Download FINRA EXAMS WITH VERIFIED QUESTIONS AND ANSWERS and more Exams Nursing in PDF only on Docsity!
FINRA EXAMS WITH VERIFIED
QUESTIONS AND ANSWERS
a broker-dealer is permitted to accept payment for a new issue from a new customer when the: registration is effective red herring is delivered preliminary prospectus is amended transaction takes place during the cooling-off period ANSWERS-registration is effective a company announces a tender offer to its shareholders with the intent to buy a maximum of 1 million shares of its outstanding stock at $10 per share and sets no minimum number of shares to be purchased. an investor wants to participate in this offer and tenders his 1,000 share position. at the close of the offer period, only 900, shares have been tendered. how many of the investor's shares will the company purchase? 0 100 900 1,000 ANSWERS-1, a customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. the customer will break even when the stock is selling at what price per share at expiration? $ $ $ $38 ANSWERS-$ a customer has a cash balance in her account together with long positions in several securities. she has made no securities transactions in the account during the past 18 months. how often must the firm send her an account statement? monthly
quarterly semiannually annually ANSWERS-quarterly a customer is an officer of a company that is involved in some significant changes. all of the following items are examples of corporate affairs that could be considered inside information if the customer shares them with his registered representative EXCEPT: pending transactions declared stock dividend top management changes imminent financial liquidity problems ANSWERS-declared stock dividend a decline in the GDP must last for at least how many quarters to be considered a recession? 1 2 3 4 ANSWERS-2 quarters A firm is a participant in a public offering. To sell a substantial amount of the securities to its customers, the firm agrees to repurchase the shares at no less than the original sales price. Such agreements are: prohibited as fraudulent and manipulative. Permissible if the securities are deposited into escrow. prohibited unless the firm immediately sets aside funds for the repurchase permissible if the customers retain the right to sell the securities into the open market. ANSWERS-prohibited as fraudulent and manipulative A married couple who earned income that exceeded $300k in each of the prior two years and reasonably expects the same for this current year is: a qualified investor an accredited investor an institutional investor a qualified institutional buyer ANSWERS-an accredited investor a member of a stock exchange responsible for providing liquidity in a security by being willing to buy and sell at all times is known as a: broker underwriter market maker transfer agent ANSWERS-market maker
an associated person who is not a registered representative is permitted to engage in which of the following activities? accept an unsolicited customer order provide account opening forms to a new customer discuss the attributes of a particular investment product prequalify prospective customers as to investment objectives ANSWERS-provide account opening forms to a new customer an investor owns 100 shares of XYZ common stock at the current market price of $ per share. if XYZ conducts a 1-for-2 reverse stock split, the investor's post stock-split position will be: 50 shares at $25 per share 50 shares at $100 per share 200 shares at $25 per share 200 shares at $100 per share ANSWERS-50 shares at $100 per share at issue, which of the following debt securities mature in one year or less? FNMA bonds GNMA bonds treasury notes money market instruments ANSWERS-money market instruments At the time of issuance, which of the following securities normally has the longest period to expiration? Rights Options Warrants Repurchase agreements ANSWERS-Warrants Blue-sky laws are regulated by which of the following entities? SEC MSRB FINRA state securities regulators ANSWERS-State securities regulators call protection is most valuable to a bond owner when bond prices are generally: rising falling stable fluctuating ANSWERS-rising
Company ABC announces a 20% stock dividend for its common shareholders. if a customer holds 1,000 shares at $50, what is the new price and number of shares following the payment of the stock dividend? 800 shares at $62. 1,000 shares at $41. 1,200 shares at $41. 1,200 shares at $50 ANSWERS-1,200 shares at $41. Describe the difference between primary distribution and secondary distribution. ANSWERS-a primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares Direct participation programs (DPP's) provide: liquidity and transparency exposure to non-correlated assets with steady returns market-related correlations with higher average returns investors with direct purchases of stock from public companies ANSWERS-exposure to non-correlated assets with steady returns FinCEN accomplishes its mission to safeguard the financial system from the abuses of financial crime, including terrorist financing and money laundering, by enforcing: SEC regulations the Bank Secrecy Act the Securities Act of 1933 the Investment Company Act of 1940 ANSWERS-the Bank Secrecy Act If a market maker posts a quotes of 10.00 - 10.10 (25x10), which of the following actions is the market maker willing to take? sell 1,000 shares at $10 and buy 2,500 shares at $10. buy 2,500 shares at $10 and sell 1,000 shares at $10. sell 100 shares at $10 and buy 250 shares at $10. buy 250 shares at $10 and sell 100 shares at $10.10 ANSWERS-buy 2,500 shares at $ and sell 1,000 shares at $10. in a period of low inflation and economic recession, the federal reserve is expected to take which of the following actions? decrease taxes raise the federal funds rate buy bonds in the open market require banks to increase reserves ANSWERS-buy bonds in the open market in over-the-counter market, the term "spread" refers to the difference between the:
call date and call price original issue discount coupon rate and call date ANSWERS-call date and call price The computation of dollar prices and accrued interest on municipal bonds is normal on what calendar basis? 30/ 30/ Actual/ Actual/365 ANSWERS-30/ the last transaction in XYZ 5.50s 2030 was at 102. this bond is selling at par premium discount asset value ANSWERS-premium The owner of which of the following products is MOST exposed to inflationary risks? utility stocks treasury bills treasury bonds blue chip industrials ANSWERS-treasury bonds the primary purpose of a syndicate desk in the context of an equity offering is to: determine the list of selling shareholders build an order book and allocate the stock solicit interest from investors in the stock offering chaperone company management during the road show ANSWERS-build an order book and allocate the stock The redemption value of an open-end investment company's shares is based on the: previous offering price previous closing NAV NAV computed after the order is received offering price computed after the order is received ANSWERS-NAV computed after the order is received to offer its shareholders a privilege to obtain its shares at a fixed price, which of the following products does a corporation issue? puts rights futures preferred stock ANSWERS-rights
