Series 79

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, 79, and 82. –ANSWER POSTED– Continue reading

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

Question (Relevant to the Series 6, Series 7, Series 62, Series 79 and Series 82):

As the price of the underlying stock of a convertible debenture goes up:

I. The parity value of the bond increases.
II. The current yield of the bond goes up.
III. The parity value of the bond decreases.
IV. The current yield of the bond goes down.

Answers:

A. I and III

B. III and IV

C. II and III

D. I and IV

Correct Answer: D. I and IV

Rationale: With a fixed conversion schedule, the parity value of the bond increases along with the price of the underlying stock. Since the nominal yield of the bond is fixed, the current yield, expressed as a percent of the bond’s price, goes down.

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

Testimonial Tuesday: October 21, 2014 Edition

“I’ve been using Solomon Exam Preparation materials for my last four Series tests: the Series 82, Series 63, Series 79 and just recently the Series 7. My scores on these tests were 88, 90, 88 and 90. The Solomon texts were comprehensive and easy to read; everything you need to know is in there. But there is so much material that these exams cover that you have to read the texts several times over and take as many practice quizzes and tests as you can until you score in the mid 80’s. Then go in for the test. That’s what I did. I went in scoring in the mid 80’s on practice exams and “peaked” at higher scores while taking the actual tests. You can’t do any better than Solomon. I highly recommend them.”

-Michael McGregor, FOCUS Investment Banking, Charlotte, NC

Read more reviews here: Solomon Exam Prep Reviews

Testimonial Tuesday: September 9, 2014 Edition

“I passed the Series 79 (on my first attempt) with help from Solomon Exam Prep….” Continue reading

“I passed the Series 79 (on my first attempt) with help from Solomon Exam Prep. I found the study book and online exams to be quite helpful, and would recommend Solomon as a study resource for anyone.”

– Joseph H., Denver, CO

Read more reviews here: Solomon Exam Prep Reviews

Study Question of the Week: August 27, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, 7, 24, 26, 55, 62, 79, and 82. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, Series 55, Series 62, Series 79, and Series 82):

What is the maximum civil penalty that can be imposed on a firm when an employee engages in insider trading?

Answers:

A. The greater of $1,000,000, or three times the amount of the profit gained or loss avoided as a result of the violation

B. The lesser of $1,000,000, or three times the amount of the profit gained or loss avoided as a result of the violation

C. Three times the amount of the profit gained or loss avoided as a result of the violation

D. $0

Correct Answer: A. The greater of $1,000,000, or three times the amount of the profit gained or loss avoided as a result of the violation

Rationale: The maximum civil penalty that can be imposed on a firm when an employee engages in insider trading is the greater of $1,000,000, or three times the amount of the profit gained or loss avoided as a result of the violation.

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

Study Question of the Week: August 20, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, 24, 62, 65, 79, 82, and 99. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 7, Series 24, Series 62, Series 65, Series 79, Series 82, and Series 99):

To qualify as a REIT, a company must do all of the following EXCEPT:

Answers:

A. Invest at least 75% of its assets into real estate or cash

B. Distribute at least 90% of its taxable income to shareholders annually in the form of dividends

C. Have a minimum of 100 shareholders after its first year of operation, and no more than 50% of its shares may be held by five or fewer individuals during the last half of any taxable year

D. Derive at least 90% of its gross income from its real estate sources

Correct Answer: D. Derive at least 90% of its gross income from its real estate sources

Rationale: A Real Estate Investment Trust is a company that owns and operates income-producing real estate, such as office buildings, apartments, malls, hotels and resorts. They differ from other real estate companies in that they are required to operate the properties they develop after they have built them, rather than selling them off. Most REITs specialize in a single type of real estate.

To qualify as a REIT, it must:

Invest at least 75% of its assets into real estate or cash
Distribute at least 90% of its taxable income to shareholders annually in the form of dividends
Be a corporation, trust, or association that would be taxable as a domestic corporation except for its status as a REIT.
Be managed by a board of directors and have ‘unit’ shares that are fully transferable
Have a minimum of 100 shareholders after its first year of operation, and no more than 50% of its shares may be held by five or fewer individuals during the last half of any taxable year
Derive at least 75% of its gross income from its real estate sources
Derive at least 95% of its gross income from those real estate sources mentioned above and dividends and interest from other sources
Have no more than 25% of its assets in securities of taxable REIT subsidiaries

By annually distributing at least 90% of taxable income to shareholders, REIT income is not taxed at the entity level. This is huge benefit to the REIT. However, because this income has never been taxed, dividend distributions to shareholders are not considered “qualified dividends,“ instead REIT dividends are generally taxed as ordinary income at the investor’s top marginal rate.

