered by a group of mutual funds allows the investor to

a. sell their shares on the New York Stock Exchange
b. exchange shares of an open-end fund for an ETF
c. exchange shares of one fund in the group for another different fund in the group at a reduced or no sales charge
d. withdraw cash from investments in fund shares without losing the option of continuing to reinvest dividends and capital gains
c. exchange shares of one fund in the group for another different fund in the group at a reduced or no sales charge
A 45-year-old customer leaves his employer and takes payout on their 401 (k) Plan assets with the intent to toll the plan into a Traditional IRA. The client fails to do so within the required time period. The client will have to pay

a. a 10% penalty on the amount paid out with no other tax consequences
b. ordinary income tax on the amount paid out with no other tax consequences
c. both a 10% penalty on the amount paid out and ordinary income tax on the amount paid out
d. no taxes associated with the 401 (k) Plan payout, because he left his employer
c. both a 10% penalty on the amount paid out and ordinary income tax on the amount paid out
Which of the following activities would NOT be done by a designated market maker on the floor of an exchange?

a. handle the execution of odd lot orders
b. record limit orders in the book
c. handle the distribution of new issues
d. trade for their own account
c. handle the distribution of new issues
Mr. Smith has been considering the purchase of a mutual fund and has decided he wants to buy $8,000 of the fund buy only has $4,000 to invest now. He asks you, his RR to lend him the other $4,000 which he will repay in 2 months. Which of the following is correct about this situation?

a. the rep may lend the customer the funds as long as the agreement is in writing
b. the rep should establish a margin account for the customer and buy the fund shares on margin
c. the rep must deny the customer's request for a loan
d. the rep may lend the customer funds with the firm's prior approval
c. the rep must deny the customer's request for a loan

reps can't make loans to customers and couldn't establish a margin account since mutual funds may not be purchased on margin
Of the following investments, which has the highest potential for capital appreciation and also the highest risk?

a. bonds issued by a municipality
b. the common stocks of a corporation
c. the preferred stocks of a corporation
d. bonds issued by a corporation
b. the common stocks of a corporation
All of the following actions by the federal government would be effective in combating an economic recession EXCEPT:

a. increasing individual income tax rates for all citizens
b. the Federal Reserve lowers interest rates
c. additional government projects and spending on infrastructure
d. additional borrowing by the federal government
a. increasing individual income tax rates for all citizens

increase in taxes would cause an increase in a recessionary period because an increase in taxes would cause a further tightening of money available for spending by the consumer thereby worsening the recession
Bobbie purchased 100 shares of ABC common stock several years ago. Which of the following rights does Bobbie have by owning common stock that preferred stock holders do not have? The right to

a. sell his shares
b. receive dividends
c. vote on important matters such as stock splits
d. inspect certain books of corporation
c. vote on important matters such as stock splits
Greg has been investing in stocks for years and now decides to buy some Treasury Securities in the secondary market. He enters an order to buy 10 US T-Bonds on Friday, September 15th. When can Greg expect settlement?

a. Wednesday, September 20th, trade date plus 3 business days
b. Tuesday, September 19th, trade date plus 2 business days
c. Monday, September 18th, trade date plus 1 business day
d. Friday, September 15th, for same-day settlement
c. Monday, September 18th, the trade date plus 1 business day

government securities- T+1 business day
common stocks in secondary market- T+2 business days
settlement of US government securities in primary market from auction- T+3 business days
When a bank has excess reserves and the bank loans those excess reserves to other banks that need to borrow to meet their reserve requirements, the excess reserves that are loaned are called

a. discount window funds
b. federal funds
c. excess equity
d. money market funds
b. federal funds

federal funds- excess reserves of commercial banks which are loaned to other banks needing overnight loans to meet their reserve requirements
Which of the following instruments/asset classes would generally be considered to be the least liquid?

a. over the counter stock
b. listed stock
c. general obligation municipal bonds
d. direct participation program units
d. direct participation program units

limited partnership, can be difficult to sell because there isn't an active secondary market for limited partnerships & limited partners need approval of general partners before they can sell
Among the various economic theories, the one that says that economic growth and stability can be promoted by the active intervention of government fiscal policies in the marketplace is referred to as which of the following?

a. Keynesian
b. supply-side
c. Monetariest
d. Libertarian
a. Keynesian

supply-side- less government intervention in the marketplace
monetarists- money supply is key to economic growth
Predictions about the future performance of mutual funds and variable annuitities are

a. permitted if the basis of the prediction is provided
b. not permitted, regardless of the situation
c. permitted if prepared by an outside and unbiased analyst
d. not permitted unless reviewed by FINRA 10 days before first use
b. not permitted, regardless of the situation

predictions or guarantees about future performance of variable products and investment companies are not allowed under any circumstances
As inflation increases over time, the best hedge against it has historically been provided by which of the following types of securities?

a. common stocks
b. preferred stocks
c. government securities (t-bonds, etc)
d. convertible bonds
a. common stocks
You are comparing two bond issues. The bonds have the same coupon rate, face value, and maturity date. One is labeled high quality and the other is labeled low quality. Which of the following would you expect of the high quality issue in comparison to the lower quality issue?

a. lower market value
b. higher market value
c. higher price volatility
d. higher yield
b. higher market value

when a bond is rated higher than similar bonds, one can expect that bond's market price to be higher and its yield to be lower. this is due to the fact that the bond is a safer investment. high quality bonds typically have lower price volatility in comparison to lower quality bonds
A client purchases 100 shares of XYZ at $33/share and buys 1 XYZ July 35 put @ 5. The stock subsequently rises to $44/share and the customer closes the option at 1 and sells the stock in the market. What is the customer's gain or loss?

a. $400 loss
b. $500 gain
c. $700 gain
d. $1,100 loss
c. $700 gain

B-3,300
B-500
S+100
S+4,400
= $700 gain
Which of the following would not be a consideration in determining whether a customer account has been excessively traded (churned) by the RR?

a. RR discretionary authority over the account
b. the quality of the securities
c. the RR's reasons for the trades
d. the account turnover
b. the quality of the securities

The quality of the securities could be an important factor in whether the trades were suitable but not generally a factor for determining churning
When helping your customer select a mutual fund all of the following would be primary considerations EXCEPT

a. the NAV (Net Asset Value) of the fund
b. the fund's historical performance
c. sale charges
d. the fund's risk and volatility profile
a. the NAV of the fund

NAV is important once the investor owns a fund but not typically a consideration before
The exercise price of a listed equity option would be adjusted for all of the following EXCEPT?

a. a 2:1 stock split
b. dividends paid in cash
c. rights issued on common stock
d. dividends paid in stock
b. dividends paid in cash

no change in number of shares that the customer will own or that the option will represent. all others answers represent a change in number of shares
Which of the following is an accurate statement regarding the delivery of trade confirmations to clients?

a. confirmations need NOT be delivered to clients in most cases
b. confirmations MUST be delivered as requested by the client
c. confirmations MUST be delivered at or prior to completion of the trade
d. confirmations MUST be delivered no later than 4 business days after trade date
c. confirmations MUST be delivered at or prior to completion of the trade
A customer buys 100 shares of ABC at 50.50 and sells 1 ABC 50 call @ 5. At what price will the customer breakeven?

a. $45
b. $45.50
c. $55
d. $55.50
b. $45.50

B-5,050
S+500
= -4,550/100
= $45.50
All of the securities listed below can be purchased on margin in a margin account EXCEPT?

