Unit 11
Your customer purchased 300 shares of XYZ stocks six months ago and sold the shares last week. The actions your customer took in relation to XYZ were to
buy long and sell long.
Which of the following is a lagging indicator?
D) Raw materials orders
C) Increase in the consumer loans to personal income ratio
When the money supply in the economy increases, what happens to interest rates and how does that affect consumer borrowing and spending?
Interest rates go down, hence borrowing and spending for consumers is easier.
Call risk is most closely associated with
reinvestment risk
A licensed person leaves the industry for full time military service. What happens to her license?
It is placed in a special inactive status
A broker-dealer may extend credit under Regulation T for which of these transactions?
A closed-end investment company purchased on the NYSE
Economic headlines state that the consumer prices are rising while unemployment remains high. This indicates the economy is experiencing
stagflation
XYZ Technology Corporation common stock currently trades at $60 per share and pays a $0.30 dividend. What is XYZ's current dividend yield?
2% --> (0.30 × 4)/30 = 1.2/60 = .02 (2%)
Holding a callable bond with call protection is least impactful for the investor when
interest rates are rising
Call protection is a period of time when the bond can not be called so why would an issuer call the bond when interest rates are rising...they wouldn't cuz they wanna keep the lower interest rate they're paying the bond owner
Upon termination a member firm must file a Form U5 within how many days?
30 days
A customer of a broker-dealer sells 300 shares of stock at $50 per share and leaves the proceeds in the account. After settlement, the proceeds are
available to the customer on demand.
According to the U.S. Commerce Department, the economy is in a recession when a decline in real output of goods and services lasts
6 months or more
A customer purchased 100 shares of MNO common stock two years ago for $20 per share. They now sell the shares for $23 per share. Over the last two years MNO has paid a $0.25 quarterly dividend. What is the total return?
25%
Total Return = ((Capital Gain or Loss + Income Received) / Cost Basis)) *100
= (($300 + (.25*8*100 shares) / $5,000)) / 100
Advantages to the investor offered by investment companies include
I. ability to invest small amounts in many different securities.
IV. increased purchasing power in the marketplace.
Automatic disqualification for an individual to be registered in the securities industry would not include
D) having been found to enter a misstatement in the application for membership.
The minimum initial requirement when purchasing 100 shares at $30 in a new account would be
$2,000
When the Federal Open Market Committee (FOMC) directs that Treasury securities be purchased in the open market, this will do which of the following?
A) Increase interest rates on loans to consumers
B) Have no impact on lending rates to consumers
C) Tighten the money supply
D) Lower interest rates on loans to consumers
D) Lower interest rates on loans to consumers
Your customer purchased Buymore Stores stock in September and sold it the next year in October for a profit. This profit will be reported for tax purposes as
long-term capital gian
The Dow Jones Industrial Average (DJIA) is a widely cited measure of the performance of the U.S. stock market. How many stocks are tracked within the average?
30
If a registered representative terminates his association with a member firm, how long can he be away (not associated with a member firm) before he must retest to again be registered?
2 years
A customer of a securities firm has concluded that selling short would be an effective trading technique to reach his investment goals. Assuming the firm's principal agrees to permit the customer to effect short sales, what type of account would be most suitable for short selling?
Margin account
Which of the following is the rate of interest charged by the Federal Reserve Bank (FRB) for short-term loans to its member banks?
discount rate
Your client, Dana McCann, just purchased a 20-year City of Salt Lake School District bond for $800. The bond has a stated rate of 4%. The current yield is
Current Yield = Coupon / Price of Bond
= (.04*100) / $800
= 40 / 800
=5%
An investor holding a 4.5% callable bond has it called away by the issuer when interest rates fall to 3.5%. This is an example of
D) business risk, which can lead to financial risk.
An individual would most likely be statutorily disqualified from working in the securities industry for which of the following reasons?