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FINRA General Securities Representative Qualification Examination (GS) Sample Questions (Q238-Q243):

NEW QUESTION # 238
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. 10 million rights per share
  • B. 10 rights per share
  • C. 6 million rights per share
  • D. 6 rights per share

Answer: D Explanation:
6 rights per share. Each share receives a right and there are six million shares receiving rights to one million new shares. So six rights are required for one share.
NEW QUESTION # 239
All sales literature and advertising relating to investment company shares prepared by members of FINRA must be filed for review with which of the following?

  • A. SEC
  • B. Anti-Trust Division of the Justice Department
  • C. Federal Reserve Board
  • D. FINRA

Answer: D Explanation:
FINRA. Sales literature regarding investment company shares must be filed with FINRA within three days after the first use.
NEW QUESTION # 240
Under a leaseback arrangement used to finance construction of local schools, who is the issuer of the municipal bonds?

  • A. a public housing authority commissioned by the federal government
  • B. a legal authority created for this purpose
  • C. the local school district
  • D. the state in which the schools are located

Answer: B Explanation:
Explanation/Reference:
Explanation: a legal authority created for this purpose. Bonds with a leaseback arrangement are issued by a specially created entity.
NEW QUESTION # 241
What is represented by the net investment income of an open-end investment company?

  • A. net income from dividend and interest paid on securities in the fund portfolio
  • B. dividends, interest, and net gains on sales of securities
  • C. net profits from the investment company operation
  • D. net gains on sales of portfolio securities

Answer: A Explanation:
net income from dividend and interest paid on securities in the fund portfolio. This is the definition of net investment income, which excludes gains on sales of securities.
NEW QUESTION # 242
A CMO is issued that has three tranches. One has an average life of 2 years. A second has an average life of 10 years. The third has an average life of 30 years. Initially, interest payments are distributed in this order:

  • A. equally to all CMO holders of any tranche
  • B. first to the holders of the 10-year tranche
  • C. first to the holders of the 30-year tranche
  • D. first to the holders of the 2-year tranche

Answer: A Explanation:
equally to all CMO holders of any tranche. All bondholders share equally in the interest payments. Only principal payments are directed to the owners in each tranche in sequential order.
NEW QUESTION # 243
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