a. US government securities
b. listed securities
c. NASDQZ securities
d. new issues
d. new issues

any securities sold with a prospectus can not be bought on margin, new issues must be paid in full
Foreign exchange rates are determined in which of the following markets?

a. they are determined in the equity securities market
b. they are determined in the primary market
c. they are determined in the fourth market
d. they are determined in the interbank
d. they are determined in the interbank

interbank- system where currencies are traded between certain banks and financial institutions
An investor who is interested in purchasing Class A mutual fund shares would have which of the following characteristics?

a. a small amount of money to invest
b. a short-term time horizon
c. a moderate to large amount of money to invest
d. speculation as an investment objective
c. a moderate to large amount of money to invest

Class A mutual fund share typically have a front-end shares load and sales charge breakpoints but generally have lower annual 12b-1 fees. Usually well suited for investors with moderate to large amount of money to invest because the sales charge breakpoints would reduce the sales charge significantly for investors with a long-term investment horizon
The Alternative Minimum Tax (AMT) may be applied to shareholders of a mutual fund that has which of the following securities contained within?

a. US Treasury bills
b. convertible bonds
c. municipal bonds issued for private industry purposes
d. investments in blue chip securities
c. municipal bonds issued for private industry purposes

AMT= taxable income + tax preference items
items= interest earned on private activity municipal bonds
You are an RR and one of your clients informs you that they will now be participating in a pension plan offered at work. The plan takes the average salary of the employee over the last 3 years of service and pays 50% of that figure. Which of the following best describes this type of plan?

a. the client has an annuity plan that is tax-deferred
b. the client has a defined contribution plan
c. the client has a defined benefit plan
d. the client has a deferred compensation plan
c. the client has a defined benefit plan

defined benefit plan- type of pension plan where income or other benefits that the employee will receive after leaving employment are "defined" by the plan
defined contribution plan- type of pension plan in which the amount of pension the employee will receive depends on the contributions made to the employee's account plus actual earnings on contributions
An individual receives her paycheck and pays for her rent and groceries for the month. After all the essential needs are paid for the remaining income is called

a. disposable income
b. gross income
c. discretionary income
d. residual income
c. discretionary income

gross income- individual's income from employement before taxes are removed
disposable income- (net income) after taxes are removed; can be spent on essentials, non-essentials, or saved and invested
discretionary income- money which can be spent after essentials are paid
Which of the following is true when the holder of put decides to exercise the put and the broker-dealer sends the exercise notice to the OCC Options Clearing Corporation? The OCC would

a. forward the exercise notice on a first in first out basis to another clearing member who has a short position that satisfies the exercise notice
b. randomly choose another clearing member who is short that series to satisfy the exercise notice
c. assign the exercise notice to the clearing member who wrote the option
d. pay the money required to satisfy the exercise price directly to the person who exercised the option
b. randomly choose another clearing member who is short that series to satisfy the exercise notice
All of the following documentation is required to open a customer margin account for the president of a bank EXCEPT:

a. a new account report form
b. a margin agreement
c. a hypothecation agreement
d. authorization from the bank's board of directors
d. authorization from the bank's board of directors

requires a new account report form
margin agreement/hypothecation agreement also required
The calculation of the contingent deferred sales load upon the redemption of a mutual fund is based on

a. the NAV at the time the fund shares are redeemed
b. the NAV at the time the fund shares were purchased
c. either the NAV at the time of purchase or the NAV at the time of redemption, whichever is greater
d. a percentage of either the NAV at the time of purchase or the NAV at the time of redemption, whichever is less, and generally the fee may not exceed 2%
d. a percentage of either the NAV at the time of purchase or the NAV at the time of redemption, whichever is less, and generally the fee may not exceed 2%
When a company does a Rights Offering, the rights are

a. sold to the general public
b. sold to existing shareholders
c. only given to existing shareholders, proportionately to shares held
d. given to the public on a first come, first serve basis
c. only given to existing shareholders, proportionately to shares held
Which of the following would contain the conditions and agreements of an upcoming issue of bonds by a corporation?

a. these would be contained in the Tombstone Ads produced for the bonds
b. these would be contained in the bond's indenture
c. these would be contained in the underwriter's agreement
d. these would be contained in the legal opinion of the bond
b. these would be contained in the bond's indenture

indenture- legal document that protects the rights of bondholders. it's a formal agreement between the issuer of the bonds and the bondholder
All of the following are typically services provided in a prime brokerage account EXCEPT

a. investment advice
b. securities lending
c. centralized trade settlement while still using multiple executing brokers
d. calculating a total return on all investments
a. investment advice

prime brokerage account- bundled package of services offered by a bd to hedge funds and other institutional investors that use aggressive trading strategies. a written prime brokerage agreement is required to open a prime brokerage account
Which of the following bond offerings would be required to have a trust indenture under the Trust Indenture Act of 1939?

a. US Treasury Bond
b. airport authority revenue bond
c. general obligation bond
d. mortgage bond
d. mortgage bond

only applicable to corporate bonds
Which of the following taxes would be deferred on contributions made by an individual to her 401 (k) plan?

a. unemployment tax at the Federal level
b. capital gains tax
c. income tax
d. real estate taxes
c. income taxes
A client enters an order for the purchase of a block of 200,000 shares of Company X. Just prior to entering the large order, the RR enters an order in their own personal account for 5,000 shares. What BEST describes what the RR has done?

a. the rr has engaged in free-riding on the purchase
b. the rr has engaged in front running on the purchase
c. the rr has engaged in churning on the purchase
d. the rr has engaged in insider trading on the purchase
b. the rr has engaged in front running on the purchase

front running- entering an order ahead of another order to benefit from fluctuations in the market due to a large volume purchase
free-riding- failure of an underwriter to make a bona fide public distribution on a hot issue
churning- excessive trading in customer's account
insider trading- individual trades on material non-public information
The SEC "quiet periods" for an IPO of an emerging growth company as applied to the underwriters are:

a. eliminated
b. shortened
c. lengthened
d. remain unchanged
a. eliminated

quiet periods- periods of time surrounds a public offering of new issue when promotional materials are generally prohibited.
A customer buys 100 shares of ABC at $80 per share. Two days later, before the customer pays for the stock, the market price of ABC increases to $90 per share. What is the customer's initial margin requirement?

a. $2,000
b. $2,500
c. $4,000
d. $4,500
c. $4,000

$80 x 100 shares= $8,000
$8,000 x 50%= 4,000
4,000 > 2,000
An investor is considered "uncovered" in which of the following scenarios involving option contracts? The investor:

a. buys 1 XYZ Call option with no other stock positions
b. buys 100 shares of ABC common stock and sells 1 ABC put option
c. buys 100 shares of XYZ common stock and sells 1 XYZ call option
d. buys 1 ABC put option with no other stock positions
b. buys 100 shares of ABC common stock and sells 1 ABC put option

long stock positions do not cover a short put contract
If an investor owns 100 shares of a stock and sells a call against the stock, the investor is considered covered
Which of the following indicates if the yield of a zero-coupon bond is currently trading at a premium or at a discount to its compound accreted value?

a. original dollar price
b. original yield
c. maturity date
d. dated date
b. original yield

original yield=coupon rate
Broker-dealers charge their margin customers interest on the debit balances held in the customers' margin accounts. What is the interest rate called that is the basis for margin rates charged to customers?

