Regulations: FINRA Review Questions
A client of a registered representative refers a new potential customer. This customer is interested in purchasing an oil and gas limited partnership unit. What percentage of the purchase amount can the representative share with the referring client as a finder's fee? A: 0% B: 5% C: 10% D: 15%
A: 0%
Any materials handed out to attendees must be filed with FINRA for seminars involving all of the following investments EXCEPT: A: Corporate debentures B: Collateralized Mortgage Obligations C: Mutual funds D: Direct Participation Programs
A: Corporate debentures
Which of the following is an SRO? A: MSRB B: SEC C: SIPC D: FDIC
A: MSRB
A registered representative wants to form a Limited Liability Company (LLC) to start investing in commercial property. The other owners of the LLC will be the representative's spouse and adult child. Which statement is TRUE about this? A: The representative must notify the member firm prior to the formation of the LLC B: The representative must notify the member firm once the LLC is formed in the state C: The representative must notify the member firm once the LLC purchases a property D: Notice to the member firm is not required
A: The representative must notify the member firm prior to the formation of the LLC
A promising new customer at a FINRA member firm has complained verbally to a registered representative that he lost $500 on the first stock recommended by that representative. Wanting to keep the customer, the representative offers to make this up to the customer by giving the customer, the customer's spouse, and each of the customer's 3 children a gift of $100. Which statement is TRUE? A: This action is a violation of FINRA rules B: This action is acceptable because it does not exceed the $100 per person gift limit C: This action is acceptable only if the member firm approves in advance D: This action is acceptable only if the payment is made by the member firm and not the representative
A: This action is a violation of FINRA rules
A registered representative is the subject of a written complaint from a customer alleging that he stole $12,000 from her account. Which statement is TRUE? A: This must be reported to FINRA promptly B: No report to FINRA is required because this complaint is not verified C: No report to FINRA is required because the amount involved is under $15,000 D: The representative can settle the complaint by offering to pay the customer $12,000
A: This must be reported to FINRA promptly
A branch manager puts a billboard in the branch window that states: "Now is a great time to invest in stocks!" This is considered to be: A: advertising B: sales literature C: public forum D: correspondence
A: advertising
Customer securities held in margin accounts: A: can be commingled with other customer margin securities and used as collateral for a loan by the brokerage firm B: can be commingled with fully paid customer securities and used as collateral for a loan by the brokerage firm C: must be held in custody of the customer D: must be segregated and placed in safekeeping
A: can be commingled with other customer margin securities and used as collateral for a loan by the brokerage firm
A registered representative that wishes to purchase Initial Public Offerings is restricted from buying IPOs of: A: common stock B: non-convertible preferred stock C: convertible preferred stock D: any new issue security
A: common stock
As long as the firm has written policies and procedures covering borrowing from customers, a registered representative can borrow money without getting the firm's prior approval from a customer who is a: A: cousin B: friend C: colleague D: neighbor
A: cousin
Arbitration is preferred over litigation as a means for settling disputes because: A: it is less time consuming and less expensive B: it allows the parties involved to get a hearing of their grievances C: the decision cannot be appealed D: the arbitration panel is more knowledgeable about industry practices
A: it is less time consuming and less expensive
Under FINRA rules, when no proxy contest is involved, the proxy of a customer whose shares are margined, that is returned without indicating how the shares should be voted is: A: not counted in the vote B: voted by the member firm C: voted by the management of the company D: returned to the shareholder for voting
A: not counted in the vote
A customer that wishes to open an account to buy new issues is required to make a: A: positive representation that he or she is not restricted within 12 months preceding the first purchase B: negative representation that he or she is not restricted within 12 months preceding the first purchase C: a quarterly positive representation that he or she is not restricted thereafter D: a quarterly negative representation that he or she is not restricted thereafter
A: positive representation that he or she is not restricted within 12 months preceding the first purchase
Under FINRA Rule 5130 on IPO distributions, a member may sell shares of a new issue of common stock to a registered representative: A: under no circumstances B: if the principal approves of the sale in writing C: if the issue does not trade at a premium in the aftermarket D: without restriction
A: under no circumstances
The minimum asset size threshold for an investor to be considered an "institutional client" for purposes of the FINRA communications rules is: A: $25 million B: $50 million C: $75 million D: $100 million
B: $50 million
