The net asset value of a mutual fund was $9.72 last month. This month it is calculated at $9.85.
What is the change in value called?
appreciation. That's the correct term for increase in value.
Bubba held one XYZ July 30 listed call option when XYZ split 2 for 1.
What is the resulting position, Bubba has on the Option Clearing Corporation's record?
long two XYZ July 15 calls. Double the number of contracts and half the strike price. This is similar to XYZ shareholders doubling the number of shares they hold at the lower price.
Municipalities are most likely to issue notes for which of the following purposes?
short-term cash needs. Notes are generally used for short-term needs.
In a best efforts distribution of a new non-exempt issue, a broker/dealer:
acts as an agent for the issuer. In a best efforts offering the investment banker acts as an agent for the issuer and makes no guarantee about selling the securities.
In regard to discretionary accounts, which of the following statements is correct?
both B and C. Choice A is the opposite of a discretionary account. Both B and C are standard procedures for a discretionary account.
A tax shelter specifically designed for small employers is:
a SIMPLE. IRAs are for any individuals, not just small employers. The other choices do not exist.
The price an investor pays for a listed option is called the
premium. That's the term for the option cost.
Under what circumstances may a municipal securities dealer guarantee a customer against loss in market value of bonds?
under no circumstances. No guarantees may be made against loss of market value because no one can guarantee the direction of the market. Insured bonds are protected against loss of principal and interest but not against market value depreciation.
A revenue bond is issued by a state agency. The state legislature is granted authority to apportion money to support the debt services if necessary, but is not legally obligated to do so.
What type of bond is this?
moral obligation. The lack of a legally binding obligation removes the issue from the general obligation category. Although defaults are possible, it is usually held that no state legislature would allow a moral obligation issue to default.
Which of the following best describes depreciation?
deductions from gross income to offset lower value of equipment. Depreciation is the deduction of costs for capital assets as their value declines.
The FINRA markup policy applies to:
agency sales OTC. Markup policy applies to basically all securities other than government and municipal offerings expect where the security is offered under a current prospectus. Choices C and D are offered under a prospectus. Choice B involves municipal securities. Therefore, choice A is the only correct answer.
Regulation T is set at 50%. Bubba's account contains long positions in the following securities with the prices listed:
100 ABC $30
200 XYZ $70
200 QBB $40
200 KKK $25
Total market value = $30,000
Debit balance in the account = $12,000
Net equity balance of the account = $18,000
Bubba wants to buy 100 shares of DUM at $30 per share and 100 shares of OUT at $120. How much how much value of additional securities must Bubba deposit in lieu of depositing cash?
$9,000. Since the required cash to deposit is $4,500 and Reg T is 50%, Bubba may deposit $9,000 of securities.
In which of the following is not a case where a deed to a condominium qualifies as a security?
there is a 14-day owner usage provision. This provision is unrelated to qualification as a security.
In a monthly review of customer statements, Bubba notices that one of his firm's clients has paid for seven purchases five days late.
What does he do?
ascertains that extensions had been obtained under Reg T. If valid reasons exist, extension of time for payment may be obtained.
Which of the following securities is traded only in the over-the-counter market?
open-end investment companies. Open-end mutual funds are a continuous offering of new securities that are not traded on an exchange. They trade only in the over-the-counter market. The other choices may trade over-the-counter or on exchanges.