a. the current federal funds rate
b. the current broker call rate
c. the discount rate established by the FED
d. the going prime rate found in the open market
b. the current broker call rate
A share of ABC 8% preferred stock with a par value of 25 will pay a quarterly dividend of:

a. $0.50
b. $2.00
c. $0.80
d. $8.00
a. $0.50

annual dividend= $25 x 8%=$2.00
quarterly dividend= $2/4= $0.50
Mr. Smith advises his RR to sell 300 shares of his ABC common stock whenever the price is right. Later that day ABC starts to move up and the RR enters a market order to sell the stock. Which of the following statements is true?

a. the RR was in violation because he did not have written discretionary authority for this customer
b. the RR handled the order appropriately since the only decisions required were related to time and price
c. the RR should have sought the approval of a supervisory person prior to entering the order
d. the RR should have refused to take the order and asked the customer to call him back later in the day to see where the stock was trading
b. the RR handled the order appropriately since the only decisions required were related to time and price
A RR thoroughly reads a preliminary prospectus and then writes a brief review of the prospectus which he wants to send the clients he believes are suitable

a. this may only be done with the branch office manager's approval
b. this may be done without restriction
c. this may only be done with the approval of a supervisory analyst
d. this may not be done under any circumstances
d. this may not be done under any circumstances

prospectus must be sent to clients without any attachments, comments, or reviews
One of your clients purchases a callable corporate bond. The bond is callable at 106.55. What will the customer receive i the corporation calls the bonds and the customer tenders them back to the corporation?

a. the customer will receive $1,065.50 for the bond and accrued interest up to the call date will be subtracted from that figure
b. the customer will receive $1,065.50 for the bond and accrued interest up to the call date will be added to that figure
c. the customer will receive par value for the bond of $1,000 and will receive $65.50 in accrued interest
d. the customer will receive par value for the bond of $1,000 and will receive $106.55 in accrued interest
b. the customer will receive $1,065.50 for the bond and accrued interest up to the call date will be added to that figure

106.55 x 10= $1,065.50
investor can expect any accrued interest
Which of the following statements by an RR is TRUE regarding dividends?

a. "It is possible for a long-term equity anticipation security to pay dividends"
b. "An investor can expect to receive dividends on the underlying security in the event that they own a call option"
c. "An investor who owns an American Depositary Receipt can expect to receive dividends from their investment when declared and paid
d. "When an investor owns a warrant or right, they are entitled to receive dividends in accordance with these securities"
c. "An investor who owns an American Depositary Receipt can expect to receive dividends from their investment when declared and paid

only ADRs out of all the answers pays dividends
In preparation for a secondary distribution a member firm decides to make purchases on the floor which would cause the price of the stock to rise so that the secondary distribution could be made at a higher price. Such activity is

a. allowed since anyone is allowed to enter buy orders
b. prohibited as market manipulation is not allowed
c. allowed if complete disclosure is made to the public
d. allowed if there are sufficient pre-sale orders received
b. prohibited as market manipulation is not allowed
Which of the following is TRUE when a corporation declares a split in its common stock?

a. the corporation's working capital would be affected
b. the corporation's retained earnings would be affected
c. the market price of the common stock will remain unchanged
d. the common stock's par value would be affected
d. the common stock's par value would be affected
A client has held a long position in BCD Common for several years and has seen a sizeable increase in price since initially buying the stock. The client fears that BCD is headed for a slight downturn in price and wishes to protect the profits that he holds from the previous increase. Which option strategy provides the MAXIMUM protection for this client?

a. this client would be best suited by buying calls on BCD
b. this client would be best suited by selling calls on BCD
c. this client would be best suited by buying puts on BCD
d. this client would be best suited by selling puts on BCD
c. this client would be best suited by buying puts on BCD
A broker-dealer firm has become insolvent. SIPC liquidation procedures have begun. Jill and Jack are married and each of them have individual accounts along with a joint account with each other at the firm. The following are their account balances: Jill's individual account has $275,000 in fully-paid securities, Jack's individual account has $265,000 in fully-paid securities, and Jill and Jack's joint account has $475,000 in fully-paid securities. What would SIPC cover in relation to these accounts?

a. SIPC coverage would total $500,000 for the three accounts since the two parties are married
b. SIPC coverage would pay $275,000 for Jill's account, $265,000 for Jack's account, and $475,000 for the joint account
c. SIPC coverage would pay $1,500,000 in this case, because each account is insured for $500,000, regardless of the amount held when the broker-dealer firm became insolvent
d. SIPC would not cover any of these claims
b. SIPC coverage would pay $275,000 for Jill's account, $265,000 for Jack's account, and $475,000 for the joint account
A broker-dealer has fired a RR for cause related to a violation of securities regulations. This RR will continue to be subject to FINRA jurisdiction for what period of time following the filing of the Form U-5?

a. 1 year
b. 2 years
c. 3 years
d. 4 years
b. 2 years
All of the following are true regarding IRA contributions EXCEPT:

a. although a tax return is filed prior to April 15th, the IRA contribution may be delayed until April 15th
b. contributions may be made at any time between January 1st and April 15th of the following year
c. if an extension for a tax return is obtained, the IRA contribution may be delayed until the date the tax return is filed
d. persons not participating in any other type of retirement plan may deduct their IRA contributions up to certain limits
c. if an extension for a tax return is obtained, the IRA contribution may be delayed until the date the tax return is filed
A client recently purchased a sizeable number of mutual fund shares and knows that the NAV will change daily. The customer asks the RR how the NAV number is computed. Which of the following best describes the computation to arrive at NAV per share?

a. NAV per share is calculated by finding the average value on a per share basis over the previous quarter
b. NAV per share is calculated by subtracting the liabilities of the fund from the total assets of the fund, then dividing this number by the total number of shares currently outstanding
c. NAV per share is calculated by taking the total value of the portfolio of the fun, adding sales charges received, and then dividing this figure by the total number of share currently outstanding
d. NAV per share is calculated by finding the total appreciation of the portfolio and dividing this figure by the total number of shares outstanding
b. NAV per share is calculated by subtracting the liabilities of the fund from the total assets of the fund, then dividing this number by the total number of shares currently outstanding
In order to free up time for the RR, a member firm has several non-registered persons telemarket prospective clients with a script. The script states the following: "Good morning, my name is _____________ and I'm calling you from Make Money Securities. Our firm expects market increases in ABC Fund, which is offered for sale by our RR. May I connect you with one of our representatives or send you further information?" Which of the following is CORRECT about this situation?

a. under no circumstances may an unregistered person perform such activities
b. all actions are permissible except projecting the future return of the ABC Fund
c. the non-registered persons can perform such actions provided they obtain the appropriate registration within 30 days
d. as long as the registered persons are standing by to take phone calls and the non-registered persons are closely supervised, the situation is acceptable
a. under no circumstances may an unregistered person perform such activities
When could one expect changes in the NAV of a mutual fund?

a. when there are changes in the value of securities within the fund's portfolio
b. when customers redeem fund shares
c. when customers exchange fund shares for another fund's shares within the same family
d. when shares of the fund are split
a. when there are changes in the value of securities within the fund's portfolio
Which of the following statements about REPOs (Repurchase Agreements) is FALSE?

