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Cards In This Set
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Henry Hubris has just obtained his Series 6 license. What transactions may Henry NOT execute with his new license?
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II.Liqudate 100 shares of the turtle closed end fund on the NYSE IV. Pruchase 100 shares of Aardvark Inc. common stock.
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Mutual fund managers are typically prohibited from engaging in which of the following trading strategies?
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I. Buying on margin, II. Selling covered calls, III. Selling naked options, IV. Selling stock short
The correct answer is I, III, & IV only
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A fund shows a NAV of $9.70 and a POP of $10. What is the funds precentage sales charge?
(A) 3%, (B) 4.75% , (C) 4.50%, (D) 3.10%
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The correct answer is (A)3%
The formula for calculating a sales charge is (POP-NAV)/POP. ($10-$9.70)=0.30/10
3%
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Terrell is trying to decide between a corporate bond yielding 7.9% and municipal bonds with similar credit ratings. If Terrell is in the 33% tax bracket, which of the following yields in a municipal bond would cause him to choose it over the corporate yielding 7.9%
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I. 2.60%, II. 5.10%, III. 5.40%, IV. 5.80% (A) IV. only
(B) III. and IV. only (C) II. III. and IV. only (D) i> II. III. and IV. only The correct answer is (B) III. and IV. only
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True of false the ratio of cash on hand to overall deposits by which banks must abide describes the reserve requirement?
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TRUE- Banks must keep a certain amount of cash on hand at all time to meet the demands of their customers.
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A Series 6 licensed RR may sell all of the following securities EXCEPT (A) open-end funds. (B) common stock. (C) variable annuities. (D) unit investments trust.
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The correct answer is (B) common stock.
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What prohibited practices is termed selling dividends?
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Recommending the purchase of a fund just prior to a dividend. -when a RR encourages a customer to purchase shares of a MF right before it distrubites a dividend and or capital gain.
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Options exist on all of the following investments EXECPT (A) individual stocks. (B) mutual funds. (C) foregin currency. (D) the S&P 500 index.
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The correct answer is (B) mutual funds. Options exist for all of the investments listed except mutual funds.
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The Quantum Growth Fund charges a standard load of 6.5%. For purchases in excess of $25,000, the fund charges a reduced sales charge of 5.5%. How many shares could an investor puchase if he deposits $35,000 when the fund's NAV is at $22?
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(A) 1507.970 shares (B) 1503.436 shares (C) 1497.503 shares (D) 1493.811 shares
The correct answer is (B) 1503.436 shares here is the calculation. Stept 1 determine the POP. This is calculated as NAV/(100%- Sales Charge) = $22/ (100%-5.5 % )=$22/.945(94.5%)= $23.28. Step2 Divide the investment amount by the POP. this gives the numnber of shares recieved. $35,000/$23.28+1503.436 shares.
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An investor owns 100 shares of stock that usually pays a 25 cent per share dividend per quarter. Last year, the stock paid a dividend for only three out of four quarters. What are the tax consequences to the individual for that year?
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(A) $75 ordinary income$25 ordinary loss
(B) $75 taxed at capital gains rates
(C) $75 ordinary income
(D) $75 ordinary income, $25 reduction in the cost basis of the stock
The correct answer is (B) $75 taxed at capital gains rate.
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Mr. X purchased 1,000 shares of QPR stock at $35 per share on April 15, 1985. Mr. X died on December 4, 2008 when the stock was worth $50 per share. He left the securities to his niece, Ms. Y, who sold the stock for $52 per share of February 2, 2009. Explain the tax consequences of Ms. Y transaction?
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She has a capital gain of $2 per share and the gaind is long-term Securities that are inherited have a basis equal to the value of the shares at the time of the decedent's death. The holding period for the securities is long term regardless of how long either the decedent or the recipient holds the shares
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Which of the following disclosures is NOT required in a bank broker-dealer ad? (A) Securities are not FDIC insured (B) Securities are subject to investment risk. (C) Securities are subject to interest rate risk (D) Securities are not guaranteed by the financial institution.
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The correct answer is (C) Securities are subject to interest rate risk
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Enoch Blevins has experienced substantial losses in the stock market and is looking to place his residual assets in a conservative investment. His new RR, Chris Taylor, advises Allen to invest his remaining capital in Top Shelf's Tortoise Treasury Receipts. Which two of the following statements are correct concerning these instruments?
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I. These securities are a direct obligation of the U.S. government II. These Securities are not a direct obligation of the U.S. government. III. These securities are noninterest-bearing.
The correct answer is II. These securities are nto a direct obligation of the U.S. government & IV.THese securities are noninterest- bearing.
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Net assets divided by total units issued is the formula for calculating the net asset value (NAV) of an accumulation unit of a variable annuity. True or fasle?
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TRUE- The means for calculating the net asset value of a variable annuity accumulation unit is: total nest assets divided by total units issued. Net assets are assets minus liabilities. This calculation is done at least once each trading day, usually at the close of trading.
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Which of the following may be purchased using margin? (A) Closed-end fund (B) Unit investment trust (C) Face amount certificate (D) Open-end fund
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The correct answer is (A) Close-end fund
Close-end funds are the only funds that are available to be purchased using margin
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