test 1

  1. Margins on government and municipal securities are set by:
  2. The minimum maintenance margin requirement for long stock positions is:
    25% of the closing price of the security that day
  3. Do orders for odd lot amounts have no standing on the NYSE trading floor?

    Are odd lot transactions are handled by the Specialist (DMM)?

    Are odd lot commissions are set by the NYSE?


    No they're set by the brokers and dealers themselves
  4. Will trading in the interbank market affect

    1 foreign currency prices in terms of U.S. dollars?

    2 future economic growth

    3 future trade deficit or surplus figures?

    4 future inflation levels
    1 Yes

    2 No

    3 Yes

    4 Yes
  5. Which of the following statements are true about Treasury Receipts?
    The investor "locks in" a rate of return that is free from reinvestment risk if the Receipt is held to maturity

    The underlying bonds are held by a trustee for the beneficial owners

    The interest income on the Receipts is subject to Federal income tax annually

    The Receipts are issued by broker-dealers, who maintain a secondary market in these securities

    Treasury Receipts represent an undivided interest in a portfolio of U.S. Government securities held by a trustee. The portfolio is assembled by a broker-dealer, who sells "receipts" representing ownership of the interest. Each receipt is, essentially, a zero-coupon obligation, that is purchased at a discount, and which is redeemable at par at a pre-set date. Thus, there is no reinvestment risk, since semi-annual interest payments are not received. The implicit rate of return is locked-in when the security is purchased, and the customer will earn that rate of return if the security is held to maturity. The annual accretion amount is taxable, since the underlying securities are U.S. Governments. At maturity, the receipt will have an adjusted cost basis of par, and will be redeemed at par, for no capital gain or loss.
  6. If an individual, aged 65, wishes to withdraw money from her variable annuity, what is subject to income tax?
    only part of withdraw which represents the earnings buildup
  7. All quotes shown in Bloomberg are
    subject to prior sale or change in price
  8. nominal (approximate) quotes cannot be given unless it is clearly stated that
    the quote is nominal.
  9. "Inside Market" for MUNI's
    doesn't really exist since they are not actively traded
  10. The MSRB requires that all quotes that are disseminated be
    "bona fide."

    However, all quotes are subject to prior sale or change in price.
  11. Non-contributory defined benefit retirement plans have contribution amounts that____ and annual benefit payments that are _____.
    • vary
    • fixed
  12. In a defined contribution the benefit payment
    can vary
  13. Are last sale reports available for eurodollars?
  14. Which sources of REIT income are counted towards the 75% test required by Subchapter M?
    • Property rentals
    • Interest from mortgages
    • Capital gains on property sales
    • Real estate tax refunds
  15. When a corporation decides to spin off a subsidiary to its shareholders, after completion, the shareholders will own:
    shares of both the parent and subsidiary company
  16. All of the following are sources for analysis and rating of individual stocks EXCEPT:

    Value Line
    Standard and Poor’s
    Member Firm In-House Research Reports

    Morningstar is a ratings service that rates mutual fund performance.
  17. A balance of payments deficit would be narrowed by
    • Increased sales of U.S. securities to foreign holders
    • Increased levels of foreign tourists visiting the United States
    • Decreased levels of U.S. imports
    • Decreased dividends paid to foreign holders of U.S. securities
  18. A balance of payments deficit would be widened by
    • Decreased sales of U.S. securities to foreign holders
    • Decreased levels of foreign tourists visiting the United States
    • Increased levels of U.S. imports
    • Increased dividends paid to foreign holders of U.S. securities
  19. A customer has purchased 1,000 shares of ABC stock at $30 per share, paying a commission of $1 per share for the transaction. ABC stock declares a 5% stock dividend. When the dividend is paid, the tax status of the investment is:
    1,050 shares held at a cost basis of $29.52 per share

    The customer will have 1,000 shares x 1.05 = 1,050

    Each share originally had a cost basis of $31 ($30 price plus $1 commission). After the dividend is paid, the cost basis is adjusted to $31 / 1.05 = $29.52.
  20. The "Monetary Environment" is a reflection of
    • Monetary policy
    • Fiscal policy

    The "Monetary Environment" is a reflection of whether credit is easy or tight, as shown by interest rate levels, money supply levels, and current economic policies of the Government - that is, fiscal policy.
  21. An order ticket is filled out and sent to the New York Stock Exchange floor for execution. After being executed on the floor, it is discovered that the account number is incorrect. Under FINRA/NYSE rules, the account number may be changed to the correct one by the:
    Branch Office Manager

    Under FINRA/NYSE rules, alterations to executed order tickets are prohibited, unless the alteration is approved in writing by a "designated person" such as a branch manager. This person must understand all the facts of the situation before approving of the change, and is responsible for the change.
  22. A mortgage backed security’s “PSA” stands for:
    Prepayment speed assumption
  23. Fiduciary accounts cannot be opened as margin accounts unless
    the account documentation specifically authorizes the opening of such an account.

    * a joint account is not a fiduciary account
  24. Fiduciary accounts include
    • Trust accounts
    • Custodian accounts
    • Guardian accounts
  25. A wealthy customer has been asked by his neighbor to invest in the private placement of a “start-up” technology company as a venture capital investor. This is the first time that the customer has considered such an investment. The customer contacts his registered representative and asks: “Aside from the investment risk associated with a “start-up” company, what are the other issues that I should consider before making such an investment.” The registered representative should inform the customer that:
    There is no public resale market for these securities unless the company “goes public” and is current in SEC filings

    These securities must be held for at least 6 months before a public resale is permitted under the provisions of Rule 144

    These securities can be resold “privately” - but there is not much of a market for private resales of unregistered securities. If the company does go public, and if the customer holds these securities for 6 months fully paid, then they can be sold under Rule 144 and the sale via the rule will register the shares.
  26. PORTAL is an
    electronic marketplace for the trading of Rule 144A issues (Rule 144A is completely different than Rule 144!) from QIB (Qualified Institutional Buyer with at least $100 million of assets to invest) to QIB.
  27. What are functions of the transfer agent?
    • Mailing dividend payments to shareholders
    • Canceling old shares and issuing new shares
    • Preparing and mailing proxies
  28. Competitive Bids are ______ filled at the Treasury Auction
    not always
  29. Under Rule 144, no filing is required if the sale amount every 90 days does not exceed:
    5000 shares worth a maximum of $50,000

    Form 144 does not have to be filed to sell restricted or control stock if 5000 shares or less, worth $50,000 or less, is sold during each 90 day period.
Card Set
test 1
test 1