Green Light Test Questions with Correct Answers
Which of the following statements is NOT TRUE regarding dividends?
A growth company normally has a low dividend payout ratio
A stock dividend creates a current tax liability when received
A blue-chip company has a long history of paying dividen...
Green Light Test Questions with
Correct Answers
Which of the following statements is NOT TRUE regarding dividends?
A growth company normally has a low dividend payout ratio
A stock dividend creates a current tax liability when received
A blue-chip company has a long history of paying dividends
The market price of a preferred stock is influenced by its dividend payout - Answer-A
stock Divided creates a current tax liability when received
A corporation is in the 34% tax bracket. Which of the following choices provides the best
return if the corporation wants to invest some of its surplus cash?
A preferred stock paying a 7.50% dividend
A corporate bond yielding 8%
A common stock yielding 6%
A municipal bond yielding 6% - Answer-A preferred stock paying 7.5% dividend
Mr. Smith is short 1,000 shares of ABC Corporation at $100. Mr. Smith enters GTC
orders to buy either 1,000 shares of ABC at $95 if it declines, or buy 1,000 shares at
$105 stop if it should go up. ABC Corporation declines to $95 but Mr. Smith is able to
buy only 300 shares. The order should be revised to:
Buy 700 at $95 and buy 700 at $105 stop
Buy 700 at $95 and buy 1,000 at $105 stop
Buy 1,000 at $95 and buy 700 at $105 stop
Buy 1300 at 95 and 1300 at $105 stop - Answer-Buy 700 at $95 and buy 700 at $105
stop
Duties of the designated market maker on the NYSE include which of the following
responsibilities?
1. Maintaining a fair and orderly market in selected securities
2. Appointing floor brokers
3. Resolving trade imbalances
4. Arbitrating disputes between member firms - Answer-1, 3 only
An investor purchases a 20-year 5.30% bond at par value that will yield 5.75% if called
at the first call date in five years. The yield to maturity on the bond is:
5.30%
More than 5.30%
Between 5.30% and 5.75%
5.75% - Answer-5.3%
, If a municipal bond has a basis of 5.25, and its coupon rate is 4 3/4%, the bond is
selling: - Answer-Below par
All of the following statements regarding commercial paper are TRUE, EXCEPT it:
May be placed (sold) by a broker-dealer
May be placed directly by the corporation
Is issued by a corporation for cash flow purposes
Is backed by a pledge of a corporation's specific assets - Answer-Is backed by a pledge
os a corporations specific assets
An investor's goal is to buy a security that establishes a fixed return, for a long period,
with no reinvestment risk. Which of the following securities BEST suits the investor's
needs?
Treasury bonds
Common stock
Highly rated corporate bonds
Treasury STRIPS - Answer-Treasury STRIPS
A level debt service bond issue is one in which: - Answer-Combined annual interest and
principal payments are equal
Given the following choices, in which security would a pension fund manager LEAST
likely invest?
Treasury notes
AA-rated corporate bonds
Blue-chip stocks
Municipal bonds - Answer-Municipal bonds
Which TWO of the following investors are considered equity owners of a corporation?
Holders of common stock
Holders of warrants
Holders of preferred stock
Holders of rights - Answer-Holders of common stock
Holders of Preferred stock
You are a registered representative at a member firm. Which of the following persons
are bound by industry rules when opening an account at another member firm? -
Answer-Your Spouse and Minor child
A client purchases $800,000 of stock in a margin account and deposits the Regulation T
margin requirement. If the current value of the stock is $700,000 and the broker-dealer
declares bankruptcy, SIPC would cover: - Answer-300,000
A customer has a nondiscretionary account at a broker-dealer. The customer owns
1,000 shares of a stock that is the subject of a news article detailing an SEC
investigation. Which of the following actions is MOST appropriate for the registered
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