RN Domain 7: Psychosocial Integrity (Quiz 2) Welcome to your Series 7 Practice Exam 5 This test is designed to prepare you mentally for the actual Series 7 Exam with the same number of (125 questions) and the same time allowed (225 minutes) as the actual exam. The Series 7 Exam is breakdown into four (4) Parts. Here are the Four (4) Domains of the Series 7 Exam with the weightage and number of questions in this practice exam: 1. Seeks Business for the Broker Dealer from Customers and Potential Customers [09 Questions] - 07% 2. Opens Accounts after Obtaining and Evaluating Customers' Financial Profile and Investment Objectives [11 Questions] - 09% 3. Provides Customers with Information about Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records [91 Questions] - 73% 4. Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions [14 Questions] - 11% Please click NEXT to start your Free Series 7 PRACTICE EXAM right away. Best of Luck! 1. Pristine Brokerage Services, (PBS), accepted as a FINRA member firm seven months ago, is planning a direct mail campaign to several thousand potential investors. The topic of the campaign deals with owning real estate through direct participation programs. Under FINRA Rule 2210 on communications with the public, this is considered A) a retail communication that needs approval, but not filing, by a designated PBS principal. B) correspondence and needs review, not approval by a designated PBS principal. C) a retail communication and must be filed with FINRA at least 10 business days before first use or publication. D) a retail communication and must be filed with FINRA within 10 business days of first use or publication. None 2. Démodé Classic Investments (DCI) is planning a direct mail campaign to several thousand potential investors. The topic of the campaign deals with owning real estate through direct participation program limited partnerships. Under FINRA Rule 2210 on communications with the public, this is considered A) a retail communication and must be filed with FINRA at least 10 business days before first use or publication. B) a retail communication that needs approval, but not filing, by a designated DCI principal. C) correspondence and needs review, not approval, by a designated DCI principal. D) a retail communication and must be filed with FINRA within 10 business days of first use or publication. None 3. All of the following may be included in an advertisement for a collateralized mortgage obligation (CMO) issue except A) a generic description of the CMO tranche. B) a disclosure of the CMO's coupon rate and final maturity date. C) a statement that the CMO is guaranteed by the U.S. government. D) a disclosure that payment assumptions may or may not be met. None 4. Your broker-dealer has prepared an advertising piece for general distribution to all of its retail customers regarding numerous option strategies. Filing the piece with FINRA is A) required within 10 business days of the time it is first used or published. B) required at least 10 business days before first use or publication. C) required to occur no later than the end of the month during which it was used. D) not required. None 5. Which of the following statements could legally appear in mutual fund advertising or sales literature? A) Our managers are dedicated to giving you the very best service. B) Our growth fund net asset value will increase faster than the market in general. C) The fund never yielded less than 8% and will continue at that rate in the future. D) Our management is unequaled in the investment industry. None 6. Which of the following observations may a registered representative make when giving a sales presentation based on performance statements and charts? A) Yield over the past five years has fluctuated between 6% and 8%, indicating it will continue at 6% or better. B) The portfolio's broad diversification will ensure the continuation of the 6% yield. C) The fund has had a positive performance in the past few years. D) The fund has consistently outperformed the market and should continue to do so. None 7. Filing with FINRA within 10 business days of first use is required for all of the following except A) retail communications concerning public direct participation programs (DPPs), B) retail communications that promote or recommend a specific registered investment company or family of registered investment companies including exchange-traded funds (ETFs). C) retail communications concerning collateralized mortgage obligations (CMOs) registered under the Securities Act, D) retail communications that promote or recommend a specific real estate investment trust (REIT). None 8. Under Options Clearing Corporation (OCC) rules regarding options communications with the public, if an educational piece making no projected performance figures or recommendations is distributed to customers, it A) need not be preceded by an options disclosure document (ODD). B) can only be distributed to retail customers. C) need not be approved by a registered options principal (ROP). D) can only be distributed to institutional customers. None 9. All the following retail communications must be