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Knopman Marks - Practice Exam Questions with Correct Answers
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Knopman Marks - Practice Exam Questions with Correct Answers
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Knopman Marks - Practice Exam Questions withCorrect Answers
Discretionary trades Correct Answer-trades where the customer does not
specify the type of security, type or transaction or quantity. For a
discretionary trade, a RR must have discretionary authority. An order
that leaves time and price open is not discretionary
Non-Qualified Plan Correct Answer-a retirement plan where
contributions are made on an after-tax basis. Invested funds grow on a
tax-deferred basis until withdrawn by employee
An investor concerned rising prices would most likely invest in a
________ _______, as its equity exposure provides a hedge against
inflation. Correct Answer-variable annuity
Fixed annuities lose purchasing power as prices _______. Correct
Answer-increase
Specially Designated Nationals (SDN's) are created in pursuant to
Correct Answer-USA Patriot Act
Transactions on SDN's list are specifically prohibited by _______
______. Correct Answer-federal law
Loans for close friend and client permissable? Correct Answer-w/
advance written consent from her firm
,A correspondence includes Correct Answer-any written communication
distributed or made available to 25 or fewer investors w/in 30-calendary
day period.
ex: IMs, emails
Bonds w/ long maturity offer: Correct Answer-stability of income due to
constant, semi-annual interest payments to the bondholder.
They also fluctuate more in market value w/ change in underlying
interest rates than comparable short-term debt.
Credit risk is the risk that Correct Answer-a borrower will be unable to
make the required payments on the loan to the lender, incl. interest and
principal. Note: lender collects req. payments from borrower
In a corporate liquidation, preferred stockholders can recover their
investments after Correct Answer-all unpaid wages, taxes, and
unsecured and secured liabilities are paid
Bondholders -> preferred stockholders -> common stockholders
STRIPS Correct Answer-zero coupon bonds (typically w/ maturities of
10 years+) that are backed by the US Treasury; no reinvestment rate risk
since there are no CF's to reinvest each year into the market.
, instead of paying coupon payments, investors buy at a discount and
receive full face value @ maturity, which is treated as interest income
and taxed at federal level only
Industrial Development Revenue bonds Correct Answer-taxable
municipal security issued by a municipality on behalf of a corporation.
Bonds are backed by lease payments made by the corporation, the debt
is the responsibility and credit quality of the corporation.
The interest income on federal agency securities (GNMA, FNMA) is
taxed at Correct Answer-federal, state, and local level.
Interest income on treasury securities is taxed @ Correct Answer-federal
level only
Money market funds typically invest in Correct Answer-short-term debt
instruments instead of corporations and banks
A closed end investment company may trade at a premium or discount
to its ___ ______ _____. Correct Answer-net asset value
Variability annuity
US Treasury Securities
Money Market Funds
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