An e-mail is defined by FINRA as correspondence if it is sent to no more than how many existing or prospective retail clients? A: 10 B: 25 C: 35 D: 50
B: 25
A customer has decided to transfer his account from Broker-Dealer A to Broker-Dealer B. Which statement is TRUE regarding the maintenance of the customers existing account records? A: Broker-Dealer A must retain the customer's existing account records (statements) for 3 years B: Broker-Dealer A must retain the customer's existing account records (statements) for 6 years C: Broker-Dealer B must retain the customer's existing account records (statements for 3 years) D: Broker-Dealer B must retain the customer's existing account records (statements for 6 years)
B: Broker-Dealer A must retain the customer's existing account records (statements) for 6 years
FINRA's 5% Policy applies to which of the following? A: Commissions charged on variable annuities B: Commissions charged on transactions effected on stock exchanges C: Underwriting spreads charged on new issue offerings effected over-the-counter D: Sales charges imposed on mutual fund offerings
B: Commissions charged on transactions effected on stock exchanges
Which decision by a registered representative requires specific customer authorization? A: Determining time of execution in a cash account B: Determining the number of shares purchased in a margin account C: Determining price of execution in a margin account D: Determining the execution venue for a trade in a margin account
B: Determining the number of shares purchased in a margin account
On Wednesday, May 15th, a registered representative receives an order to sell 100 shares of ABC stock that has been "transferred and shipped" to the customer. Before executing the order, the registered representative must make sure the securities can be delivered by: A: Thursday, May 16th B: Friday, May 17th C: Monday, May 20th D: Tuesday, May 21st
B: Friday, May 17th
Who does NOT have to be licensed in a broker-dealer? A: Chief Executive Officer B: Partner who only provides capital C: Chief Financial Officer D: Sales individual
B: Partner who only provides capital
Which of the following would be considered to be a "retail communication"? A: Direct mailing sent to 15 existing retail clients B: Password-protected website maintained by a broker-dealer C: Institutional communication D: Correspondence to an individual client
B: Password-protected website maintained by a broker-dealer
A communication sent to 30 retail clients and 10 institutional clients is defined as (a): A: Correspondence B: Retail Communication C: Public Appearance D: Institutional Communication
B: Retail Communication
What is the U.S. Government agency that has enforcement authority over the U.S. securities markets? A: FINRA B: SEC C: MSRB D: CFTC
B: SEC
An electronic communication that recommends securities that is sent by a registered representative to each of her 77 customers is defined as: A: Advertising B: Sales Literature C: Correspondence D: Educational Material
B: Sales Literature
Which of the following is a violation of FINRA rules? A: Recommending the purchase of put options to protect a stock position from a downwards market move B: Sharing in the profits and losses of a customer's account C: Selling exempted securities to a customer with a written agreement to buy back the securities at a later date D: Charging customers different commission rates for similarly sized trades
B: Sharing in the profits and losses of a customer's account
If a reference to FINRA is made on a member firm's website, which statement is TRUE? A: The FINRA name cannot be hyperlinked to the FINRA website B: The FINRA name must be hyperlinked to the FINRA website and the font size used for the FINRA name must be smaller than the font used for the member's name C: The FINRA name must be hyperlinked to the FINRA website and the font size used for the FINRA name must be larger than the font used for the member's name D: The FINRA name cannot be hyperlinked to the FINRA website unless the firm specifically requests an exemption from this prohibition from FINRA
B: The FINRA name must be hyperlinked to the FINRA website and the font size used for the FINRA name must be smaller than the font used for the member's name
As the result of a hearing in front of the District Hearing Panel, a registered representative is suspended. Which statement is TRUE regarding the right of appeal? A: The decision of the District Hearing Panel is final and cannot be appealed B: The decision may be appealed to the National Adjudicatory Council C: The decision may be appealed to the Securities and Exchange Commission D: The decision may be appealed to Federal Court
B: The decision may be appealed to the National Adjudicatory Council
A customer instructs a registered representative to "Buy 500 shares of ADP whenever you think the price is right." Which statement is TRUE about this order? A: The order is the same as a limit order B: The order is the same as a not held order C: Acceptance of the order requires a prior written discretionary power of attorney from the customer D: The order can be accepted only if pre-approved by a branch manager
B: The order is the same as a not held order
A registered representative at a FINRA member firm has been elected to his cooperative apartment building's Board of Directors. Which statement is TRUE? A: This event must be reported to FINRA B: This event must be reported to his or her employer C: This event must be reported to both FINRA and his or her employer D: No report is required to either FINRA or the employing member firm
