7 Hour USPAP Eaxm with correct Answers graded A+

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) I and III. - CORRECT ANWERS-D) I and III. The Trade Reporting and Compliance Engine (TRACE) is the FINRA approved trade reporting system for corporate bonds trading in the OTC secondary market. It is not an execution system. Both sides of a TRACE eligible transaction are required to report a trade when it occurs. All of the following would be considered nonpublic arbitrators EXCEPT A) Joel, an attorney who frequently represents and solicits clients in disputes concerning investment accounts B) Daniel, a mutual fund portfolio advisor for several years before retirement last month C) Susan, a corporate vice president working for a tech company listed on the NYSE D) Grace, a banking executive overseeing lending services - CORRECT ANWERS-C) Susan, a corporate vice president working for a tech company listed on the NYSE Nonpublic arbitrators are any persons who have worked in the financial industry for any duration during their careers including persons associated with a mutual fund or a hedge fund, and persons associated with an investment adviser. Additionally, any financial industry professionals who regularly represent or provide services to investor parties in disputes concerning investment accounts or transactions including attorneys and accountants will also be considered non-public arbitrators if the activity has taken place within the past 5 years. Which of the following terms or phrases does NOT apply to REITs? A) Redeemable. B) Secondary market. C) Managed. D) Dividends taxed at full ordinary income rates. - CORRECT ANWERS-A) Redeemable. REITs trade in the secondary market and are not redeemable. The real estate portfolio is actively managed, and dividends paid by REITs do not meet the requirements to be taxed as qualified dividends and are, therefore, taxed as ordinary income.