1. Mark Schwimmerr owns 2,500 shares of TP Corporation. Which of the following actions would dilute Mark’s equity?

1. Primary share offerings (registered)
2. A stock split
3. Payment of a stock offering
4. Secondary share offerings (registered)

(A) I only

(B) II only

(C) I, II, and IV

(D) I, II, III, and IV

2. A customer, Phillip Regis, has an established margin account with a long market value of $20,300 and a debit balance of $7,500, with Regulation T at 50 percent. What amount does the long market value have to decrease below to trigger a maintenance call?

(A) $20,300

(B) $7,500

(C) $10,150

(D) $10,000

3. All of the following are examined by a fundamental analyst EXCEPT

(A) earnings per share

(B) balance sheets

(C) income statements

(D) trendlines

4. The Trade Reporting and Compliance Engine (TRACE) promotes better market transparency by allowing trade details to be released to the investing public that purchases

(A) corporate bonds in the OTC secondary market

(B) warrants

(C) CMOs

(D) new issue primary market securities

5. Mike Smith is one of your clients. Mike is 55 years old, has a wife, two young adults going to college, and two children living at home. You have helped Mike determine his investment profile and how much risk he should be willing to take. However, Mike is hot on a particularly speculative security that doesn’t fit his investment profile. Mike calls you saying he wants to purchase $20,000 worth of this security. What should you do?

(A) Accept the order and mark it as unsolicited.

(B) Refuse the order because it doesn’t fit his investment profile.

(C) Do nothing until talking to a principal.

(D) Limit Mike’s exposure by making sure that he doesn’t purchase more than $5,000 worth of this speculative security.

6. Which TWO of the following are TRUE relating to a firm that sells securities out of its own inventory?

1. It is acting as a broker.
2. It is acting as a dealer.
3. It charges a commission.
4. It charges a markup.

(A) I and III

(B) I and IV

(C) II and III

(D) II and IV

7. Use the following exhibit to answer this question:

What is the break-even point for an investor who purchases an ABC Dec 60 put?

(A) 48

(B) 50

(C) 70

(D) 72

8. All of the following are good delivery for a trade of 930 shares EXCEPT

(A) 1 certificate for 900 shares, 1 for 30 shares

(B) 2 certificates for 400 shares each, 2 for 50 shares each, 2 for 15 shares each

(C) 4 certificates for 200 shares each, 10 for 13 shares each

(D) 4 certificates for 200 shares each, 13 for 10 shares each

9. An investor has a child who will be going to college in 15 years. Which of the following is a suitable investment?

(A) T-bills

(B) T-notes

(C) Treasury receipts

(D) Long call options

10. Which of the following statements is TRUE about revenue bonds?

(A) Their value is measured by the municipal project’s capacity for generating revenue.

(B) They are secured by a mortgage-backed bond.

(C) They are a type of general obligation bond.

(D) They are subject to the statutory debt limitations of the issuing jurisdiction.

11. Which of the following is the balance sheet equation?

(A) assets = liabilities + shareholder’s equity

(B) assets + liabilities = shareholder’s equity

(C) shareholder’s equity + assets = liabilities

(D) None of the above

12. Regarding the taxation of dividends from corporate securities, which TWO of the following are TRUE?

1. Qualified dividends are taxed at the investor’s income tax rate.
2. Qualified dividends are taxed at a maximum rate of 20 percent.
3. Nonqualified dividends are taxed at the investor’s tax rate.
4. Nonqualified dividends are taxed at a maximum rate of 20 percent.

(A) I and III

(B) I and IV

(C) II and III

(D) II and IV

13. All of the following change the conditions of an option contract EXCEPT

(A) a stock split

(B) a cash dividend

(C) a stock dividend

(D) None of the above

14. Cain Weidman owns 1,000 shares of HIT Corp. HIT issues stock with cumulative voting. What is the maximum number of votes that Cain can cast for one candidate if there are four vacancies on the board of directors of HIT?