prefiled with FINRA except A) retail communications concerning investment companies with custom ratings. B) retail communications concerning public DPPs. C) retail communications concerning the member firm's opening for business last month. D) retail communications concerning options without previously providing an ODD. None 10. A registered representative of a FINRA member firm specializes in handling business accounts. In which of the following accounts are the business owners subject to double taxation? A) Sole proprietorships B) S corporations C) LLCs D) C corporations None 11. If a business owner's goal is to establish an entity that features ease in raising capital and limits personal liability, which of these entities is the most appropriate? A) A general partnership B) A sole proprietorship C) An S form of corporation D) A limited liability company (LLC) None 12. Many businesses open brokerage accounts to invest surplus funds. For which of the following business forms would suitability information on the owners not be required? A) An S corporation B) A sole proprietorship C) An LLC D) A C corporation None 13. Dale Wells, a British citizen temporarily working in the United States, wants to form a business venture with other investors. Wells is looking for favorable tax treatment of earnings and losses. Wells also wants to limit the number of investors but is willing to share control of the enterprise with others to attract them. What business form would you advise? A) S corporation B) C corporation C) Limited partnership D) General partnership None 14. Which of the following businesses would have the simplest requirements for opening an account at a FINRA member firm? A) A limited partnership. B) An S corporation. C) A general partnership D) A sole proprietorship None 15. For which of the following business structures is the income taxed to the business? A) A general partnership B) A limited partnership C) A C corporation. D) An S corporation None 16. Which of the following business structures will generally have the fewest number of owners? A) A general partnership B) An LLC C) An S corporation D) A sole proprietorship None 17. Which of the following forms of business is preferred when the goal is raising a significant amount of capital? A) C corporation B) S corporation C) LLCs D) General partnership None 18. Which of the following types of business organizations does not protect owners' personal assets from losses incurred by the business? A) Sole proprietorships B) C corporation C) LLCs D) S corporation None 19. Which of the following occurs in a partnership account if one partner dies? A) The surviving partners receive the deceased partner's share. B) The account is frozen until a new or amended partnership agreement is received. C) The surviving partners are considered joint tenants. D) The surviving partners are considered joint tenants and receive the deceased partner's share. None 20. The concept of double taxation applies to shareholders of A) general partnerships. B) limited partnerships. C) S corporations. D) C corporations. None 21. AMZ Corporation has declared a cash dividend of $1.10. On the ex-dividend date, an open order to buy AMZ at 52 stop would A) remain at 52 stop. B) be automatically adjusted to 53.10 stop. C) be automatically adjusted to 51.90 stop. D) be automatically adjusted to 52.10 stop. None 22. There are a number of different types of orders that a registered representative can enter for a client. Of the following, which one has the greatest assurance of being executed? A) A limit order B) A buy stop order C) A market order D) A sell stop order None 23. A customer sells short 100 shares of XYZ Corporation at $78 per share. The support and resistance levels for XYZ are at $70 and $80, respectively. If he wishes to protect his position, which of the following is the best place to put in a buy stop order? A) $80.10 B) $70.10 C) $78.10 D) $69.85 None 24. There are a number of different types of orders that a registered representative can enter for a client. Of the following, which one would be most appropriate for a client wishing to protect a profit on a short stock position? A) A buy stop order. B) A buy limit order. C) A sell limit order. D) A sell stop order None 25. There are a number of different types of orders that a registered representative can enter for a client. Of the following, which one would be most appropriate for a client wishing to protect a profit on a long stock position? A) A sell limit order. B) A sell stop order C) A buy stop order D) A market order None 26. A day order is entered to buy 500 LMN at 24.35. By the close of the trading day the firm has been able to purchase 100 shares at 24.25 and 200 shares at 24.35. If the remainder of the order is unfilled, what is the outcome? A) The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close. B) The customer may reject the incomplete order unless the remainder can be filled within three business days. C) The customer may demand that the firm deliver the remaining shares at 24.35. D) The customer may reject the incomplete order unless the broker-dealer can guarantee filling the remainder by