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

Study Question of the Week: July 9, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, 51, 52, 53, 62, 79, 82, and 99. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 7, Series 51, Series 52, Series 53, Series 62, Series 79, Series 82, and Series 99):

When new bonds are issued with the purpose of using the proceeds to pay off older bonds, it is called?

Answers:

A. Refunding

B. Defeasement

C. A sinking fund redemption

D. A bond SWAP

Correct Answer: A. Refunding

Rationale: A bond refunding is the replacement of existing bonds with new “refunding“ bonds. The issuer of refunding bonds often seeks to lower its interest payments by paying off its previously issued (refunded) bonds with newly issued bonds that pay interest at a lower rate. Another reason to refund existing bonds may be to release the issuer from legal covenants or restrictions in the original indenture.

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

Study Question of the Week: June 25, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 51, Series 52, Series 53, Series 62, Series 79, Series 82, and Series 99. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 7, Series 51, Series 52, Series 53, Series 62, Series 79, Series 82, and Series 99):

Why would a bond issuer decide to issue an advance refunding bond?

Answers:

A. Because interest rates have risen

B. To lock into the current lower interest rates

C. Because the CPI has gone up

D. To try to increase the yield on their bond issue

Correct Answer: B. To lock into the current lower interest rates

Rationale: A bond refunding is the replacement of existing bonds with new “refunding“ bonds. The issuer of refunding bonds seeks to lower its interest payments by paying off its previously issued (refunded) bonds with newly issued bonds that pay a lower interest rate. An advance refunding bond refers to one in which more than 90 days must elapse before the refunded bond can be retired. An issuer typically uses advance refunding when interest rates have dropped significantly, but the next call date is not in the near future. An advance refunding bond allows the issuer to lock in the lower interest rates now without risking that they rise before the call date arrives.

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

Study Question of the Week: June 12, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 52, Series 62, Series 65, Series 79, and Series 82. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 7, Series 52, Series 62, Series 65, Series 79, and Series 82):

All of the following is true of the Securities Act of 1933 except?

Answers:

A. One of its purpose is to prohibit fraud and deceit in the marketing of securities

B. It requires that all securities are registered with the federal government prior to offering them for sale

C. The Act requires that a company’s financial statements are certified by independent accountants

D. It regulates how securities are issued and first sold to the public

Correct Answer: B. It requires that all securities are registered with the federal government prior to offering them for sale

Rationale: The Securities Exchange Act of 1933 has two main purposes: (1) to require that companies publicly disclose all relevant financial information about their securities prior to offering them for sale, and (2) to prohibit fraud and deceit in the marketing of securities. The Act requires that most securities be registered with the
federal government prior to their sale, but there are securities that are exempt from registration. The Act regulates how securities are issued and first sold to the public.

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

Study Question of the Week: June 4, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 62, Series 79, and Series 82. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 7, Series 24, Series 62, Series 79, and Series 82):

Under Rule 144, which of the following persons would be subject to holding period limits on a re-sale?

Answers:

A. A C.E.O who holds 10,000 shares of the publicly traded company he runs

B. A C.E.O who purchased 10,000 shares of restricted securities two years ago of the company that he runs

C. A person who is not an affiliate purchased 10,000 shares in a private placement 1 year ago

D. A person who is not an affiliate purchased 10,000 shares of a company’s stock 2 months ago from an affiliate of the company

Correct Answer: D. A person who is not an affiliate purchased 10,000 shares of a company’s stock 2 months ago from an affiliate of the company

Rationale: If a person purchases shares from an affiliate, the shares are considered restricted, even if they were not restricted in the affiliates’ hands and therefore subject to holding period limits. Holding period limits are 6 months for reporting companies and 1 year for non-reportng companies.

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

Study Question of the Week: May 28, 2014 Edition

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

Study ? of the Week

Question (Relevant to the Series 7, Series 24, Series 62, Series 79, and Series 82):

Which of the following is not exempt from the registration requirements of the Securities Act of 1933?

Answers:

A. State bonds

B. Insurance company variable annuities

C. Municipal bonds

D. Common carrier (e.g., railroad) securities

Correct Answer: B. Insurance company variable annuities

Rationale: State and municipal bonds are backed by the full faith of the respective governments. Common carrier securities are reviewed by the ICC. If variable annuities were not registered, no authority would have jurisdiction over them.

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