Got four ?s wrong. 1, 2, 9, 14. Also, I always have a couple I guess at that I get right. Of course, there are always a couple that I guess at and get wrong, too. :0)
Questions were on function of an investment company (pool investors funds, offers mgmt of funds, maintains diversified investments.) the price of the securities is determined by the market.
face amt certificates investors can redeem prior to maturity, but do not receive the FULL face amt...what they receive is determined by a formula. I answered that Mortgage owners had to buy them...because I thought it was the lenders who at one point in time had to. but it was the lenders that made the borrowers buy them.
REITs do not pay taxes on their ordinary income if they redistribute 95% of it to its investors.
#14 I got wrong for not reading it well...Investment companies must register w/SEC, offer a prospectus and solicit proxies for matters requiring shareholder approval. Investment objectives can be changed by a majority approval of STOCKHOLDERS and the answer said MANAGEMENT.
I knew better.
So, I'm starting to see some familiar concepts and terms and so the material is a little easier to read. At least in this chapter. I'm 2/3 of the way through the book.
Will order a new book on Tuesday...hopefully the new book will be here by the time I'm done reading the next 10 chapters in this book. haha...that shouldn't be a problem.
Monday, November 29, 2010
Sunday, November 28, 2010
Series 7 Securities Licensing Exam - Chapter 21
Eek, didn't do well on this, either 7/15 on Margin Accounts.
Missed 4, 5, 9, 10, 11, 13, 14, 15.
missed a ? on what happens when a restricted account is declared. i got 1/2 the ? - that it has fallen below 50% LMV - correct; missing the part which she must do for any further purchases...which i erroneously said deposit 100%. she only needs to deposit 50%.
missed ? on what happens to DR and EQ balances when SMA is used to purchase stock on margin (DR goes up by full amt of margin plus excess, not just excess) and (Equity balance is not effected.
LMV does not increase when interest or dividends are paid to margin accounts.
missed two (one regarding a short sale going down, the other LMV going up), i.e. LMV of a long acct goes up, creating an excess amt put into an SMA. the LMV goes down, what happens to the SMA? nothing, b/c it is a "DR" and the DR doesn't fluctuate with LMV. (only with payments or interest, etc.) SMAs only decrease if a withdrawal is made or securities are purchased w/it.
? on calculating excess. reg T requires 50% of SMV on short accounts. if SMV = 1900 then 1900 x .50 = 950. if EQ = 1800 then excess is EQ - 50 % x SMV. 1800 - 950 = $850. i think i had used CR to calc the 50%, instead of SMV.
a question on combined equity, which = LMV - SMV + CR - DR.
finally a ? on a nonequity corporate bond, which i could not remember the formula for, and just guessed.
Missed 4, 5, 9, 10, 11, 13, 14, 15.
missed a ? on what happens when a restricted account is declared. i got 1/2 the ? - that it has fallen below 50% LMV - correct; missing the part which she must do for any further purchases...which i erroneously said deposit 100%. she only needs to deposit 50%.
missed ? on what happens to DR and EQ balances when SMA is used to purchase stock on margin (DR goes up by full amt of margin plus excess, not just excess) and (Equity balance is not effected.
LMV does not increase when interest or dividends are paid to margin accounts.
missed two (one regarding a short sale going down, the other LMV going up), i.e. LMV of a long acct goes up, creating an excess amt put into an SMA. the LMV goes down, what happens to the SMA? nothing, b/c it is a "DR" and the DR doesn't fluctuate with LMV. (only with payments or interest, etc.) SMAs only decrease if a withdrawal is made or securities are purchased w/it.
? on calculating excess. reg T requires 50% of SMV on short accounts. if SMV = 1900 then 1900 x .50 = 950. if EQ = 1800 then excess is EQ - 50 % x SMV. 1800 - 950 = $850. i think i had used CR to calc the 50%, instead of SMV.
a question on combined equity, which = LMV - SMV + CR - DR.
finally a ? on a nonequity corporate bond, which i could not remember the formula for, and just guessed.
