An investor who commits a sizable portion of her portfolio to long-term AAA rated bonds would be exposing herself to
A)
uncertainty about the ability of the issuer to make timely payments of interest and principal.
B)
liquidity risk.
C)
purchasing-power r
A(wrong)
M1 is a measure of which of the following?
A)
Large time deposits
B)
Consumer savings deposits
C)
Cash and funds in demand deposit accounts
D)
Liquid securities
(wrong) c
Which of the following statements describing Section 529 plans is true?
A)
The maximum contribution varies from state to state.
B)
The fees associated with them are similar from state to state.
C)
They can only be opened for children under age 18.
D)
Most
a
Changes in the overall economy that negatively impact securities values are called
A)
unsystematic risk.
B)
nonsystematic risk.
C)
universal risk.
D)
systematic risk.
d
Your customer, Maya Jenyer, is 27 years old and in the 20% federal income tax bracket. She is interested in opening a Roth IRA as a supplement to her retirement savings. Her intention is to place the entirety of her contribution into the Windmill Growth F
a
Numbers measuring the output of goods and services have been declining for just under two years. The economy would be characterized as
A)
expanding.
B)
being in a depression.
C)
being just under the recessionary measurement threshold.
D)
being in an econo
d
The residents of the city of Sandy Place, California, recently voted in favor of issuing a bond. The proceeds of the bond will be used to build a baseball stadium for the local minor league baseball team. Though the bond's costs are expected to be covered
c(wrong)
The federal act that requires registration with the Securities and Exchange Commission (SEC) as a face-amount certificate company, unit investment trust company, or management company is
A)
the Securities Exchange Act of 1934.
B)
the Trust Indenture Act o
d
Which of the following persons would be allowed to purchase shares of an initial public offering (IPO)?
A)
Someone owning 15% of a member broker-dealer
B)
An attorney acting on behalf of the managing underwriter
C)
The father of a member broker-dealer emp
d
Which of the following offering types would be used for a deal that will be sold exclusively to residents of one state?
A)
A Rule 144 offering
B)
A Reg A offering
C)
A Rule 147 offering
D)
A Reg S offering
c
Which of the following may be considered suspicious?
A)
Moving large sums of money between accounts with the same last names
B)
A client expressing undue concern about substantial commissions being charged to the account
C)
A customer unconcerned about lo
b (wrong)
The maximum amount of securities that may be sold by an insider within a three-month period under Rule 144 is
A)
1% of the shares outstanding or the average weekly volume of trading in the previous four weeks, whichever is greater.
B)
the average weekly v
a
Your customer is interested in Sierra Verde Coffee Company stock, which is currently trading at $22 a share. She would like to buy 400 shares, but not for more than $20 a share. Which order best meets her request?
A)
Buy stop at $20
B)
Sell stop at $20
C)
d
A customer of a broker-dealer holding two penny stocks in her account, purchased on unsolicited trades, should expect to receive an account statement how frequently?
A)
Monthly
B)
Only months when a penny stock transaction has occurred
C)
Annually
D)
Quar
d (wrong)
Seacoast Securities, LLC must maintain a copy of its membership agreement for how many years?
A)
Forever
B)
Three years
C)
Six years
D)
Four years
a(wrong)
If a real estate investment trust (REIT) distributes 85% of its net investment income to shareholders, on how much of its net investment income must the trust pay taxes?
A)
15%
B)
85%
C)
Only on that portion not taxable to the shareholders
D)
100%
d
Regular way settlement for the purchase of an equity option occurs
A)
the same business day as the trade date.
B)
two business days after the trade date.
C)
three business days after the trade date.
D)
one business day after the trade date.
d
Your customer, Leticia Ryan, loves to drive fast cars. She has been considering purchasing a very fast car from an Italian automaker. Recently, she read that changes in the dollar might impact what she will pay for the car. She asks you to help her unders
b
For a new customer opening an account, assuming there are no physical or mental impairments, what age would trigger the registered representative to request that the name of a trusted contact person for the account be given?
A)
Age 55
B)
Age 21
C)
Age 18
d
Regarding the third and fourth markets, which of the following is true?
A)
The third market allows institutions to trade directly with each other.
B)
The third market can be accessed through electronic communication networks (ECNs) only.
C)
The fourth mar
c
Your broker-dealer is a fully disclosed firm. This means that it
A)
holds customer securities at the broker-dealer.
B)
accepts customer funds to be held at the broker-dealer.