a. typically REPOs denominations start at a minimum of $1,000,000
b. REPOs are considered money market instruments
c. REPOs are often thought of as risk-free investments
d. REPOs typically have maturities of less than 3 months
c. REPOs are often thought of as risk-free investments

have a very low risk but not riskless
Mrs. Jones has a conservative investing approach. She has a large portfolio of blue chip common stocks and wants to use options to receive additional income from the portfolio. Which of the following would be the MOST suitable recommendation for Mrs. Jones?

a. buy puts options on the portfolio of securities
b. write put options on the portfolio of securities
c. buy call options on the portfolio of securities
d. write call options on the portfolio of securities
d. write call options on the portfolio of securities
When a customer opens a margin account at a broker-dealer, they are required to sign certain documents. Which of the following best describes the agreement between the customer and the broker-dealer related to the terms and conditions of financing involved in purchasing on margin?

a. this is covered in the customer's new account form
b. this is covered in a consent by the client to the loan from the broker-dealer
c. this is covered in the customer's hypothecation agreement
d. this is covered in the credit agreement for a line of credit with the customer
d. this is covered in the credit agreement for a line of credit with the customer

hypothecation agreement- discloses that securities purchased on margin may be pledged by the broker-dealer as collateral in order to finance such margin accounts
When a client opens an options account at a firm, regulations dictate that the firm must receive an account agreement signed by the customer in what time frame?

a. following approval of the account, the firm must receive the signed account agreement within 15 days
b. the firm must receive the signed account agreement prior to approval of the account
c. following approval of the account, the firm must receive the signed account agreement within one month
d. the firm must receive the signed account agreement no fewer than 10 business days before approval of the account
a. following approval of the account, the firm must receive the signed account agreement within 15 days
Mr. Smith, your client, has maintained about 80% of his portfolio in fixed income securities. Interest rates are expected to decline over the next 12 month period. Mr. Smith calls you because he is concerned about this prediction and his portfolio. Which of the following recommendations would be appropriate for you to give to Mr. Smith?

a. move 50% of his portfolio into equity securities
b. leave his portfolio the way it is now
c. move 60% of his portfolio into money market funds
d. move 25% of his portfolio into limited partnerships
b. leave his portfolio the way it is now
Eurodollars are BEST described with which of the following statements?

a. Eurodollars are the currency of a group of European countries
b. Eurodollars represent currency of the US that is currently being held in foreign (non-US) banks
c. Eurodollars represent currency of a group of European countries that are held in domestic banks (banks in the US)
d. Eurodollars represent currency that may only be traded in European markets
b. Eurodollars represent currency of the US that is currently being held in foreign (non-US) banks
SEC rule 415 allows "Shelf Registration". This permits one registration statement to cover all securities to be issued during the next:

a. 6 months
b. 1 year
c. 2 years
d. 3 years
d. 3 years
An investor, whose investment objective is speculation, would MOSTLY be concerned with which of the following?

a. their exposure to reinvestment risk
b. their exposure to currency risk
c. their exposure to interest rate risk
d. their exposure to capital risk
d. their exposure to capital risk

capital risk- risk of loss of the principal value of an asset or security
reinvestment risk- risk that interest rates will decline and income received from existing investments will earn less when reinvested than the original investment
interest rate risk- loss of market value on fixed income securities because of a rise in competitive interest rates, especially on securities with long-term maturities
currency risk- risk that changes in the exchange rate will adversely affect your investment
Which of the following investments allow a maximum contribution limit of 100% of earned income, not to exceed $6,000 (tax year 2021) and assuming the investor is less than 50 years of age?

a. a traditional ira
b. a keogh plan
c. a 401(k) plan
d. an education ira
a. a traditional ira

education ira- not linked to earned income
keogh and 401(k) plans have higher contribution limits
The appreciation of the value of a variable annuity during the accumulation period is

a. taxed as ordinary income each year
b. tax deferred until annuitization
c. taxed as a capital gain each year
d. adjusts the cost basis and is taxed each year
b. tax deferred until annuitization
The following quote appears on a consolidated tape:
XYZ P 25.13 +.25. B 25 A 25.25
How much should you expect to pay to buy 100 shares?

a. $25 per share
b. $25.13 per share
c. $25.25 per share
d. $25.38 per share
c. $25.25 per share

XYZ= symbol for company's security
P= last trade was on The Pacific Stock Exchange
$25.13= last trade price for a round lot
.25= trade was .25 higher than the previous trade
B= bid price of $25
A= ask price of $25.25
Which of the statements below on open-end funds is FALSE?

a. at least once annually, shareholders should receive distributions of any capital gains of the fund
b. 8.5% is the largest allowable sales charge
c. the secondary market is where such funds are traded
d. some customers may qualify for breakpoints
c. the secondary market is where such funds are traded
Which of the following options positions would give the investor MAXIMUM protection when hedging using options?

a. long calls and short calls
b. long calls and long puts
c. short calls and short puts
d. short calls and long puts
b. long calls and long puts

the only benefit a write (short the option) can get is the amount of premium received when the option is written
A day trader of blue chip common stocks would be most concerned with which of the following risks?

a. purchasing power risk
b. timing risk
c. default risk
d. interest rate risk
b. timing risk

timing risk- risk incurred trying to time the market, or a particular investment
purchasing power risk- risk of loss of buying power, especially on fixed income securities with long-term maturities
interest rate risk- loss of market value on fixed income securities because of a rise in competitive interest rates, especially on securities with long-term maturities
An investor, Mrs. Smith, is seeking a mutual fund offering a high yield. Which of the following is the best choice for Mrs. Smith?

a. aggressive growth fund
b. hedge fund
c. income fund
d. emerging growth fund
c. income fund

growth fund- would offer more capital appreciation
hedge fund- not a type of mutual fund
When a company calls an issue of bonds, all of the following would typically be FALSE EXCEPT:

a. the ratio debt to net worth will increase
b. the company's credit rating will be reduced
c. the holders of called bonds will receive the face value of the bond plus a call premium
d. the holders of called bonds will be able to reinvest and receive a higher coupon
c. the holders of called bonds will receive the face value of the bond plus a call premium
Which of the following is generally NOT TRUE in relation to Corporate Commercial Paper?

a. commercial paper is normally offered in book-entry form
b. commercial paper is normally issued in callable form
c. commercial paper is normally sold at a discount
d. commercial paper is normally unsecured debt of a corporation
b. commercial paper is normally issued in callable form
Which of the following accurately describes a secondary offering or secondary distribution?

a. an offering of securities that remained after an initial public offering that was not fully sold
b. a rights offering of primary shares that would take place after the completion of an initial public offering
c. transactions that take place within an underwriting syndicate before shares are actually made available to the pulic
d. an offering in the secondary market of securities owned by one of more major owners wishing to sell large volumes of their shares
d. an offering in the secondary market of securities owned by one of more major owners wishing to sell large volumes of their shares

secondary offering or secondary distribution- redistribution of large block of securities held by one or more major shareholders who wish to sell a large volume of shares
A customer buys 1 XYZ May 50 call for 2 and buys 1 XYZ May 35 put for 1 when XYZ is selling at $39 per share. XYZ decreases to $28 and the put is sold for the in-the-money amount while the call expires unexercised. The customer's profit or loss is:

a. $1,000 loss
b. $400 profit
c. $300 profit
d. $300 loss
b. $400 profit

B-200
B-100
S+700
= +400
When an investor buys either a corporate or municipal bond, how frequently is interest paid?

