Questions and Answers
When must contributions to Individual Retirement Accounts be made by?
April 15 tax filing date the year after the contribution may be claimed.
What does it mean when the Specialist (DMM) tells the trader '20,000 shares of ABC have been stopped at 25'?
The Specialist/DMM has guaranteed a price of $25 to the trader.
Who is prohibited from trading for their own account? (Select all that apply)
Who makes trades on a principal basis? (Select all that apply)
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If an account is frozen, what does this mean?
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What is the maximum potential loss when a customer sells 1 ABC Jan 60 Put @ $7 and buys 1 ABC Jan 45 Put @ $1?
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A client, age 72 with $314,000 in her Traditional IRA, has a required minimum distribution (RMD) of $11,000. This will result in a cost basis of ___ for the share distribution and a sale proceeds of ___, with ___ of ordinary income and a cost basis of ___ for the shares transferred into her cash account.
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What is the maximum potential loss when a customer sells short 100 shares of ABC stock at $60 and sells 1 ABC Oct 60 Put @ $6?
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Regarding a margin account transaction where a customer buys 1 ABC Jan 50 Call @ $10 and sells 1 ABC Jan 60 Call @ $5, which statement is TRUE?
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What is the BEST recommendation for Customer Z to meet their needs for a large cash down payment in 5 years while reducing taxable income?
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Study Notes
Flashcard Study Notes
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Variable Annuities Registration
Salespersons selling variable annuities must register with FINRA and the State Insurance Commission.
Requires either Series 6 (mutual funds and variable annuities) or Series 7 (general securities) license. -
IRA Contribution Deadline
Contributions to Individual Retirement Accounts must be made by the April 15 tax filing date of the following year. -
Specialist/Tape Price Guarantee
When a Specialist (DMM) stops shares at a certain price, they guarantee that price to the trader. -
Prohibited Trading for Own Account
Floor brokers and Order Book Officials (OBOs) are prohibited from trading for their own accounts. -
Principal Basis Trading
Market makers, registered options traders (DMMs), and competitive traders make trades on a principal basis. -
Frozen Account Implications
A frozen account requires cash payments in advance for 90 days prior to purchasing. -
Short Put Spread Maximum Loss
Selling a short put spread with a maximum potential loss of $900 when both puts become in-the-money. -
RMD in Shares for IRA
Taking a Required Minimum Distribution (RMD) in shares results in a cost basis of $0 for the shares distributed, with sale proceeds and ordinary income stated as $11,000. -
Unlimited Loss in Short Selling
Short selling 100 shares of stock combined with selling a put option results in unlimited potential loss. -
Margin Account Transaction Truth
In a margin transaction involving a call spread, the correct statement regarding margin requirements is that a $500 margin deposit is needed. -
Eurodollar Bonds Foreign Currency Risk
U.S. issuers of Eurodollar bonds are not subject to foreign currency risk, while non-U.S. issuers are. -
Investment Strategy for Tax Bracket Couple
A couple aiming to reduce taxable income and save for a house down payment should invest in mutual funds holding high-yielding stocks to facilitate easy liquidation and tax efficiency.
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Description
Test your knowledge on key finance concepts such as variable annuities registration, IRA contribution deadlines, and trading regulations. This quiz covers essential information for finance professionals and aspiring salespersons. Enhance your understanding of trading practices and regulations.