the end of the day. None 27. XYZ Corporation has set Friday, January 23, as the record date for its next quarterly dividend distribution. To receive the dividend, a customer, long 1 XYZ Feb 40 call, must issue exercise instructions on or before A) Monday, January 19. B) Wednesday, January 21. C) Tuesday, January 20. D) Friday, January 23. None 28. An investor sold 100 shares of RAN common stock short at $50 per share. The RAN is now at $38. The investor is still bearish on the stock but would like to protect that gain. What would you recommend if this were your client? A) Enter a buy stop order at $55 B) Enter a sell order at $40 C) Enter a buy stop order at $40 D) Enter a sell stop order at $40 None 29. A customer has his broker enter an order to buy GHI stock at the opening. Though transmitted promptly, the order does not reach GHI's trading post in time to be filled at the opening. How is the order handled? A) The order is handled as a market order. B) The order is executed in the day, at a price as close to the opening price as possible. C) The order is canceled. D) The order automatically becomes an at-the-open order in the following trading session. None 30. Your client feels that GGZ, currently trading around 39, would be a good buy at 38. Therefore, she places an order to buy 200 GGZ at 38 GTC. On the ex-date, when the stock splits 2:1, the order is still on the order book. How is the order adjusted on the ex-date? A) Buy 400 GGZ at 19 GTC B) Buy 200 GGZ at 19 GTC C) Buy 100 GGZ at 76 GTC D) Buy 400 GGZ at 38 GTC None 31. An order ticket is marked as follows: Buy 10 GGZ 9% debentures at 95 AON good til canceled (GTC). All of the following statements regarding this order are true except A) the order will expire at the end of the day. B) this is a buy limit order. C) if executed, the customer will pay $9,500 or less for the bonds. D) the trade will be filled in its entirety or not at all. None 32. A broker-dealer informs a customer that her order was not executed because of stock ahead. The order was most likely A) a margin purchase. B) a market order. C) a limit order. D) a short sale. None 33. What type of order provides that market activity can cause activation, but it is possible that the trade itself may or may not be executed? A) A market order B) An open buy order C) A stop order. D) A stop limit order None 34. When referring to a stock, the term spread refers to A) the range between the high and low price for a particular year. B) the dealer's markup. C) the difference between the bid and asked prices. D) the range between the high and low price for a particular trading day. None 35. An unqualified legal opinion means that A) the issue is legal, but certain contingencies may limit the flow of funds in the future. B) the underwriter has failed to disclose sufficient information to qualify the issue. C) the bond counsel has rendered an opinion without any qualifying limitations. D) the interest is not exempt from state or local taxes. None 36. A municipal bond dealer gives your firm's trading desk an estimate of a municipal security's market value. This is A) a workable indication. B) holding a quote. C) a nominal quote. D) a firm quote. None 37. A qualified legal opinion issued for a municipal bond underwriting means that A) the bond counsel is considered competent. B) the legal opinion is qualified with restrictions and conditions. C) the bond attorney is qualified to express her opinion on the bond. D) the revenue bond issue has certain debt limitations. None 38. A municipal revenue issue's flow of funds statement is contained in A) the notice of sale. B) the bond contract. C) the legal opinion. D) the agreement among underwriters. None 39. Your FINRA member firm takes 100 GO bonds from a municipal bond dealer out-firm for one hour. This means that A) after one hour, your firm owns the bonds. B) your firm controls the bonds for one hour. C) the municipal bond dealer has one hour to sell these bonds to another member at a greater price. D) the municipal bond dealer has one hour to change the quoted price. None 40. A quotation on a municipal security between dealers is assumed to be A) a workable quote. B) an indication of interest. C) a bona fide quote. D) a nominal quote. None 41. Expressed as a percentage of par, one basis point equals A) one-one hundredth of 1%. B) one-one thousandth of 1%. C) 10%. D) one-tenth of 1%. None 42. One of the benefits of adding a sinking fund provision to a municipal bond issue is that the bond will generally A) receive a higher rating. B) have a longer maturity. C) receive more favorable tax treatment. D) carry a higher coupon. None 43. Which of the following quotes represents a municipal dollar bond quote? A) 8.20 - 8.00 B) 0.085 C) $850 - $870 D) 85½ None 44. One of the benefits of adding a sinking fund provision to a municipal bond issue is that the bond will generally A) be issued without a call provision. B) receive more favorable tax treatment. C) have a longer maturity. D) be issued with an interest rate lower than without the sinking fund. None 45. Each of the following would be disclosed to potential municipal bond buyers in the official