a. interest is paid every week
b. interest is paid every month
c. interest is paid on a quarterly basis
d. interest is paid on a semi-annual basis
d. interest is paid on a semi-annual basis

dividend payments= quarterly
The agreement that authorizes a broker-dealer to pledge a customer's margin securities as collateral for a loan from a bank to the broker-dealer is called:

a. a credit agreement
b. a loan consent agreement
c. a hypothecation agreement
d. a joint account agreement
c. a hypothecation agreement

customers pledge their securities to broker-dealers as collateral to make securities purchases
A new client opens up a margin account at the firm. The client wishes to perform a short sale as their first transaction. They wish to sell short 1,000 shares of MNO corporation, which is currently trading at $2.25 per share. How much must this client deposit assuming no other deposits have been made at this time?

a. the client must deposit $1,125
b. the client must deposit $2,250
c. the client must deposit $2,500
d. the client must deposit $4,500
c. the client must deposit $2,500

minimum deposit required for low priced stock with a market price between $0-$2.50, is $2.50 per share. Yes, this investor has to give $2.50 per share, not the current market value of $2.25
Which of the following statements about Roth IRA plans is TRUE?

a. Roth IRA plans are not permitted to invest in individual stocks
b. maximum contributions for a single year for an individual with a Roth IRA plan would be $5,000
c. the original owner of the plan must receive minimum distributions by the age of 70 1/2
d. the qualified distributions of a Roth IRA plan are not taxable
d. the qualified distributions of a Roth IRA plan are not taxable
Which of the following US Government securities are classified as money market instruments?

a. treasury bills
b. treasury notes
c. treasury bonds
d. treasury strips
a. treasury bills

short-term discounted government debt security
Which of the following is NOT a characteristic of Notes issued by the US Treasury?

a. all US treasury notes have a call feature
b. maturities on these securities are typically intermediate
c. quotes on these securities are listed as a percentage of the note's par value
d. interest is paid on these securities semi-annually
a. all US treasury notes have call features
Which of the following types of bonds secures its income from fees charged to user?

a. revenue bond
b. general obligation bond
c. collateral bond
d. convertible bond
a. revenue bond

ex. toll roads
In general, which of the following is TRUE in terms of orders used to protect a profit or limit a loss?

a. buy limits are used to protect a long stock position, while sell limits are used to protect a short stock position
b. buy stops are used to protect a short stock position, while sell stops are used to protect a long stock position
c. sell limits are used to protect a short stock position, while buy stops are used to protect a long stock position
d. sell stops are used to protect a long stock position, while buy limits are used to protect a short stock position
b. buy stops are used to protect a short stock position, while sell stops are used to protect a long stock position

investors don't use limit orders to protect long or short stock positions
When a bond is trading at a discount, the current yield on the bond is:

a. unrelated to its yield to maturity
b. less than its yield to maturity
c. equal to its yield to maturity
d. more than its yield to maturity
b. less than its yield to maturity
SEC Rule 144A permits the resale of non-registered securities to all of the following EXCEPT

a. insurance companies
b. banks
c. mutual funds
d. individuals
d. individuals

QIBs- Qualified Institutional Buyers
Customers of member firms are required to receive statements of their accounts at a MINIMUM of

a. weekly
b. monthly
c. quarterly
d. semi-annually
c. quarterly
Which regulator determines which securities can be purchased on margin when the securities are non-exempt securities trading on the OTC market?

a. FINRA
b. FRB
c. SEC
d. SIA
b. FRB
Which of the following callable bonds currently trading at an 8% basis would most likely be refunded?

a. 5 1/2% of 2025, callable at 100
b. 8 1/2% of 2035, callable at 100
c. 8% of 2035, callable at 103
d. 6 1/2% of 2025, callable 103
b. 8 1/2% of 2035, callable at 100

the highest coupon is 8.5%
Mortgage Real Estate Investment Trusts generally invest in which of the following?

a. properties handled by developer or builders
b. income producing properties
c. residential mortgage loans
d. oil and gas propertes
a. properties handled by developer or builders
An Open-end Mortgage Bond issued by a corporation is one in which the property used to secure the bonds:

a. cannot be used to secure a later loan unless the later loan is lesser in claim
b. can be used to secure additional debt as long as the additional bonds are subordinated
c. can be used to secure additional bonds and all bonds rank equally
d. can be used to secure additional debt and in the event of bankruptcy bonds would be repaid by the earliest maturities first
c. can be used to secure additional bonds and all bonds rank equally
Which of the following statements pertaining to fiduciary accounts is FALSE?

a. generally, "prudent investor" rules apply to such accounts
b. speculation is typically prohibited in such accounts
c. unless the documents which establish the account specifically permit it, purchasing securities on margin in such accounts is prohibited
d. the profits of such an account may be shared with the fiduciary in charge of managing the account
d. the profits of such an account may be shared with the fiduciary in charge of managing the account
The ratio at which one country's currency can be converted into another country's currency is known as the:

a. federal funds rate
b. deficit rate
c. european currency rate
d. exchange rate
d. exchange rate

determined by the intervention of central banks and general market forces
Which of the following is true about a cash account versus a cash transaction?

a. a cash account is where purchases can be made with borrowed funds from the broker-dealer
b. a cash transaction is a transaction which settles on the same day that the transaction occurs
c. a cash account is where all transactions settle on the same day that the transactions take place
d. a cash transaction is an account where purchases are always paid for in full and settle regular way
b. a cash transaction is a transaction which settles on the same day that the transaction occurs

cash account- customer can buy securities but must pay for purchases in full. not all transactions in a cash account settle regular way or same day- depends on security that customer is purchasing
cash transaction- customer buys or sells security which settles on the same day as trade day
A customer enters an order to Buy 100 shares of ABC @49 stop. This order will be activated by which of the following?

a. a trade executed at $49 or higher
b. a trade executed at $49 or lower
c. buy stop orders are not allowed
d. buy stop orders are executed as soon as they reach the floor of the exchange
a. a trade executed at $49 or higher

buy stop orders are always entered ABOVE current market price & will become a MARKET order as soon as trade is executed at $49 or higher
used to protect short stock positions & take advantage of an upward break in resistance level of a stock
All of the following are true of a corporate bond with a call feature EXCEPT:

a. interest payments cease after the bond is called
b. it limits the upside potential on the bond
c. if the bond has a call premium, it normally declines in later years
d. the bond will be sold for a higher price because of the call feature
d. the bond will be sold for a higher price because of the call feature

call features are less desirable to investors so bonds usually sell for a lower price
Leafy Trees Inc. has the following facts regarding its common shares as of April:
Authorized shares: 10,000,000
Issued and outstanding ; 8,000,000
May: it repurchases 1,000,000 shares
June: it completes a 2 for 1 stock split
How many shares are outstanding after the split?

a. 14,000,000
b. 20,000,000
c. 18,000,000
d. 16,000,000
a. 14,000,000

outstanding stock= issued stock - treasury stock
8,000,000 - 1,000,000= 7,000,000
2/1 x 7,000,000= 14,000,000
What type of order would an investor enter if they wanted to buy 1 ABC May 50 Call when the premium for the option declined from its current value?