under a system of statutory voting, a common stockholder has as many votes for each vacancy on the board of directors as the number of: positions vacant on the board directors present at the meeting shares owned by the stockholder proxies available for voting by the board ANSWERS-shares owned by the stockholder Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? same stock on the same day in a margin account same stock in different accounts on the same day the same stock in different account in the same household the same stock in a cash account without paying for the stock in full ANSWERS-the same stock in a cash account without paying for the stock in full Under FINRA rules, noncash compensation connected with the sale of variable contracts includes all of the following items EXCEPT: gifts meals lodging commissions ANSWERS-commissions Under FINRA rules, which of the following activities by a registered representative requires written notification to her firm? volunteering as a youth soccer league coach gambling resulting in winnings in excess of $10k driving part time for a transportation network company on weekend selling nonproprietary investment company securities products through her firm ANSWERS-driving part time for a transportation network company on weekends under industry regulations, an initial purchase of $3k of common stock in a margin account requires a cash deposit of: $ $1, $2, $3,000 ANSWERS-$2, under normal circumstance, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? 3 months 6 months 13 months
the NAV 30 days after the owner's death the same cost basis as the deceased the same cost basis as the deceased plus capital gains distribution ANSWERS-the NAV of the shares when the owner dies when a broker-dealer charges a commission on a securities transaction, it has acted as: an agent a principal underwriter a market maker ANSWERS-agent when is interest on treasury notes paid? quarterly semiannually annually at maturity ANSWERS-semiannually when selling a fixed amount of a base currency to purchase a counter currency, which of the following factors is primarily used to determine how much of the counter currency the customer will receive? the spot exchange rate the counter currency's inflation rate the trade balance between the two countries the credit rating of the counter currency's government ANSWERS-the spot exchange rate which of the following actions is required of a broker-dealer's anti-money laundering program? designating an AML compliance officer filing of the firm's AML program with FINRA conducting background checks of all employees identifying to regulators the employees responsible for Currency Transaction Reports ANSWERS-designating an AML compliance officer Which of the following actions is required when a firm receives cash in excess of $10k from one customer in one business day? file a Currency Transaction Report (CTR) file a suspicious activity report (SAR) with the SEC issue a cash transfer receipt to the customer place a five-day hold on the customer's account for the funds received ANSWERS-file a currency transaction report (CTR) which of the following actions violates FINRA rules regarding selling away?
recommending to a customer the services of another broker-dealer sharing commissions with another registered representative in the same BD advising customers to buy mutual funds at amounts just below a discount level engaging in private securities transactions without written prior consent of the employing BD ANSWERS-engaging in the private securities transactions without written prior consent of the employing BD which of the following communications with the public is considered misleading? historical illustrations based on factual performance product comparisons that illustrate material differences a research report that includes a buy recommendation for a specific security literature providing a 10-year performance information to support predictions of future performance ANSWERS-literature providing 10-year performance information to support predictions of future performance which of the following considerations should a registered representative explain to a customer when recommending a 529 college savings plan? the potential deductibility of contributions from state taxes the potential deductibility of contributions from federal taxes the income eligibility restrictions to contribute to the account the right of the account beneficiary to the assets at the age of majority ANSWERS-the potential deductibility of contributions from state taxes Which of the following Form U4 reportable events results in a statutory disqualification? personal bankruptcy filing written customer complain alleging misappropriation of assets a felony theft charge a felony conviction for a DUI charge ANSWERS-a felony conviction of a DUI charge which of the following investment risks is the greatest risk in a variable life insurance policy? credit risk market risk inflation risk interest rate risk ANSWERS-market risk which of the following investments are generally traded according to their average life rather than their stated maturity dates? corporate bonds government bonds asset-backed securities fixed-rate capital securities ANSWERS-asset-backed securities
they are exempt from federal taxes they are exempt from registration under the Securities Act of 1933 they are issued in bearer form only they are general obligations of the fed gov ANSWERS-they are exempt from registration under the Securities Act of 1933 which of the following statement is true about treasury stock? it has voting rights it receives dividends it is issued stock that has been subsequently reacquired by the corporation it is authorized stock that has not been issued and is held in the corporation's treasury ANSWERS-it is issued stock that has been subsequently reacquired by the corporation which of the following statement is true regarding a customer account held as tenants in common? the owners must equally share the assets the ownership of the decedent's assets is governed by their will or state law tenants in common is permitted for use only for two individuals tenants in common is permitted for use only for married couples or family members ANSWERS-the ownership of the decedent's assets is governed by their will or state law
