Which TWO of the following statements are true concerning a company that becomes delisted from the NYSE or NASDAQ? I. It may be quoted on the OTC Bulletin Board II. It may only be quoted in the OTC Pink market. III. Firm quotes would no longer be available. IV. Fir quotes may still be available.
(I and IV) A company that fails to meet the maintenance requirements of securities listed on the NYSE or NASDAQ will become delisted. When this occurs, the company may be quoted (but not listed) on the OTC Bulletin Board or in the OTC Pink market (also called the Pink Sheets). Quotes on the OTCBB or the electronic Pink Sheets generally are firm quotes. Firm quotes obligate the offering dealer to buy or sell the amount quoted.
A business that is traded on an exchange, owns properties in its portfolio, and makes mortgage loans to developers is an example of a: a. Closed-end investment company b. Exchange-traded notes c. Hybrid REIT d. A direct participation program
(c) A Real Estate Investment Trust (REIT) that owns properties (office buildings) and also makes loans to real estate developers is a Hybrid REIT. These business structures are a combination of an equity REIT and a mortgage REIT.
Which of the following statements BEST describes Exchange-Traded Notes (ETNs)? a. ETNs are debt instruments linked to the performance of a commodity, currency, or index. b. ETNs are equity securities that pay a large dividend. c. ETNs are mutual funds that invest in debt instruments. d. ETNs are equity securities that represent ownership of a securities exchange.
(A) Exchange-traded notes (ETNS) are a type of unsecured debt security. This type of debt security differs from other types of fixed-income securities since ETN returns are linked to the performance of a commodity, currency, or index minus applicable fees. SImilar to ETFs, ETNs are traded on an exchange, such as the NYSE, and may be purchased on margin or sold short. Investors may also choose to hold the debt security until maturity.
The IPO of Symphony Music was registered on July 1, 20XX. If the manager of the new issue wants to publish a research report on Symphony Music, what would be the earliest date that it could publish the report? a. July 11, 20XX b. August 1, 20XX c. August 11, 20XX d. September 1, 20XX
(c) The earliest date on which a manager or comanager of Symphony Music could publish a research report after the IPO (on July 1, 20XX) is August 11, 20XX. FINRA rules incorporate quiet periods that follow an IPO and secondary offering, during which time the investment banking client may not be the subject of a research report nor may a research analyst make a public appearance regarding securities that are covered by the quiet period. The quiet period is 40 days.
A municipal finance professional (MFP) residing in New Jersey would be permitted to make which of the following political contributions? a. A $350 contribution to a New Jersey gubernatorial candidate b. A $200 contribution to a Philadelphia, PA mayoral fundraiser c. A $250 contribution to the mayor's reelection committee in her hometown d. None of the above
(C) MFPs are limited to a maximum contribution of $250 per official, per election in which they are entitled to vote. An MFP would trigger the ban by making contributions in localities where she is not eligible to vote.
When an investor purchases a municipal fund security, she will pay a sales load that is stated in the official statement. Which TWO of the following statements are TRUE regarding an advertisement for this municipal fund security? I. The minimum sales load should be stated in the ad. II. The maximum sales load should be stated in ad. III. Sales charges may not be reflected in performance data. IV. Sales charges may be reflected in performance data.
(II and IV) A 529 College Savings Plan is a type of municipal fund security. If sales loads are depicted in a municipal fund securities advertising, the maximum amount of the sales charge should be stated. Additionally, sales charges may be reflected in the performance data of the investment and, if they are not, a statement to that effect should be made.
Which of the following political contributions made by a municipal finance professional would NOT violate the provisions of the MSRB Rule G-37? a. $100 to a candidate for whom you may vote b. $100 to a candidate for whom you may not vote c. $500 to a candidate for whom you may vote d. $500 to a candidate for whom you may not vote
(a) MFPs are allowed to make political contributions of up to $250 per person to candidates for whom they are permitted to vote. Any contribution made to a candidate for whom they are not entitled to vote would be a violation. For example, if you are an MFP and resident of NJ, you may not contribute to an election for the governor of NY.
Which TWO would be the most suitable purchasers of municipal zero-coupon bonds? I. An investor who does not seek present additional cash flow II. An investor who seeks the tax benefits of long-term capital gains III. An investor who needs cash for living expenses. IV. A custodian acct where the parent of the minor child is in the highest tax bracket?
Which of the following employees of a municipal securities firm would be considered a municipal finance professional?
A variable annuity would be MOST suitable for: a. A client in a high tax bracket who is purchasing the annuity for his spouse's retirement needs b. A client in a high tax bracket who is purchasing the annuity for short-term liquidity needs c. A client who is purchasing the annuity in a 401K for retirement d. A client who is purchasing the annuity in order to have the funds available by the age of 50
Which TWO of the following activities would require special disclosure documents? I. Penny stock trading II. Trading in high-yield bonds III. Day trading IV. Online trading
Advertising for municipal fund securities investments must be approved prior to its official use by: a. The Municipal Securities Rulemaking Board b. The state sponsoring the municipal fund securities investment program c. A principal of the firm who is selling the program d. The portfolio manager of the municipal fund security investment
The correct order for the transfer of an account from one firm to another is: I. The carrying firm validates the transfer instructions II. The customer is informed of any nontransferable securities III. The carrying firm sends the customer's securities to the receiving firm IV. The customer provides a written transfer request to the receiving firm
Which of the following statements is NOT TRUE regarding a firm's anti-money laundering program? a. The program must comply with a blueprint or template supplied by the SEC b. The program must be designed to comply with the Bank Secrecy Act. c. The program must provide for annual testing of the system. d. The firm must designate a specific individual response for implementing the firm's anti-money laundering program and must identify the person to FINRA.