B: This event must be reported to his or her employer
A customer brings $50,000 of cash to the brokerage firm office and gives it to the registered representative to pay for a securities purchase. The registered representative should: A: reject the cash payment, since cash payments over $10,000 cannot be accepted B: accompany the customer to the cashier, so that the customer can be given a receipt for the payment C: accept the payment on the firm's behalf D: deposit the cash to his personal account and issue a check in the same amount to the firm for crediting to the customer's account
B: accompany the customer to the cashier, so that the customer can be given a receipt for the payment
The Firm Element component of the "Continuing Education" requirement must be completed: A: semi-annually B: annually C: bi-annually D: tri-annually
B: annually
Under FINRA rules, disputes between a registered representative and a brokerage firm are handled by: A: binding arbitration and are appealable B: binding arbitration and are non-appealable C: litigation and are appealable D: litigation and are non-appealable
B: binding arbitration and are non-appealable
When an issuer wishes to conduct a shareholder vote as part of the annual meeting, the proxies are sent to beneficial owners holding shares in street name by (the) A: shareholder relations department of the issuer B: broker-dealer holding the shares C: DTCC D: transfer agent
B: broker-dealer holding the shares
A brokerage firm is permitted to hold fully paid customer securities if the: A: customer gives a full power of attorney to the brokerage firm and signs a rehypothecation agreement B: brokerage firm segregates those positions from margin securities and places them in safekeeping C: customer identifies in writing the specific securities that he wishes the brokerage firm to hold D: brokerage firm sends the customer a written receipt for the securities being held
B: brokerage firm segregates those positions from margin securities and places them in safekeeping
A registered representative with a wealthy clientele has many clients that are officers of publicly held companies. The registered representative receives an order from the executive vice-president of ADAP Corp. to sell 4% of the outstanding shares. Prior to placing this order, the registered representative may, in his or her personal account,: A: buy ADAP put options B: buy ADAP common stock C: sell ADAP call options D: sell short ADAP stock
B: buy ADAP common stock
In a communication to the public, a member firm: A: cannot make reference to the FINRA name B: can state that it is a member of FINRA C: can stated that it is approved by FINRA D: can state that it is endorsed by FINRA
B: can state that it is a member of FINRA
All of the following persons can be on securities industry arbitration panels EXCEPT: A: disinterested persons who are affiliated with member firms B: interested persons who are affiliated with member firms C: members of the general public D: attorneys who are members of the bar
B: interested persons who are affiliated with member firms
All of the following practices are prohibited under FINRA rules EXCEPT: A: selling dividends B: selling listed securities to customers on margin C: recommending purchases beyond a customer's financial capacity D: trading mutual fund shares
B: selling listed securities to customers on margin
All of the following statements are true about the compliance meeting held by the firm that registered individuals must attend EXCEPT: A: the content of the meeting must address compliance issues that have arisen at the firm B: the meeting must be held every 2 years C: proof of attendance at the meeting is required D: the meeting cannot include topics on how to improve sales
B: the meeting must be held every 2 years
Under FINRA rules, a customer complaint that must be resolved by the member firm is defined as any: A: verbal complaint B: written complaint C: complaint received by certified mail D: complaint received in any form
B: written complaint
Records of speaking engagements must be maintained by FINRA member firms for: A: 6 months B: 1 year C: 3 years D: 5 years
C: 3 years
Who does NOT have to be licensed in a broker-dealer? A: President B: Equity trader C: ACATS clerk D: Sales individual
C: ACATS clerk
Under FINRA rules, which account would be considered to be "discretionary"? A: An omnibus account run by an investment adviser for his clients B: An account where a third party power of attorney has been given by the customer to another individual C: An account where the broker has the power to decide when and what to trade without specific customer authorization D: A partnership account where only one of the partners has trading authorization
C: An account where the broker has the power to decide when and what to trade without specific customer authorization
To take a second job, under FINRA rules, a registered representative must obtain prior written approval from (the): A: FINRA B: SEC C: Branch Manager D: Financial and Operations Principal
C: Branch Manager
The FINRA 5% Policy requires that consideration be given to all of the following when determining mark-ups and commissions EXCEPT: A: Level of service provided by the firm B: Type of security involved in the transaction C: Financial condition of customer D: Dollar amount of the transaction
C: Financial condition of customer
