Series 7 Part 4

Front 1

The common stock of ABC Corporation currently earns $3 per share. If the price-to-earnings ratio for this stock is 14, what is the current market price?

Back 1

42

Front 2

The S&P 100 index closed on August 10 at 536.04. "The Wall Street Journal" quotes the closing premium for the OEX September 510 call at 28.90. The time value of the contract is:

Back 2

2.86

Front 3

ABC, a publicy held Corporation, decides to issue shares in an additional public offering. If the APO is for an additional 1 million shares and 60% of the shares are subscribed to in the preemptive rights offering, how many shares will the standby underwriter for this offering have available to sell to the public?

Back 3

400,000

Front 4

Your client has a combined margin account. The value of the long stock position has increased by $5,000, and the value of the short stock position has dropped by $2,000. What is the net change to the equity in the account?

Back 4

$7,000 increase

Front 5

An investor purchases 100 shares of CDE on December 20, 2000 for $2,000. On the same day, he purchases 100 shares of QRS for $2,000. On January 3, 2001, he sells the CDE stock for $1,700 and the QRS stock for $2,200. On January 24, 2001, he purchases 200 shares of CDE for $3,000. What capital gains or losses did he realize from these transactions?

Back 5

$200 gain in QRS

Front 6

When a registered representative recommends a municipal bond purchase to a customer, which of the following would be of LEAST consideration regarding suitability?

a. customer's tax bracket

b. the intended use of funds raised by the issue

c. customer's state of residence

d. bond's rating

Back 6

b. the intended use of funds raised by the issue

Front 7

A stock pays a $0.50 quarterly dividend. The company had earnings per share last year of $10. The companies dividend retention ratio is:

Back 7

80%

Front 8

What are 2 characteristics of commercial paper?

Back 8

short-term debt instrument

unsecured debt

Front 9

At which stage of the money-laundering process are illicit funds most susceptible to detection?

Back 9

Placement

Front 10

If a customer went long 10 swiss franc puts (10,000 SF per contract) for a premium of 5.25 each, how much can the client lose on the total position of 10 contracts?

Back 10

5250

Front 11

An investor has an established margin account with a current market value of $13,500 and a debit balance of $4,775 with Regulation T at 50%. How much excess equity does the investor have in the account?

Back 11

1975

Front 12

Which of the following best describes an intangible drilling cost?

Back 12

labor, fuel, or drilling rig rental

Front 13

Corporate bonds that are guaranteed are:

Back 13

guaranteed as to payment of principal and interest by another corporation

Front 14

Broker/Dealers are required to maintain customer identification programs (CIPs) and to check the names of new clients againsts

Back 14

a list of specially designated nationals (SDNs) maintained by the Office of Foreign Assets Control

Front 15

Who is responsible for ensuring that a corporation does not have more shares of stock outstanding than it has been authorized to issue?

Back 15

Registrar

Front 16

If a customer buys 1 XYZ Aug 50 put at 1, and sells 1 XYZ Aug 65 put at 10 when XYZ is at 58, what is the maximum risk?

Back 16

600

Front 17

A customer owns a 7 1/2% ABC convertible bond currently trading at 115. The conversion price is $40. What is the parity price of the common?

Back 17

$46

Front 18

By which government is the income from eurodollar bonds always taxed?

Back 18

Government of the country in which the investor pays taxes

Front 19

If a customer writes 1 Jul 80 put at 7 and the put is exercised when the market price is at 70, for tax purposes, what is the effective cost basis of the stock put to the seller?

Back 19

73

Front 20

Your customer in his early 30s has received a modest inheritance from a relative. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable?

Back 20

variable annuity

Front 21

Which of the following acts requires full and fair disclosure of all material information about equity and debt securities ofered for the first time to the public?

Back 21

Securities Act of 1933

Front 22

MSRB rules prohibit dealers from entering into which of the followin transactions with a mutual fund?

