MASTERY EXAM #1 questions and answers

MASTERY EXAM #1 questions and answers In a corporate liquidation, the last to get paid is: A. Unpaid wages and taxes B. Bondholders C. Preferred stockholders D. Common stockholders - D. Common stockholders All of the following are types of oil and gas direct participation programs EXCEPT: A. Balanced B. Income C. Exploratory D. Developmental - A. Balanced The term "publicly traded fund" is the common name for a(n): A. open end management company B. closed end management company C. fixed unit investment trust D. participating unit investment trust - B. closed end management company When comparing a mutual fund to a hedge fund, which statement is FALSE? A. Hedge funds are less regulated B. Hedge funds are more risky C. Hedge funds are only available to qualified purchasers D. Hedge funds are liquid - D. Hedge funds are liquid All of the following statements are true regarding the trading of ADRs EXCEPT: A. ADRs are traded on the New York Stock Exchange B. ADRs are traded on the NASDAQ Stock Market C. ADRs are traded on the American Stock Exchange D. ADRs are traded on the Chicago Board Options Exchange - D. ADRs are traded on the Chicago Board Options Exchange ABC 8% $100 par preferred is trading at $105 in the market. The current yield is: A. 6.6% B. 7.6% C. 8.6% D. 10.6% - B. 7.6% ANNUAL INCOME/MARKET PRICE = CURRENT YIELD $8/$105= 7.6% An ADR has been issued where each ADR equals 600 ordinary shares of the foreign issuer. If a client wished to buy enough ADRs to cover 6,000 ordinary shares, how many ADRs must be purchased? A. 1 B. 10 C. 100 D. 1,000 - B. 10 Since each ADR equals 600 ordinary shares, then 10 ADRs equals 6,000 ordinary shares. Under IRS rules, if a customer selling shares of stock wishes to use specific identification instead of FIFO for cost basis reporting, the broker-dealer effecting the trade must be notified of this no later than: A. Trade date B. Settlement date C. December 31st of that year D. April 15th of the following year - B. Settlement date All of the following terms apply to mutual fund shares EXCEPT: A. continuously issued B. tradeable C. Redeemable D. non-negotiable - B. tradeable Which of the following statements are TRUE about tax shelters that invest in raw land? I. Raw land is depreciable II. Raw land is not depreciable III. The main reason to invest in raw land is for the depletion deduction IV. The main reason to invest in raw land is for the capital gains potential A. I and III B. I and IV C. II and III D. II and IV - D. II and IV All of the following features are common to both preferred stock and bonds EXCEPT: A. fixed rate B. periodic payments C. can be callable D. fixed maturity date - D. fixed maturity date Which statements are TRUE regarding Treasury debt instruments? I. T-Notes are sold by competitive bidding at auction conducted by the Federal Reserve II. T-Notes are sold by negotiated offering III. T-Notes are issued in book entry form with no physical certificates issued IV. T-Notes are issued in bearer form A. I and III B. I and IV C. II and III D. II and IV - A. I and III Which of the following statements are TRUE when comparing bonds and preferred stock? I. Payments to bondholders are subject to approval of the Board of Directors II. Payments to preferred stockholders are subject to approval of the Board of Directors III. Bonds are considered senior securities over common stock in a corporate dissolution IV. Preferred stock is considered to be a senior security over common stock in a corporate dissolution A. I and III only B. II and IV only C. II, III, IV D. I, II, III, IV - C. II, III, IV