Which of the following is an example of a primary market transaction?
Answer(s): A
Exco Resources' new bond issue is a primary market transaction. The primary market refers to the market for new issues. The other three scenarios describe transactions in securities that are already being traded and are secondary market transactions.
Dottie is a newly-minted, registered representative and is doing some cold calling to line up appointments with prospects. When doing so, Dottie:I). must not call anyone on her firm's do-not-call list.II). must not call anyone on the FTC's national do-not-call-list.III). must not call anyone before 7 a.m. or after 7 p.m., based on the time zone of the person being called.IV). must provide the person called with her name, the name and contact information of her firm, and the purpose of her call.
Answer(s): C
Only Selections I, II, and IV are correct. When Dottie does her cold calling, she must not call anyone listed on either her firm's do-not-call list or the FTC's national do -not-call list, and she must provide the person called with her name, the name and contact information of her firm, and the purpose of her call. Under FINRA's telemarketing rules, she must not call anyone before 8 a.m. or after 9 p.m., based on the time zone of the person being called.
A preemptive right:
A right entitles its owner to buy shares of stock at a specified price within a specified time period in order to retain his proportionate ownership in a firm. As such, it is a call option, but it is not usually attached to a bond as a sweetener; that would be a warrant.
In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. A month later, you notice that the stock is selling for $55 and decide to sell it.What is the tax consequence of this sale to you?
Answer(s): B
If you sell Hasbro stock for $55 and it was selling for $44 on the day that your uncle died, the sale will result in $3,300 of taxable income, taxed to you as long-term capital gain income. Your cost basis is the price at which the stock was selling on the day your uncle died, $44, so your gain on the sale is ($55 - $44) x 300 shares = $3,300. Although you owned the stock for only a month, the IRS stipulates that capital gain (or loss) earned on the disposition of inherited investment property will be considered to be long-term capital gain, regardless of how long it is held by the beneficiary prior to its sale.
Nancy invested $1,850 in the MidFee Mutual Fund, which has a 4% front -end load. The net asset value (NAV) per share of the fund at the time of her purchase was $22.20.How many shares of the fund was Nancy able to purchase?
If Nancy invested $1,850 in MidFee, which has a 4% front-end load, when the fund's net asset value was $22.50, she was able to purchase 80.00 shares. The offer price of the fund = NAV/ (1 - % load) = $22.20/ (1 - 0.085) = $23.125. An investment of $1,850 would, therefore, purchase $1,850/$23.125 = 80 shares.
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