Authorized stock that has not been sold or distributed is referred to as correct answers Unissued stock
The term for active stock that represents the # of shares owned by the public is correct answers Outstanding stock
A person wishes to open an account with you without giving financial statu...
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Authorized stock that has not been sold or distributed is referred to as correct answers Unissued
stock
The term for active stock that represents the # of shares owned by the public is correct answers
Outstanding stock
A person wishes to open an account with you without giving financial status and is not certain of
objectives. you may: correct answers accept an order only if it is unsolicited
The administrator ha the authority to amend or rescind a provision of the USA: correct answers if
the deemed appropriate and in the public's best interest
The Uniform prudent investor act correct answers sets standards by which investment advisors
should manage discretionary accounts
Who is not required to file a consent to service of process correct answers Agents for an Issuer
An option contract that gives the right to sell is a correct answers put contract
Capital gains from municipal bond trading are: correct answers tax free if the investor lives in the
same state as the issuer
A security will be registered by qualification. What can an agent say to a prospective buyer?
correct answers The security will be registered in the state
A pbulicly raded limited partnership is called a correct answers MLP or Master Limited
Partnership
The broker call rate is based on: correct answers The rate banks charge broker/dealers for loans
secured by securities
The USA does not mandate registration of which of the following correct answers issuers
Capital Market theory assumes: correct answers No taxes or transaction costs
If representatives of federal covered advisor terminate their employment who is required to
inform the state adminstrator? correct answers the advisor representatives not eh employee
Which of the following are not affected by the sale of debentures? correct answers Shareholders
equity
Which of the following are not required to file an annual report with the SEC? correct answers
Privately held corporations
,For a financial goal to be ultimately successful, it must be: correct answers Quantifiable
A stock without a long earnings history and a higher than average P/E ratio is considered a:
correct answers Growth Stock
Orders that are considered market manipulation correct answers Matched orders and wash sales
BABs correct answers Their interest is taxable and proceeds go to public projects
The bond feature that states that the conversion formula will be adjusted for any stock dividends
or splits is called the: correct answers Anti-dilutive covenant
Is failing to disclose all information a prohibited practice? correct answers No
When you BUY the higher strike price in a put transaction it creates a: correct answers Debit
spread
Short swing profits made by the IRS result from: correct answers trades or sales of securities
held by the insurer for less than 6 months. These profits are paid back to the corporation
Which form of registration is available only to seasoned companies in certain states? correct
answers notification filing
In order for a 401(k) plan to comply with ERISA 404(c), the plan must: correct answers have at
least 3 different investment alternatives
What is the discount rate? correct answers the rate of interest which a central bank charges on its
loans and advances to a commercial bank
What is the prime rate? correct answers the interest rate that commercial banks charge their most
creditworthy customers, generally large corporations. The prime interest rate, or prime lending
rate, is largely determined by the federal funds rate, which is the overnight rate that banks use to
lend to one another.
What is the federal funds rate? correct answers he interest rate at which depository institutions
lend reserve balances to other depository institutions overnight on an uncollateralized basis
A corporation has issued 10 million shares of common stock that are currently trading for $5 per
share. There are 2 million shares of treasury stock. What is the total value of outstanding
common stock shares? correct answers Outstanding stock = Common stock - Treasury stock so
10 million - 2 million = 8 million * $5/share = 40 million
A securities registration contains misstatements of material facts. All of the following may be
held responsible for this violation of the Uniform Securities Act (USA) EXCEPT correct
answers Agents
,A registration fee I. Is required for all initial applications. II. Is not required for renewal
applications. III. Will be refunded in full if the registration is denied. IV. Will be partially
refunded if the registration is denied. correct answers I and IV
The administrator can take a portion of the fee if it gets denied
If the Federal Reserve Board through the FOMC (Federal Open Market Committee) lowers the
discount rate, which of the following will decline? I. T-Bill discount rate; II. Federal Funds rate;
III. Prime rate; IV. Lending levels at banks correct answers I and II
Which advisers must become federally registered? correct answers Those with assets exceeding a
certain amount
Advisers with assets over $110 million must register with the SEC
When is an investment adviser representative's registration effective? correct answers Only
during employment with an adviser
A client reveals material inside information to an agent. The agent should I. Confirm the
information with other sources. II. Notify his supervisor and await instructions. III. Notify the
firm's trading desk. IV. Not effect any trades based on the information. correct answers II and IV
According to the Uniform Securities Act, investment adviser advertising must correct answers
Not violate the Investment Advisors act of 1940
An annuity contract holder is considering a 1035 exchange from one annuity contract to another.
Which of the following should she take into consideration prior to effecting a 1035 exchange?
correct answers Surrender chargers
A Canadian broker/dealer has a client who relocated to California. The client has a tax-qualified
account. To transact business in California, the broker/dealer must meet which of the following
requirements? I. Register with the SEC, FINRA and the California state administrator; II. Be in
good standing with Canadian SROs; III. Submit a Consent to Process to the California State
Administrator; IV. Only transact business in the client's tax-qualified account. correct answers II,
III, and IV
Dollar cost averaging plans have which of the following features? I. They are voluntary plans. II.
They entail purchasing the same number of shares each period. III. Investors are penalized for
missing subsequent investment periods. IV. The investor's personal share cost will be lower than
the share price over the period. correct answers I and IV
The entire amount that the return earns on an investment including capital gains, paid dividends,
and any appreciation/depreciation in the price of the security is called correct answers Total
Return
Under the Uniform Securities Act, an over-the-counter security, such as a corporate bond trading
on the OTC market, is considered a(n) correct answers Nonexempt security
, IRA contributions correct answers Must be made in cash
Which of the following is not a characteristic of Brady Bonds? correct answers Paid semi-
annually
William's broker/dealer sends him a newsletter each quarter, monthly email account updates, and
a Christmas card each holiday season. Which of these mailings require some form of
recordkeeping in the office file system? correct answers A record or copy of all of these items
should be placed in the file system as they constitute correspondence with a client.
According to the Uniform Securities Act, the registration of an agent correct answers Expires
every December 31st
An indexed annuity is a type of correct answers fixed annuity
In order to reduce trade execution costs, an Investment Adviser combined several customer
accounts that use the same model portfolio. Which of the following statements regarding
combining customer accounts is correct? correct answers It is commingling and only permitted
with prior written consent from the customers.
UITs have fixed portfolios, which means that correct answers The holdings in the portfolio are
fixed for the life of the trust.
The amount of money that an investor pays for newly issued common stock in excess of its par
value is called correct answers Paid in capital surplus
Moody's MIG rating would apply to which of the following? correct answers Bond anticipation
notes
Alex, a representative of a registered investment adviser, has a friend at Fast Paced Funds that
mentioned to him at a cocktail party that his company will pay bonus commissions to advisers
who sell higher volumes of Skyward Bound Fund. Skyward has not performed very well over the
past 5 years due to market declines, but has achieved 30% annualized growth in the last 6
months. Can Alex inform his clients that the fund has enjoyed a 30% rate of return during the
past 5 years? correct answers No, the average investor would be misled by such a statement as it
overemphasizes the short-term performance of the fund
According to ERISA, what are the rules that a 401(k) plan fiduciary must follow regarding
participants' choice of investment options? correct answers The plan must allow participants the
opportunity to change investment options at least once per quarter.
Which of the following does NOT describe a defined benefit plan? correct answers Contributions
are tied to company profits
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