Smart Company, Inc., has cash it intends to use in six months for purchase of equipment. The most prudent investment during the six-month period is:
Which of the following pairs of corporation characteristics are easiest for a partnership to avoid?
In the sale of open-end investment company shares, the amount at which the sales charge is reduced on quantity transactions is referred to as the:
In the distribution of a new issue underwriters or selling group member are prohibited from:
Bubba has a short margin account with a short market value of $22,000, a credit balance of $42,000, and SMA of $500.
What is the equity in Bubba’s account?
Bubba buys one XYZ November 65 call at $3 and one XYZ November 65 put at $2. XYZ is trading at $72. The put expires and the call is closed at its intrinsic value.
What is the resulting profit?
The Bubba Corporation is offering stock to the public for the first time. The registration statement lists 150,000 shares for sale at $400 per share. The company conducts business in a 100-mile radius that includes towns in two neighboring states.
Which of the following information is not required in the preliminary prospectus for this offering?
Which of the following pairs of terms are synonyms in connection with most mutual funds?
Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm’s research report on that stock?
Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40.
What conversion ratio does Bubba determine?
Bubba Corporation has net income of $4,200,000. It has 100,000 outstanding shares of 8% preferred stock ($100 par value) and 400,000 shares of common stock ($10 par value).
What are the earnings per share of common stock?
Bubba is concerned about the liquidity of a possible municipal bond purchase. He is therefore probably most interested in the rating supplied by which of the following?
Under which of the following conditions are homeowners most likely to refinance existing mortgages?
What type of security is quoted with a bid price of 4.72 and an asking price of 4.68?
In a securities underwriting a participating firm is said to be liable severally but not jointly.
What is this type of underwriting is called?
Regulation T is set at 50%. Bubba’s account contains long positions in the following securities with the prices listed:
100 ABC $30
200 XYZ $70
200 QBB $40
200 KKK $25
Total market value = $30,000
Debit balance in the account = $12,000
Net equity balance of the account = $18,000
If Bubba wants to buy 100 shares of DUM at $30 per share, how much additional money must be deposited?
Which of the following types of investment companies pays out 90% of its net investment income to shareholders?
Under what circumstances may a registered investment company change its investment objective?
Which of the following sources provides news of prospective municipal securities sales to underwriters?
Bubba owns a subordinated debenture in a company that is liquidating.
When will he get paid?
A NYSE floor member executing an order for a public customer asks the specialist in the stock to guarantee a price while giving the customer an opportunity to obtain a better price. This procedure is known as:
The FINRA markup policy requires that over-the-counter transactions with a customer be at:
Which of the following does not issue debt securities that trade in the open market?
Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?
Bubba buys an OTC stock from a firm that is a market -maker in the stock.
What may be said about the price he pays?
A large manufacturing company has current assets of approximately $9,400,000 and current liabilities of about $4,900,000.
Which of the following statements is true about the current ratio?
In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. In April, Bubba exercises the put option and uses his stock for delivery.
What is his resulting tax consequence?
A corporate bond is quoted as having a net change in value of plus one point.
By how much did the bond price increase?
Which of the following may occasionally be purchased at a discount from net assets value?
Bubba holds 200 shares of common stock in a utility company and receives rights to subscribe to an additional 100 shares at $20. The utility company is raising $40 million of new capital.
How many shares of common stock for the utility company were outstanding prior to the rights offering?
A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering.
What subscription ratio is the corporation establishing for each new share?
Bubba Corporation issued bonds that pay interest on January 15 and July 15 each year until maturity. An investor purchasing these bonds on Monday, April 12, must pay the contract price plus accrued interest for:
A leveraged company is best described as one that has a small portion of its capitalization represented by:
Bubba purchases 100 shares of XYZ at 78 and, on the same day, writes 1 XYZ October 80 call for a premium of 4. If the option expires unexercised, what is Bubba’s profit on the 100 shares of stock?
Bubba buys 100 shares of XYZ stock at $40 per share and sells a listed July XYZ call at 45 for a $2 premium.
What is his loss potential?
Bubba buys municipal bonds with a $100,000 principal amount at 89 on margin. His account has no cash or securities.
What is his minimum required deposit?
A public offering by an investment banker in which any securities not sold are returned to the issuer is known as:
Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing. Under FINRA Conduct Rules, Bubba may:
Which of the following statements about the custodian for an open-end mutual fund is correct?
Which of the following items is not deducted to determine a corporation’s net income?
A four-letter symbol assigned to an issue is characteristic of an equity security that is:
In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600.
If Bubba sells the stock at $45 in July, what is his resulting tax liability for that transaction?
A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering.
How many rights will the corporation distribute to its shareholders?
Bubba is age 54 and has investments in a retirement plan with his former employer valued at $104,500. Bubba withdraws $25,000 to open a retail clothing store.
Which of the following statements is true regarding Bubba’s tax consequences?
If a mutual fund has invested its assets by allocating about one-third each for bonds, preferred stocks, and common stocks, it is identified as:
The amount for which the securities of a close-end investment company are selling above net asset value is know as:
Which of the following is the least important method of money control exercised by the Federal Reserve?