(A) 100

(B) 250

(C) 1,000

(D) 4,000

15. Where can an investor find the most information about a new municipal issue?

(A) In a prospectus

(B) In an official statement

(C) In a tombstone ad

(D) In a registration statement

16. Records of written customer complaints must be kept on file for at least

(A) 2 years

(B) 3 years

(C) 4 years

(D) 6 years

17. Which two of the following are true of Roth IRAs?

1. Contributions are made from after-tax dollars.
2. Contributions are made from pre-tax dollars.
3. Distributions are tax-free.
4. Distributions are taxed on the amount above the amount of the contribution.

(A) I and III

(B) I and IV

(C) II and III

(D) II and IV

18. All of the following can validate a mutilated certificate EXCEPT

(A) the issuer

(B) the broker-dealer

(C) the registrar

(D) the paying agent

19. One of your clients wants to start adding some diversity to her portfolio by investing in mutual funds. Which of the following is the most important consideration when choosing a mutual fund?

(A) Whether the fund is load or no-load

(B) Management fees

(C) Investment objectives

(D) 12b1 fees

20. Common stockholders in a corporation can do which of the following?

(A) Elect the corporation’s board of directors

(B) Make decisions about the day-to-day dealings, such as the office supply dealer used by the corporation

(C) Receive interest payments

(D) Expect to be paid par value for their stock if the corporation goes out of business

21. Which of the following investments are suitable for a 21-year-old investor who has limited resources but would like to start investing on a regular basis?

1. Growth funds
2. Collateralized debt obligations (CDOs)
3. Call options
4. Hedge funds

(A) I only

(B) II and IV

(C) I, II, and III

(D) I, III, and IV

22. Which of the following is true regarding Penny Stock Disclosure Documents?

(A) They may be described orally prior to the customer's first transaction in penny stocks.

(B) They must be provided to the customer in written form prior to the customer's first transaction in penny stocks.

(C) They must be described orally and provided in written form prior to the customer's first transaction in penny stocks.

(D) The broker-dealer must provide a link to penny stock rules on their website prior to the confirmation sent to customers after the first transaction in penny stocks.

23. Which of the following statements is TRUE regarding municipal revenue bond issues?

(A) The bonds are backed by the issuer’s unlimited taxing power.

(B) User fees provide revenue for bondholders.

(C) The bonds’ feasibility is not dependent on the earnings potential of the facility or project.

(D) Revenue bonds are most suitable for investors with high risk tolerance.

24. Jameson and Johnson Securities sent Art a confirmation of his latest trade of Johnstone Corporation common stock. Which of the following items should be on the confirmation?

1. The trade date and the settlement date
2. Whether Jameson and Johnson acted as an agent or a principal
3. The name of the security and how many shares were traded
4. The amount of commission paid if Jameson and Johnson acted as an agent

(A) I and III

(B) I, II, and III

(C) I, III, and IV

(D) I, II, III, and IV

25. If a customer, Jessica James, gives limited power of attorney to her registered representative, which of the following is TRUE?

(A) The registered representative still needs verbal authorization from Jessica for each trade.

(B) Jessica must sign a power-of-attorney document.

(C) The registered representative must sign a power-of-attorney document.

(D) Jessica must initial each order before it is entered.

26. Which of the following is NOT a characteristic of a real estate investment trust (REIT)?

(A) Pass-through treatment of income only

(B) Pass-through treatment of income and losses

(C) At least 75 percent of the assets must be invested in real-estate-related projects.

(D) Ownership of real property without management responsibility

27. A principal is responsible for approving new accounts opened for

1. individuals
2. corporations
3. banks
4. trusts

(A) I only

(B) I and II

(C) I, II, and III

(D) I, II, III, and IV

28. A customer of Dim Outlook securities decides to close his account. How long after closing the account must Dim Outlook keep the customer records?