Saturday, November 27, 2010
Series 7 Securities Exam - Chapter 20
This is on customer accounts which was pretty straight forward.
Missed 3?s. # 5, 8, 12.
5 was a question on custodial account. i know that if the acct makes income of more than 1400/yr it must be taxed at the custodian's rate. but i answered that the minor would pay those taxes under their SSN, but it is actually a portion of the $1400 at the child's rate (*15% usually) and the balance at the custodian's higher tax rate (i.e. 30%).
missed a question about a fiduciary account where the answer should have been the prudent man rule, not the fiduciary investing as he or she sees fit. Which to me, is kind of the same, but i get what they're trying to get across here.
if an individual dies w/a will it is testate. if they die w/o a will, it is intestate. the question says if the individual dies leaving a detailed will which of the following types of accounts distribute the estate? answer a) intestate b) executor account. they said the right answer is A and I answered B because *an executor is the executor of the will...
so i think i'm right on that last one.
12/15 or 13/15 depending on my appeal. :D
Missed 3?s. # 5, 8, 12.
5 was a question on custodial account. i know that if the acct makes income of more than 1400/yr it must be taxed at the custodian's rate. but i answered that the minor would pay those taxes under their SSN, but it is actually a portion of the $1400 at the child's rate (*15% usually) and the balance at the custodian's higher tax rate (i.e. 30%).
missed a question about a fiduciary account where the answer should have been the prudent man rule, not the fiduciary investing as he or she sees fit. Which to me, is kind of the same, but i get what they're trying to get across here.
if an individual dies w/a will it is testate. if they die w/o a will, it is intestate. the question says if the individual dies leaving a detailed will which of the following types of accounts distribute the estate? answer a) intestate b) executor account. they said the right answer is A and I answered B because *an executor is the executor of the will...
so i think i'm right on that last one.
12/15 or 13/15 depending on my appeal. :D
Series 7 Securities Exam - Chapter 19
Forex Options
Options based on trade, using the option to purchase currency at a given strike price. The given strike price is based on exchange rates.
Okay stuff, if you have an investor whose company trades or has substantial retail services oversees.
Missed questions 1, 4, 6, 7, 8, 11, 14. D:
ECUs contract size are 62.5k. I thought that was just DMs.
The question on if a currency is expected to increase what should the investor buy i said a call option on the USD, but the answer is a call option on the foreign currency. of course, that is b/c it was the franc which was expected to rise. if the dollar was expected to rise, i would have been right. but i wasn't.
i had absolutely no idea how to calculate the margin requirements since they are terribly complicated. it is not the same formula as a security index.
one ? was on if a DM fell and he had a call what would he lose. i neglected to mulitply my answer by the # of contracts.
i missed one ? calculating the premium of a french franc b/c i took the "tenth of cent" decimal the wrong way. i missed another question calculating DM b/c i multiplied the contracts by the $1.77 not $0.0177 (which is that darn tenth of a cent thing again). also once multiplied by the tenth of a cent, the premium amount needs to be mulitplied by the # of DM in the contract, not the number of contract (instead of 100k, 62,500).
# of yen in a Japenese yen contract is 6,250,000 not 62.5 M.
onto a new section!
Options based on trade, using the option to purchase currency at a given strike price. The given strike price is based on exchange rates.
Okay stuff, if you have an investor whose company trades or has substantial retail services oversees.
Missed questions 1, 4, 6, 7, 8, 11, 14. D:
ECUs contract size are 62.5k. I thought that was just DMs.
The question on if a currency is expected to increase what should the investor buy i said a call option on the USD, but the answer is a call option on the foreign currency. of course, that is b/c it was the franc which was expected to rise. if the dollar was expected to rise, i would have been right. but i wasn't.
i had absolutely no idea how to calculate the margin requirements since they are terribly complicated. it is not the same formula as a security index.
one ? was on if a DM fell and he had a call what would he lose. i neglected to mulitply my answer by the # of contracts.
i missed one ? calculating the premium of a french franc b/c i took the "tenth of cent" decimal the wrong way. i missed another question calculating DM b/c i multiplied the contracts by the $1.77 not $0.0177 (which is that darn tenth of a cent thing again). also once multiplied by the tenth of a cent, the premium amount needs to be mulitplied by the # of DM in the contract, not the number of contract (instead of 100k, 62,500).