a. buy at the opening
b. debit spread
c. limit order to buy
d. market order
c. limit order
Reg T governs the extension of credit for all of the following EXCEPT

a. listed common stock
b. NASDAQ national market system OTC securities
c. government securities
d. listed corporate bonds
c. government securities
If a covered member or covered associate makes a political contribution that exceeds the limitations provided in the SEC's "Pay-to-Play" rules, that member is the prohibited from engaging in distribution or solicitation activities with or for that government entity for what period of time?

a. 1 year
b. 2 years
c. 3 years
d. 5 years
b. 2 years
A variable annuity contract is similar to a life insurance policy because it may contain all of the following EXCEPT

a. death benefits
b. beneficiary designation
c. loan provisions
d. guaranteed cash values
d. guaranteed cash values
A customer with a variety of investment products in his account elects to put a Transfer on Death (TOD) agreement in place with relation to his account. Which of the following is TRUE?

a. the customer should be informed that beneficiaries named in the agreement are permanent
b. assets will automatically be passed to beneficiaries per institutions in the TOD agreement and will avoid being tied up in legalities associated with regulations on assets of a deceased person
c. beneficiaries avoid estate taxes related to the death and subsequent inheritance due to the TOD agreement
d. all types of investment products and securities held in the account will be transferred upon the death of the customer
b. assets will automatically be passed to beneficiaries per institutions in the TOD agreement and will avoid being tied up in legalities associated with regulations on assets of a deceased person
When does settlement take place on cash transactions?

a. the 4th business day after trade date
b. the 2nd business day after trade date
c. the next business day after trade date
d. the same day as trade date
d. the same day as trade date
Under the SEC's Pay-to-Play Rules, a "Covered Member" is BEST described as a person or firm that

a. is not included in the rules
b. has previously made political contributions
c. solicits a government entity in relation to investment advisory services
d. accepts political contributions from politicians
c. solicits a government entity in relation to investment advisory services
Under the SEC's "Pay-to-Play" rules, which of the following contributions by a covered associate is permitted to an elected official's campaign in which the covered associate may NOT vote?

a. contributions of $350 or less per election, per covered associate
b. contributions of $350 or more per election, per covered associate
c. contributions of $150 or less per election, per covered associate
d. contributions of $150 or more per election, per covered associate
c. contributions of $150 or less per election, per covered associate
Which of the following statements is generally accurate regarding securities issued by agencies of the US Government?

a. though these securities pay interest, only the principal is considered to be safe and liquid
b. they generally do not trade in the secondary market
c. both the principal and interest payments are considered to be safe
d. the US government fully backs the issues of federal agencies
c. both the principal and interest payments are considered to be safe
A limited partner in a non-leveraged, non-assessable limited partnership assumes all of the following risks EXCEPT:

a. lack of liquidity
b. changes in the tax code
c. the general partner(s) management ability
d. losses in the excess of the limited partner's investment
d. losses in the excess of the limited partner's investment
Repurchase Agreements are characterized by all of the following EXCEPT:

a. repo rates are negotiated by the parties involved
b. banks and thrifts use repos to raise temporary capital funds
c. the FRB uses repos as instruments of monetary policy
d. their fixed maturities make them unsuitable for use by corporations
d. their fixed maturities make them unsuitable for use by corporations

corporations like repos because the maturities can be flexible which makes them ideal for parking funds for a short time
A wife owns a small business and has net income of $100,000 for the year. Her husband was hired by her as an accountant for her business and was paid $30,000. Which of the following is true concerning the amount that can be contributed to an IRA by the wife and/or husband?

a. the wife can contribute 20% of her earned income to an IRA
b. the husband and wife can each contribute 20% of their earned income to an IRA
c. the wife could only contribute $2,500 to her account and $2,500 to her husband's account
d. each or either can deposit $6,000 into their own IRA
d. each or either can deposit $6,000 into their own IRA

maximum $6,000
What is the current yield for a preferred stock which has a par value of $100 and a current market price of $95 with an annual dividend payment of 5%?

a. 5.26%
b. 1.9%
c. 1.31%
d. 5%
a. 5.26%

annual dividend= $5
CMV= $95
$5/$95= 5.26%
American Depositary Receipts are used to facilitate

a. the trading of domestic stocks abroad
b. the trading of foreign stocks domestically
c. currency exchange for transactions from US to foreign nations
d. currency exchange for transactions from foreign nations to the US
b. the trading of foreign stocks domestically
Which of the following would NOT be considered a "contribution" under the Pay-to-Play rules?

a. a donation of time by an individual at campaign headquarters
b. a donation of time by an individual where the member's empty office is being used for campaign purposes
c. a donation of time by an individual where the donor is using their own company's phone system to make phone calls
d. a donation of time and office space by a firm and its employees to be used for campaign purposes
a. a donation of time by an individual at campaign headquarters
One of your clients has large holdings of a few blue-chip corporations. The investor wishes to hold onto the stock for multiple reasons, but she is uncertain about price fluctuations in the short-term future. How can she use options to provide the MOST downside protection?

a. she can purchase call options on the securities in her portfolio
b. she can sell call options on the securities in her portfolio
c. she can purchase put options on the securities in her portfolio
d. she can sell put options on the securities in her portfolio
c. she can purchase put options on the securities in her portfolio

if investor is looking for "most"/"maximum" amount of protection on the downside and currently has holdings in a security, the investor should purchase put options on securities in questions. this will allow investor to "put" the stock to the seller of a put contract at the strike price on the contract if the market price of the stock goes down
The Trust Indenture Act of 1939 regulates corporate debt issues and requires the designation of a trustee. What duty does this trustee have?

a. the trustee is charged with ensuring that the proper filing procedures take place with relation to the issue and SEC registration
b. the trustee is charged with allocating any remaining bonds that may not have been sold in the initial issuance
c. the trustee is charged with acting on behalf of bondholders and ensuring that the rights of these bondholders are not infringed upon
d. the trustee is charged with being the liaison to the SEC in relation to all matter associated with the bond issue
c. the trustee is charged with acting on behalf of bondholders and ensuring that the rights of these bondholders are not infringed upon
When determining position limits, an investor that is short XYZ calls would be affected by which of the following?

a. short XYZ puts
b. long XYZ calls
c. long XYZ puts
d. long XYZ shares
c. long XYZ puts

position limits apply to options which are on the "same side of the market"
short calls and long puts are on the same side of the market
Harvey had his registration revoked last year. If he wants to re-join the securities industry as a licensed person, who can approve it?

a. FINRA
b. SEC
c. the member firm's executive committee by unanimous vote only
d. the US justice department
b. SEC
An underwriting syndicate is formed using a western agreement. Firm A has 25% participation of the $100 million issue. Firm A sells $25 million. At the end of the offering, $10 million remains unsold. Firm A's liability for the unsold portion will be:

a. 0
b. $2.5 million
c. $10 million
d. $100 million
a. 0

western agreement= not responsible for selling any other syndicate members' unsold shares
One of your friends is excited to inform you that they have decided to open up an IRA account. They are doing so in late April and starting the account with a deposit of $1,750. Consideration for this deposit to the IRA account MUST be for

a. only the previous year
b. the past year or the present year, depending upon your friend's wishes
c. only the current year
d. the previous year, given that your friend has filed the proper extensions with the IRS to do so
c. only the current year

if contributions to IRA account is made before April 15th, it could count towards the prior year
Which of the following is true concerning the over-the-counter market?

