Quiz 1

Which of the following statements regarding the SRO is/are TRUE? *

FINRA’s Uniform practice Code determines the discipline for those violating its rules

The MSRB formulates and interprets its rules, but does not enforce them

The CBOE provides a trading venue for ETFs

FINRA is responsible for enforcing MSRB rules

What type of securities are acquired through a private placement? *

Locked Securities

Secured Securities

Restricted Securities

Prohibited Securities

What is the holding period for restricted stock and control stock? *

Restricted stock is 6 months, no holding period for control stock

Restricted stock is 4 months, no holding period for control stock

Restricted stock is 6 months, with holding period for control stock

Restricted stock is 4 months, with holding period for control stock

How many shares can be sold when filing Form 144? *

The greater of 1% of the outstanding shares or the average weekly trading volume over the previous 4 weeks

Preemptive rights have immediate intrinsic value: *

True

False

Warrants must be exercised within a short period from issuance *

True

False

Customers must be aware of a broker-dealer’s control relationship after the trade *

True

False

Only one broker-dealer can be used when an issuer is purchasing its own stock *

True

False

Which statements are true? *

A bond’s current yield is also referred to as its basis

If interest rates are rising, bond prices are falling

When bond yields are falling, bond prices are falling

If a bond is trading at par, its coupon rate, current yield, and yield-to maturity are the same

Which of these is true? *

Issuers will likely call bonds when interest rates are low

Issuers will make tender offers for their bonds when interest rates are low

Bondholders will exercise put provision when interest rates are high

An issuer may call its bonds during call protection periods

Which of these statements are TRUE with regards to underwritings? *

Syndicates are created so that multiple firms share in the liability of a bond offering

Voter approval is normally required when issuing GO Bonds

Feasibility studies are used when issuing revenue bonds

The issuer and underwriter work out the offering terms in a competitive sale

Which of these statements are TRUE with regards to corporate bonds? *

Buying corporate bonds put an investor’s capital at less risk than purchasing stock

With corporate bonds, the corporation gives up control as well as a portion of profits

Interest must be paid on bonds before dividends are paid on stock

The corporation is required to repay the money that was borrowed plus interest

MM SIE Exam Prep