All of the following are defined as "immediate family" for purposes of FINRA Rule 5130 on IPO distributions EXCEPT: A: Financially independent parent of broker-dealer employee B: Financially independent spouse of broker-dealer employee C: Financially independent uncle of broker-dealer employee D: Financially dependent uncle of broker-dealer employee
C: Financially independent uncle of broker-dealer employee
Which of the following is NOT required to be retained on file by a broker-dealer? A: Customer complaints B: Trade confirmations C: IPO prospectuses D: Correspondence
C: IPO prospectuses
Which of the following would constitute a violation of the FINRA Conduct Rules? A: Opening a cash account for a customer without obtaining that customer's signature B: Offering to trade ETF shares for a customer C: Recommending to a customer that he should get a group of friends together to buy mutual fund shares at a breakpoint D: Discussing the purchase of mutual fund shares with a customer before sending a prospectus
C: Recommending to a customer that he should get a group of friends together to buy mutual fund shares at a breakpoint -trading of mutual fund shares is prohibited, ETF are not
Which statement is TRUE about purchases of Initial Public Offerings by relatives of employees of member firms under the FINRA IPO Rule? A: Relatives of employees of member firms are not covered by the rule B: Relatives of employees of member firms are prohibited from buying IPOs without exception C: Relatives of employees of member firms can possibly buy IPOs offered through other member firms D: Relatives of employees of member firms are only permitted to buy IPOs with prior FINRA notification and approval
C: Relatives of employees of member firms can possibly buy IPOs offered through other member firms
A registered representative is employed by a broker-dealer that is a subsidiary of a publicly traded company, listed on the New York Stock Exchange. Which statement is TRUE? A: The registered representative may recommend the purchase of the parent company's common stock B: The registered representative cannot recommend the purchase of the parent company's common stock unless the trade is pre-approved by a manager C: The registered representative may accept unsolicited orders for the parent company's common stock D: The registered representative may only accept orders from institutions for the parent company's common stock
C: The registered representative may accept unsolicited orders for the parent company's common stock
A registered representative has spent 10 years working at his broker-dealer and has sold customers many mutual funds that pay trail commissions from 12b-1 fees. The registered representative is thinking about leaving his firm to do charitable work. He would like to collect the trail commissions on the funds after he terminates his employment from the firm. Is this possible? A: No, because only individuals who are currently registered can collect commissions B: No, because the representative must currently be servicing accounts to receive commissions C: Yes, if there is a written agreement between the member firm and the registered representative that is executed prior to termination D: Yes, because the representative will now be doing charitable work
C: Yes, if there is a written agreement between the member firm and the registered representative that is executed prior to termination
A registered representative wishes to give a speech to a group of 35 potential retail clients. The speech is scripted and explains the differences between investing in growth versus value stocks. All of the following statements are true about giving the speech EXCEPT: A: the content must be approved in writing by a compliance officer or principal prior to giving the speech B: the speech must be truthful and in good taste C: a copy of the speech must be pre-filed with FINRA D: the speech must be informational, not promotional, in nature
C: a copy of the speech must be pre-filed with FINRA
All of the following would be considered to be a "retail communication" EXCEPT a(n): A: direct mailing sent to 30 existing retail clients B: password-protected website maintained by a broker-dealer C: institutional communication D: internet bulletin board
C: institutional communication -retail communication > 25 people
A registered representative is provided with an all-expenses paid trip by a mutual fund sponsor to a resort in Hawaii. FINRA defines this as: A: a gift B: a gratuity C: non-cash compensation D: business entertainment
C: non-cash compensation
A firm's research department issues a research report on ABC Corp. and changes its recommendation from "Reduce" to "Accumulate." Based on this information a registered representative calls all his clients and tells each one to: "Use all available cash to buy as much ABC Corp. stock as you can immediately." This action by the registered representative is: A: appropriate since the recommendation is based on the firm's research B: appropriate only if the proposed investment is not too risky for the customer C: not appropriate because it induces the customer to invest beyond his financial capacity D: not appropriate because it makes a recommendation based on inside information
C: not appropriate because it induces the customer to invest beyond his financial capacity