(A) 6 months

(B) 2 years

(C) 3 years

(D) 6 years

29. When a corporation declares a cash dividend, which of the following is true in relation to the corporation’s balance sheet?

(A) Assets decrease.

(B) Liabilities increase.

(C) Working capital remains the same.

(D) Stockholder's equity increases.

30. George Lincoln opens a margin account and signs a loan consent, hypothecation, and credit agreement. Which of the following statements are TRUE?

1. George’s stock may not be kept in street name.
2. A portion of George’s stock may be pledged for a loan.
3. George will be required to pay interest on the money borrowed.
4. George’s stock must be cosigned by the broker-dealer.

(A) I and IV

(B) II and III

(C) I and II

(D) None of the above

31. Terri Hogan is a customer who wants to invest in securities. Which of the following is most likely to provide Terri with the highest dividend rate?

(A) Straight preferred

(B) Convertible preferred

(C) Participating preferred

(D) Callable preferred

32. A Regulation D private placement is

(A) an offering of securities to no more than 35 unaccredited investors in a 1-month period

(B) an intrastate offering

(C) an offering of securities worth no more than $5 million in a 12-month period

(D) a large offering of commercial paper

33. To protect investors of variable life insurance policies who become disabled, there is a rider called a(n)

(A) disability rider

(B) waiver of premium

(C) early withdrawal rider

(D) None of the above

34. As a client’s investment objectives change, a registered rep should keep track of those changes so that he can rebalance the client’s portfolio and make proper recommendations. Which of the following changes may affect a customer’s investment objectives?

1. Growing older
2. Getting divorced
3. Having triplets
4. Getting a higher paying job

(A) I and III

(B) I, II, and III

(C) II, III, and IV

(D) I, II, III, and IV

35. JKLM Corporation has declared a $0.40 dividend payable to shareholders of record on Thursday, September 14. What would happen to the opening price of JKLM on Wednesday, September 13?

(A) It would be reduced by the amount of the dividend.

(B) It would remain the same.

(C) It would be increased by the amount of the dividend.

(D) Cannot be determined

36. Larry Eagle is a resident of Michigan. Mr. Eagle purchased a Michigan municipal bond. What is the tax treatment of the interest that Larry earns on his Michigan bond?

1. It is exempt from local taxes.
2. It is exempt from state taxes.
3. It is exempt from federal taxes.

(A) III only

(B) I and III

(C) II and III

(D) I, II, and III

37. Charges for services performed by a broker-dealer (such as collection of money due for principal, interest, or dividends; transfer or exchange of securities; safekeeping of securities; and so on) should be

(A) considered part of the broker-dealer's business and not charged

(B) charged at a maximum rate of 1½ percent of the customer's portfolio

(C) charged at a maximum rate of 5 percent of the securities being held, transferred, and so on

(D) fair and reasonable

38. An investor wants to invest in a DPP that’s relatively safe. Which of the following are you LEAST likely to recommend?

(A) A real-estate partnership that invests in raw land

(B) An oil and gas developmental program

(C) An oil and gas income program

(D) An equipment leasing program

39. All the following activities are a registrar’s functions EXCEPT

(A) accounting for the number of shares outstanding

(B) auditing the transfer agent

(C) ensuring that the outstanding shares do not exceed the number of shares on the corporation’s books

(D) transferring shares into the name of the new owner

40. All the following information is required on a preliminary prospectus EXCEPT

(A) the final offering price

(B) the purpose for which the issuer is raising the funds

(C) a statement in red lettering stating that items on the preliminary prospectus are subject to change before the final prospectus is issued

(D) the issuer’s history and financial status

41. Prior to opening a day-trading account for a customer, a member shall make a reasonable effort to determine certain information about the customer, including

(A) her investment objectives

(B) her marital status

(C) her trading experience

(D) All of the above

42. A mutual fund has an NAV of $9.30 and a POP of $10. What is the sales charge of this fund?

(A) 5 percent

(B) 6 percent

(C) 7 percent

(D) 8 percent

43. If the FDA increases pollution standards that are more costly for oil companies, investors who own shares of oil company stock would most likely see the value of their shares decline due to

(A) purchasing power risk

(B) reinvestment risk

(C) credit risk

(D) regulatory risk

44. On a competitive bid for a new municipal underwriting, the difference between the syndicate bid and the reoffering price is the

(A) discount price

(B) offering price

(C) spread

(D) bid price

45. If a customer wants to open a cash account at a brokerage firm, the signature(s) of which of the following is/are required?

