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 6Series 24, Series 26, Series 52Series 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 6Series 7Series 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 6Series 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.

 

Study Question of the Week: December 18, 2013 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 6Series 7, Series 65, and Series 66)

The IRS uses the FIFO method for taxing:

Answers:

A. Withdrawals from a life insurance contract

B. Withdrawals in excess of the basis in a variable annuity contract

C. Loans from a life insurance contract

D. None of the choices listed

Correct Answer: A. Withdrawals from a life insurance contract

Rationale: Life insurance enjoys “first in, first out“ treatment from the IRS. Annuities are taxed on a LIFO basis, and money borrowed from a life insurance contract is not taxed at all.

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

Study Question of the Week: December 11, 2013 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 26, Series 62, 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 7Series 24, Series 26Series 62, Series 82, and Series 99)

Jenny and Sam each have an individual account, and they have a joint account, and an UGMA account for their daughter Sarah. What is the combined maximum amount that is covered by the SIPC for the four accounts?

Answers:

A. $500,000

B. $1,000,000

C. $1,500,000

D. $2,000,000

Correct Answer: D. $2,000,000

Rationale: SIPC covers a maximum of $500,000 per “separate customer” at a broker-dealer or clearing firm including up to $250,000 in cash.  Total coverage can be higher for multiple accounts if the accounts are considered to be held by separate customers. There are five categories of separate customers defined by the SIPC. These categories include 1) individual accounts, 2) joint accounts, 3) accounts held by executors, administrators, and guardians/custodians/conservators (such as UGMA accounts), 4) accounts held by corporations, partnerships, or unincorporated associations, and 5) trust accounts. Thus, two individual accounts held by two different people, one joint account, and one UGMA account would be considered four separate customers by the SIPC, and therefore subject to a maximum of $2,000,000 of coverage.

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

Study Question of the Week: November 13, 2013 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 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 6, Series 7Series 62, Series 65, and Series 82)

Which of the following statements are true about government agency-issued bonds?

I. They typically have a lower face value than other bonds
II. Interest is paid on a monthly basis
III. The maturity date is always specified
IV. They are known as high-risk investments

Answers:

A. II and III

B. III and IV

C. II only

D. I and II

Correct Answer: C. II only

Rationale: Government agency-issued bonds typically have higher face value than other bonds and their maturity dates are often not specified. Interest is typically paid on a monthly basis and these bonds are generally low-risk investments.

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

Study Question of the Week: October 9, 2013 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, 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 7Series 24, Series 62, and Series 99)

Which of the following agreements allows the broker-dealer to use the customer’s securities as collateral on a loan?

Answers: 

A. loan consent agreement

B. hypothecation agreement

C. credit agreement

D. prime broker agreement

Correct Answer: B. hypothecation agreement

Rationale: The hypothecation agreement allows the broker-dealer to use the customer’s securities as collateral on a loan. The credit agreement details the terms and conditions for the credit that the broker-dealer is extending to the customer. This agreement will include how the firm will calculate the interest charged on the credit and what interest rate the loan rate it will be tied to (e.g., broker call rate). The loan consent agreement permits the broker-dealer to lend the customer’s securities to other customers wishing to execute short sales. This agreement is not required of customers opening a margin account, but strongly encouraged by the broker-dealer.

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