Study Question

Study Question of the Week: March 26, 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, 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, and Series 99):

Sam, an agent, is passionate about politics. He lives in State A and works in State B. He wants to contribute money to some campaigns for public office in each state, but is also hoping to engage in municipal securities business with each state. Where can Sam make contributions?

Answers:

A. State A only

B. State B only

C. State A and State B

D. Neither State A nor State B

Correct Answer: A. State A only

Rationale: Agents are allowed to make contributions to candidates that they could vote for, up to $250 per election. Contributions to other candidates would result in bans from doing municipal securities business with the municipal issuer where the candidate is running for office.

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

Study Question of the Week: March 5, 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 65, Series 66, 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 24, Series 62, Series 65, Series 66, and Series 99):

All the following statements regarding Roth IRAs are correct EXCEPT:

Answers:

A. Contributions to a Roth IRA are tax deductible up to specified limits

B. Earnings in a Roth IRA accrue income tax-free

C. Distributions from a Roth IRA may be tax-free

D. Roth IRAs are subject to the same contribution limits as regular IRAs

Correct Answer: A. Contributions to a Roth IRA are tax deductible up to specified limits

Rationale: Roth IRAs are individual retirement accounts that are funded with after-tax contributions. Individuals can contribute to their Roth IRAs up to the IRS maximum contribution limit. Earnings within the Roth IRA accrue tax-free and distributions from the Roth IRA may also be tax-free when certain criteria are met.

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

Study Question of the Week: February 26, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 65, and Series 66. –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 65, and Series 66):

James cannot believe XYZ is continuing to go down. He would like to give it a little more time to recover, but would like to protect himself if it continues to fall. What type of order would James most likely enter?

Answers:

A. Buy stop

B. Sell Stop

C. Market

D. Sell limit

Correct Answer: B. Sell Stop

Rationale: A sell stop order helps an investor avoid further losses if a stock price continues to drop. A stop order triggers a sale or purchase if the stock reaches a certain price. In this case, James would place the order below the current market and if the stock price decreased to his ‘stop price’, the order would become a market order and sell his position. The order would still allow for James to potentially recover if the stock goes up. If a market order was entered, the stock would be immediately sold at the next available ask price. A sell limit order is an order to sell at a specific price. A sell limit is usually used if the seller only wants to sell if a stock goes up to a certain specified price, but it hasn’t hit that price yet.

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

Study Question of the Week: February 19, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 55, Series 62, and Series 79. –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 24, Series 55, Series 62, and Series 79):

In order to qualify for the Rule 10b-18 safe harbor for repurchases, which of the following is correct?

I. The repurchase transactions made in a single day must occur through only one broker-dealer

II. The repurchase transactions made in a single week must occur through no more than two broker-dealers

III. The repurchase transactions must occur within 10 minutes of market open or within 30 minutes of market close

IV. The repurchase transactions must not be the opening transaction or within 30 minutes of market close

Answers:

A. I and III

B. I and IV

C. II and III

D. II and IV

Correct Answer: B. I and IV

Rationale: Rule 10b-18 provides a safe harbor for issuer repurchase transactions. It allows the issuer to repurchase its own stock without being liable for manipulation based solely on the manner, timing, price, and volume of the repurchase transactions. In order to qualify, any repurchase transactions made in a single day must be made through only one broker-dealer. The transactions also must not be the opening transaction or within 30 minutes of the close of that market. For actively traded securities, the transactions must not be the opening purchase or within 10 minutes of the close of that market (actively traded securities are those with an ADTV of at least $1 million and a public float of at least $150 million). The transactions must comply with price and volume limitations as well.

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

Study Question of the Week: February 12, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 65, and Series 66. –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 65, and Series 66):

Carlos, age 58, is in the 25 percent marginal income tax bracket. If he takes a $10,000 distribution from his IRA to pay off credit card debt, Carlos will be subject to a total payment of:

Answers:

A. $0

B. $3,250

C. $2,500

D. $3,500

Correct Answer: D. $3,500

Rationale: Carlos will have to pay ordinary income tax of 25% on his distribution, plus a 10% penalty for early withdrawal because he is under age 59 1/2. $10,000 (distribution amount) x 35% (tax + penalty) = $3,500 total payment for both tax-and-penalty. Perhaps Carlos should look at the $1,000 he will be paying in penalty and compare that to the total anticipated interest payments he will be making on his credit card over the next year and a half.

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

Study Question of the Week: February 5, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 24, Series 26, Series 52, 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 6, Series 24, Series 26, Series 52, Series 62, Series 79, and Series 82):

When must a Suspicious Activity Report be filed under the Bank Secrecy Act?

Answers:

A. Within 15 days of the transaction

B. Within 15 days of discovery

C. Within 30 days of the transaction

D. Within 30 days of discovery

Correct Answer: D. Within 30 days of discovery

Rationale: The Bank Secrecy Act requires that money service businesses file Suspicious Activity Reports (SARs) within 30 days of becoming aware of any suspicious transaction that is required to be reported. In the securities business, suspicious transactions are required to be reported if they involve $5,000 or more. A copy of the report must be kept for five years.

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

Study Question of the Week: January 29, 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 52, Series 62, Series 65, 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 52, Series 62, Series 65, and Series 82):

How much would you pay for a $1,000 10-year Treasury bond priced at 101.08 (excluding accrued interest)?

Answers:

A. $1,010.80

B. $10,108.00

C. $1,012.50

D. $1,010.25

Correct Answer: C. $1,012.50

Rationale: Treasury bonds are typically priced in percentage points of par and in fractions of 32nds of percentage points. For example the .08 of the quote should be understood as 8/32nds of a percentage point or .25%. Thus, 101.08 is equivalent to 101.25% of par which is $1,000 x 101.25 which is $1,012.50.

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

Study Question of the Week: January 22, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 52, and Series 65. –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 52, and Series 65):

The Fed (Federal) Funds rate refers to:

Answers:

A. The rate banks have to pay when borrowing from the Federal Reserve

B. The rate broker-dealers pay when borrowing on behalf of customers

C. The rate that the most credit worthy customers pay when borrowing

D. The rate banks charge each other for overnight loans over $1,000,000

Correct Answer: D. The rate banks charge each other for overnight loans over $1,000,000

Rationale: The Federal Funds Rate refers to the rate that banks charge each other for short-term loans.

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

Study Question of the Week: January 8, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 62, 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 6, Series 7, Series 62, and Series 82):

Which of the following bonds are subject to Federal income tax on the interest they pay?

I. GNMA’s

II. Corporate bonds

III. Commercial paper

IV. Treasury Bills

Answers:

A. I and IV

B. II and IV

C. I, II, and III

D. I, II, III, and IV

Correct Answer: D. I, II, III, and IV

Rationale: All of these bonds are subject to Federal income tax. It is only certain types of municipal bonds that are exempt from Federal taxation.

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

Study Question of the Week: January 2, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, 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 6, Series 7, Series 62, Series 79, and Series 82):

10 bond points on a corporate bond is equivalent to:

Answers:

A. $10

B. $100

C. $1,000

D. 10% of a bond’s current value

Correct Answer: B. $100

Rationale: A “point” is an abbreviated term for “one percentage point” of the par value. With regards to corporate bonds, it generally refers to $10 increments of a $1,000 par value bond’s price.

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