1. The registered representative
2. The customer
3. The principal
4. The guarantor

(A) IV only

(B) I and III

(C) I, II, and III

(D) I, II, III, and IV

46. Which TWO of the following are TRUE regarding immediate-or-cancel orders?

1. They must be executed immediately.
2. They allow for partial execution.
3. They must be executed in one attempt immediately.
4. They may be executed in several attempts.

(A) I and III

(B) II and IV

(C) II and III

(D) II and IV

47. All the following securities are typically sold short EXCEPT

(A) over-the-counter common stock

(B) preferred stock

(C) exchange listed stock

(D) municipal bonds

48. In an initial margin transaction, an investor purchases 100 shares of WXY at $24 per share. What is the margin call?

(A) $1,200

(B) $1,800

(C) $2,000

(D) $2,400

49. The indenture of a corporate bond includes all of the following EXCEPT

(A) the coupon rate

(B) the credit rating

(C) the name of the trustee

(D) the maturity date

50. Which of the following items can be found in the certificate of limited partnership?

1. The goals of the partnership and how long it’s expected to last
2. The authority of the general partner to charge a fee for making management decisions for the partnership
3. How the profits are to be distributed
4. The amount contributed by each partner, plus future expected investments

(A) I, II, and III

(B) II, III, and IV

(C) I, III, and IV

(D) I, II, III, and IV

51. All the following securities may pay a dividend EXCEPT

(A) warrants

(B) common stock

(C) American depositary receipts (ADRs)

(D) participating preferred stock

52. Marty Martinez wants to create a short combination using his existing option. If Marty is short 1 DEF Aug 60 call, which of the following option positions should Marty purchase or sell?

(A) Long 1 DEF Aug 70 put

(B) Long 1 DEF Aug 60 put

(C) Short 1 DEF Aug 50 put

(D) Short 1 DEF Aug 60 put

53. Which of the following is/are true of a REIT?

1. It must invest at least 75 percent of its assets in real-estate-related activities.
2. It must be organized as a trust.
3. It must distribute at least 90 percent of its net investment income.
4. It must pass along losses to shareholders.

(A) I, II, III, and IV

(B) I, II, and III

(C) I only

(D) II and IV

54. An investor purchases 300 shares of DUD Corp. at $45 per share and purchases 3 DUD Oct 40 puts at 6. What is the customer’s break-even point?

(A) 39

(B) 45

(C) 46

(D) 51

55. Under the Securities Act of 1933, which of the following securities are exempt from registration and disclosure provisions?

(A) Railroad equipment trust certificate

(B) Municipal bonds

(C) Commercial paper maturing in 270 days or less

(D) All of the above

56. One of your customers is interested in investing in an oil and gas limited partnership. As his registered rep, which of the following steps are you required to take?

1. Prescreen the customer.
2. Determine the economic soundness of the program.
3. Explain the risks of investing in limited partnerships.
4. Have your customer fill out a partnership agreement.

(A) I and III

(B) I, II, and III

(C) II, III, and IV

(D) I, II, III, and IV

57. Which of the following funds changes its balance to hold more fixed-income securities and less equity securities as the years pass?