Under FINRA rules, a readily apparent reference to Broker Check and hyperlink to the Broker Check website is required: A: only on a member firm's initial webpage that is intended to be viewed by retail investors B: only on a member firm's web page that includes a professional profile of a registered person who conducts business with retail investors C: on both a member firm's initial webpage that is intended to be viewed by retail investors and any web page that includes a professional profile of a registered person who conducts business with retail investors D: on every page of a member firm's website that is intended to be viewed by retail investors
C: on both a member firm's initial webpage that is intended to be viewed by retail investors and any web page that includes a professional profile of a registered person who conducts business with retail investors
A registered representative wishes to sell a customer a limited partnership unit that is offered through his friend - the general partner in the venture. Under FINRA rules, this action is: A: permitted without restriction B: only permitted if general partner approves C: only permitted if the member firm is notified in writing and gives prior written approval to the transaction D: only permitted if FINRA is notified in writing and gives prior written approval to the transaction
C: only permitted if the member firm is notified in writing and gives prior written approval to the transaction
Under FINRA arbitration rules, the arbitration panel for a dispute involving a customer will consist of individuals: A: working in the securities industry B: who have a minimum of 5 years' experience as securities attorneys C: working both inside and outside the securities industry D: who are employees of FINRA
C: working both inside and outside the securities industry
A representative who is new to the industry is setting up her on-line social media profile, using a template provided by her firm, which is one of the largest asset managers. She wants clients to know about her capabilities and the "high touch" personal involvement that she will offer. Which statement made in the profile would be considered to be misleading? A: "With the resources offered by our firm, we have proprietary in-depth research reports on companies and industries that you can only get through us" B: "I will work diligently to find the best investments that meet your specific investment objectives, risk tolerance level, and investment time horizon" C: "I will be your personal point of contact, so that any questions or concerns that you have will be answered by me and not by some individual who is not personally involved in managing your account" D: "I have industry experience and depth of knowledge, assuring you that your account is being managed by one of the best in the business"
D: "I have industry experience and depth of knowledge, assuring you that your account is being managed by one of the best in the business"
Which action is permitted under FINRA rules? A: A registered representative accepts a $300 gift from a customer B: A registered representative pays for a $1200 sushi meal with a customer C: A registered representative gives a customer $200 tickets to a show D: A registered representative accompanies a customer to a show, for which the representative paid $200 for the tickets
D: A registered representative accompanies a customer to a show, for which the representative paid $200 for the tickets -business entertainment must be accompanied by RR
Which statement is TRUE regarding compensation? A: Broker-Dealers earn fees for rendering advice B: Investment Advisers earn commissions for executing transactions C: Investment Advisers earn mark-ups for executing transactions D: Broker-Dealers earn commissions for executing transactions
D: Broker-Dealers earn commissions for executing transactions
Under the FINRA Conduct Rules, a broker-dealer may charge a customer for all of the following services EXCEPT: A: Collection of dividends B: Safekeeping of securities C: Handling the transfer and reregistering of securities D: Distributing proxies to the owners of margin securities
D: Distributing proxies to the owners of margin securities
A registered representative receives a large buy order from an institution and buys that stock for his own account before placing the order. This is known as: A: Inter positioning B: Free Riding C: Backing Away D: Front Running
D: Front Running
FINRA enforces regulations in all of the following markets EXCEPT: A: First Market B: Second Market C: Third Market D: Futures Market
D: Futures Market
All of the following individuals are permitted to be included in arbitration panel EXCEPT: A: Persons affiliated with member firms B: Disinterested persons with no industry affiliation C: Attorneys that are members of the bar D: Persons involved in the dispute
D: Persons involved in the dispute
All of the following statements are true regarding the U.S. securities markets EXCEPT: A: The Federal Reserve Board decides which securities can be traded on margin B: FINRA has regulatory authority over the U.S. securities markets and market participants in the trading of all non-exempt securities C: The Securities and Exchange Commission has regulatory authority over the U.S. securities market and market participants D: The MSRB has regulatory authority over the U.S securities markets and market participants in the trading of all exempt securities
D: The MSRB has regulatory authority over the U.S securities markets and market participants in the trading of all exempt securities