statement of a new municipal bond issue except A) the issue's purpose. B) the creditworthiness of the issue. C) the source from which interest and principal will be paid. D) the disclosure that it was prepared by the underwriters. None 46. All of the following municipal securities are quoted on a yield basis except A) serial bonds. B) tax anticipation notes. C) term bonds. D) secured bonds. None 47. All of the following are allowable municipal dealer quotes except A) requests for bids only. B) an unidentified nominal quote. C) requests for offers only. D) bona fide quotes. None 48. Which of the following securities is typically sold with the legal opinion attached? A) Municipal bonds B) Participating preferred stock C) U.S. Treasury issues D) Corporate bonds sold under the Trust Indenture Act of 1939 None 49. A 4% municipal bond maturing in 2040 has a current yield of 4.4% with a yield to maturity of 4.7%. What is the basis of this bond? A) 4.4% B) 4.5% C) 4.7% D) 4.0% None 50. In a new municipal offering, who is responsible for hiring bond counsel? A) The syndicate manager B) The issuer C) Syndicate members D) The Municipal Securities Rulemaking Board None 51. Who attests to the legality of a bond issue and issues a legal opinion on a proposed new municipal bond issue? A) Syndicate manager B) Case attorney C) State administrator D) Bond counsel None 52. The call provisions of a municipal issue would be detailed most completely in A) the bond resolution. B) The Bond Buyer. C) the legal opinion. D) the official notice of sale. None 53. Whether funds should be allocated to support the debt service on a moral obligation bond in default is usually determined by A) the state legislature. B) the courts. C) the state governor. D) the trustee. None 54. You have a high-income client who wishes to maximize his after-tax interest income. Which of the following investments might not meet your client's objective? A) AA-rated municipal note B) AA-rated revenue bond C) AA-rated general obligation bond D) AA-rated industrial development bond None 55. All of the following municipal bonds would be defined as revenue bonds except A) new housing authority bonds. B) general obligation bonds. C) special tax bonds. D) special assessment bonds. None 56. A city's day-to-day operational expenses may be met by the issuance of A) grant anticipation notes (GANs). B) bond anticipation notes (BANs). C) credit-linked notes (CLNs). D) tax anticipation notes (TANs). None 57. The call provisions of a municipal issue would be detailed most completely in A) the bond resolution. B) the official notice of sale. C) The Bond Buyer. D) the legal opinion. None 58. Which of the following are funded by general tax receipts? A) Bond anticipation notes (BANs) B) Hospital revenue bonds C) Tax anticipation notes (TANs) D) Revenue anticipation notes (RANs) None 59. All of the following characteristics regarding industrial development bonds (IDBs) are true except A) funds from the lease are used to pay the principal and interest on the bonds. B) the bonds are normally backed by the full faith and credit of the municipality. C) the funds are used to construct a facility for a private corporation. D) the bonds are issued by municipalities or other governmental units. None 60. It is not uncommon for municipal revenue bonds to have a catastrophe call provision. Another term that might be used for this provision is A) unplanned call. B) unexpected call. C) extraordinary call. D) premium call. None 61. All of the following would be considered when evaluating a municipal revenue bond's creditworthiness except A) competing facilities. B) management expense. C) collection ratio. D) coverage ratio. None 62. Which of the following governmental bodies receive the least amount of their revenues from property taxes? A) County governments B) School districts C) State governments D) Municipalities None 63. A city has issued bonds to construct a new sewage treatment facility. If the bonds are not backed by the full taxing authority of the city, all of the following statements about the bond issue are true except A) if earnings fall short of the amount needed to make principal and interest payments, the debt service reserve can be used. B) the disbursement of principal and interest payments must be approved semiannually by the state public service commission. C) there is no debt limitation on the issue. D) the interest on these bonds is not considered a preference item for the alternative minimum tax. None 64. Which of the following investment vehicles has the highest credit risk? A) General obligation bonds B) Industrial revenue bonds C) New Housing Authority bonds D) Ginnie Mae pass-through certificates None 65. The bond resolution includes all covenants between A) the bond counsel and the bondholders. B) the issuer and the trustee acting for the bondholders. C) the issuer and the Municipal Securities Rulemaking Board. D) the issuer and the bond counsel. None 66. In safety of principal, general obligation municipal bonds are considered second only to A) common stock. B) AAA-rated corporate bonds. C) U.S. government and agency bonds. D) preferred stock. None 67. If