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NEW QUESTION 22
The term “secondary market” refers to:
- A. trading in issues of low quality
- B. private placements
- C. trading in outstanding issues
- D. issues that banks are not permitted to underwrite
Answer: C
Explanation:
trading in outstanding issues. Secondary market transactions involve trading in securities after the original issue is made. When an issuer offers new securities to the public it is a “primary offering”.
NEW QUESTION 23
Bubba’s order to purchase investment company shares must be executed at a price based upon the net asset value of the shares:
- A. computed the same day the order is received by the dealer
- B. computed the previous day at the close of the NYSE
- C. next computed after receipt of the order by the dealer
- D. last computed before receipt of the order by the dealer
Answer: C
Explanation:
Explanation/Reference:
Explanation: next computed after receipt of the order by the dealer. This is called “forward pricing”.
Generally, the price is computed as of the close of the market on the day of the order. However, if the order is received after this computation, the order is executed based upon the next day calculation.
NEW QUESTION 24
Upon opening a new account for a customer, a registered representative should:
- A. determine what is suitable for the customer based upon his financial background
- B. investigate the customer’s credit rating
- C. all of the above
- D. inquire about age
Answer: C
Explanation:
Explanation/Reference:
Explanation: all of the above. These are required I Rule 405 of the NYSE and under suitability requirements in the Rules of Fair Practice of the FINRA.
NEW QUESTION 25
Which of the following is not usually an additional function of a mutual fund’s custodial bank?
- A. dividend disbursing agent
- B. investment advisor
- C. transfer agent
- D. registrar
Answer: B
Explanation:
Explanation/Reference:
Explanation: investment advisor. The custodial bank is usually also selected for other functions, but not as investment advisor. That assignment is generally performed by a special advisory firm or the mutual fund management company.
NEW QUESTION 26
Bubba Corporation issued bonds that pay interest on January 15 and July 15 each year until maturity. An investor purchasing these bonds on Monday, April 12, must pay the contract price plus accrued interest for:
- A. 93 days
- B. 87 days
- C. 89 days
- D. 90 days
Answer: D
Explanation:
90 days. Interest accrues from the coupon date to the settlement date. A regular way purchase on April 12 will settle on April 15. corporate bonds are figures on 30-day months, regardless of the actual number of days in the month. The year is considered 360 days. Therefore, interest is calculated for 16 days in January plus 30 each for February and March plus 14 for April.
NEW QUESTION 27
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