C)
acts as its own back office, performing all functions such as sending out cus
d(wrong)
In general, a corporation assumes the least risk when it obtains funds from the sale of
A)
secured bonds.
B)
zero coupons.
C)
debentures.
D)
preferred stock.
d
Representative Gary Willikers recently passed his licensing exams and was hired by Seacoast Securities, Inc., a broker-dealer member firm. He was recommended to the position by his Uncle George, who has worked for the firm for over a decade. Gary would li
b
Your customer notices that the Japanese yen puts he is considering are European style and asks you what that means. Which of the following statements is correct?
A)
This means that the customer may enter exercise instructions at any time.
B)
This means th
b
Juan owns 1,000 shares of the big box retailer Buystuff, Inc. (Ticker: BSTF). He has owned the shares for 10 years and they have appreciated nicely. If Juan desires to generate income from the BSTF position, he could do which of the following?
A)
Buy 10 B
b(wrong)
Max Larsson purchased stock of a company in the business of manufacturing yachts. Two years ago, his securities had lost most of their value immediately following a newly enacted luxury tax on purchases of more than $300,000. The investment most likely su
d
A breakpoint sale is defined as the sale of mutual fund shares in an amount
A)
required as the minimum investment in a fund as specified by the SEC.
B)
just below the dollar amount at which the sales charge is reduced.
C)
just below the public offering pr
b
If a 40-year-old customer earns $65,000 a year and his 38-year-old spouse earns $40,000 a year, how much may they contribute to an individual retirement account (IRA)?
A)
They may each contribute 100% of earned income or the maximum annual allowable dolla
a
Anna, a manager for Great Plains Securities, resigns her position and surrenders her principal registrations in order to return to being a registered representative with no management duties. She will continue at the same firm and in the same office. How
a
Registered Representative Jan Wu terminated her employment with her broker-dealer 18 months ago in order to return to school and complete a graduate degree in finance. She has completed her education and applies for a position with a new broker-dealer fir
c
A corporate stock transaction occurs regular way on Monday, August 3. Ownership of the securities is recognized as changing hands between buyer and seller on
A)
Thursday, August 6.
B)
Wednesday, August 5.
C)
Tuesday, August 4.
D)
the trade date
b(wrong)
Under the Investment Company Act of 1940, an investment company may take all of the following forms except
A)
a unit investment trust.
B)
a limited partnership with partners as passive investors.
C)
an open-end investment company.
D)
a closed-end investme
b
Variable annuities include which of the following attributes?
A)
Guaranteed life income
B)
Tax-free growth
C)
Unlimited pretax contributions
D)
Intraday liquidity
a
Which of the following interest rates is set by the FRB?
A)
Broker call loan rate
B)
Discount rate
C)
Prime rate
D)
Federal funds rate
b
All of the following statements about a bond selling above par value are true except
A)
the current yield is higher than the yield to maturity.
B)
the yield to maturity is lower than the nominal yield.
C)
the nominal yield always stays the same.
D)
the no
d
Which of the following companies is in a cyclical industry?
A)
A heavy equipment maker
B)
A gold mining company
C)
A petroleum refiner
D)
A beverage bottler
a
Which of the following is correct concerning an uncovered call writer?
A)
The premium is the maximum gain and the loss potential is unlimited.
B)
Both gains and losses are unlimited since the position is uncovered.
C)
Both gains and losses are limited to
a
Which of the following is not information required for Form U4?
A)
Education
B)
Work history
C)
Felony conviction
D)
Home address
a
Which of the following reasons for separation would not require further disclosure on Form U5?
A)
Discharged
B)
Deceased
C)
Permitted to resign
D)
Other
b
An existing shareholder receives 1,000 stock rights from the issuer, allowing the holder to do all of the following except
A)
exercise the rights to purchase more shares.
B)
hold the rights indefinitely for future use.
C)
sell the rights and profit from a
b
DRG Pharmaceuticals, Inc. common stock is currently trading at $52 a share. A put with a strike price of $50 a share would be described as which of the following?
A)
Having no intrinsic value
B)
Trading in the money
C)
Trading at the money
D)
Having $2 of
a
A registered representative is permitted to work from a home residence conducting normal business activities. Regarding the arrangement, all of the following statements are true except
A)
taking customer orders for the purchase and sale of securities woul
d
You notice a new customer, Malcolm Wren, has a pattern of buying and selling stocks with holding periods of just a day or two. He seems unconcerned with losses. Additionally, between trades, he wires the money to and from a number of offshore accounts. Af
c
NuBuckle, Inc., is an established accessory maker that is listed on several major exchanges. If your client owns 200 shares of NuBuckle common shares, they have all of the following rights except
A)
a right to vote for who will serve on the board.