industrial development bonds are called because of condemnation, this would be covered under which of the following clauses in the bond indenture? A) Catastrophe B) Refunding C) Refinancing D) Defeasance None 68. Which of the following types of municipal bond issues is associated with a flow of funds? A) Tax anticipation notes (TANs) B) General obligation (GO) bonds C) Revenue bonds D) School district bond None 69. Which of the following bonds may be secured by a leaseback arrangement? A) Lease-rental bonds B) Variable-rate demand obligations C) Toll-bridge bonds D) Housing authority bonds None 70. Long-term securities issued by municipalities that use a Dutch auction method to reset short-term interest rates known as clearing rates are A) real estate investment trusts (REITs). B) American depositary receipts (ADRs). C) auction rate securities (ARS). D) collateralized mortgage obligations (CMOs). None 71. An investor anticipating a rise in interest rates would likely purchase A) callable bonds. B) bonds issued by the U.S. Treasury. C) corporate bonds. D) variable-rate demand obligations or reset bonds. None 72. A calamity (catastrophe) call may be made by a municipal issuer if A) the issuer has accumulated excess money in its surplus account. B) the issuer must call outstanding bonds on a predetermined schedule as outlined in the bond contract. C) a building constructed with revenue bond financing has been condemned. D) interest rates have fallen. None 73. Which of the following would not be found in a municipal revenue bond resolution? A) Reporting requirements regarding revenues collected B) Conditions of the maintenance covenant C) Underwriting agreement D) Terms of the rate covenant None 74. All of the following are characteristics of Section 8 bonds except A) they are also known as Public Housing Authority (PHA) and New Housing Authority (NHA) bonds. B) they are backed by the U.S. government. C) they are a type of general obligation bond. D) they are used to finance subsidized housing. None 75. Municipal bonds that are backed by the income from specific projects are known as A) income bonds. B) revenue bonds. C) general obligation bonds. D) debenture bonds. None 76. A municipal bond, issued with a covenant that states, "If revenue collections are not sufficient to meet debt service requirements, the issue will be backed by the full faith and credit of the municipality," is known as A) a moral obligation bond. B) a Section 8 bond. C) a double-barreled bond. D) a contingent liability bond. None 77. An investor has purchased a municipal certificate of participation (COP). COPs can be characterized by all of the following except A) they would require voter approval before a municipality could issue them. B) the holder of a COP could foreclose on the asset generating the revenue in the case of default. C) the holder of the COP participates in lease or loan payments from a specific piece of equipment or facility purchased or built by the municipality. D) they are a form of municipal revenue bond. None 78. A customer purchased a full faith and credit bond. This bond would be known as A) a sinking or surplus fund bond. B) a general obligation bond. C) a revenue bond. D) a moral obligation bond. None 79. If a municipal bond rated BBB is prerefunded, all of the following statements are true except A) the marketability of the issue will decrease. B) funds required to meet debt servicing have been set aside in escrow. C) the rating of the issue will increase. D) the issue is now backed by U.S. government securities. None 80. All of the following statements regarding municipal revenue bonds are true except A) no debt limitation is set by the issuing municipality. B) the maturity of the revenue bond will usually exceed the useful life of the facility being built. C) revenue bonds can be issued by inter- or intrastate authorities. D) the interest and principal are paid from revenue received from the facility. None 81. When a securities professional refers to a bond as a full faith and credit issue, it is A) a moral obligation bond. B) a general obligation bond. C) a special tax bond. D) a revenue bond. None 82. All of the following may be used to service special tax bond issues except A) gasoline taxes. B) business license taxes. C) excise taxes. D) real estate taxes. None 83. If an investor purchases a bond anticipation note (BAN) that matures in one year, when will the investor collect the interest? A) At maturity B) Semiannually C) Quarterly D) Monthly None 84. All of the following might affect the credit rating of a municipal revenue issue except A) the quality of the facilities management. B) the rate covenants set forth in the indenture. C) the tax rates of nearby municipalities. D) the debt service coverage ratio. None 85. Which of the following secures an industrial revenue bond (IDR)? A) Trustee guarantees B) Corporate net lease payments C) Municipal taxes D) State taxes None 86. A moral obligation bond is one where A) the governing legislature is empowered, but not obligated to appropriate funds to prevent the bond from going into default. B) the board of directors of the entity is empowered, but