a. it is where customers buy and sell securities publicly with each other on an exchange floor
b. it is an auction market
c. listed securities are never traded in this market
d. it is where prices are negotiated between broker-dealers
d. it is where prices are negotiated between broker-dealers

when listed securities trade otc, it is called the third market
When disciplinary action is taken against a broker-dealer final authority is in the hands of the

a. SEC
b. FINRA
c. state administrator in the state where the violation occurred
d. broker-dealers supervisory committee
a. SEC
A mutual fund breakpoint occurs when

a. redemptions equal the purchases
b. the sales load is reduced because a specified dollar amount has been invested
c. the sales charges to the customer equal the customer's return from their investments
d. there is a break in performance and a downturn in investment value
b. the sales load is reduced because a specified dollar amount has been invested
Each of the following would be expected to increase during an expansionary period in a business cycle EXCEPT for

a. corporate losses
b. production
c. employement
d. demand for goods
a. corporate losses
Which of the following is NOT a characteristic of a Traditional Individual Retirement Account (IRA)?

a. individuals over 72 may not make tax-deductible contributions
b. a penalty of 10% applies to early withdrawals on such plans
c. taxes on earnings in such accounts are deferred until the owner withdraws them in retirement
d. an annual tax deduction is made available on these accounts up to the maximum contribution, but the deduction is limited or eliminated under certain circumstances
a. individuals over 72 may not make tax-deductible contributions

no age limit on making contributions as long as the working individual has sufficient earned income
A client is currently looking for growth, but intends to move investments into income in the next few years. The agent for this client recommends that the client choose a mutual fund company which offers a "family fund" or "family of funds" with a few different offerings for both growth and income. What is the primary reason that the client should choose a fund family that offers the objectives that they desire, versus two different mutual fund companies?

a. the client will always have more diversification if they stay within the same family of funds
b. within the same family of funds, the client will not have tax consequences when the client switches objective from growth to income
c. within the same family of funds, the client will not be subject to additional sales charges associated with the switch of objective from growth to income
d. the client should pick the same family of funds, because it is always better to stick with only one company offering mutual funds
c. within the same family of funds, the client will not be subject to additional sales charges associated with the switch of objective from growth to income

tax consequences would still apply to the switch
Which of the following is NOT a requirement under Regulation S-P?

a. maintaining the confidentiality of aggregated firm data such as the total volume of trades executed by the firm and total assets handled by the firm
b. maintaining the confidentiality of personally identifiable financial information that the firm collects and maintains to better service client accounts
c. delivery of an initial privacy notice to each client upon opening an account with the firm
d. delivery of a privacy notice to clients a minimum of annually after clients open an account and receive the initial privacy notice
a. maintaining the confidentiality of aggregated firm data such as the total volume of trades executed by the firm and total assets handled by the firm
Which of the following best describes a corporate resolution? It is a document that

a. describes the rights and duties of the corporations board of directors
b. authorizes specific person(s) to enter orders on behalf of the corporation
c. describes the terms under which the corporation will meet margin calls
d. authorizes the corporation to resolve internal disputes between employees
b. authorizes specific person(s) to enter orders on behalf of the corporation

corporations will need corporate resolution, corporate charter, and corporate by-laws when opening an account
Which of the following is NOT defined as "security" under Federal Securities Laws?

a. mutual funds (open end funds)
b. municipal bond uits
c. variable annuity contracts
d. commodity futures contracts
d. commodity futures contracts

commodity futures are regulated by the CFTC
If an investor bought 1000 equity shares (when issued) on Monday, May 19th, when would this transaction settle according to FINRA rules?

a. a date determined by FINRA's UPC Committee
b. it depends on whether the issuer has a market cap of more than $1 billion
c. May 21st
d. May 20th
a. a date determined by FINRA's UPC Committee
Which of the following is an example of permissible stabilization activities (buying and selling) by an underwriter?
I. IPO- 40 Bid- 39.87 Offer- 40.12
II. IPO- 20 Bid- 20.00 Offer- 20.25
III. IPO- 30 Bid- 29.50 Offer- 29.75
IV. IPO- 25 Bid- 24.75 Offer- 25.00

a. I
b. II
c. III
d. IV
d. IV

managing underwriter is permitted to stabilize by buying at or below the public offering price
first we look at the bid price, then second, we look at the offer price
Dividends are paid by all of the following types of securities EXCEPT:

a. ADRs
b. UIT
c. money market funds
d. preferred stock
b. UIT
Disciplinary decisions made by FINRA will be released to the public for all of the following situations EXCEPT:

a. conference with FINRA regarding compliance issues with the firm
b. imposition of a monetary sanction
c. suspension or revocation of a registered person associated with a member
d. barring of a member
a. conference with FINRA regarding compliance issues with the firm
Which of the following is incorrect regarding trading for CBOE index options?

a. market makers trade for their own account at their own risk
b. the public limit order book is handled by the Order Book Official
c. floor brokers execute orders for other brokers on a commission basis
d. market maker orders always have priority over public orders
d. market maker orders always have priority over public orders
An investor has a long-term investment objective. Of the following, which is the best reason that a variable annuity may meet the investor's objective?

a. avoiding tax penalties set forth by State insurance regulators requires a holding period on such investments of no less than two years
b. annuities must exist for a minimum of 5 years in order for death benefits to be activated
c. the individual's investment will be negatively affected to a significant degree by surrender charges
d. avoiding tax penalties at the federal level requires a holding period of 10 or more years
c. the individual's investment will be negatively affected to a significant degree by surrender charges
Your firm has securities available from a SEC Reg D private placement of variable life policies, which are unregistered. One of your fellow RRs would like to place an ad in a financial newspaper regarding the availability of the securities. Reg D allows which of the following in this situation?

a. because it's a private placement, Reg D advertising is limited to hedge fund sales literature only
b. as long as accredited investors are the only ones allowed to invest in the products, general advertising is acceptable, even if it reaches non-accredited members of the public
c. accredited investors who are pre-qualified for the purchase of the security may be invited to a sales seminar by the RR
d. as long as the RR focuses advertising toward investors with sizeable net worth, advertising is acceptable
c. accredited investors who are pre-qualified for the purchase of the security may be invited to a sales seminar by the RR
An investor is looking over the pros and cons of several retirement plans. She wants to invest funds that she is not required to withdraw at any given time, since she intends to continue working well into her 70s. Which of the following would be INAPPROPRIATE for this investor?

a. a roth ira
b. a traditional ira
c. a defined-benefit plan
d. a deferred compensation plan that is not qualified
b. a traditional ira
Under FINRA rules, the maximum allowable sales charge on a single-payment variable annuity contract is

a. 8 1/2%
b. 9%
c. 20%
d. not a set percentage, but rather what is considered "fair and reasonable"
d. not a set percentage, but rather what is considered "fair and reasonable"
When a Non-Managed Fee-based account is established for a client which of the following should be disclosed?
I. name of the IA who will be making decisions for the account
II per transaction fee which will charged for each trade done in the account
III. a full description of the services provided in the account
IV. list of assets eligible for this type of account

a. I & II only
b. I & III only
c. II & III only
d. III & IV only
d. III & IV only

account is NON-MANAGED so there would be no IA
ABC Corporation has 2,000,000 shares of common stock outstanding and decides to issue 500,000 new shares in order to raise capital. The Corporate Charter includes a preemptive rights clause. Assuming that ABC Corporation also has 10,000,000 shares of common stock authorized and 1,000,000 treasury shares, which of the following statements is correct?

