AD BANKER EXAM QUESTIONS AND ANSWERS
A manufacturing corporation has applied to open an account with a FINRA member
firm. The company wants to be able to invest its surplus cash, and would like the ability
to use the securities in the account as collateral for margin transactions. Which of the
following documents must the member firm obtain from the company to open this
account?
I Corporate resolution
II Corporate charter
III Margin account agreement
A
II and III
B
I, II, and III
C
I and II
D
I and III - Answers -b
Assets - Liabilities = - Answers -net worth
The department of a broker-dealer that negotiates with issuers when selling securities to
the public is: - Answers -Investment Banking
Which of the following is not considered a money market instrument? A
CDs offered by banks to their depositors
B
Bankers' acceptances
C
T-bills
D
Commercial pape - Answers -CDs offered by banks to their depositors
B
Who may contribute to an HR-10 Keogh plan?
self-employed musician
The 21-year-old secretary of a self-employed musician
The musician's spouse if the spouse is not a participant of a plan at work
The 19-year-old secretary of a self-employed musician - Answers -A self-employed
musician
The CPI is an indicator of:
,A
The average cost of specific goods and services
B
The sum total of final goods and services produced in the nation in a given year
C
The fluctuation of goods and utilities that make up GNP
D
The average cost of private utilities and consumer goods over a 3-month period -
Answers -The average cost of specific goods and services
Which of the following is an accurate description of an American Depositary Receipt
(ADR)?
A
Shares of a foreign corporation held in a foreign branch of an American bank
B
Shares of a foreign corporation held in a foreign bank
C
Shares of a domestic corporation held in a foreign branch of an American bank
D
Shares of a foreign corporation held in a domestic bank - Answers -a
Which of the following statements regarding SEP IRAs is false?
A
Contributions to SEP IRAs are not tax deductible
B
The SEP is established by the employer
C
The contribution amount for a SEP IRA is significantly greater than for a traditional IRA
D
The SEP allows for flexible contribution amounts - Answers -a
Three friends have a joint account registered as tenants in common. The account
reflects only one Social Security number. One of the friends dies and sufficient proof is
provided. What will happen to the assets in the account?
A
The decedent's assets will go to their estate
B
The decedent's portion of the account will move to the friend whose Social Security
number is on the account
C
The remaining friends will obtain the decedent's portion of the account
D
, The account will be closed, and the assets will be distributed equally to each party -
Answers -a
How are hedge funds structured?
A
They are structured as LLCs
B
They are structured as corporations
C
They are structured as limited partnerships
D
They are structured as general partnerships - Answers -c
An investor is considering purchasing bonds and inquires about the differences and key
features of convertible and non-convertible corporate bonds. All the following are true
statements, except:
A
Convertible bonds will have lower yields than non-convertible bonds
B
Convertible bonds have appreciation potential based on the market price of the
common stock
C
The bonds will have the same yields, but convertible bonds offer appreciation potential
based on the market price of the common stock
D
Typically, convertible bonds are also callable which could result in a forced conversion -
Answers -c
Which of the following are leading economic indicators?
I. The stock market
II. The money supply
III. New housing starts
IV. Personal income - Answers -c
Who is exempt from liability under insider trading laws?
A
Financial printers
B
No one is exempt
C
Attorneys for issuers
D
CPAs utilized by issuers - Answers -b
A manufacturing corporation has applied to open an account with a FINRA member
firm. The company wants to be able to invest its surplus cash, and would like the ability
to use the securities in the account as collateral for margin transactions. Which of the
following documents must the member firm obtain from the company to open this
account?
I Corporate resolution
II Corporate charter
III Margin account agreement
A
II and III
B
I, II, and III
C
I and II
D
I and III - Answers -b
Assets - Liabilities = - Answers -net worth
The department of a broker-dealer that negotiates with issuers when selling securities to
the public is: - Answers -Investment Banking
Which of the following is not considered a money market instrument? A
CDs offered by banks to their depositors
B
Bankers' acceptances
C
T-bills
D
Commercial pape - Answers -CDs offered by banks to their depositors
B
Who may contribute to an HR-10 Keogh plan?
self-employed musician
The 21-year-old secretary of a self-employed musician
The musician's spouse if the spouse is not a participant of a plan at work
The 19-year-old secretary of a self-employed musician - Answers -A self-employed
musician
The CPI is an indicator of:
,A
The average cost of specific goods and services
B
The sum total of final goods and services produced in the nation in a given year
C
The fluctuation of goods and utilities that make up GNP
D
The average cost of private utilities and consumer goods over a 3-month period -
Answers -The average cost of specific goods and services
Which of the following is an accurate description of an American Depositary Receipt
(ADR)?
A
Shares of a foreign corporation held in a foreign branch of an American bank
B
Shares of a foreign corporation held in a foreign bank
C
Shares of a domestic corporation held in a foreign branch of an American bank
D
Shares of a foreign corporation held in a domestic bank - Answers -a
Which of the following statements regarding SEP IRAs is false?
A
Contributions to SEP IRAs are not tax deductible
B
The SEP is established by the employer
C
The contribution amount for a SEP IRA is significantly greater than for a traditional IRA
D
The SEP allows for flexible contribution amounts - Answers -a
Three friends have a joint account registered as tenants in common. The account
reflects only one Social Security number. One of the friends dies and sufficient proof is
provided. What will happen to the assets in the account?
A
The decedent's assets will go to their estate
B
The decedent's portion of the account will move to the friend whose Social Security
number is on the account
C
The remaining friends will obtain the decedent's portion of the account
D
, The account will be closed, and the assets will be distributed equally to each party -
Answers -a
How are hedge funds structured?
A
They are structured as LLCs
B
They are structured as corporations
C
They are structured as limited partnerships
D
They are structured as general partnerships - Answers -c
An investor is considering purchasing bonds and inquires about the differences and key
features of convertible and non-convertible corporate bonds. All the following are true
statements, except:
A
Convertible bonds will have lower yields than non-convertible bonds
B
Convertible bonds have appreciation potential based on the market price of the
common stock
C
The bonds will have the same yields, but convertible bonds offer appreciation potential
based on the market price of the common stock
D
Typically, convertible bonds are also callable which could result in a forced conversion -
Answers -c
Which of the following are leading economic indicators?
I. The stock market
II. The money supply
III. New housing starts
IV. Personal income - Answers -c
Who is exempt from liability under insider trading laws?
A
Financial printers
B
No one is exempt
C
Attorneys for issuers
D
CPAs utilized by issuers - Answers -b
