Which of the following statements is correct regarding US government agency
securities?
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Correct Answer:
The securities of GNMA are backed by the US government, while those of
FNMA and other government sponsored enterprises are not backed by
the US govt, although these carry an implied backing.
Explanation:
US government agency securities (GNMA) are backed by the US govt,
while the securities of government sponsored enterprises (FNMA) are not
, backed by the US govt. These securities, do, however, carry the implicit
backing of the US govt.
Textbook Reference:
Please see textbook section 3.3.1
During a period of recession, consumers generally experience
I. Increasing bond prices
II. Decreasing bond prices
III. Lower bond yields
IV. Higher bond yields
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Correct Answer:
I and III
Explanation:
In times of recession, interest rates are generally falling, so bond prices
are rising.
Textbook Reference:
Please see textbook section 10.2.1
An entity engages in oil and gas drilling. Rather than paying income tax at the entity
level, it flows through the tax consequences to its investors. It is a
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Correct Answer:
Direct participation program
Explanation:
A direct participation program (DPP) is characterized by the flow-through
of tax consequences to investors. It may participate in oil & gas, real estate,
agriculture, and other types of activities.
, Textbook Reference:
Please see textbook section 5.2
The status of a company's financial position at a particular point in time is best
measured by which of the following financial statements?
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Correct Answer:
balance sheet
Explanation:
The balance sheet displays a company's financial position at a point in
time. It lists the assets, liabilities, and shareholders' equity balances as of the
fiscal quarter or year end.
The income statement provides the best overview of a company's
profitability during a particular period. It provides an overview of the
company's sales amounts, associated expenses, and net income.
The cash flow statement records the cash inflows and outflows of the
company during a particular time period.
Textbook Reference:
Please see textbook section 10.2.6.2
A broker-dealer provides a communication to 15 retail customers and 10 institutional
investors. This communication would be classified as
A) retail communication
B) market commentary
C) institutional communication
D) correspondence
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, D)Correspondence to 25 or fewer retail investors within any 30-calendar-
day period
Edgar is about to receive his first distribution from a non-qualified variable annuity
that he began funding several years ago. He asks you if he will have to pay any taxes
on this distribution. You should tell Edgar that
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Correct Answer:
he will have to pay taxes on all funds received in excess of his original
contribution
Explanation:
Distributions from non-qualified variable annuities are subject to tax liability
on the amount in excess of the original contribution (which was funded
with after-tax dollars).
Textbook Reference:
See textbook section 12.3.3.5
Underwriting timeline
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securities?
Give this one a try later!
Correct Answer:
The securities of GNMA are backed by the US government, while those of
FNMA and other government sponsored enterprises are not backed by
the US govt, although these carry an implied backing.
Explanation:
US government agency securities (GNMA) are backed by the US govt,
while the securities of government sponsored enterprises (FNMA) are not
, backed by the US govt. These securities, do, however, carry the implicit
backing of the US govt.
Textbook Reference:
Please see textbook section 3.3.1
During a period of recession, consumers generally experience
I. Increasing bond prices
II. Decreasing bond prices
III. Lower bond yields
IV. Higher bond yields
Give this one a try later!
Correct Answer:
I and III
Explanation:
In times of recession, interest rates are generally falling, so bond prices
are rising.
Textbook Reference:
Please see textbook section 10.2.1
An entity engages in oil and gas drilling. Rather than paying income tax at the entity
level, it flows through the tax consequences to its investors. It is a
Give this one a try later!
Correct Answer:
Direct participation program
Explanation:
A direct participation program (DPP) is characterized by the flow-through
of tax consequences to investors. It may participate in oil & gas, real estate,
agriculture, and other types of activities.
, Textbook Reference:
Please see textbook section 5.2
The status of a company's financial position at a particular point in time is best
measured by which of the following financial statements?
Give this one a try later!
Correct Answer:
balance sheet
Explanation:
The balance sheet displays a company's financial position at a point in
time. It lists the assets, liabilities, and shareholders' equity balances as of the
fiscal quarter or year end.
The income statement provides the best overview of a company's
profitability during a particular period. It provides an overview of the
company's sales amounts, associated expenses, and net income.
The cash flow statement records the cash inflows and outflows of the
company during a particular time period.
Textbook Reference:
Please see textbook section 10.2.6.2
A broker-dealer provides a communication to 15 retail customers and 10 institutional
investors. This communication would be classified as
A) retail communication
B) market commentary
C) institutional communication
D) correspondence
Give this one a try later!
, D)Correspondence to 25 or fewer retail investors within any 30-calendar-
day period
Edgar is about to receive his first distribution from a non-qualified variable annuity
that he began funding several years ago. He asks you if he will have to pay any taxes
on this distribution. You should tell Edgar that
Give this one a try later!
Correct Answer:
he will have to pay taxes on all funds received in excess of his original
contribution
Explanation:
Distributions from non-qualified variable annuities are subject to tax liability
on the amount in excess of the original contribution (which was funded
with after-tax dollars).
Textbook Reference:
See textbook section 12.3.3.5
Underwriting timeline
Give this one a try later!