not obligated to appropriate funds to prevent the bond from going into default. C) the U.S. government is empowered, but not obligated to appropriate funds to prevent the bond from going into default. D) the bondholders are empowered, but not obligated to appropriate funds to prevent the bond from going into default. None 87. Which of the following may not lead to an industrial development bond being called? A) The municipality is approaching a statutory debt limit. B) Interest rates are falling. C) Funds are available in the surplus account to call the bond. D) The facility is destroyed by a storm. None 88. Another term for municipal overlapping debt is A) refunded debt. B) double-barreled debt. C) coterminous debt. D) defeased debt. None 89. A variable-rate municipal bond investment's main advantage is that A) it is likely to increase in value. B) its price should remain relatively stable. C) its interest is exempt from all taxes. D) it is noncallable. None 90. Which of the following would not be found within the protective covenants for a municipal revenue bond issue? A) The issue's rating B) Catastrophe clause C) Additional bonds test D) Flow of funds None 91. All of the following sources of revenue could be used to service general obligation debt except A) ad valorem taxes. B) fines. C) sales taxes. D) user charges. None 92. All of the following are examples of short-term municipal obligations except A) bond anticipation notes (BAN). B) state and local government securities (SLGS). C) tax and revenue anticipation note (TRAN). D) tax anticipation note (TAN). None 93. A project that was funded with a revenue issue has been condemned by the state under an eminent domain proceeding. The outstanding bonds would be subject to which of the following call provisions? A) Catastrophe call B) Prerefunding call C) Defeasance call D) Refunding call None 94. Which of the following details would not be found on the bond resolution for a revenue bond? A) The insurance covenant B) The maintenance covenant C) The rate covenant D) The tax covenant None 95. New Housing Authority (NHA) bonds are a relatively safe investment because A) rental income provides a hedge against inflation. B) banks buy these bonds. C) they are backed by the full faith and credit of the issuing municipalities. D) the U.S. government guarantees a contribution to secure the bonds. None 96. A municipal bond rating service would consider all of the following when evaluating a revenue bond except A) feasibility studies. B) operating revenues. C) the debt service coverage ratio. D) the public's attitude toward debt. None 97. Each of the following choices are potential sources of funds associated with the backing of a revenue bond issue except A) lease payments. B) ticket revenues. C) concessions. D) fines. None 98. In rating a general obligation (GO) bond, all of the following factors would be considered by an analyst except A) the tax collection ratio. B) the total outstanding debt. C) the flow of funds. D) the public's attitude toward debt. None 99. A municipal revenue bond has a catastrophe call feature, but otherwise, is not callable. Which of the following statements regarding the features of this bond that must be described on a customer's confirmation is true?\ A) It must be designated as callable. B) It must be designated as callable in the event of an act of God. C) It need not be designated as callable. D) It must be designated as subject to eminent domain. None 100. The trust indenture of a revenue bond will show all of the following except A) the rate covenant. B) the reoffering yields. C) the revenue pledge. D) the application of flow of funds. None 101. Revenue bond rate covenants require the user fees to be high enough to cover all of the following obligations of the issuing authority except A) the operations and maintenance. B) the optional call provisions. C) the debt service reserve fund. D) the debt service. None 102. You are having a discussion with one of your clients regarding suitable investments. The client is in a high-income tax bracket and has a high net worth as well. During the conversation, your client mentions several investments that he is thinking about that might be beneficial to him now. Of those listed, which would be the best recommendation? A) Noninvestment-grade corporate bonds B) A real estate investment trust (REIT) C) Municipal bonds D) A corporate blue-chip balanced mutual fund None 103. Variable-rate municipal bonds are subject to all of the following risks except A) interest rate. B) default. C) market. D) liquidity. None 104. Which of the following is considered a source of debt service for a city-issued general obligation (GO) bond? A) Revenue generated by a hospital B) Sales taxes C) Real estate taxes D) Tolls on roads None 105. Which of the following is a double-barreled bond? A) General obligation bond to construct a new grade school B) Hospital bond backed by revenues and taxes C) Anticipation note D) New Housing Authority (NHA) bond None 106. Which of the following is not a source of revenue for a municipal revenue bond issue? A) Fees B) Ad valorem taxes C) Assessments D) Tolls on