B)
a ri
d
An investor who is an affiliate of XYZ Corporation holds shares of restricted XYZ stock. These shares have
A)
no holding period but are subject to volume limits for as long as the investor is an affiliate.
B)
a six-month holding period and are subject to
b
Which of the following orders wouldnot be a discretionary trade?
A)
Liquidate the weakest position among the three airline stocks in the portfolio
B)
Spend up to $10,000 buying a great airline stock
C)
Spend an appropriate amount investing in Seabird Airl
d(wrong)
A registered representative is required to participate in an annual training plan prepared by the broker-dealer, which takes into account�among other things�recent regulatory developments, the scope of the broker-dealer's business activities, and its supe
c
Which of the following is a common way to reduce nonsystematic risk?
A)
Stratification
B)
Concentration
C)
Diversification
D)
Inflation
c
ABC Corp stock is trading at BID 75.32, ask 75.35 5 x 12. What is the spread?
A)
$0.30
B)
$0.03
C)
$0.35
D)
$3.00
b
Registered Representative Jim Terry recently purchased a list of potential investors and plans to begin to cold call them soon. In addition to the other rules of the TCPA of 1991, Jim needs to consult
A)
the national and the state's do-not-call registries
b
An investor holds a bond where the issuer is scheduled to repay the borrowed principal at intervals over a number of years. This investor is holding
A)
a balloon bond.
B)
a term bond.
C)
a serial bond.
D)
a series bond.
c
The gross domestic product (GDP) for a country is best defined as
A)
all of the goods and services exported to other countries for consumption.
B)
the difference between goods produced and services produced.
C)
all of the goods and services produced withi
c
An investor has the following position in MES stock: 100 shares at $30. After a 2:1 stock split, this investor will have
A)
200 shares at $30 per share.
B)
200 shares at $15 per share.
C)
100 shares at $60 per share.
D)
100 shares at $15 per share.
b
A customer has expressed interest in exchange-traded funds (ETFs) and wishes to discuss them with you. You could tell the customer all of the following except
A)
real-time quotes are available for ETFs.
B)
ETFs have a NAV, calculated at the end of the tra
b
A member firm broker-dealer is found to be in violation of a Securities and Exchange Commission (SEC) federal regulation and could be subject to all of the following except
A)
monetary fines.
B)
revocation of the firm's registration.
C)
jail sentences for
c
Which of the following may not be disclosed to a potential buyer while a security is in registration?
A)
There will be a road show in NYC in May.
B)
A brokerage report shows the security is properly valued.
C)
The issue is expected to be priced early June
b
Local government investment pools (LGIPs) are established by
A)
the federal government to provide municipalities a place to invest funds long term.
B)
states to provide municipalities a place to invest funds short term.
C)
states to provide municipalities
a
Janet Johnson, a registered representative and licensed insurance agent, meets in the home with a 50-year-old widower to discuss what to do with life insurance proceeds of his deceased spouse. The widower is apprehensive about liquidity. Johnson hands him
b
Your customer purchased 100 shares of Cuesta Verde Homes at $15 per share in a margin account. How much must the customer deposit by settlement day to pay for the trade?
A)
$2,000
B)
$1,500
C)
$750
D)
$2,500
b
Your customers, Frank and Gracia Chen, are considering investing in a private placement to add to their portfolio. They mention they are accredited investors. If accurate, they have a net worth of at least
A)
$1 million or had an annual income greater tha
c
All of the following are U.S. government agency debt securities except
A)
Federal National Mortgage Association securities.
B)
Treasury notes.
C)
Farm Credit Administration securities.
D)
Government National Mortgage Association securities.
b
Regarding stock rights and stock warrants, which of the following is true?
A)
Warrants are sometimes bundled with other securities.
B)
Warrants have a short-term subscription length (expiry).
C)
Rights are exercised to purchase shares at a premium above t
a
When a security position is liquidated for a gain, cost basis
A)
is taxed as a capital gain.
B)
represents the difference between capital invested and sales proceeds.
C)
represents a return of capital invested (principal).
