7 Hour USPAP Eaxm with
correct
Answers graded
A+
All of the following are fiduciary accounts EXCEPT: A)
TOD accounts.
B) trust
accounts. C)
estate accounts.
D)
guardian accounts. - CORRECT ANWERS-A) TOD accounts.
Transfer on Death Accounts (TOD) are individual accounts with a designated
beneficiary to receive account assets upon the death of the account owner.
If a writer of an XYZ equity call option is assigned, which of the following should be
delivered to the OCC?
A)
Cash equal to the market value of the underlying XYZ security
B)
Any listed security of comparable value to XYZ
C)
Rights or warrants exercisable to purchase the underlying XYZ security
D)
The underlying XYZ security - CORRECT ANWERS-D)
The underlying XYZ security
When a call is exercised, that specific security must be delivered by the assigned writer.
The option contract does not allow for exercise settlement in cash, securities of
equivalent value, or securities exercisable to purchase the underlying securities such as
rights or warrants.
In analyzing the ability of a company to meet its debt obligations but not wanting to
chance that certain accounting decisions or practices will cloud the picture, one
measure that you might look at is the firm's A) net worth found on the firm's balance
,sheet B) earnings before interest, taxes, depreciation, and amortization (EBITDA),
calculated from the firm's income statement
C)
price-to-earnings (P/E) ratio D) cash flow found on a cash flow
statement - CORRECT ANWERS-B)
earnings before interest, taxes, depreciation, and amortization (EBITDA), calculated
from the firm's income statement
Earnings before interest, taxes, depreciation, and amortization (EBITDA), calculated
from the firm's income statement, is a metric that measures the ability of a company to
repay debt obligations (interest and principal), eliminating accounting decisions and
techniques that might not allow for the best assessment.
The principal tax benefit of investing in an exploratory oil and gas drilling program is
derived from: A) intangible drilling costs. B) capital appreciation. C) recapture. D)
depreciation expenses. - CORRECT ANWERS-A) intangible
drilling costs.
Intangible drilling costs (IDCs), which are a significant portion of all drilling costs, are a
major tax advantage to a limited partner and are tax deductible in the year in which they
are incurred. IDCs are costs that, after incurred, hold no salvage or ongoing value.
Examples are labor and geological survey.
A new customer has given you written authorization to transfer the holdings in his
account at another broker/dealer to his new account at your broker/dealer. Under the
Uniform Practice Code, using the automated customer account transfer system form
(ACATS) the carrying broker/dealer would have how many days to validate the positions
and how many days to complete the transfer after validation?
1 business day to validate.
2 business days to validate.
2 business days to transfer after validation.
3 business days to transfer after validation. - CORRECT ANWERS-D)
I and IV.
Under the Uniform Practice Code the carrying broker/dealer has 1 business day to
validate positions and 3 business days to transfer to the receiving broker/dealer after
validation.
All of the following statements regarding a mark to the market are true EXCEPT:
A) it often occurs in connection with margin transactions. B) it occurs because
of a change in the stock's market value covered by a contract. C)
it may result in a request for additional collateral. D) it
requires the use of a due bill. - CORRECT ANWERS-D) it
requires the use of a due bill.
, A mark to the market occurs when one party to a contract becomes partially unsecured
due to a change in the stock's market value covered by a contract. A mark to the market
is a request for additional collateral.
If an investor opens a new margin account and buys 100 shares of DWQ at 18, with
Regulation T at 50%, what is the investor's initial margin requirement? A) 3600.
B)
1800.
C) 900.
D)
2000. - CORRECT ANWERS-B) 1800.
If the initial transaction is less than $2,000, the investor must deposit 100% of the
market value.
Which of the following would be the least appropriate investment in a traditional IRA for
a 67-year-old client?
A)
Treasury notes.
B)
Variable annuities.
C)
Corporate bonds.
D)
Common stock. - CORRECT ANWERS-B)
Variable annuities.
Why buy a tax-deferred product in a tax-deferred account? A variable annuity will
provide no additional tax savings and will likely increase the expense of the IRA. In
addition to sales and surrender charges, variable annuities may impose other charges
such as mortality and expense risk charges, administrative fees, etc. In less than 4
years, your client will have to begin making withdrawals regardless of any surrender
charges the annuity may impose.
The Trade Reporting and Compliance Engine (TRACE): requires
that both sides of a transaction report the trade. requires only the
sell side of a transaction report the trade. is a reporting system for
corporate bonds trading in the OTC market. is an execution system
for corporate bonds trading on exchanges.
A)
II and III.
B) I and
IV. C)
II and IV.
