7 Hour USPAP Exam with correct Answers graded A+

7 Hour USPAP Eaxm with correct
Answers graded A+
All |of |the |following |are |fiduciary |accounts |EXCEPT:
A)
TOD |accounts.
|B)

trust |accounts.
|C)

estate |accounts.
|D)

guardian |accounts. |- |CORRECT |ANWERS-A) |TOD |accounts.
Transfer |on |Death |Accounts |(TOD) |are |individual |accounts |with |a |designated |beneficiary
|to |receive |account |assets |upon |the |death |of |the |account |owner.




If |a |writer |of |an |XYZ |equity |call |option |is |assigned, |which |of |the |following |should |be
|delivered |to |the |OCC?

A)
Cash |equal |to |the |market |value |of |the |underlying |XYZ |security
|B)

Any |listed |security |of |comparable |value |to |XYZ
|C)

Rights |or |warrants |exercisable |to |purchase |the |underlying |XYZ |security
|D)

The |underlying |XYZ |security |- |CORRECT |ANWERS-D)
|The |underlying |XYZ |security

When |a |call |is |exercised, |that |specific |security |must |be |delivered |by |the |assigned |writer.
|The |option |contract |does |not |allow |for |exercise |settlement |in |cash, |securities |of |equivalent

|value, |or |securities |exercisable |to |purchase |the |underlying |securities |such |as |rights |or

|warrants.




In |analyzing |the |ability |of |a |company |to |meet |its |debt |obligations |but |not |wanting |to
|chance |that |certain |accounting |decisions |or |practices |will |cloud |the |picture, |one

|measure |that |you |might |look |at |is |the |firm's

A)
net |worth |found |on |the |firm's |balance |sheet
|B)

earnings |before |interest, |taxes, |depreciation, |and |amortization |(EBITDA), |calculated |from
|the |firm's |income |statement

|C)

,price-to-earnings |(P/E) |ratio
|D)

cash |flow |found |on |a |cash |flow |statement |- |CORRECT |ANWERS-B)
earnings |before |interest, |taxes, |depreciation, |and |amortization |(EBITDA), |calculated |from
|the |firm's |income |statement

Earnings |before |interest, |taxes, |depreciation, |and |amortization |(EBITDA), |calculated
|from |the |firm's |income |statement, |is |a |metric |that |measures |the |ability |of |a |company |to

|repay |debt |obligations |(interest |and |principal), |eliminating |accounting |decisions |and

|techniques |that |might |not |allow |for |the |best |assessment.




The |principal |tax |benefit |of |investing |in |an |exploratory |oil |and |gas |drilling |program |is
|derived |from:

A)
intangible |drilling |costs.
|B)

capital |appreciation.
|C)

|recapture.

|D)

depreciation |expenses. |- |CORRECT |ANWERS-A)
|intangible |drilling |costs.

Intangible |drilling |costs |(IDCs), |which |are |a |significant |portion |of |all |drilling |costs, |are |a
|major |tax |advantage |to |a |limited |partner |and |are |tax |deductible |in |the |year |in |which |they

|are |incurred. |IDCs |are |costs |that, |after |incurred, |hold |no |salvage |or |ongoing |value.

Examples |are |labor |and |geological |survey.

A |new |customer |has |given |you |written |authorization |to |transfer |the |holdings |in |his |account
|at |another |broker/dealer |to |his |new |account |at |your |broker/dealer. |Under |the |Uniform

|Practice |Code, |using |the |automated |customer |account |transfer |system |form |(ACATS) |the

|carrying |broker/dealer |would |have |how |many |days |to |validate |the |positions |and |how |many

|days |to |complete |the |transfer |after |validation?

1 |business |day |to |validate.
2 |business |days |to |validate.
2 |business |days |to |transfer |after |validation.
3 |business |days |to |transfer |after |validation. |- |CORRECT |ANWERS-D) |I
|and |IV.

Under |the |Uniform |Practice |Code |the |carrying |broker/dealer |has |1 |business |day |to
|validate |positions |and |3 |business |days |to |transfer |to |the |receiving |broker/dealer |after

|validation.




All |of |the |following |statements |regarding |a |mark |to |the |market |are |true |EXCEPT:
|A)

it |often |occurs |in |connection |with |margin |transactions.
|B)

it |occurs |because |of |a |change |in |the |stock's |market |value |covered |by |a |contract.
|C)

, it |may |result |in |a |request |for |additional |collateral.
|D)

it |requires |the |use |of |a |due |bill. |- |CORRECT |ANWERS-D) |it
|requires |the |use |of |a |due |bill.

A |mark |to |the |market |occurs |when |one |party |to |a |contract |becomes |partially |unsecured
|due |to |a |change |in |the |stock's |market |value |covered |by |a |contract. |A |mark |to |the |market |is

|a |request |for |additional |collateral.




If |an |investor |opens |a |new |margin |account |and |buys |100 |shares |of |DWQ |at |18, |with
|Regulation |T |at |50%, |what |is |the |investor's |initial |margin |requirement?

A)
|3600.

|B)

|1800

.
|C)

|900.

|D)

2000. |- |CORRECT |ANWERS-B)
1800.
If |the |initial |transaction |is |less |than |$2,000, |the |investor |must |deposit |100% |of |the |market
|value.




Which |of |the |following |would |be |the |least |appropriate |investment |in |a |traditional |IRA |for |a
|67-year-old |client?

A)
Treasury |notes.
|B)

Variable |annuities.
|C)

Corporate |bonds.
|D)

Common |stock. |- |CORRECT |ANWERS-B)
|Variable |annuities.

Why |buy |a |tax-deferred |product |in |a |tax-deferred |account? |A |variable |annuity |will
|provide |no |additional |tax |savings |and |will |likely |increase |the |expense |of |the |IRA. |In

|addition |to |sales |and |surrender |charges, |variable |annuities |may |impose |other |charges

|such |as |mortality |and |expense |risk |charges, |administrative |fees, |etc. |In |less |than |4

|years, |your |client |will |have |to |begin |making |withdrawals |regardless |of |any |surrender

|charges |the |annuity |may |impose.




The |Trade |Reporting |and |Compliance |Engine |(TRACE):
|requires |that |both |sides |of |a |transaction |report |the |trade.

|requires |only |the |sell |side |of |a |transaction |report |the |trade.

is |a |reporting |system |for |corporate |bonds |trading |in |the |OTC |market. |is
|an |execution |system |for |corporate |bonds |trading |on |exchanges.

A)