a. ABC could choose to offer the new shares directly to the public
b. 10,000,000 rights will be issued by ABC Corporation
c. an investor that owns 200 shares could subscribe to 50 shares of the new issue
d. the 1,000,000 treasury shares would participate in the rights offering
c. an investor that owns 200 shares could subscribe to 50 shares of the new issue

2,000,000/500,000= 4:1
200 rights/4= 50 new shares
The depreciation of the dollar relative to other currencies will have which of the following results?
I. US exports will become more competitive in world markets
II. US exports will become less competitive in world markets
III. foreign imports will become more competitive in the US
IV. foreign imports will become less competitive in the US

a. I & II
b. I & IV
c. II & III
d. III & IV
b. I & IV
Of the following options transactions, which MUST be labeled either "Uncovered" or "Covered" on the ticket?

a. a closing purchase transaction
b. a opening purchase transaction
c. a opening sale transaction
d. a closing sale transaction
c. a opening sale transaction
Which of the following would NOT lead to disintermediation?

a. investors on a large scale deposit additional savings into banks and savings and loans
b. savings bank rate are below money market rates
c. the federal reserve has adopted a tight money policy
d. investors on a large scale withdraw savings from banks and savings and loans
a. investors on a large scale deposit additional savings into banks and savings and loans

disintermediation= large scale withdrawals of deposits
An investor is looking at an order and sees a size of 20 x 5. What does this mean?

a. it means that a total of 100 shares are available in 5 round lots of 20 shares each
b. it means that 20 shares are available at the bid price listed in the quote and 5 shares are available at the ask price listed in the quote
c. it means that 2,000 shares are available at the bid price and 500 shares are available at the ask price
d. it means that 20 market makers are offering to sell at the bid price and 5 market makers are offering to buy at the ask price
c. it means that 2,000 shares are available at the bid price and 500 shares are available at the ask price

the size of an order references the amount of round lots (100 shares each) that are available at that price in the market maker's quote
The sales charge on money market funds is usually

a. spread loaded
b. no load
c. front end loaded
d. deducted from the initial investment only
b. no load
For certain matters, mutual fund shareholders must receive proxy statements. Each of the following are examples of such matters EXCEPT for

a. any change in the fund's portfolio of securities
b. the election of the fund's board of directors
c. the transition of the fund from one investment objective to another
d. the transition of the fund from one investment advisory firm to another
a. any change in the fund's portfolio of securities

changes on a daily basis
On the ex-dividend date, an open limit buy order is usually

a. reduced by the amount of the dividend
b. increased by the amount of the dividend
c. canceled
d. not changed
a. reduced by the amount of the dividend

buy limit and sell stop orders are reduced by the amount of the dividend on the morning of the ex-date
Which of the following are true about the over-the-counter market?
I. FINRA regulates trading practices in the OTC market
II. the SEC directly regulates OTC transactions
III. the Federal Reserve Board regulates which OTC securities are marginable

a. I only
b. II only
c. I and III
d. I, II, and III
c. I and III

SEC oversees the entire brokerage industry
Mr. Jones has a margin account with no cash or securities position. He purchases 100 shares of WL at 83 and one WL January 90 listed put at 10. The required deposit when Regulation T is 50% is:

a. $4,150
b. $5,150
c. $5,650
d. $9,300
b. $5,150

$8,300 x 50%= $4,150 deposit
also purchased the put, and premiums must be paid in full
premium @ 10= $1,000 option deposit
$1,000 + $4,150= $5,150 total deposit
A 45 year old client with a variable annuity decides to do a cash surrender of her contract so that she will have a down payment on a second home. Any gain in her contract will be taxed as:

a. capital gains
b. capital gains plus a 10% penalty tax
c. ordinary income at the holder's marginal tax rate
d. ordinary income at the holder's marginal tax rate plus a 10% penalty tax
d. ordinary income at the holder's marginal tax rate plus a 10% penalty tax
ABC Company raised its cash dividend from 18 cents to 19 1/2 cents and also declared a 5% stock dividend. The record date of the cash dividend is Thursday, May 20 and the record date of the stock dividend is Wednesday, May 12. An investor buys 1,000 shares of ABC regular way on Wednesday, May 12. The customer will receive a cash dividend of?

a. $180
b.$188
c. $195
d. $204.75
c. $195

19.5 cents per share
$0.195 x 1000= $195
Which of the following most accurately describes the figure that results from subtracting a mutual fund portfolio's cost from its current market value?

a. NAV
b. Appreciation
c. Amortization
d. Offering price
b. Appreciation

appreciation= increase in value of an asset
amortization= accounting procedure such as the depreciation of the value of an asset over its useful life
NAV= market value of mutual fund shares (bid price)
offering price= NAV + sales charge
A client is interested in investing in the real estate sector, but shows great concern about the possibility of depreciation within the sector and more specifically within certain geographic areas. What recommendation should an RR handling this client's account make in relation to achieving the HIGHEST amount of diversification in real estate-related investments?

a. the client should invest in securities issued by the Federal National Mortgage Association (FNMA)
b. the client should invest in ETF's that are issued on a REIT index
c. the client should focus investments in one REIT
d. the client should invest in securities issued by the Government National Mortgages Association (GNMA)
b. the client should invest in ETF's that are issued on a REIT index

provides the maximum level of diversification of the investment options
A customer wishing to exercise their preemptive rights should send the rights to the:

a. rights agent
b. transfer agent
c. underwriter
d. syndicate
b. transfer agent
A customer buys 100 shares of XYZ at $60 per share and buys 1 XYZ October 60 put at 4. Which of the following statements is true?

a. maximum profit- $400; maximum loss- $5,600
b. maximum profit- $5,600; maximum loss- $6,400
c. maximum profit- unlimited; maximum loss- $400
d. maximum profit- $6,400; maximum loss- unlimited
c. maximum profit- unlimited; maximum loss- $400

long the stock= unlimited profit
premium paid = $400= limited loss
Which of the following is true of Commercial Paper?

a. it is a long term
b. it is illiquid
c. it is issued for a specific amount and matures on a specific date
d. it is secured by durable goods and owned by the issuing corporation
c. it is issued for a specific amount and matures on a specific date
Which of the following is accurate regarding the Series 6 license?

a. it allows one to sell mutual funds, equity securities, and corporate bonds
b. it provides customers the assurance that investment advice provided by the licensed individual has been approved by a regulatory agency
c. it allows the representative to offer futures and commodities products to his clients
d. my registration authorizes me to sell mutual funds to clients
d. my registration authorizes me to sell mutual funds to clients
Which of the following statements is generally accurate regarding securities issued by agencies of the US Government?

a. though these securities pay interest, only the principal is considered to be safe and liquid
b. they generally do not trade in the secondary market
c. both the principal and interest payments are considered to be safe
d. the US Government fully backs the issues of federal agencies
c. both the principal and interest payments are considered to be safe
An attorney who is not an active participant in a retirement plan earns $150,000 annually and the attorney's spouse is unemployed. For this couple, the maximum combined tax deduction for tax year 2021 allowed for IRA accounts according to IRS rules is

a. $13,000
b. $6,000
c. $12,000
d. $6,500
c. $12,000

$6,000 per spouse
Sam is buying stock in his cash account, which will be given to his nephew, who is a minor. The gift is considered to be completed when

a. the securities have been paid for
b. settlement date arrives
c. the securities are registered
d. the order is executed
c. the securities are registered
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