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FINRA General Securities Representative Examination (GS) Sample Questions:
1. A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of
common stock. If it already has six million shares outstanding at the time of the offering. What
subscription ratio is the corporation establishing for each new share?
A) 6 rights per share
B) 10 rights per share
C) 10 million rights per share
D) 6 million rights per share
2. Which of the following situations is possible for a writer of a covered call option?
A) depositing margin into his account
B) buying the underlying stock if the call is exercised
C) selling the security he already owns
D) purchasing a put option to hedge against unlimited loss potential
3. Bubba buys one XYZ October 80 put and sells one XYZ October 70 put. What is his position called?
A) calendar spread
B) straddle
C) combination
D) money spread
4. Which of the following statements regarding mutual funds is true?
A) the terms "management company" and "investment advisor" are interchangeable
B) the sponsor receives a management fee based on the fund's totalassets
C) the custodian can also be the transfer agent
D) the management company receives a portion of the sales load for managing the fund assets
5. When the market value in a long margin account decreases, the SMA will:
A) decrease
B) fluctuate
C) stay the same
D) increase
Solutions:
Question # 1 Answer: A | Question # 2 Answer: C | Question # 3 Answer: D | Question # 4 Answer: C | Question # 5 Answer: C |
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