Tag: Series 7

Study Question of the Month – February 2016

This month’s study question from the Solomon Online Exam Simulator question database is now available! Relevant to the Series 7, 24, and 62. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available!

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 7, Series 24, and Series 62): When a transaction is executed at 3:00pm Eastern Time, what are the TRACE reporting requirements (assuming the transaction is not a list or fixed offering price transaction, a takedown transaction, or an asset-backed securities transaction)?

Answers: 

A. It must be reported within 10 seconds of execution

B. It must be reported within 15 minutes of execution

C. It must be reported within 30 seconds of execution

D. It must be reported by 8:15 on the next business day

Correct Answer: B. It must be reported within 15 minutes of execution

Rationale: Transactions executed between 8:00 am and 6:15 pm must be reported to TRACE within 15 minutes of execution, and do not receive a designation.

Congratulations to Jessi B., this month’s Study Question of the Month winner!

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question of the Month – January 2016

This month’s study question from the Solomon Online Exam Simulator question database is now available! Relevant to the Series 7, Series 24, Series 55, and Series 62. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available!

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 7, Series 24, Series 55, and Series 62): A market maker has a listed a quote of 32.20 – 32.80, 12 x 7 for ABCD stock on NASDAQ. The market maker accepts a buy limit order from a customer for 200 shares at 32.60. What quote will the market maker have to display to comply with a SEC rules?

Answers:

A. 32.60 – 32.80, 10 x 7

B. 32.20 – 32.80, 12 x 7

C. 32.60 – 32.80, 2 x 7

D. 32.20 – 32.80, 2 x 7

Correct Answer: C. 32.60 – 32.80, 2 x 7

Rationale: The SEC requires market makers to immediately (within 30 seconds) display customer limit orders that are better than their current best quote for NMS stocks. In this case, the buy limit order is better than the market maker’s current bid (32.60 > 32.20) so the market maker must immediately display the adjusted quote.

Congratulations to David A., this month’s Study Question of the Month winner!

Study Question of the Month – December

This month’s study question from the Solomon Online Exam Simulator question database is now available! Relevant to the Series 7, Series 27, and Series 52. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available!

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 7, Series 27, and Series 52): John Johnson is interested in investing in municipal bonds, but wants to be sure he can convert his investment to cash quickly in case an unexpected expense comes up. Which of the following investments would allow John to return the investment to the issuer and receive money prior to maturity?

Answers:

A. Moral obligation bond

B. Revenue anticipation note

C. Zero-coupon bond

D. Variable-rate demand obligation

Correct Answer: D. Variable-rate demand obligation

Rationale: Variable-rate demand obligations (VRDOs) contain a put option, which gives investors the right to put the security back to the issuer at any time, at a price equal to the bond’s face value plus accrued interest. For example, assume that an investor has a VRDO with a face value of $1,000 and accrued interest of $30. The security will mature in a little under three months. Due to a pressing medical expense, the investor decides to return the VRDO to the issuer and receive the $1,030.

Congratulations Marty T., this month’s Study Question of the Month winner!

Study Question of the Month – November

This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, 7, 62, 65 and 79. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 6, Series 7, Series 62, Series 65 and Series 79): A few years back ABC Corporation issued callable bonds yielding 6%. The call price is 104, and the call protection period has ended. The bonds are trading at 105 today. Which of the following are true:

I. The current yield on these bonds is 6.3%

II. The current yield on these bonds is 5.7%

III. There is a good chance the bonds will be called

IV. There is a good chance the bonds will not be called

Answers: 

A. I and III

B. I and IV

C. II and III

D. II and IV

Correct Answer: C. II and III

Rationale: The formula for calculating current yield is the annual interest on the bond ($60) divided by the current price of the bond ($1050) which is equal to 5.7%. Because ABC can finance the debt at a lower interest rate than they are currently paying there is a good chance that they will call the bonds.

Congratulations Stephen Z., this month’s Study Question of the Month winner!

All study questions are from Solomon’s industry-leading Online Exam Simulator.

FINRA Enacts New Rule 2040 on Payments to Unregistered Persons

FINRA Rule 2040 became effective August 24, 2015. It replaces NASD Rules 2420 and 1060(b). This change affects the Series 6, 7, 24, 26, 27, 28, 62, and 82 exams. Continue reading

Exam AlertFINRA Rule 2040 became effective August 24, 2015.  It replaces NASD Rules 2420 and 1060(b).  This change affects the Series 6, 7, 24, 26, 27, 28, 62, and 82 exams.

FINRA Rule 2040 explains that an entity must register as a broker-dealer in order to receive commissions and fees for a securities transaction, unless it is a transaction that does not require registration.  FINRA does not explicitly outline which transactions do not require registration, but it states that member firms can make this determination on their own by:

  • Relying on releases, no-action letters, and interpretations from the SEC
  • Requesting a no-action letter from the SEC
  • Seeking a legal opinion

Rule 2040 further states that retired representatives may continue to be paid commissions on customer accounts if the representative and member have agreed upon the continuing payments before retirement.

Finally, Rule 2040 (c) states that members may conduct transactions with foreign finders as long as certain requirements are met, including:

  • The member firm is sure that the finder does not need to register as a broker-dealer in the U.S. and the compensation arrangement doesn’t violate foreign law
  • Neither the finder nor the customer is a U.S. citizen, and both live abroad
  • Customers receive a document disclosing the compensation paid to the finder by the member firm
  • Customers acknowledge receipt of this disclosure to the member firm in writing, which the firm retains and keeps available for inspection
  • Confirmation of each transaction indicates that a finder’s fee is being paid by written agreement

Source: Regulatory Notice 15-07

Study Question of the Month – October

This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, 52, 62, 65 and 66. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 7, Series 52, Series 62, Series 65 and Series 66):

The interest rate on a SLGS certificate or bond can never fall below:

Answers:

A. The Treasury rate

B. One basis point above the Treasury rate

C. One basis point below the Treasury rate

D. Zero

Correct Answer: D. Zero

Rationale: The SLGS interest rate is always one basis point below the Treasury security that has a comparable maturity, unless the Treasury rate itself equals zero, which is the floor below which the interest rate on a SLGS cannot go. In this case the Treasury rate and the SLGS rate will be equal.

 

All study questions are from Solomon’s industry-leading Online Exam Simulator.

Bank Loan Disclosures on EMMA

EMMA, the Electronic Municipal Market Access website, now allows issuers to voluntarily share bank loan disclosure information online. Continue reading

EMMA, the Electronic Municipal Market Access website, now allows issuers to voluntarily share bank loan disclosure information online.

EMMA was created by the MSRB to give investors online access to official statements for municipal bonds, as well as other disclosure documents.  By adding the ability for issuers to share bank loan disclosure information, the MSRB is helping to provide investors with more transparency and more information with which to approach the municipal market.

The information can be posted on the issuer’s customized homepage. Getting it displayed is a two-step process. First, the issuer must submit the bank loan disclosure via the EMMA Dataport Submission Portal.  Once the information is submitted, it can be published on the Customized Issuer Homepage by using the Issuer Dashboard.

Investors will find bank loan disclosures and other documentation under the Continuing Disclosure tab on the issuer’s customized homepage.

EMMA is covered on the Series 7, 50, 51, 52, and 53 exams.  For more information about EMMA and the services it provides, please visit: http://emma.msrb.org/aboutemma/overview.aspx