Which of the following statement is TRUE regarding a registered individual who recently left the employment of a FINRA member firm? A: The individual is allowed to maintain his license at another member firm without being employed by that firm B: The individual's registration is terminated when the U-5 is filed and he must pass the "Top-Off" Exam again to reenter the business C: The license remains active for an indefinite time period if the individual does not affiliate with another member firm D: The license lapses if the individual remains unaffiliated for 2 years
D: The license lapses if the individual remains unaffiliated for 2 years
A registered representative wants to use her social media account to contact both existing and prospective clients who also use the site. Which statement is TRUE about the registered representative doing this? A: The registered representative is prohibited from doing this and is only permitted to contact clients through e-mail accounts established by the member firm B: The registered representative can do this if the communication is filed with FINRA 10 days in advance of distribution C: The registered representative can only contact existing clients, and the communications must be captured and supervised by the member firm D: The registered representative can contact both existing and prospective clients as long as the communications are captured and supervised by the member firm
D: The registered representative can contact both existing and prospective clients as long as the communications are captured and supervised by the member firm
Which statement is TRUE about a registered representative who wishes to take a second job under FINRA rules? A: This action is prohibited B: This action is permitted without restriction C: This action requires the prior written approval of FINRA D: This action requires the prior written approval of the member organization employer
D: This action requires the prior written approval of the member organization employer
A registered representative has done fund raising and charitable work for a not-for-profit hospital for many years and has just been invited to join the hospital's Board of Directors. She will get no compensation for this. Does she have to amend her U4 filing for this? A: No, because it is charitable work B: No, because she has been fund raising for the hospital for many years C: No, because she is not being compensated D: Yes, because this is an outside business activity
D: Yes, because this is an outside business activity
A registered representative has done fund raising and charitable work for a not-for-profit hospital for many years and has just been invited to join the hospital's Board of Directors. She will get no compensation for this. Does she have to get permission of her broker-dealer to do this? A: No, because it is charitable work B: No, because she has been fund raising for the hospital for many years C: No, because she is not being compensated D: Yes, because this is an outside business activity
D: Yes, because this is an outside business activity
A registered representative would be permitted to take a loan from a customer who is all of the following EXCEPT: A: a spouse B: a parent C: a bank lending to the representative on the same terms and conditions as loans made to the general public D: a bank lending to the representative on more favorable terms and conditions than loans made to the general public
D: a bank lending to the representative on more favorable terms and conditions than loans made to the general public
To open a margin account for a customer: A: no signature of the customer is required B: a customer signature must be obtained on the hypothecation agreement prior to placing the first order in the account C: a customer signature must be obtained on the hypothecation agreement prior to confirmation of the first transaction in the account D: a customer signature must be obtained on the hypothecation agreement prior to settlement of the first transaction in the account
D: a customer signature must be obtained on the hypothecation agreement prior to settlement of the first transaction in the account
A registered representative is employed by a broker-dealer that is a publicly traded company, listed on the New York Stock Exchange. Which statement is TRUE? The registered representative may: A: recommend the purchase of his employer's stock to existing customers B: solicit new customers to buy his employer's stock C: write and distribute a research report recommending the purchase of the employer's stock D: accept unsolicited orders for his employer's stock; but cannot solicit orders for, nor recommend the security
D: accept unsolicited orders for his employer's stock; but cannot solicit orders for, nor recommend the security
All of the following actions by a registered representative are prohibited under FINRA rules EXCEPT: A: spreading rumors of a sensational character that might be expected to influence prices on the exchange B: lending money to a customer where investment securities will be the collateral for the loan C: sharing in the gain or loss of a customer account D: accepting unsolicited orders from non-established customers
D: accepting unsolicited orders from non-established customers
All of the following are defined as "institutional clients" for purposes of the FINRA communications rules EXCEPT: A: mutual fund B: investment adviser C: investor with $50 million of assets D: accredited investor
D: accredited investor