(A) A balanced fund

(B) A hedge fund

(C) A life-cycle fund

(D) A growth fund

58. For investors interested in purchasing CMOs, which of the following tranches is considered the safest?

(A) Planned amortization class

(B) Targeted amortization class

(C) Companion

(D) Z

59. The first time a company ever issues securities is called a(n)

(A) IPO

(B) first market trade

(C) rights offering

(D) None of the above

60. A saucer formation is an indication that a security is

(A) consolidating

(B) breaking out

(C) reversing from a bullish trend

(D) reversing from a bearish trend

61. Broker-dealers may charge a

1. commission
2. markup
3. markdown

(A) I only

(B) I and II

(C) II and III

(D) I, II, and III

62. Use the following exhibit to answer this question:

If an investor buys a TUV Nov 60 put and writes a TUV Nov 50 put, what is the maximum gain?

(A) $275

(B) $325

(C) $675

(D) $725

63. Which of the following features of a corporation would be examined by a fundamental analyst?

(A) Earnings trends

(B) Support and resistance

(C) Breadth of the market

(D) None of the above

64. Mr. Smith has an inactive account with stocks and bonds at a broker-dealer. How often is the firm required to send Mr. Smith an account statement?

(A) Once a month

(B) Once a week

(C) Once every three months

(D) Once every six months

65. Which of the following DOES NOT describe Treasury stock?

(A) It has no voting rights.

(B) It is stock that was previously authorized but is still unissued.

(C) It is issued stock that has been repurchased by the company.

(D) It does not receive dividends.

66. All of the following impact the marketing of a municipal bond issue EXCEPT

(A) the rating

(B) the interest

(C) the date of maturity

(D) the dated date

67. IRAs may be set up in all the following ways EXCEPT

(A) single life

(B) life with period certain

(C) joint and last survivor

(D) uniform lifetime

68. An investor who purchases a variable life insurance policy faces which of the following risks?

(A) The insurance company may have to increase the premium if the securities held in the separate account underperform the market.

(B) The insurance company may decrease the premium if the securities held in the separate account outperform the market.

(C) The policy may have no cash value if the securities held in the separate account perform poorly.

(D) The death benefit may fall below the minimum in the event that the securities held in the separate account underperform.

69. All of the following are nonfinancial influences that may help determine an investor’s investment profile EXCEPT

(A) the investor’s age

(B) the amount of marketable securities the investor owns

(C) the number of dependents

(D) investment experience

70. Which of the following is TRUE of a durable power of attorney?

(A) It would be automatically revoked in the event that the grantor is declared incompetent.

(B) It gives power of attorney to someone else in the event that an individual becomes incompetent.

(C) It gives power of attorney to someone else in the event that an individual dies.

(D) Once in place, it may not be revoked by the grantor.

71. One of your clients purchased a 4 percent ABC convertible bond yielding 5 percent and convertible at $50. If your client holds the bond until maturity, how much will she receive?

(A) $1,000

(B) $1,020

(C) $1,025

(D) $1,050

72. Barbara Billington has a margin account with a market value of $30,000 and a debit balance of $12,000. If Barbara wants to purchase an additional $10,000 of stock in this account, what amount must she deposit?

(A) $2,000

(B) $3,000

(C) $5,000

(D) $10,000

73. Ginny Goldtrain is a wealthy investor who is in the highest income bracket. Ginny is looking for an investment that would limit her tax liability and put her on equal footing with investors in lower income-tax brackets. Which of the following securities would you MOST likely recommend?

(A) High-yield bonds

(B) CMOs

(C) Municipal bonds

(D) Hedge funds

74. An investor purchased 200 shares of AYLA Corp common stock for a price of $5,000 on October 1st. The following October 1st, the investor sold the 200 shares of AYLA Corp common stock for $6,000. The $1,000 capital gain will be

1. considered short-term
2. considered long-term
3. taxed at a maximum rate of 20 percent
4. taxed at the investor's tax bracket

(A) I and III

(B) I and IV

(C) II and III

(D) II and IV

75. The largest source of backing for a local GO bond is

(A) property tax

(B) sales tax

(C) income tax

(D) traffic fines and parking tickets

76. Brett Overtrade is a registered representative who works for Missed Again Securities. Brett has just learned of the death of one of his customers. Which of the following actions should Brett take regarding his deceased customer’s account?

