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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Seeks Business for the Broker-Dealer from Customers and Potential Customers | 24% | - Prospecting and communication with clients
|
| Topic 2: Provides Customers with Information About Investments | 50% | - Investment company securities and variable contracts
|
| Topic 3: Obtains and Verifies Customers' Purchase and Sales Instructions | 10% | - Order processing and transaction procedures
|
| Topic 4: Opens Accounts After Obtaining and Evaluating Customer Financial Profile | 16% | - Customer account types and documentation
|
1. Which of the following statements regarding CMOs is false?
A) CMOs are considered to have lower risk and, therefore, offer lower returns.
B) CMO investors are divided into classes, and the class determines when the investor will receive
payments of principal.
C) Relative to other bonds, CMOs are illiquid.
D) CMOs are zero-coupon bonds that are backed by real estate.
2. Your cousin has recently attended a seminar on the benefits of diversification. Based on what he learned,
he decided to sell the shares he had in a large stock growth fund and put 50% of his money in hotel stocks
and 50% in airline stocks. Based on this information, you can tell him:
A) that he's less diversified than he was before, but can expect a higher rate of return.
B) none of the above.
C) that he's less diversified than he was before.
D) that he's wise beyond his years.
3. A retirement plan under which the benefit to be paid upon retirement is specified when an employee is
signed up for the plan is known as a:
A) defined contribution plan.
B) 401(k) plan.
C) SIMPLE-IRA.
D) defined benefit plan.
4. Which of the following bonds will experience the greatest percentage change in price for a given change
in interest rates?
A) a bond with 10 years to maturity that pays a 7% coupon
B) a bond with 5 years to maturity that pays a 7% coupon
C) a bond with 10 years to maturity that pays a 5% coupon
D) a bond with 5 years to maturity that pays a 5% coupon
5. Ms. Newbie, a registered representative employed by Savvy Investments, has received a letter of
complaint from a client that Ms. Newbie believes is unfair and illegitimate. More specifically, she believes
that the complaint misstates the facts. Under these circumstances, Ms. Newbie:
A) must provide a copy of the complaint to Savvy Investments, who can decide whether or not to ignore
the letter after hearing Ms. Newbie's side of the story.
B) can toss the complaint in the trash.
C) must respond to the complaint in writing.
D) must provide a copy of the complaint to Savvy Investments, who is required to respond to the
complaint in writing and to keep a record of it.
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: C | Question # 3 Answer: D | Question # 4 Answer: C | Question # 5 Answer: D |
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