Portfolio margin permits an investor to: a. Avoid margin deficiencies b. Assume greater leverage c. Trade directly with market makers d. Trade without depositing funds until the securities decline in value
In order to implement a portfolio margin program, the firm must obtain approval from: a. The options exchange b. FINRA c. The SEC d. The OCC
When a margin requirement is designed to consider that the risk of one position is offset by another position (i.e. having a long S&P 400 position offset by a short S&P 100 position) this approach to calculating a margin requirement would be considered:
The minimum equity requirement for a pattern day trader is: a. $25,000, which the client has five business days to deposit b. $25,000, which must be deposited before the client may continue day trading c. Four times the maintenance requirement for the account d. $2,000 or 100% of the short market value
Investors may receive disclosure and secondary market information concerning municipal securities: a. Through the EMMA system b. Through the TRACE system c. Directly from the issuer d. From the OATS system
FINRA disseminates bond transaction information for all these securities EXCEPT: a. Non investment-grade corporate bonds b. Rule 144A securities c. Investment-grade corporate bonds d. GSE bonds
Which TWO of the following statements are TRUE concerning Trade Reporting and Compliance Engine (TRACE) reports? I., Only the seller is required to report the transaction II. Both the buy and the seller involved in the transactions are required to report it III. The system is used for corporate debt IV. The system is used for municipal debt
An investor would like to trade exchange-traded funds (ETFs) in her brokerage account. Which TWO of the following are TRUE regarding purchasing/selling short ETF shares? I. Purchases may be executed in a cash or margin account II. Short sales may be executed in a cash or margin account III. Short sales may only be executed in a margin account IV. Leveraged ETFs can only be purchased in a margin account
In mutual fund advertising, it is NOT permissible to state that: a. A fund does not charge a 12b-1 fee b. Dollar cost averaging assures long-term growth c. Funds of competitors have higher expense ratios d. The investment adviser has 20 years experience
The system used to report municipal securities transactions is called the: a. Trade Reporting and Compliance System b. Order Audit Trail System c. Trade Reporting and Compliance Engine d. Real-Time Transaction Reporting System
The term fast market is characterized by which TWO: I. An imbalance of orders II. A very low number of trades III. Highly volatile prices IV. The quotes of market makers being updated very quickly
Which of the following lists assists a broker-dealer in making a reasonable determination that a security is available to be borrowed from another broker-dealer in order to effect a short sale transaction? a. An Easy to Borrow List b. A Hard to Borrow List c. A Threshold Security List d. A Restricted Stock List
In a soft-dollar arrangement, the broker dealer would be permitted to pay: a. The cost of a coach flight for a portfolio manager to attend a conference b,. The cost of a conference concerning the future of the computer software industry c. The cost of computer terminals used to deliver market data services d. A percentage of the salaries of the adviser's internal research staff
A RR wants to place an ad for a mutual fund in his local paper. According to FINRA, prior approval must be given by: a. A registered principal b. The SEC c. The sponsor of the mutual fund d. A compliance officer
What is the acronym associated with the clearing process of a client instructing his bank to deliver securities against payment by the clearing firm? a. RVP b. COD c. DVP d. POA
Selling away takes place when an RR: a. Sells his firm's client list to nonaffiliated broker-dealers without his firm's permission b. Engages in private securities transactions outside his regular scope of employment without permission. c. Sells securities through his firm in a financial product not created by his firm. d. Purchases speculative securities for his own account
Which TWO of the following situations would require written notification to an employer? I. A registered person is leaving the country on a business trip for more than 3 months. II. A registered principal is serving on the board of directors of a private company. III. A registered person wants to act as a consultant for a private placement of a security that is not being offered by her broker-dealer IV. A registered principal intends to purchase corporate securities in a personal account established at her employing broker-dealer.
The Order Audit Trail System tracks the: a. Execution of an order only b. Cancellation of an order only c. Time an attempt was made to place an order d. Entire life of an order that is accepted by a member firm
According to SRO rules, an email message complaining about excessive commissions sent to an RR's personal electronic device: a. Does not constitute an official complaint since the electronic device is not an official broker-dealer contact channel and its used for business is typically prohibited b. Is a complaint and must be maintained by the broker-dealer c. Is a complaint and must be forwarded to the appropriate SRO d. Must be followed up within 10 business days by a written document from the client to be considered an official complaint
Under SRO rules, the carrying firm must complete the transfer of a customer account: a. Within one business day of receipt of the transfer instructions b. Within 3 business days of validation of the transfer instructions c. Immediately upon receipt of the transfer instructions d. Immediately upon validation of the transfer instructions
A broker-dealer must include all the following components in its business continuity plan, EXCEPT: a. The impact of a disruption of the firm's counterparties b. The home addresses and phone numbers of key employees c. Regulatory reporting d. Alternative locations for employees
Merlin has been invited to join a syndicate selling a new offering of common stock. The CEO notices the agreement among underwriters mentions a penalty bid. Which is an example of a penalty bid? a. If Merlin fails to sell its allotment, it will be liable for 2x normal commitment b. If Merlin fails to solicit a certain number of indications of interest, it will be required to pay a fee to the syndicate manager. c. If Merlin sells some of the issue to a customer, who later sells the stock back to the syndicate at the stabilizing bid, Merlin will forfeit concession. d. If Merlin sells some of the issue to a customer, who later sells the stock back to the syndicate at the stabilizing bid, Merlin could be pen
XYZ Corp needs to borrow funds in the bond market. While current interest rates are not attractive, the company knows rates could drop and want to be ready to sell bonds quickly. Needs bonds to be liquid as possible. Which one? a. Private placement under Regulation D b. An intrastate offering under Rule 147 c. A traditional registration statement d. A shelf registration under Rule 415
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