1. Mark his customer’s account as deceased.
2. Cancel all open orders.
3. Wait for the proper legal papers.

(A) I and II

(B) I and III

(C) II and III

(D) I, II, and III

77. The trading volume for some large institutional orders is concealed from the public. What is this called?

(A) Fourth market trades

(B) Dark pools of liquidity

(C) Third-market trades

(D) A violation

78. A Designated Market Maker is responsible for doing all of the following EXCEPT

(A) maintaining a fair and orderly market

(B) competing with public orders to keep trading as active as possible

(C) trading for his own account

(D) trading for customer accounts

79. Which of the following bonds most likely has the highest coupon rate?

(A) DEF Corp. mortgage bonds

(B) DEF Corp. collateral trusts

(C) DEF Corp. debentures

(D) DEF Corp. equipment trusts

80. Your client, Dana Griffin, is about to retire and she wants predictable income. Which of the following would NOT be a good investment for Dana?

1. AA rated IDB
2. U.S. Treasury note
3. AA rated debenture
4. Income bonds

(A) II only

(B) I and III

(C) II and IV

(D) IV only

81. What is the maximum loss on a debit spread?

(A) The difference between the premium paid and the premium received

(B) The difference between the two strike prices multiplied by 100, less the premium paid, plus the premium received

(C) The difference between the two strike prices multiplied by 100, less the premium paid

(D) The difference between the two strike prices multiplied by 100

82. Sal Gold is new to investing and wants to purchase a security that will provide him with current income with minimal risk. Which of the following are you LEAST likely to recommend?

(A) An income fund

(B) Treasury bonds

(C) An international fund

(D) AA rated municipal bonds

83. Which of the following is the issuer and guarantor of all listed options?

(A) The OCC

(B) The OAA

(C) The ODD

(D) The CBOE

84. If your customer, William Goate, purchases shares in a municipal bond fund, which of the following statements is TRUE?

(A) Dividends are subject to alternative minimum tax.

(B) Dividends are taxable to all investors.

(C) Capital gains distributions are taxable.

(D) Capital gains distributions are not taxable.

85. An investor opens a margin account by purchasing 1,000 shares of ABC at $15 per share and shorting 1,000 shares of DEF at $12 per share. What is the investor's margin call as a result of these transactions?

(A) $1,500

(B) $3,000

(C) $13,500

(D) $27,000

86. These municipal notes provide interim financing for a municipality that’s waiting for a grant from the U.S. government.

(A) BANs

(B) TRANs

(C) GANs

(D) CLNs

87. An investor is holding 1 ABC Oct 35 call option. Which of the following option positions, if purchased by this customer, would create a long straddle?

(A) Short 1 ABC Nov 35 call option

(B) Short 1 ABC Oct 30 call option

(C) Long 1 ABC Oct 40 call option

(D) Long 1 ABC Oct 35 put option

88. Luke Landworker holds 10 XYX May 30 calls. XYX increases to $40, and he exercises the calls. Luke tells his registered rep to sell the stock immediately after purchase. If these trades are executed in a margin account, how much does Luke have to deposit?

(A) $3,000

(B) $30,000

(C) $35,000

(D) No deposit is required.

89. Regarding margin accounts, which two of the following are TRUE?

1. Minimum maintenance on a long account is 25 percent.
2. Minimum maintenance on a short account is 25 percent.
3. Minimum maintenance on a long account is 30 percent.
4. Minimum maintenance on a short account is 30 percent.

(A) I and II

(B) I and IV

(C) II and III

(D) III and IV

90. Use the following exhibit to answer this question:

What is the net worth of ABCD Corporation?