A registered representative recommends the purchase of a GNMA pass-through certificate to a customer that seeks safety of principal and a moderate level of income. When doing so, the registered representative states to the customer "GNMA certificates are guaranteed by the U.S. government and each month you will receive a check, all of which is income to you." This statement is: A: truthful and accurate B: deceptive because GNMA certificates are not directly guaranteed by the U.S. government C: deceptive because GNMA certificates make payments semi-annually, not monthly D: deceptive because GNMA certificates make payments that are a combination of both principal and interest
D: deceptive because GNMA certificates make payments that are a combination of both principal and interest
Under FINRA rules, a registered representative: A: may borrow money from a customer only with the permission of FINRA B: may borrow money from a customer only with the permission of the branch manager C: may borrow money from a customer only with the permission of the customer D: may not borrow money from a customer
D: may not borrow money from a customer
After completion of his or her first Regulatory Element review, a Registered Representative: A: is not required to complete any further Regulatory Element reviews B: must complete an annual Regulatory Element review thereafter C: must complete a Regulatory Element review every two years thereafter D: must complete a Regulatory Element review every three years thereafter
D: must complete a Regulatory Element review every three years thereafter
A dispute between a registered representative and a member firm is submitted to arbitration. If either party is dissatisfied with the decision: A: an appeal may be filed with FINRA B: an appeal may be filed with the Securities and Exchange Commission C: an appeal may be filed in Federal Court D: no appeal is permitted because the decision is binding
D: no appeal is permitted because the decision is binding
A customer requests the preliminary prospectus for a new issue that a firm is underwriting. The registered representative "highlights" important information in the document with a red marking pen. This action is: A: permitted with written approval of the branch manager B: permitted if the registered representative sends the customer a letter acknowledging the alterations C: permitted if the altered document is filed with the SEC D: not allowed under any circumstances
D: not allowed under any circumstances
Under FINRA rules, a registered representative may: A: borrow money from a customer only with the permission of FINRA B: borrow money from a customer only with the permission of the branch manager C: borrow money from a customer only with the permission of the customer D: not borrow money from a customer
D: not borrow money from a customer
A registered representative with a FINRA member firm is opening a new cash account for a customer who lives in another state. The customer explains that he wishes to place a trade today. To accommodate the customer's wish, the registered representative gets the customer's permission to sign the customer's name to the arbitration agreement. This action by the registered representative is: A: permitted if a branch manager approves B: permitted if the customer's verbal permission has been tape recorded C: permitted if the customer follows up with written permission within 48 hours D: prohibited
D: prohibited
A registered representative makes the following recommendation to her customer: "In case of an emergency requiring immediate cash, you may not be able to sell your securities and get a check the same day. I recommend that you send $10,000 of cash to me at my office where I will place it in safekeeping. If you have an emergency cash need, I can bring the cash to you immediately." This action is: A: permitted, since it better serves the client B: permitted only if the registered representative has worked in the business for at least 10 years C: permitted only if the registered representative is also a registered investment adviser representative D: prohibited under FINRA rules
D: prohibited under FINRA rules
All of the following communications with the public must be approved in advance of use by a principal EXCEPT a(n): A: form letter to be sent to all customers that recommends allocating assets among stock, bond and money market fund investments B: advertisement placed in the local newspaper that states that "Now is the time to open an IRA account" C: research report that recommends the purchase of ABC stock D: prospectus sent to customers who request information about a mutual fund
D: prospectus sent to customers who request information about a mutual fund
Failure to complete the Regulatory Element within the stated time period will result in a registered representative's: A: termination B: censure C: expulsion D: suspension
D: suspension
All of the following time stamps are on an order ticket EXCEPT the time of: A: order entry B: trade execution, if executed C: order cancellation, if canceled D: trade reporting to the Consolidated Tape
D: trade reporting to the Consolidated Tape
Under FINRA rules, alterations to executed order tickets for orders that were filled on the NYSE are prohibited: A under all circumstances B: unless the alterations are approved in writing by the Floor Governors of the NYSE C: unless the alterations are approved in writing by the DMM on the floor of the NYSE D: unless the alterations are approved in writing by the Branch Manager
D: unless the alterations are approved in writing by the Branch Manager
