Question 1

All government bonds and the majority of corporate bonds are traded:

Options :

A : on the floor of the NYSE.

B : via electronic communication networks (ECNs).

C : on regional exchanges.

D : in the over-the-counter market.

Answer: D

Question 2

Paul is 36 years old and is married with two children, ages eight and ten. Paul lays carpet for a living, working as an independent contractor, and earns about $35,000 a year. His wife, Paula, is 33 years old, drives a school bus and earns only $18,000 a year, but her job provides the family with low-cost health insurance. They live conservatively and barely make ends meet. Paula recently inherited $180,000, however, and the couple would like to invest it, with the goal that they can both retire when Paul turns 62. The inheritance also included an educational endowment for their children, so they will not have to worry about saving for their children’s college educations. Which of the following would not be a suitable recommendation for the allocation of their investment monies?

Options :

A : municipal bond fund

B : aggressive growth stock fund

C : Roth IRA

D : life insurance

Answer: A

Question 3

Which of the following formulae is used to calculate the net dividend income per share of a mutual fund?

Options :

A :

Subtract operating expenses from dividend and interest income and divide the result by the number of outstanding shares.

B : Divide gross investment income by the number of outstanding shares.

C :

Subtract operating expenses from the income derived from dividends, interest, and short -term capital gains earned by the fund and divide the result by the number of outstanding shares.

D :

Add dividends, interest, and short-term and long-term capital gains earned by the fund; subtract operating expenses; then divide the result by the number of outstanding shares.

Answer: A

Question 4

By investing in a diversified portfolio, an investor will:

Options :

A : lower both his risk and his expected return.

B : lower his risk without affecting his expected return.

C : lower his risk and increase his expected return.

D : eliminate all the market risk associated with his investment portfolio.

Answer: B

Question 5

Dottie is a newly-minted, registered representative and is doing some cold calling to line up appointments with prospects. When doing so, Dottie: I. must not call anyone on her firm’s do-not-call list. II. must not call anyone on the FTC’s national do-not-call-list. III. must not call anyone before 7 a.m. or after 7 p.m., based on the time zone of the person being called. IV. must provide the person called with her name, the name and contact information of her firm, and the purpose of her call.

Options :

A : I and III only

B : I and IV only

C : I, II, and IV only

D : I, II, III, and IV

Answer: C

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