(A) $3,150,000

(B) $1,650,000

(C) $8,150,000

(D) $10,150,000

91. The initial expiration for standard exchange-listed options is

(A) 1 month from the issue date

(B) 3 months from the issue date

(C) 6 months from the issue date

(D) 9 months from the issue date

92. One of the advantages of portfolio margin is that it allows

(A) smaller investors the opportunity to purchase securities on margin

(B) less sophisticated investors a chance to purchase securities on margin

(C) investors to avoid maintenance calls

(D) investors greater leverage

93. Which of the following statements regarding municipal bonds with call provisions is TRUE?

(A) Bonds are likely to be called when interest rates fall.

(B) Call provisions favor investors.

(C) Bonds are likely to be called when interest rates rise.

(D) Call provisions are not advantageous to issuers.

94. TUVW Corporation common stock is currently trading in the market for $22 per share. TUVW Corp. pays an annual dividend of $0.60 per share and has an earnings per share (EPS) of $4. What is the PE ratio?

(A) 4.50

(B) 5

(C) 5.50

(D) Cannot be determined

95. The Order Audit Trail System tracks the

(A) execution of an order only

(B) cancellation of an order only

(C) entire life of an order form entry to execution

(D) None of the above

96. Sam Smith sends an email to his registered rep, John Johnson, complaining about the amount of commission he was charged on his last trade. According to FINRA rules, what should John Johnson do with the complaint?

(A) Ignore it because the complaint needs to be in writing

(B) Print it out and give it to his principal

(C) Print it out and send it to FINRA

(D) Forward it to FINRA’s complaint department

97. Which of the following best describes the tax status of a limited partnership?

(A) The partnership is fully taxed.

(B) All tax liability flows through to the limited partners.

(C) Any income generated is taxed as ordinary income.

(D) Any gains generated are taxed as capital gains.

98. Which of the following sequences reflects the priority of payments made when a limited partnership is liquidated?

1. Secured creditors
2. General creditors
3. Limited partners
4. General partners

(A) I, II, III, IV

(B) IV, II, III, I

(C) IV, II, I, III

(D) I, IV, II, III

99. All of the following are types of blue-sky registration EXCEPT

(A) registration by cooperation

(B) registration by coordination

(C) registration by qualification

(D) registration by filing

100. A TUV Oct 60 call is trading for 9 when TUV is at $65. What is the time value of this option?

(A) 0

(B) 4

(C) 5

(D) 9

101. Which of the following need approval from a brokerage firm’s principal?

1. New accounts
2. Recommendations
3. Handling of complaints
4. Trades in all accounts

(A) I and II

(B) I, III, and IV

(C) II, III, and IV

(D) I, II, III, and IV

102. A quote of 1.20 bid 1.18 offered is most likely a quote on which of the following:

(A) A T-bond

(B) A T-bill

(C) A general obligation (GO) bond

(D) A Fannie Mae (FNMA) bond

103. Which of the following municipal bonds is backed by lease payments made by an underlying facility?

(A) IDR

(B) LTGO

(C) LRB

(D) BAB

104. If a corporation pays a cash dividend, how does it affect its balance sheet?

1. Assets decrease
2. Liabilities decrease
3. Net worth decreases
4. Net worth remains the same

(A) I and III

(B) II and III

(C) I, II, and III

(D) I, II, and IV

105. All of the following are included on a confirmation for non-callable municipal bonds that were purchased on a yield basis EXCEPT

(A) the purchase price

(B) the par value

(C) the yield to maturity

(D) the taxable equivalent yield

106. Which of the following option positions provides an investor with potential premium income while limiting the maximum loss potential?

(A) Debit spread

(B) Credit spread

(C) Long straddle or long combination

(D) Short straddle or short combination

107. A customer wants her registered representative to purchase a security that is incompatible with her investment objectives. What action should the registered representative take under FINRA rules?

(A) Enter the order and note that it was unsolicited.

(B) Enter the order only if the customer puts her request in writing.

(C) Obtain the approval of the firm’s compliance officer before entering the order.

