Exam -with 100% verified solutions-2024
What type of risk is unique to a specific industry, business enterprise, or investment type?
Under which of the following circumstances is an investor in a position to acquire stock?
Options- a premium
Options- strike price
A customer believes that ABC's...
1). What type of risk is unique to a specific industry, business enterprise, or investment type?
Ans: Nonsystematic risk
2). Under which of the following circumstances is an investor in a position to acquire stock?
Ans: Buy a call, sell a call (The holder of a call has the right to buy stock at the strike
price if exercised. The seller of a put is obligated to buy stock at the strike price if
exercised)
3). Options- a premium
Ans: the cost of an option contract, expressed in dollars per share of the underlying
stock
4). Options- strike price
Ans: The price at which the stock will be bought or sold if the contract is exercised,
expressed in dollars per share
5). A customer believes that abc's price will go up but does not have the money to buy 100
shares right now. how could the customer use options to profit from an increase in the
stock's price?
Ans: buy calls, write puts (both are bullish)
6). A corporation's offer to current stockholders of the ability to purchase a proportionate
number of new shares at a specific price for a limited time is called a
Ans: right (they usually expire in 30-45 days)
7). American depositary receipts (adrs)
Ans: issued by banks, represent a specific number of shares of a foreign company,
and trade and pay dividends in dollars
PaperStoc.com Page 1 of 39
, 8). Which of the following records must be maintained for 6 years?
Ans: Customer ledgers (statements)
9). While underwriters can assist with preparation and filing, the accuracy and adequacy of
these documents is the responsibility of the
Ans: Issuing corporation
10). What institutions serve as depository and clearing facilities?
Ans: Depository Trust Company and National Securities Clearing Corporation (most
specifically) then carrying and clearing firms can act as these as well.
11). What is a transfer agent?
Ans: (often a bank) for a corporation is responsible for ensuring that its securities are
issued in the correct owner's name, canceling old and issuing new certificates,
maintaining records of ownership, and handling problems relating to lost, stolen, or
destroyed certificates
12). What is the function of the clearing corporation?
Ans: Acting as an intermediary in a trade, examples of these can be a commercial
bank, can be a broker-dealer but doesn't have to be
13). Who is considered a control person (security)
Ans: those owned by directors, officers, or persons (which include corporations,
trusts, etc.) who own or control 10% or more of the issuer's equity securities (an
unaffiliated person would have to own 10% or more of the outstanding shares)
14). What are the two components of return on investment?
Ans: Capital gains and income
15). To expand the overall economy, we want to
Ans: buy securities via open-market operations, pushing interest rates down
16). To meet a regulation t margin call, a customer would have how long?
PaperStoc.com Page 2 of 39
, Ans: settlement plus 2 additional business days (or S + 2)
17). What is a fully disclosed broker-dealer
Ans: one that introduces its business to a carrying firm to clear transactions
18). The regulation enacted by the sec to protect the privacy of customer information is known
as
Ans: Regulation S-P
19). A market maker that does not honor its firm quote is said to be
Ans: "backing away"
20). A deficit in the u.s. balance of payments can occur if
Ans: interest rates in foreign countries are higher than U.S. domestic rates and U.S.
consumers are purchasing (importing) foreign goods
21). The general partner of a limited partnership has responsibility of
Ans: Organizing and managing the partnership, assumes unlimited liability, and is
responsible for paying all partnership debts
22). To grow or expand the economy, u.s. fiscal policy should be to
Ans: cut taxes (so consumers have more money to spend) and increase government
spending for programs and development (to create more jobs)
23). What is the federal funds rate
Ans: the rate commercial money center banks charge each other for an overnight,
unsecured loan
PaperStoc.com Page 3 of 39
, 24). The federal open market committee (fomc)
Ans: buy or sell Treasury securities in the open market. Purchases add money to the
economy, making the money available to lend more plentiful, and sales take money out
of the economy, making money available to lend less plentiful.
25). Reports of rising inventories generally occur during which period of the business cycle?
Ans: Contraction, due to a lack of consumer demand
26). Who is exempt from registering with sipc?
Ans: Those who deal exclusively with US Government securities (i.e.-Treasury bonds),
exclusively municipality securities, and in redeemable investment company securities
27). Retail investor
Ans: An individual who makes investments such as the purchase of securities for his
or her account rather than for an organization
28). Market maker
Ans: Any entity, individual or organization, willing to accept the risk of holding a
particular security in its own account to facilitate trading and provide liquidity in that
security
29). When the federal reserve board wants to expand (loosen) the money supply, it will
Ans: buy Treasury securities from banks in the open market
30). Sros functioning under the sec include...
Ans: FINRA, MSRB and CBOE
31). Mild inflation can
Ans: encourage growth and stimulate the economy
PaperStoc.com Page 4 of 39
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Academik001. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.49. You're not tied to anything after your purchase.