# of yen in a Japenese yen contract is 6,250,000 not 62.5 M.
onto a new section!
Friday, November 26, 2010
Series 7 Securities Exam Chapter 18
YAY I got 100% on this portion of testing.
It was on Index Options. I like it! Technically, I got one question wrong, but the answer by it's own definition said the one I chose was correct. Obviously a misprint and/or editing error...
sigh.
Next up Foreign Currency Options.
It was on Index Options. I like it! Technically, I got one question wrong, but the answer by it's own definition said the one I chose was correct. Obviously a misprint and/or editing error...
sigh.
Next up Foreign Currency Options.
Series 7 Securities Exam - Chapter 17
This chapter was on Options Strategies.
Pretty interesting stuff.
Missed a lot of questions. I did discover, however, that this book is one of the most poorly rated topical material for the Series 7 on Amazon. The ratings were 2 and 1 stars across the board. I was glad I'm not the only one finding serious flaws in the editing and etc.
Missed ?s 1, 2, 3, 9, 12, 14. Straddles FOUR times. How to purchase one (buy a call, sell a call). What the profit would be one one given x parameters. And the break even point on the straddle (I picked the choice that gave only half of the correct answer - the call - without realizing it should also be the put, thinking that the put would not gain him money but would actually cut into the premium. Silly me.) What points the straddle encompass ie the break even points on each side of the put and call (which is to add the premiums paid to the strike of the put and subtract the premiums from the call, creating a Put Less Premium to Strike to Call + Premium range).
Breakeven point on the long call spread is the net premium (premium made by writing less the premium paid by buying) plus the Call Strike price.
Okay, two more chapters on this very long sections and I will be done. YAY.
Pretty interesting stuff.
Missed a lot of questions. I did discover, however, that this book is one of the most poorly rated topical material for the Series 7 on Amazon. The ratings were 2 and 1 stars across the board. I was glad I'm not the only one finding serious flaws in the editing and etc.
Missed ?s 1, 2, 3, 9, 12, 14. Straddles FOUR times. How to purchase one (buy a call, sell a call). What the profit would be one one given x parameters. And the break even point on the straddle (I picked the choice that gave only half of the correct answer - the call - without realizing it should also be the put, thinking that the put would not gain him money but would actually cut into the premium. Silly me.) What points the straddle encompass ie the break even points on each side of the put and call (which is to add the premiums paid to the strike of the put and subtract the premiums from the call, creating a Put Less Premium to Strike to Call + Premium range).
Breakeven point on the long call spread is the net premium (premium made by writing less the premium paid by buying) plus the Call Strike price.
Okay, two more chapters on this very long sections and I will be done. YAY.
Series 7 Securities Exam - Chapter 16
Equity Options and Trading
Did terrible. Missed 4, 6, 7, 12-15.
Question content; trading deadline of options. twice. to buy/sell stops at 402. HOLDERS window to exercise ends at 530.
OCC's role in the market.
Margin minimum and basic requirements. Twice. One covered and one uncovered.
CROP and options exchanges need educational material.
CROP and how many contracts on a single side of the market, exercise limits.
To close a hold position you make a closing sale.
Whoop tee do.
Did terrible. Missed 4, 6, 7, 12-15.
Question content; trading deadline of options. twice. to buy/sell stops at 402. HOLDERS window to exercise ends at 530.
OCC's role in the market.
Margin minimum and basic requirements. Twice. One covered and one uncovered.
CROP and options exchanges need educational material.
CROP and how many contracts on a single side of the market, exercise limits.
To close a hold position you make a closing sale.
Whoop tee do.
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