Greenlight 1 Exam Update 2024 | Greenlight
Actual Exam Update 2024 Questions and
Correct Answers Rated A+
Which of the following is NOT a characteristic of preferred stock?
A) It has a fixed dividend
B) The board of directors must declare the dividends
C) It has a dividend that is not guaranteed
D) It carries voting rights - ANSWER-D) It carries voting rights
The board of directors must declare dividends for both common and
preferred stock. Neither common nor preferred stockholders are
guaranteed a dividend. Preferred stock normally has a fixed dividend.
Preferred stock does not have voting rights, only common shares may vote.
A brokerage firm creates an in-house, non-cash incentive program. This is
permitted if it's tied to the RR's sale of which of the following products?
A) All securities products that are sold by the RR
B) Equity securities that are sold by the RR
C) Mutual fund shares that are sold by the RR
D) Only the securities that are created by the RR's employing firm -
ANSWER-A) All securities products that are sold by the RR
A broker-dealer is permitted to create its own internal sales programs that
offer non-cash incentives, such as merchandise and vacation trips.
,However, FINRA places some restrictions on these arrangements. One of
the restrictions requires that non-cash incentive programs be based on an
RR's total production for all securities products sold, rather than being
based on the sale of any specific products. The products may be created
by a different broker-dealer, such as a mutual fund sponsor.
When analyzing a mutual fund's expenses, an analyst does NOT consider:
A) The management fees charged by the investment adviser
B) The fees charged by the fund's custodian
C) The fund's expense ratio
D) The sales load charged to buy fund shares - ANSWER-D) The sales
load charged to buy fund shares
When analyzing a mutual fund's expenses, an analyst is concerned about
the amount of expenses as compared to the amount of money managed by
the fund. This comparison is made by calculating the fund's expense ratio
(operating expenses divided by total net assets). The operating expenses
include management fees (which is usually the largest expense) and the
fee paid to the fund's custodian. Total net assets are the fund's assets
minus liabilities. Sales charges are not considered expenses of the fund.
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:
A) Class A shares are oriented toward short-term trading, while Class B
shares have a long-term perspective
,B) Class A shares should be purchased by income-oriented investors while
Class B shares are for those seeking capital appreciation
C) Class A shares can be purchased directly from the fund, while Class B
shares are offered through broker-dealers
D) Class A shares have a front-end sales charge, while Class B shares
have a contingent deferred sales charge - ANSWER-D) Class A shares
have a front-end sales charge, while Class B shares have a contingent
deferred sales charge
The difference between Class A and Class B shares is normally that the A
shares have a front-end sales charge while the B shares have a contingent
deferred sales charge (CDSC). A CDSC is deducted only when the investor
redeems shares. Generally, if the investor holds the B shares for a
sufficient period of time, there is no sales charge deducted upon
redemption.
Industrial production is considered what type of economic indicator?
A) Leading
B) Lagging
C) Cyclical
D) Coincident - ANSWER-D) Coincident
Economists separate indicators into leading, coincident, and lagging
economic indicators. Industrial production moves at the same time as the
overall economy and is a coincident indicator
, A corporation declares a 5% stock dividend that's payable on Thursday,
October 18. If the record date is Wednesday, October 3, the ex-date for this
distribution is:
A) Monday, October 1
B) Tuesday, October 2
C) Wednesday, October 17
D) Friday, October 19 - ANSWER-B) Tuesday, October 2
The ex-date for small stock dividends (less than 25%) is one business day
before the record date. In this case, the determination of the ex-date is the
same as if it was a cash dividend.
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?
A) Business risk
B) Liquidity risk
C) Inflation risk
D) Market risk - ANSWER-B) Liquidity risk
If a security is thinly traded, it indicates that the market for that investment
is illiquid. If an investment has a wide spread, it means the difference
between the bid and ask prices is larger than normal. Market risk, or the
risk that the market will affect a security's value, is a real risk, but not the
most significant one for a thinly traded stock. Even if the stock market
increases, the stock itself may still be illiquid.