D)
correct
Answers graded
A+
All of the following are fiduciary accounts EXCEPT: A)
TOD accounts.
B) trust
accounts. C)
estate accounts.
D)
guardian accounts. - CORRECT ANWERS-A) TOD accounts.
Transfer on Death Accounts (TOD) are individual accounts with a designated
beneficiary to receive account assets upon the death of the account owner.
If a writer of an XYZ equity call option is assigned, which of the following should be
delivered to the OCC?
A)
Cash equal to the market value of the underlying XYZ security
B)
Any listed security of comparable value to XYZ
C)
Rights or warrants exercisable to purchase the underlying XYZ security
D)
The underlying XYZ security - CORRECT ANWERS-D)
The underlying XYZ security
When a call is exercised, that specific security must be delivered by the assigned writer.
The option contract does not allow for exercise settlement in cash, securities of
equivalent value, or securities exercisable to purchase the underlying securities such as
rights or warrants.
In analyzing the ability of a company to meet its debt obligations but not wanting to
chance that certain accounting decisions or practices will cloud the picture, one
measure that you might look at is the firm's A) net worth found on the firm's balance
,sheet B) earnings before interest, taxes, depreciation, and amortization (EBITDA),
calculated from the firm's income statement
C)
price-to-earnings (P/E) ratio D) cash flow found on a cash flow
statement - CORRECT ANWERS-B)
earnings before interest, taxes, depreciation, and amortization (EBITDA), calculated
from the firm's income statement
Earnings before interest, taxes, depreciation, and amortization (EBITDA), calculated
from the firm's income statement, is a metric that measures the ability of a company to
repay debt obligations (interest and principal), eliminating accounting decisions and
techniques that might not allow for the best assessment.
The principal tax benefit of investing in an exploratory oil and gas drilling program is
derived from: A) intangible drilling costs. B) capital appreciation. C) recapture. D)
depreciation expenses. - CORRECT ANWERS-A) intangible
drilling costs.
Intangible drilling costs (IDCs), which are a significant portion of all drilling costs, are a
major tax advantage to a limited partner and are tax deductible in the year in which they
are incurred. IDCs are costs that, after incurred, hold no salvage or ongoing value.
Examples are labor and geological survey.
A new customer has given you written authorization to transfer the holdings in his
account at another broker/dealer to his new account at your broker/dealer. Under the
Uniform Practice Code, using the automated customer account transfer system form
(ACATS) the carrying broker/dealer would have how many days to validate the positions
and how many days to complete the transfer after validation?
1 business day to validate.
2 business days to validate.
2 business days to transfer after validation.
3 business days to transfer after validation. - CORRECT ANWERS-D)
I and IV.
Under the Uniform Practice Code the carrying broker/dealer has 1 business day to
validate positions and 3 business days to transfer to the receiving broker/dealer after
validation.
All of the following statements regarding a mark to the market are true EXCEPT:
A) it often occurs in connection with margin transactions. B) it occurs because
of a change in the stock's market value covered by a contract. C)
it may result in a request for additional collateral. D) it
requires the use of a due bill. - CORRECT ANWERS-D) it
requires the use of a due bill.
, A mark to the market occurs when one party to a contract becomes partially unsecured
due to a change in the stock's market value covered by a contract. A mark to the market
is a request for additional collateral.
If an investor opens a new margin account and buys 100 shares of DWQ at 18, with
Regulation T at 50%, what is the investor's initial margin requirement? A) 3600.
B)
1800.
C) 900.
D)
2000. - CORRECT ANWERS-B) 1800.
If the initial transaction is less than $2,000, the investor must deposit 100% of the
market value.
Which of the following would be the least appropriate investment in a traditional IRA for
a 67-year-old client?
A)
Treasury notes.
B)
Variable annuities.
C)
Corporate bonds.
D)
Common stock. - CORRECT ANWERS-B)
Variable annuities.
Why buy a tax-deferred product in a tax-deferred account? A variable annuity will
provide no additional tax savings and will likely increase the expense of the IRA. In
addition to sales and surrender charges, variable annuities may impose other charges
such as mortality and expense risk charges, administrative fees, etc. In less than 4
years, your client will have to begin making withdrawals regardless of any surrender
charges the annuity may impose.
The Trade Reporting and Compliance Engine (TRACE): requires
that both sides of a transaction report the trade. requires only the
sell side of a transaction report the trade. is a reporting system for
corporate bonds trading in the OTC market. is an execution system
for corporate bonds trading on exchanges.
A)
II and III.
B) I and
IV. C)
II and IV.
D)