(D) The registered representative cannot enter the order.

108. All the following calculations can be determined by finding the information on a corporation’s balance sheet EXCEPT

(A) working capital

(B) net worth

(C) current yield

(D) quick assets

109. Which of the following are money market securities?

(A) Commercial paper

(B) Treasury bonds

(C) American depositary receipts (ADRs)

(D) Warrants

110. Income derived from an investment in a real-estate limited partnership is termed

(A) earned income

(B) passive income

(C) portfolio income

(D) capital gains

111. ABC stock pays an annual dividend of $4, has an earnings per share of $8, and a market price of $40. What is ABC's PE ratio?

(A) 2

(B) 5

(C) 10

(D) 20

112. An investor purchases 1 TUV Sep 30 call for a premium of 4. This option will expire

(A) on the third Saturday in September

(B) on the third Friday in September

(C) on the Saturday following the third Friday in September

(D) on a date to be assigned by the CBOE

113. All of the following are true regarding limited partners EXCEPT

(A) They have access to unlimited financial information regarding the partnership.

(B) They may participate in management decisions because limited partners have a tremendous amount of risk.

(C) They may vote to terminate a partnership.

(D) They may invest in competing partnerships.

114. What is the primary objective for an individual who invests in undeveloped land?

(A) Depletion deductions

(B) Depreciation deductions

(C) Appreciation potential

(D) Tax-deferred income

115. Which of the following are true about closed-end funds?

1. They may only issue common stock.
2. They are generally listed on an exchange.
3. They have a fixed number of shares outstanding.
4. They are redeemable.

(A) II and III

(B) I and IV

(C) I, III, and VI

(D) II, III, and IV

116. One of your wealthier clients is interested in purchasing a fund. If liquidity is high on his list of investment objectives, which of the following would be the least suitable recommendation?

(A) ETFs

(B) Inverse ETFs

(C) Hedge funds

(D) Money market funds

117. What is the maximum potential loss for an investor who sells a call option?

(A) The strike price × 100 shares

(B) The strike price × 100 shares, less the premium

(C) The strike price × 100 shares, plus the premium

(D) Unlimited

118. An investor purchased 1,000 shares of WXY at $40. If WXY announces a 5 for 4 split, what is the investor’s position after the split?

(A) 1,250 WXY at $32

(B) 1,250 WXY at $50

(C) 800 WXY at $32

(D) 800 WXY at $50

119. Changes in which of the following non-financial information might change an investor's investment objectives?

1. The investor growing older
2. Getting married or divorced
3. Investment experience
4. Family responsibilities

(A) II and IV

(B) I, II, and III

(C) I, II, and IV

(D) I, II, III, and IV

120. Which of the following ratios does not measure the liquidity of a company?

(A) Current ratio

(B) Quick ratio

(C) Ratio of cash and securities to current liabilities

(D) Debt to equity ratio

121. Which of the following is characteristic of commercial paper?

(A) It is quoted as a percent of par.

(B) It is proof of ownership of the corporation.

(C) It is issued to raise capital for a corporation.

(D) It is junior to convertible preferred stock.

122. Which of the following is true about advertising for a municipal fund security?

1. It must be approved by a principal of the firm selling the securities.
2. It must not be fraudulent.
3. It must first be approved by the MSRB.
4. It must be approved by the state administrator in each state in which the security is to be sold.

(A) I only

(B) I and II

(C) III and IV

(D) I, II, III, and IV

123. What is the maximum contribution for a 56-year-old investor into a traditional IRA each year?

(A) $4,000

(B) $5,000

(C) $5,500

(D) $6,500

124. A mutual fund that invests only in securities within a specific industry is called a

(A) Balanced fund

(B) Growth fund

(C) Hedge fund

(D) Sector fund

125. At what time must an individual begin withdrawals from a Roth IRA?

(A) At age 59½

(B) At age 70½

(C) On April 1st of the year after turning 70½

(D) None of the above