Question 1

NASDAQ is:

Options :

A : an acronym for Norway’s major stock exchange.

B : the government organization that insures accounts at U.S. brokerage firms.

C : a computerized system that links together the U.S. regional exchanges.

D : a computerized quotation system used in the over-the-counter market.

Answer: D

Question 2

Giant Investments filed a registration statement with the SEC for a new fund it wanted to introduce and has received word that the registration statement is now effective. Based on this, Jack, a registered representative with Giant Investments, can tell a client that:

Options :

A :

because the SEC has recently announced the fund’s registration statement effective, the client can rest assured that it is a sound long-term investment.

B :

the SEC pronouncement on the effectiveness of the registration statement means only that the SEC has deemed that enough information has been provided in the registration statement for the client to judge the quality of the investment for himself.

C : the SEC warrants that there have been no misstatements of fact in the registration statement.

D :

because the SEC has recently approved the fund, it is likely to be a much safer investment than other, older funds in the same fund category.

Answer: B

Question 3

Which of the following is not a characteristic of all auction stock exchanges in the U.S.? the exchange.

Options :

A : There is a central marketplace.

B : Stocks that are traded on the exchange must meet certain listing requirements, determined by the exchange.

C :

In order to conduct a trade on the exchange, a broker must be a member of the exchange or hold a license to trade on the exchange.

D : If a stock is listed on one of these exchanges, it is not permitted to be listed on any other exchange.

Answer: D

Question 4

In order for the Invest4U Mutual Fund to qualify as a regulated investment company under Internal Revenue Code Subchapter M, it must:

Options :

A : distribute at least 90% of its net investment income to its shareholders.

B : distribute at least 98% of its net income from capital gains to its shareholders.

C : invest at least 75% of its monies in diversified securities.

D : Both A and B are required for Invest4U to qualify as a regulated investment company.

Answer: D

Question 5

Ms. Scatty is a registered representative with a well-known family of mutual funds. When selling one of the funds, she forgets to give her buyer a prospectus. Which of the following statements is true?

Options :

A : Ms. Scatty can be held civilly liable under the Securities Act of 1933.

B : Ms. Scatty can be held criminally liable under the Securities Act of 1933.

C : Since mutual funds are not covered under the Securities Act of 1933, there is no liability in this instance.

D : Both A and B are true statements.

Answer: A

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