STC GREENLIGHT EXAM 2 WITH CORRECT ANSWERS AND CORRECT RATIONALES 2024
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Course
STC Greenlight
Institution
STC Greenlight
STC GREENLIGHT EXAM 2 WITH CORRECT ANSWERS AND CORRECT RATIONALES 2024
1. Which of the following statements is TRUE concerning member firms' suitability requirements for
institutional investors?
Institutional investors are exempt from SRO suitability requirements
The SRO suitability requirem...
STC GREENLIGHT EXAM 2 WITH CORRECT ANSWERS
AND CORRECT RATIONALES 2024
1. Which of the following statements is TRUE concerning member firms' suitability requirements for
institutional investors?
Institutional investors are exempt from SRO suitability requirements
The SRO suitability requirements apply unless the account is defined as a Qualified Institutional Buyer
The suitability requirements are more stringent than those of retail accounts
The suitability requirements are less stringent than those of retail accounts: The suitability requirements
are less stringent than those of retail accounts
Institutional investors are subject to FINRA suitability requirements, but they are less stringent than
those of retail accounts
2. Which of the following is NOT monitored by a technical analyst?
Technical analysts use price and trading volume information.
Dividend payout ratios would be important to a fundamental analyst.
3. A client's market order to sell is executed at $21.35; however, the client is told that it was executed at
$21.85. In this case, the customer will:
Cancel and rebill the original order
Receive $21.85
Receive $21.35
,File a complaint: Receive $21.35
4. Relative to a convertible bond, which of the following choices will produce a desirable arbitrage
situation?
The stock is at parity with the bond
The stock is at a premium to parity and the bond is trading at par
The stock is at a discount to parity and the bond is trading at par
The yield on the bond equals the yield on the stock: The stock is at a premium to parity and the bond is
trading at par
An arbitrage situation occurs when there is a price difference in comparable securities. If the stock is
selling above parity, the value of the stock received from converting the bond is more than the value of
the bond.
5. A municipality is issuing 50,000 bonds at a public offerings price of $1,000. The manager of the
underwriting syndicate receives $1.25 per bond. The total takedown is $8.75 per bond and the selling
concession is $5.00 per bond. What amount will the issuer receive?
$991.25 per bond for a total of $49,562,500
$990.00 per bond for a total of $49,500,000
$985.00 per bond for a total of $49,250,000
$1,000.00 per bond for a total of $50,000,000: $990.00 per bond for a total of $49,500,000
The members of the underwriting syndicate receive $8.75 for bonds they sell.
This is the total takedown which is composed of a selling concession of $5.00 per bond and an
additional takedown of $3.75 per bond for their risk.
The total spread is $10.00 ($1.25 manager's fee plus $3.75 to the syndicate for risk plus a $5.00 profit
for the sale of the bonds)
, 6. A company is in the process of an initial public offering. The issuer has asked what action it would
need to take in order to register the securities in nine states. It is important for the issuer to make sure
the:
Issuer has registered the securities in all nine states
Registered persons offering the securities are registered in all nine states
Broker-dealers offering the securities are registered in all nine states
Issuer's securities are exempt from state registration requirements in all nine states: Broker-dealers
offering the securities are registered in all nine states
State securities laws (blue-sky laws) are designed to protect investors from fraudulent securities
dealings.
In addition to federal filing requirements, issuers may be required to register the securities in any state
where they anticipate sale
The issuer's only requirement is to register the securities in all nine states. Broker-dealers and their
representatives are required to register in any state in which they are offering the securities to clients
residing in that state.
7. Which of the following persons establishes positions in secondary market municipal bonds for a
broker-dealer?
Underwriter
Trader
Agent
Principal: Trader
A trader is responsible for positioning (carrying inventory) secondary market municipal bonds.
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