Back 22

Accepting portfolio trades from the fund as compensation for sales of the fund's shares

Front 23

An officer of QRS, inc. while talking to his next-door neighbor (a registered representative), mentions that QRS plans to announce its takeover of another corporation next week. Based on this information, what should the registered representative have his customers do?

Back 23

No recommendation should be based on this information.

Front 24

An analyst interested in measuring the breadth of market movement as an indicator of future market direction would monitor the:

Back 24

advance/decline line

Front 25

A customer buys an Oct 79.50 foreign currency call on the Australian dollar. The Australian dollar spot price is 89.73, and the option contract size is 10,000 Australian dollars. If the option contract is offered at 11, what was the customer's total premium paid for the contract?

Back 25

1100

Front 26

Pertinent information required for disclosure to customers in a Regulation A offering is delivered in a(n):

Back 26

offering circular

Front 27

An instrument that illustrates the transfer of title to any dividend, interest, or right that pertains to securities contracted for is called:

Back 27

a due bill

Front 28

the unqualified legal opinion on a municipal bond states that:

Back 28

the issuer has the authority to issue bonds that are legal, valid, and enforceable obligations of the issuer

Front 29

If a customer wishes to change a day order to a GTC order in the middle of the day, the registered representative should:

Back 29

allow the day order to expire at the end of the day and put in the GTC order before the next day's opening

Front 30

A customer, without giving written authorization, may permit a registered representative to exercise his judgement as to:

Back 30

the price at which to enter the order

when to enter the order

Front 31

Which of the following industries is most likely to be considered cyclical?

Back 31

Durable goods

Front 32

Your firm has determined that a person seeking to open an account is on the Office of Foreign Asset Control's (OFAC) list of individuals who are viewed as threats to the United States. Who must oversee your firm's dealings, if any, with this individual?

Back 32

An officer of the firm who has been designated to monitor and check customer names against the Specially Designated Nationals (SDN) list maintained by the OFAC.

Front 33

Which of the following documents sets forth the priority of sale of securities?

Back 33

The syndicate letter

Front 34

A customer purchased a full faith and credit bond. this bond would be known as a:

Back 34

general obligation bond

Front 35

A company's dividend on its common stock is

Back 35

determined by its board of directors

Front 36

A New York Exchange Specialist (designated market maker) is employed by:

Back 36

a member of the exchange

Front 37

Under the Intrastate offering rule (Rule 147) when may a resident purchaser of securities resell them to a nonresident?

Back 37

nine months from the end of the distribution

Front 38

Your client writse 2 ABC November 220 calls at 5, and buys 200 shares of ABC common stock at $220 in his margin account. What is the breakeven point for each covered call position?

Back 38

215

Front 39

An investor owns 100 shares of IBM. Which of the following would make a long hedge?

Back 39

Buying a put on IBM

Front 40

Individuals with diversified stock holdings in their portfolios write covered calls to:

Back 40

increase their rate of return on the stocks held in their portfolio

Front 41

Customers seeking to open an options account may be granted approval by the:

Back 41

branch manager initially, with the subsequent approval of a ROP

Front 42

A customer is short 100 XYZ shares at 26 and long 1 XYZ 30 call at 1. What is the maximum potential loss on the positions?

Back 42

500

Front 43

If a 42 year old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding:

Back 43

accumulation units

Front 44

The ex-date for NYSE-listed issues is set by:

Back 44

the NYSE

Front 45

A taxpayer's MOST advantageous tax benefit is:

Back 45

a tax deduction

Front 46

The maximum amount of securities that can be offered under Regulation A is:

Back 46

$5 million per issuer but no more than $1.5 million for each selling affiliate

Front 47

A customer wishes to close a short option position. The order ticket must be marked as:

Back 47

a closing purchase

Front 48

Which of the following ratios is normally considered adequate coverage of interest and principal charges for a municipal revenue bond?

Back 48

2:1

Front 49

Instead of signing on the back of a security sold, the registered owner could sign on a separate paper called a(n):

Back 49

stock(or bond) power

Front 50

Investor information about the financial condition of a municipal issuer is most likely found in the:

Back 50

official statement