Exam (elaborations)
STC Series 7 - Examination 1 with 100- correct answers(graded A+).
- Course
- Institution
STC Series 7 - Examination 1 with 100- correct answers(graded A+).
[Show more]
Content preview
STC Series 7 - Examination 1with 100% correct
answers(graded A+)
1. A market order to buy should be executed at the:
a. Highest bid available
b. Lowest bid available
c. Highest offer available
d. Lowest offer available - answer (D) A market order to buy should
be executed at the lowest offer price available. A market order to
sell should be executed at the highest bid price available. (11-1)
2. All of the following enforce MSRB rules EXCEPT the:
a. Comptroller of the Currency
b. FINRA
c. MSRB
d. SEC - answer (C) The MSRB has no enforcement power. The SEC
and FINRA enforce municipal regulations for
broker-dealers. The Comptroller of the Currency, FRB, and FDIC
enforce municipal regulations for dealer banks. The MSRB
establishes its rules but has no enforcement powers. (10-10)
3. How long after a new issue is registered for sale will it be shown
on the Nasdaq system?
a. On the effective date
,b. 10 days after the effective date
c. 30 days after the effective date
d. 45 days after the effective date - answer (A) A new issue will
appear on the Nasdaq system on the effective date of the issue. The
effective date, which is determined by the SEC upon completion of
the registration process, is the first date that the securities may be
sold to the public. (12-2)
4. An investor purchases a BAT Sept 30 put @ 2 and also writes a
BAT Sept 40 put @ 8. The investor will profit if:
I. The spread widens to more than 6
II. The spread narrows to less than 6
III. Both options expire
IV. Both options are exercised
a. I or III
b. I or IV
c. II or III
d. II or IV - answer (C) The position described is a spread. The
investor received more (8) for the put that he sold than he paid (2)
for the put that he purchased. The spread is therefore a credit
spread and the investor wants the spread to narrow. If both options
expire, the investor gets to keep the 6 points of net premium and
would have a profit. (15-23)
5. Which of the following are entitled to participate in a Keogh Plan?
I. A self-employed doctor
II. A security analyst who made $2,000 giving public lectures on
technical analysis
,III. An engineer of a corporation who made $5,000 making public
speeches on his specialization
IV. An executive of a corporation who re¬ceived $5,000 in stock
options from his corporation
a. I and II only
b. II and III only
c. I, II, and III only
d. I, II, III, and IV - answer (C) An individual with self-employed
income may establish a Keogh. Of the choices given, a doctor could
participate because he is self-employed.
The security analyst and the engineer could set up a plan for the
income they derived from outside self-employed activities. An
executive of a corporation who received $5,000 in stock options
could not participate because he is not self-employed. (17-10)
6. An investor is in the 28% tax bracket. Which of the following
investments would afford him the best after-tax yield?
a. A 5% municipal bond
b. A 5 3/4% corporate bond
c. A 6 1 /2% yankee bond
d. A 6 3/4% convertible bond - answer (A) The 5% municipal bond
would offer the best after-tax yield because the interest income is
completely free from federal income taxes. The other investments
are types of corporate debt subject to federal income taxes and 28%
of the income received would be taxable. The taxable equivalent
yield of the 5% municipal bond is 6.94%. This is calculated by
dividing the 5% municipal yield by the complement of the tax
bracket which is 72%. The result is greater than the other choices.
(8-26)
7. A specialized or specialty fund invests in stocks that are
primarily:
, a. In many industries
b. In a particular industry or geographical area
c. Traded in the OTC market
d. Special situations - answer (B) A specialized or specialty fund is
a type of a fund that invests primarily in a particular industry or
geographical area. (18-8)
8. A broker-dealer that is an MSRB member firm sells bonds to one
of its customers. If the broker-dealer is NOT a member of the
syndicate, the firm is entitled to the:
a. Total takedown
b. Additional takedown
c. Syndicate expenses
d. Concession - answer (D) A broker-dealer that is not a member of
the syndicate selling part of a new issue of municipal bonds is
entitled to the concession. A member of the syndicate is entitled to
the additional takedown plus the concession, which is also known as
the total takedown. (10-8)
9. A customer sells 100 shares of CM short. CM pays a 5% stock
dividend. When the customer covers the short position, the
customer will have to deliver:
a. 5 shares of CM
b. 100 shares of GM
c. 105 shares of GM
d. None of the above - answer C) When a customer sells short, the
brokerage firm borrows stock to deliver it to the buyer.
All cash and stock dividends paid are the responsibility of the
customer who sold the stock short. In this example, GM paid a 5%
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 GUARANTEEDSUCCESS. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $14.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
82265 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now