Regulation T is set at 50%. Bubba’s account contains long positions in the following securities with the prices listed:
100 ABC $30
200 XYZ $70
200 QBB $40
200 KKK $25
Total market value = $30,000
Debit balance in the account = $12,000
Net equity balance of the account = $18,000
What is Bubba’s excess equity in the account?
Bubba wants to buy 500 shares of an NYSE listed stock at 38.87 but he wants to buy at one time, right away, or else forget it.
What kind of order should the registered representative enter?
A registered representative is given a limited trading authorization by a client. This permits the representative to:
Feasibility studies and engineering surveys are most necessary prior to which of the following new offerings?
An investment company acting as a conduit in the distribution of net investment income, pursuant to IRS rules, is called:
What Federal Reserve Board regulation governs the extension of securities-related credit by banks?
To qualify as an intrastate offering under SEC Rule 147, which of the following is true of the issue?
Bubba buys a 5% municipal bond maturing in 15 years that is trading at a market price of 85 . What is the nominal yield?
Bubba opens an account at a broker/dealer with instructions to “transfer and ship”. This means that:
Which of the following does not affect the public offering price of a new issue?
If a municipality has funds available to make a partial call of an issue of outstanding serial bonds, which bonds should be called first?
A market-maker has purchased a particular stock over a period of time for prices as high as $9 per share and as low as $3 per share. The average cost is approximately $6 per share. The current NASDAQ quote for the stock is 5 to 5.25. According to the FINRA Conduct Rules, the dealer’s offering price to the public should be based upon:
In a monthly review of customer statements, Bubba notices that one of his firm’s clients has paid for seven purchases five days late.
What does he do?
Call loans made by banks to broker/dealers are generally for the purpose of which of the following?
Under Regulation T, when must money be deposited to cover requirements for Bubba’s new purchases on margin?
A mutual fund with an 8% load and a 1% redemption fee carries a current quote of $6.25 - $6.79. If an investor has tendered his shares for redemption on that basis, the per share price he will receive is approximately:
Provisions of SEC Rule 145 normally apply to an exchange of one security for another as a result of:
What is the term applied to a classification of CMO securities having a stated maturity, average life, and estimated yield?
Which of the following oil and gas programs does not directly involve drilling?
Bubba buys one XYZ October 80 put and sells one XYZ October 70 put.
What is his position called?
At the time it underlying stock is trading at 48, Bubba buys a listed call option with a $50 strike price for $300. At what minimum price must that stock trade for Bubba to recover his investment (ignoring commission and taxes)?
Who is responsible for verifying that limited partners meet net worth and income requirements?
Regulation T is set at 50%. Bubba’s account contains long positions in the following securities with the prices listed:
100 ABC $30
200 XYZ $70
200 QBB $40
200 KKK $25
Total market value = $30,000
Debit balance in the account = $12,000
Net equity balance of the account = $18,000
What is the buying power in Bubba’s account?
Which of the following sets out the details for the management board of condominiums, including the board’s powers and limitations?
When depositors withdraw money from savings institutions to invest in US treasury securities, this is called:
Which of the following have a stated interest rate on the face of the certificates?
Bubba sells 100 shares of XYZ short at $58 and buys 1 XYZ Mar 60 Call at $3.
What is the customer’s maximum loss?
A mutual fund custodian is paid according to which of the following specifications when receiving deposits from a shareholder’s reinvestment plan?
Bubba entered an order to sell long 100 shares of XYZ at 38.75 stop limit. Thereafter, the following round-lot transactions occurred: 38.75, 38.65, 38.50.
At what price was Bubba’s order executed?
After an extended period of backing and filling, a stock moves up sharply through a resistance level on heavy volume. A technical analyst would likely call this a:
The preferred stock of Greatest Technology Corporation has a $100 par and is convertible into four shares of common stock. The preferred is trading at 104.50. The preferred is callable at 101. If the common stock price is presently 27.89, which of the following actions would be a successful arbitrage:
Although a corporation has no earnings in a particular year, it is obligated to pay interest on all its outstanding debt except the following:
Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account.
He may do so by depositing stocks with a market value of:
Bubba has a cash account and fails to make full and prompt payment for a purchase. The broker liquidated the transaction. Two weeks later, Bubba places another buy order for 100 shares of XYZ.
What does the broker do?
Service charges by a FINRA dealer for transfer and safekeeping of customer securities held in street name:
Bubba has a short margin account with a short market value of $22,000, a credit balance of $42,000, and SMA of $500.
What is the NYSE minimum equity maintenance for this account?
How many days after the settlement date must a broker/dealer “buy in” a customer who has failed to deliver securities?
With respect to the public offering of securities by an underwriting syndicate, which of the following is true?
Customers who engage in increased activity of wiring money from their account could indicate which of the following activities?
Which of the following option positions is indicative of the same class of option?
Bubba is opening a margin account with a member organization. He wishes to purchase 100 shares of XYZ at $15 per share.
What is Bubba’s initial cash deposit?
In a 401(k) plan, when are employee’s contributions of compensation deferral vested?
In the offering of new securities, members of the syndicate are permitted to sell to other dealers less the reallowance. The amount of the reallowance is determined by: