GREEN LIGHT TEST 1 QUESTIONS
AND ANSWERS ALL CORRECT
A type of offering in which the issuing corporation is assured of receiving the full amount
of the offering and anything unsold is retained by the underwriter is a: - Answer- Firm
commitment
May a brokerage firm place a temporary hold on the transfer of securities? - Answer-
Yes, for the account of a senior investor.
Which of the following statements is NOT TRUE regarding a company's Form 10-K? -
Answer- It allows shareholders to vote without attending the annual meeting.
The relative of an 85-year-old account holder contacts the registered representative of
the account and requests that funds be transferred to her account which is also held at
the same firm. If the RR suspects financial exploitation, which of the following is the
BEST course of action? - Answer- Attempt to resolve the matter with the customer prior
to placing a temporary hold.
The U.S. government agency that is responsible for regulating the process by which
issuers raise capital is: - Answer- The Securities Exchange Commission (SEC)
When selling a security for a customer, all of the following items MUST be included on
the sell order ticket, EXCEPT: - Answer- The customer's Social Security number
Which of the following investors typically are entitled to vote - Answer- Common
stockholders only
Which of the following activities is acceptable during the cooling-off period? - Answer-
Soliciting indications of interest
Which of the following is not subject to the Investment Company Act of 1940? - Answer-
Hedge funds
When opening a new account for a customer and determining suitability, an RR must
obtain: - Answer- The customer's age
An investment in preferred stock represents: - Answer- An ownership position in the
company
, Which of the following is the rate that commercial banks charge on loans to broker-
dealers for margin purposes? - Answer- Call rate
Which of the following is an institutional investor? - Answer- A bank, regardless of the
amount of assets
A change in which of the following choices does NOT require the broker-dealer to send
a notice to the customer? - Answer- Net worth
May a brokerage firm place a temporary hold on a securities transaction? - Answer-
Yes, for the account of a specified adult.
When is a fee-based account appropriate for a customer? - Answer- When the
customer is using an investment adviser to implement an active management strategy
Which of the following bonds will provide safety of principal as well as capital
appreciation? - Answer- A convertible bond
A client has been watching a thinly traded stock and has noticed that it has not had any
trading activity today. What type of risk is the MOST significant for this type of
investment? - Answer- Liquidity risk
In reviewing prices for a mutual fund, an investor notices that the Beacon Fund has two
listings, one for Class A shares and the other for Class B shares. The distinction
between the two classes of shares would most likely be: - Answer- Class A shares have
a front-end sales charge, while Class B shares have a contingent deferred sales charge
The main difference between a registered exchange-traded REIT and a registered non-
traded REIT is: - Answer- The amount of liquidity each of the securities has
A registered person is asked by the sponsor of a limited partnership to sell partnership
units to his clients. Since the partnership is not being sold through the representative's
broker-dealer, the sponsor will compensate the representative directly. For this
situation, which of the following statements is TRUE? - Answer- For the person to
participate, the broker-dealer must give written approval for the transaction and must
record the transaction on its books.
An Operations Professional is notified by a registered representative (RR) that he has
received a written complaint from a customer. The RR informs the Operations
Professional that the issue is now rectified and no further action is required. What is the
MOST appropriate action for the Operations Professional to take? - Answer- Notify the
principal of the complaint
A corporation has a 7% cumulative preferred stock issue outstanding. The company
paid a $5 dividend three years ago, $6 two years ago, and $7 last year. If the company
AND ANSWERS ALL CORRECT
A type of offering in which the issuing corporation is assured of receiving the full amount
of the offering and anything unsold is retained by the underwriter is a: - Answer- Firm
commitment
May a brokerage firm place a temporary hold on the transfer of securities? - Answer-
Yes, for the account of a senior investor.
Which of the following statements is NOT TRUE regarding a company's Form 10-K? -
Answer- It allows shareholders to vote without attending the annual meeting.
The relative of an 85-year-old account holder contacts the registered representative of
the account and requests that funds be transferred to her account which is also held at
the same firm. If the RR suspects financial exploitation, which of the following is the
BEST course of action? - Answer- Attempt to resolve the matter with the customer prior
to placing a temporary hold.
The U.S. government agency that is responsible for regulating the process by which
issuers raise capital is: - Answer- The Securities Exchange Commission (SEC)
When selling a security for a customer, all of the following items MUST be included on
the sell order ticket, EXCEPT: - Answer- The customer's Social Security number
Which of the following investors typically are entitled to vote - Answer- Common
stockholders only
Which of the following activities is acceptable during the cooling-off period? - Answer-
Soliciting indications of interest
Which of the following is not subject to the Investment Company Act of 1940? - Answer-
Hedge funds
When opening a new account for a customer and determining suitability, an RR must
obtain: - Answer- The customer's age
An investment in preferred stock represents: - Answer- An ownership position in the
company
, Which of the following is the rate that commercial banks charge on loans to broker-
dealers for margin purposes? - Answer- Call rate
Which of the following is an institutional investor? - Answer- A bank, regardless of the
amount of assets
A change in which of the following choices does NOT require the broker-dealer to send
a notice to the customer? - Answer- Net worth
May a brokerage firm place a temporary hold on a securities transaction? - Answer-
Yes, for the account of a specified adult.
When is a fee-based account appropriate for a customer? - Answer- When the
customer is using an investment adviser to implement an active management strategy
Which of the following bonds will provide safety of principal as well as capital
appreciation? - Answer- A convertible bond
A client has been watching a thinly traded stock and has noticed that it has not had any
trading activity today. What type of risk is the MOST significant for this type of
investment? - Answer- Liquidity risk
In reviewing prices for a mutual fund, an investor notices that the Beacon Fund has two
listings, one for Class A shares and the other for Class B shares. The distinction
between the two classes of shares would most likely be: - Answer- Class A shares have
a front-end sales charge, while Class B shares have a contingent deferred sales charge
The main difference between a registered exchange-traded REIT and a registered non-
traded REIT is: - Answer- The amount of liquidity each of the securities has
A registered person is asked by the sponsor of a limited partnership to sell partnership
units to his clients. Since the partnership is not being sold through the representative's
broker-dealer, the sponsor will compensate the representative directly. For this
situation, which of the following statements is TRUE? - Answer- For the person to
participate, the broker-dealer must give written approval for the transaction and must
record the transaction on its books.
An Operations Professional is notified by a registered representative (RR) that he has
received a written complaint from a customer. The RR informs the Operations
Professional that the issue is now rectified and no further action is required. What is the
MOST appropriate action for the Operations Professional to take? - Answer- Notify the
principal of the complaint
A corporation has a 7% cumulative preferred stock issue outstanding. The company
paid a $5 dividend three years ago, $6 two years ago, and $7 last year. If the company