D)
is taxed as ordinary income.
c
The regulatory element of a representative's continuing education will need to be completed within 120 days of certain anniversaries of their licensing. Which of the following is not an anniversary where a representative would be required to complete the
d
A risk within a business that represents a specific threat to that company is an example of which of the following?
A)
Purchasing power risk
B)
Systematic risk
C)
Nonsystematic risk
D)
Market risk
c
In a cash account, an investor must pay for a purchase by
A)
depositing at least 50% of the purchase price by settlement.
B)
having the cash available in the account.
C)
having at least 50% of the trade in the account.
D)
depositing the entire amount of t
d(wrong)
Which of the following mutual fund share classes has no back-end load, lower operating expenses, and low or no 12b-1 fees?
A)
Class C upon conversion to Class B
B)
Class C
C)
Class B
D)
Class A
d
Which of the following is a non financial consideration?
A)
Last year's AGI
B)
Risk tolerance
C)
Income
D)
Debt service
b
The Achieving a Better Life Experience (ABLE) Act of 2014 enabled the establishment of ABLE accounts for certain individuals. Which of the following statements regarding ABLE accounts is false?
A)
Contributions to ABLE accounts are tax deductible.
B)
Elig
a
If a customer wishes to open a cash account in his name only and allow a third party to make trading decisions but not withdraw cash and securities, he must instruct his broker-dealer to open
A)
a custodial account.
B)
a cash account with full power of at
c
Automatic disqualification for an individual to be registered in the securities industry would not include
A)
having been found as the cause of another associated person's suspension.
B)
being charged with a non-securities-related misdemeanor.
C)
having b
b
If the U.S economy were to enter a deflationary period, which of the following would likely occur?
A)
Interest rates would increase.
B)
Employment would rise.
C)
Gold prices would increase.
D)
Fixed-income payments become more valuable.
d(wrong)
Regarding a member firm's fingerprint records for employees, which of the following statements is not true?
A)
Fingerprint records are required for all those physically handling cash or securities, whether the position is deemed clerical or not.
B)
Finger
b
What does the BID represent?
A)
The highest amount that someone can sell the security
B)
The lowest amount that someone can sell the stock at
C)
The lowest amount some may buy the security for
D)
The highest amount that someone may buy the security for
d
Your customer is very excited about Cavendish Carousel Corp., a maker of amusement park rides. He believes that the company is well poised to grow in the next several years. His attitude is described as
A)
bearish.
B)
bovine.
C)
brutish.
D)
bullish.
d
An investor holds a 4% corporate bond with a yield to maturity of 2.75%. How much will be received in interest on each of the scheduled interest payment dates?
A)
$20.00
B)
$27.50
C)
$40.00
D)
$400.00
a
Which of the following risks is not a nonsystematic risk?
A)
Default risk
B)
Business risk
C)
Legislative risk
D)
Interest rate risk
d(wrong)
Regarding delivery for listed option contracts when exercised, which of the following is true?
A)
Currency and index options are cash settled in U.S. dollars.
B)
Equity and index options are settled in U.S. dollars.
C)
Currency and equity options are sett
d
Which of the following is considered a systematic risk?
A)
Regulatory risk
B)
Purchasing power risk
C)
Financial risk
D)
Default risk
b
A customer submits a written complaint disputing monetary charges assessed against an account held at a member broker-dealer. Resolution of this complaint will take place by
A)
the Code of Arbitration (COA).
B)
the Uniform Practice Code (UPC).
C)
the Cond
a
An investor sold MJS stock, a stock not currently owned in her portfolio. This is
A)
a bearish position.
B)
a long position.
C)
a closing transaction.
D)
a limited-risk position.
a
If the Midlands Pencil Corporation has issued several different debt securities, an investor would expect the lowest income stream from
A)
convertible debentures.
B)
subordinated debentures.
C)
speculative bonds.
D)
ordinary debentures.
a(wrong)
Defined benefit retirement plans offer which of the following features?
A)
Plan assets vest after 12 months.
B)
The employee's benefits and length of service requirements are explained in the plan disclosure documents.
C)
Retirement payments are tax free
b
A married couple opens a new account as JTWROS. All of the following statements regarding this account are true except
A)
in the event of death, the decedent's interest is distributed through the decedent's estate.
B)
orders may be given by either party.
a
Your customer purchased MAS stock in September and sold it in the next year in February for a profit. This profit will be reported for tax purposes as
A)
a long-term capital gain.
B)
short-term ordinary income.
C)
long-term ordinary income.
D)
a short-ter
d