Actual Exam Update 2024 Questions and
Correct Answers Rated A+
Which of the following is NOT a characteristic of preferred stock?
A) It has a fixed dividend
B) The board of directors must declare the dividends
C) It has a dividend that is not guaranteed
D) It carries voting rights - ANSWER-D) It carries voting rights
The board of directors must declare dividends for both common and
preferred stock. Neither common nor preferred stockholders are
guaranteed a dividend. Preferred stock normally has a fixed dividend.
Preferred stock does not have voting rights, only common shares may vote.
A brokerage firm creates an in-house, non-cash incentive program. This is
permitted if it's tied to the RR's sale of which of the following products?
A) All securities products that are sold by the RR
B) Equity securities that are sold by the RR
C) Mutual fund shares that are sold by the RR
D) Only the securities that are created by the RR's employing firm -
ANSWER-A) All securities products that are sold by the RR
A broker-dealer is permitted to create its own internal sales programs that
offer non-cash incentives, such as merchandise and vacation trips.
,However, FINRA places some restrictions on these arrangements. One of
the restrictions requires that non-cash incentive programs be based on an
RR's total production for all securities products sold, rather than being
based on the sale of any specific products. The products may be created
by a different broker-dealer, such as a mutual fund sponsor.
When analyzing a mutual fund's expenses, an analyst does NOT consider:
A) The management fees charged by the investment adviser
B) The fees charged by the fund's custodian
C) The fund's expense ratio
D) The sales load charged to buy fund shares - ANSWER-D) The sales
load charged to buy fund shares
When analyzing a mutual fund's expenses, an analyst is concerned about
the amount of expenses as compared to the amount of money managed by
the fund. This comparison is made by calculating the fund's expense ratio
(operating expenses divided by total net assets). The operating expenses
include management fees (which is usually the largest expense) and the
fee paid to the fund's custodian. Total net assets are the fund's assets
minus liabilities. Sales charges are not considered expenses of the fund.
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:
A) Class A shares are oriented toward short-term trading, while Class B
shares have a long-term perspective
,B) Class A shares should be purchased by income-oriented investors while
Class B shares are for those seeking capital appreciation
C) Class A shares can be purchased directly from the fund, while Class B
shares are offered through broker-dealers
D) Class A shares have a front-end sales charge, while Class B shares
have a contingent deferred sales charge - ANSWER-D) Class A shares
have a front-end sales charge, while Class B shares have a contingent
deferred sales charge
The difference between Class A and Class B shares is normally that the A
shares have a front-end sales charge while the B shares have a contingent
deferred sales charge (CDSC). A CDSC is deducted only when the investor
redeems shares. Generally, if the investor holds the B shares for a
sufficient period of time, there is no sales charge deducted upon
redemption.
Industrial production is considered what type of economic indicator?
A) Leading
B) Lagging
C) Cyclical
D) Coincident - ANSWER-D) Coincident
Economists separate indicators into leading, coincident, and lagging
economic indicators. Industrial production moves at the same time as the
overall economy and is a coincident indicator
, A corporation declares a 5% stock dividend that's payable on Thursday,
October 18. If the record date is Wednesday, October 3, the ex-date for this
distribution is:
A) Monday, October 1
B) Tuesday, October 2
C) Wednesday, October 17
D) Friday, October 19 - ANSWER-B) Tuesday, October 2
The ex-date for small stock dividends (less than 25%) is one business day
before the record date. In this case, the determination of the ex-date is the
same as if it was a cash dividend.
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?
A) Business risk
B) Liquidity risk
C) Inflation risk
D) Market risk - ANSWER-B) Liquidity risk
If a security is thinly traded, it indicates that the market for that investment
is illiquid. If an investment has a wide spread, it means the difference
between the bid and ask prices is larger than normal. Market risk, or the
risk that the market will affect a security's value, is a real risk, but not the
most significant one for a thinly traded stock. Even if the stock market
increases, the stock itself may still be illiquid.
