Knopman

New Knopman Study Question and Answer 2023. Investors holding preferred stock should expect a return based on Correct Answer: fixed quarterly payments (dividends) SPIC protects each customer for up to _______ with a maximum of _________ in cash Correct Answer: Protects $500k up to 250k cash OTC Pink Securities include Correct Answer: foreign equity issues, warrants, ADRs, and DPPs. c Correct Answer: 6500 Catch up contributions for IRA Correct Answer: Must be 50 or above, can contribute additional 1000 Settlement of a municipal syndicate account must be completed within Correct Answer: 30 calendar days At age 57, Daniel started a Roth IRA. He is now age 60 and takes a $20,000 distribution for retirement income. What is the tax consequence of his distribution? Correct Answer: The earnings portion is taxable but there is no 10% penalty Why would Roth IRA earnings be taxable Correct Answer: If they haven't been contributing for at least 5 years Why would Roth IRA be subject to 10% penalty Correct Answer: Distributions taken before 59.5 What is stagflation Correct Answer: high inflation and high unemployment, slow economic growth A $10,000 U.S. Treasury bond is quoted as Bid 102.8, Ask 16. How much would an investor pay to buy this bond? Correct Answer: Investors purchase at the ask price of 102.16. Treasuries are quoted in 32nds, so the asked price is actually 102 16/32nds (½) for each $100 of face value. 102.50 x 100 = $10,250. Rule 144 Correct Answer: Corporate insider can sell the greater of 1% of the outstanding shares or the avg weekly trading volume over the previous four weeks In unfilled GTC buy limit orders Correct Answer: Good till Canceled - the limit price is automatically reduced by the amount of the dividend on the ex-dividend date, unless the investor uses a do not reduce (DNR) instruction Trades must be reported to the Real Time Transaction Reporting System within Correct Answer: 15 minutes of execution Negotiable security Correct Answer: one that can be freely transferred, assigned or delivered to another entity MLPs are Correct Answer: Master limited partnerships whose partnership units trade freely on exchanges, like stocks MLPs are generally _______ and have ____ Correct Answer: are generally very liquid and have no minimum purchase or share requirements. All IRA contributions must be made by Correct Answer: the due date of the individual's federal income tax return, which usually is the next April 15. Securities Exchange Act of 1934 Correct Answer: - 20 years maximum jail - $5 million individual fine - $25 million non-natural persons (corps/partnership) Switching Correct Answer: aka churning occurs when a registered representative moves a customer from one mutual fund to another fund that is very similar, without apparent purpose or benefit. Spoofing Correct Answer: a disruptive algorithmic trading activity employed by traders to outpace other market participants and to manipulate markets. The primary goal of any SRO (FINRA or the NYSE) Correct Answer: is to provide safeguards for investor protection, as well as promoting integrity within the marketplace SRO stands for "self-regulatory organization". With an SRO, the principles and rules that govern the organization have been formulated and approved Correct Answer: Ken buys a stock for $50 and holds it one year. He receives $2 of dividend income and its price appreciates to $53. What is his approximate total return? Correct Answer: On a $50 investment, he earns $3 of appreciation (gain) and $2 of dividends = $5 total return. His approximate total return is 10% ($5 divided by $50) An investor with no other positions buys an ABC May 63 put at 6.25. The investor buys the stock in the market and exercises the put when the stock is trading for 52. What is the investor's profit or loss? Correct Answer: The investor paid $625 to purchase the put. The stock is purchased at the market price for $5,200. The exercise of the put permits the investor to sell the stock at the strike price, so the customer makes $6,300. The investor has a profit of $475 (Paid $5,825, received $6,300). allow securities issuers to make multiple offerings of equity or debt securities over up to a three-year period, without having to file a new registration or prospectus. Correct Answer: shelf registration Call premiums do what? Correct Answer: Protect investors from having debt with an attractive yield refinanced long before maturity Call premiums mitigate reinvestment risk in the event interest rates decline by requiring the issuer to pay a premium if refinancing the bonds prior to maturity. For example, a 10-year bond with a 10-year maturity might have a call premium of 105% after the first call date. This would require the issuer to pay investors 105% of par to call away the issue. Stabilization Correct Answer: allows the underwriter to bid on a new issue in the secondary market to prevent a decline in price. Investors who are injured by price manipulation can sue for damages and costs. The suit must be brought within Correct Answer: three years of the manipulation and within one year of discovery. This is the statute of limitation. An investor is likely to purchase a put for all of the following reasons EXCEPT A) To prevent a long stock position from losing money B) To protect a gain on a long stock position C) To profit from a decline in the value of stock D) To generate income for a portfolio Correct Answer: An investor pays a premium to purchase a put, so income is not generated from this position. Long puts can protect a stock position from loss, protect a gain, or profit from a decline in the value of the underlying stock.