Green light missed Test Questions with Answers
A member firm is required to send duplicate account statements to FINRA: - Answer-If the customer is an employee of FINRA
A member firm is required to send duplicate account statements to FINRA when a customer of the firm is an employee of FINRA. T...
Green light missed Test Questions with
Answers
A member firm is required to send duplicate account statements to FINRA: - Answer-If
the customer is an employee of FINRA
A member firm is required to send duplicate account statements to FINRA when a
customer of the firm is an employee of FINRA. The member firm would need written
instructions from the employee of FINRA when opening an account in order to send the
duplicate account statements.
Which of the following securities trade without accrued interest? - Answer-Treasury bills
What is meant by 4.50% less 3/4 for a municipal bond selling in the secondary market?
- Answer-$1,000 bond at 4.50 yield less $7.50
Quotes for serial municipal bonds are usually per $1,000 and on a yield-to-maturity
basis. The less 3/4 represents the concession or discount offered to another dealer (3/4
point = $7.50).
The relative of an 85-year-old account holder contacts the registered representative of
the account and requests that funds be transferred to her account which is also held at
the same firm. If the RR suspects financial exploitation, which of the following is the
BEST course of action? - Answer-Attempt to resolve the matter with the customer prior
to placing a temporary hold.
A bond with a 4% coupon is priced at a 3.20 basis. If the bond's yield-to-maturity
decreased by 10 basis points, the yield would be: - Answer-3.10%
If a bond is priced at a 3.20 basis, this means that it is priced to yield 3.20 or has a YTM
of 3.20%. If the bond's basis decreased by 10 basis points, the new yield-to-maturity is
3.10%. The fact that the bond has a 4% coupon rate is relevant for determining whether
the bond is trading at a premium or discount to par value. Since the bond's YTM is less
than 4%, the bond is trading at a premium.
A customer owns 1,000 shares of LRR preferred stock and the company is in the
process of conducting a rights offering for its common stock. Under the terms of the
rights offering, two rights are required to buy one new share and the subscription price
is $25 (the stock's current market price is $26.50). This customer would be entitled to
which of the following? - Answer-No additional shares
, As far as rights offerings are concerned, preferred stockholders do not have the right to
subscribe to the offering. Instead, rights offerings are made available to common
stockholders.
A doctor receives an inheritance of $250,000. She is concerned how this may affect her
tax situation. The doctor inquires about where she should park the money while she
obtains professional tax advice. Which of the following recommendations is the MOST
appropriate? - Answer-A municipal money-market mutual fund
Which of the following activities does NOT take place during the cooling-off period? -
Answer-Stabilizing the issue
When a new stock issue is going to be offered, a registration statement must be filed
with the SEC. After the filing, there is a period when the SEC reviews the information to
ensure full disclosure. During the cooling-off period, a preliminary prospectus (red
herring) is prepared to be used to receive indications of interest from the public. The
issue must be registered in each state in which it will be sold according to state (Blue-
Sky) laws. Prior to the completion of the final prospectus, a due diligence meeting is
held where all concerned parties (issuer and underwriter) meet to insure that everything
has been done properly. Stabilization of the issue takes place after the new security is
selling in the market.
A customer is concerned about an investment in his portfolio. He will be traveling for the
day and wants his registered rep to sell 500 shares of the stock whenever the rep feels
the time is right. Which of the following is true regarding these instructions? - Answer-
The registered rep can determine the time to sell the shares.
Once verbal authorization is received from a customer, an RR may select the price
and/or time of execution if the customer has specified (1) whether to buy or sell, (2) the
specific security, and (3) the amount to be bought or sold. Without these three details,
written discretionary authority is required. However this only applies to transactions on
one day. In order to initiate transactions for more than one day the registered
representative would have to have written discretionary authority.
Which of the following CMOs has the MOST prepayment risk? - Answer-Support or
companion tranches
The planned amortization class (PAC) is a type of CMO that is designed for more risk-
averse investors and provides a predetermined schedule of principal repayment, as
long as mortgage prepayment speeds are within a certain range. This greater
predictability of maturity is accomplished by establishing a sinking-fund type of
schedule. The PAC tranche has top priority and receives principal payments up to a
specified amount. Any excess principal goes to a companion or support tranche that
has lower priority. Holders of the companion tranche are generally compensated for this
risk with higher yields.
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