Question 1

Bubba plans to borrow some money and pledge securities as collateral. Which of the following can he not use as collateral?

Options :

A : Series EE bonds

B : US treasury bills

C : US treasury notes

D : US treasury bonds

Answer: A

Question 2

Bubba is opening a margin account with a member organization. He wishes to purchase 100 shares of XYZ at $15 per share. What is Bubba’s initial cash deposit?

Options :

A : $375

B : $1,050

C : $1,500

D : $2,000

Answer: C

Question 3

Bubba holds 200 shares of common stock in a utility company and receives rights to

subscribe to an additional 100 shares at $20. The utility company is raising $40 million of

new capital.

How many rights does Bubba receive?

Options :

A : 20

B : 50

C : 100

D : 200

Answer: D

Question 4

Securities may be sold under SEC rule 144 provided that the following conditions are met:

Options :

A : the company files regular financial data with the SEC

B : they are sold in agency transactions only

C : they are sold in principal transactions only

D : both A and B

Answer: A

Question 5

Hypothecation usually refers to which of the following?

Options :

A : forecasting the market based upon past performance

B : pledging securities as collateral

C : determining a reasonable offering price for a new issue

D : none of the above

Answer: B