roads None 107. All of the following items of information must be included in a municipal securities confirmation except A) the date of maturity that has been fixed by a call notice. B) whether the securities are fully registered or book entry. C) an extraordinary call provision. D) the capacity in which the broker-dealer acted. None 108. It is not uncommon for municipal revenue bonds to have a catastrophe call provision. Another term that might be used to refer to this provision is A) an unplanned call. B) a premium call. C) an extraordinary call. D) an unexpected call. None 109. A double-barreled bond would be defined as A) a bond that is exempt from both federal and state taxes. B) a bond of a foreign issuer that is backed by the U.S. government, with the interest payable either in dollars or in foreign currency. C) a bond that has its principal and interest backed by revenues of a facility and the general taxing authority of a municipality. D) a corporate bond that pays interest from ordinary income and revenue received from operating a facility for a municipality. None 110. Which of the following bonds is issued to finance the construction of subsidized housing and is backed by rents and the taxing authority of the U.S. government? A) Special tax B) Section 8 C) Special assessment D) Moral obligation None 111. All of the following would be found in a bond resolution for a new municipal issue except A) the issuer's obligations to bondholders. B) the costs to be incurred by the issuer in connection with the offering. C) covenants to which the issuer must adhere. D) a description of the issue. None 112. A municipality that has issued grant anticipation notes (GANs) (short-term municipal notes) does so in expectation that the debt service will be paid by the receipt of funds attained A) via grants from the federal government. B) from both tax and other anticipated revenue. C) through the issue of long-term bonds. D) from future tax revenue. None 113. With bonds subject to a gross revenue pledge, the first priority will be to pay A) the sinking or surplus fund. B) operation and maintenance. C) bond interest and principal. D) the first lien on the property. None 114. A bond resolution would most likely be found in an offering of A) corporate bonds. B) U.S. Treasury bonds. C) unrated bonds. D) municipal bonds. None 115. If a moral obligation bond goes into default, the only way bondholders can be repaid is A) by waiting for the issuer to become solvent again. B) a court order. C) through legislative apportionment. D) through an asset liquidation. None 116. All of the following information is included in a municipal bond resolution except A) compensation paid to the underwriters. B) an authorization to sell the securities. C) restrictive covenants that are binding on the issuer. D) any call provisions that allow the issuer to redeem the bonds before their scheduled maturity. None 117. In addition to their tax advantages, municipal bonds are often purchased for their safety. Your client wishing to purchase municipal bonds with the utmost in safety should buy A) moral obligation bonds. B) double-barreled bonds. C) New Housing Authority bonds. D) general obligation bonds. None 118. Debt service on an industrial revenue bond is secured by A) special assessments. B) ad valorem taxes. C) lease payments paid by a corporation. D) sales taxes. None 119. Revenue bonds may be called for all of the following reasons except A) interest rates have fallen. B) a provision in a sinking fund agreement is calling for a partial call. C) the facility has been destroyed. D) the issuer has reached a statutory debt limit. None 120. All of the following statements regarding a municipality's collection ratio are true except A) a high collection ratio is more favorable than a low collection ratio. B) the collection ratio measures the municipality's property tax collections. C) the collection ratio is calculated as follows: taxes collected divided by taxes assessed. D) a poor collection ratio might mean the municipality is likely to default on its revenue bonds. None 121. Which of the following is limited in the case of a limited tax municipal bond? A) The number of bonds issued B) The number of taxpayers C) The type of tax that can be used to service the debt D) The number of buyers None 122. If an indenture has a closed-end provision, this means A) additional issues have no lien on the revenue stream. B) a sinking or surplus fund must be established. C) additional issues will have junior liens. D) the bonds must be called before maturity. None 123. Special tax bonds are A) backed by property taxes. B) self-supporting bonds. C) general obligation bonds. D) backed by sales, excise taxes, or both. None 124. An example of a taxable bond issued by a municipal government is A) a general obligation bond (GO). B) Series EE bonds. C) a Build America Bond (BAB). "D) a tax anticipation note (TAN). None 125. Each of the following are generally used to service state general obligation bond issues except A) motor vehicle license fees. B) real estate taxes. C) income taxes. D) sales taxes. None 1 out of 125 Time is Up! Time's upTime is Up!
