Question 1

Book value of a corporation is also know as:
A)net tangible asset value per share
B)intangible value
C)par value
D)dilution value

Accepted Answer

net tangible asset value per share. Book value is much easier to say.

Question 2

Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account. He may do so by depositing stocks with a market value of:
A)$9,333
B)$5,714
C)$4,000
D)$2,800

Accepted Answer

$9,333. If Bubba were depositing cash, he would need $2,800 (70% x $4,000). Since he is depositing stock, he would have to deposit enough with loan value of $2,800. To arrive at this, divide $2,800 by the 30% loan value to obtain $9,333.

Question 3

Bubba owns 100 shares of XYZ at $58. He needs to limit his loss to 5 points or less and will accept a longer time for the order to be executed, to make sure the loss does not exceed 5 points. Which of the following orders would be the best recommendation?
A)sell limit order
B)sell stop-limit order
C)sell stop order
D)buy stop order

Accepted Answer

sell stop-limit order. A sell stop-limit order specifies a price, but will not turn into a market order. This order will only get executed at the price or better. Stop orders, although quicker in execution, will turn into market orders and the customer will not be guaranteed a specific price. Stop-limit orders are risky, in that the order may or may not get executed, but in this situation, it is the best choice.

Question 4

Under what conditions may an FINRA member firm sell an IPO to an employee of another broker/dealer?
A)if the amount of the purchase is small and the transaction accords with the employee's normal investment practice
B)if the member firm notifies the other broker/dealer of the transaction
C)if the employing broker/dealer guarantees that resale of the securities acquired by its employee will be restricted for two years
D)under no circumstances

Accepted Answer

under no circumstances. An FINRA member firm may not, under any circumstances, allocate shares to itself, any of its employees, or to any employee of a firm that underwrites securities.

Question 5

Under a leaseback arrangement used to finance construction of local schools, who is the issuer of the municipal bonds?
A)the state in which the schools are located
B)the local school district
C)a legal authority created for this purpose
D)a public housing authority commissioned by the federal government

Accepted Answer

a legal authority created for this purpose. Bonds with a leaseback arrangement are issued by a specially created entity.

Question 6

A financial institution requesting a quote on a block of 100 bonds from a dealer in government securities receives a quote of 98.02 bid, 98.06 asked. What is the dollar amount the institution will receive if the financial institution sells these bonds to the dealer?''
A)$98,062.50
B)$98,187.50
C)$98,250.00
D)$98,750.00

Accepted Answer

$98,062.50. The financial institution receives the bid price, which is 98 and 2 / 32. Two thirty-seconds is $0.625. The 98 is the percentage of a $1,000 bond. Multiplying 98% by $1,000 results in $980. Add $0.625 to $980 to arrive at $980.625 per bond. But…there are 100 bonds. So, multiplying $980.625 by 100 equals $98,062.50.

Question 7

Convertible preferred stock has all of the following characteristics except:
A)a lower dividend rate than non-convertible preferred
B)a dilution of earnings if converted into common stock
C)a requirement for shareholders to always accept the call price when called
D)required dividend payments to shareholders before any dividends are paid to holders of common stock

Accepted Answer

a requirement for shareholders to always accept the call price when called. All of the other statements are true "except" this one. Convertible preferred shareholders have an opportunity to convert to common stock. There is no forced call price.

Question 8

Which of the following municipal bonds may be grouped under the classification of "revenue bonds"?
A)special tax
B)new housing authority
C)general obligation
D)limited tax

Accepted Answer

special tax. The other categories are not revenue bonds. Special tax is the only type that fits the general grouping.

Question 9

In a triple net lease, which of the following is the tenant not responsible for paying?
A)taxes
B)financing charges
C)insurance premiums
D)maintenance

Accepted Answer

financing charges. In a triple net lease, the tenant is responsible for taxes, insurance, and maintenance.

Quiz 3: Assorted Securities and Investments

Book value of a corporation is also know as:

Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account. He may do so by depositing stocks with a market value of:

Bubba owns 100 shares of XYZ at $58. He needs to limit his loss to 5 points or less and will accept a longer time for the order to be executed, to make sure the loss does not exceed 5 points. Which of the following orders would be the best recommendation?

Under what conditions may an FINRA member firm sell an IPO to an employee of another broker/dealer?

Under a leaseback arrangement used to finance construction of local schools, who is the issuer of the municipal bonds?

A financial institution requesting a quote on a block of 100 bonds from a dealer in government securities receives a quote of 98.02 bid, 98.06 asked. What is the dollar amount the institution will receive if the financial institution sells these bonds to the dealer?''

Convertible preferred stock has all of the following characteristics except:

Which of the following municipal bonds may be grouped under the classification of "revenue bonds"?

In a triple net lease, which of the following is the tenant not responsible for paying?