Tamarac 99

which of the following is requried when a firm opens and investment advisory account for an investment adviser who is acting on behalf of a client of the account

trading authority

when should form bd be updated

whenever the information on the form becomes inaccurate

what is the maximum sales charge that can be assessed on a purchase of open end investment company shares with all options allowed

8.50%

Within how many days does a carrying member have to validate an ACAT form? A. 10 business days B. 1 business day C. 2 business days D. 3 business days

B. 1 business day

• T-bills are generally sold in all the following increments EXCEPT:

B. 13 weeks T-bills are short-term cash equivalent securities; they are generally sold in increments of 4 weeks, 13 weeks, and 26 weeks.

what does regulatioin s-p provide

client protection from having their private information misused

hypothecation agreement

collateral

American Depositary Receipts (ADRs) are: A. receipts for foreign bank deposits held by US citizens B. receipts issues for US stocks deposited in a local treasury C. receipts issued for deposits of US stocks held by foreign companies D. receipts issued for foreign stock

D. receipts issued for foreign stock

Which of the following is not a valid reason for a carrying member to take exception to the transfer instructions on an ACAT form? A. the SSN on the transfer instructions does not match the number on the carrying firm's records B. the account does not include any transferable assets C. the customer signature is improper D. there is a dispute in the balance of the account

D. there is a dispute in the balance of the account

Which would be considered bullish: I. Buy Call II. Sell Put III. Sell Short IV. Long Put

I & II A bullish outlook would anticipate an increase in price

Which of the following are true about bearer bonds: I. the bondholder is presumed to be the owner II. bearer bonds are still issues by some companies and municipalities III. intereste coupons are attached to the bonds IV. Although the owner's name does not appear on the certificate, it does appear on the interest coupons

I & III

Warrants differ from the rights in the following respects: I. Warrants are long-term, rights are short-term II. Warrants are usually issues at strike price above the market price, which rights have a subscription price below the market price III. Warrants are typically offered "sweetness" for other securities, while rights are only offered to existing shareholders

I, II, & III

FINRA receives a formal complaint that Psychic Investments did not use reasonable diligence when executing an OTC order. While investigating the bad-execution complaint, FINRA will consider all of the following factors: I. character of the market II. size of the transaction III. number of markets checked by OTC trader IV. interpositioning

I, II, III, & IV

The OTC Market is also known as I. an institutional market II. an interdealer market III. a negotiated market IV. a triple-auction market

II & III

Which os the following are advantages to the investor of having capital gains and dividends automatically reinvested into his/her mutual fund account? I. avoiding taxation on the gains II. avoiding market timing considerations by dollar cost average III. purchasing new shares at POP IV. purchasing new shares at NAV

II & IV

Which of the following are functions of a mutual fund custodian? l. safekeeping of mutual fund and client assets ll. receive dividends and interest payments lll. issuing new shares when sold lV. underwriting activities

l & ll

What is primarily guaranteed by the medallion signature guarantee program

securities

the escheatment process is governed by

state law

an account is considered restricted if

the equity is less than the reg t amount but greater than the minimum maintenance requirement

which of the following are advantages to the investor of having capital gains and dividends automatically reinvested into his or her mutual fund account -acoiding taxation on the gians -avoiding market timing considerations by dollar cost averaging -purchasing new shares pop -purchasing new shares at nav

3 and 4

how often must customers account records be updated

3 years

a member firm must preserve records of customer complaints for at least

4 years

Institutional Account

50 million or more

• The Trade Reporting and Compliance Engine (TRACE) developed by FINRA can best be described as a system that:

A. Accommodates reporting of transactions in debt securities "Trade Reporting and Compliance Engine" or "TRACE" means the automated system developed by FINRA that, among other things, accommodates reporting and dissemination of transaction reports where applicable in TRACE-Eligible Securities. "TRACE-Eligible Security" means a debt security that is United States ("U.S.") dollar-denominated and issued by a U.S. or foreign private issuer or issued or guaranteed by an Agency or a Government-Sponsored Enterprise.

• Which of the following are required to be provided to a customer who purchases a mutual fund from a member firm? I. prospectus II. statement of additional information III. trade confirmation IV. the mutual fund's sales literature

A. I and III The only information required to be given to an investor is a prospectus and a confirmation of any trade that occurred.

• Which of the following business practices are prohibited? I. engaging in outside business activities without prior written notification from his/her broker-dealer II. selling away III. using fraudulent tactics to sell securities

A. I, II and III All three are prohibited by FINRA. Selling away is when an associated person engages in private security transactions without his or her broker-dealer's knowledge or consent.

You are underwriting an offering for Company XYZ. During due diligence, you discover that the company may be involved in illegal activity. You file a Suspicious Activity Report (SAR). What is the deadline for filing the SAR?

A. No later than 30 calendar days after the date of initial detection of the facts that formed the basis for filing the SAR A Suspicious Activity Report (SAR) must be filed no later than 30 calendar days after the date of initial detection of the facts that formed the basis for filing the SAR.

Which of the following is not a characteristic? A. Preferred stock has preference over bonds if a company is liquidated B. Preferred stock has preference over common stock is a company is liquidated C. Preferred stockholders receive dividends before common stockholders D. Preferred stock can have a convertible feature

A. Preferred stock has preference over bonds if a company is liquidated

A designated market marker (specialist) on the NYSE receives a buy order and sell order at the same time, and at the same price. Instead of executing them against each other, the specialist trades separately with each party. Which of the following is true about this information? A. This is a violation if the customers would have received a better price if they had traded with each other B. This is permissible in all situations C. This is permissible as long as disclose is given D. This is always a violation

A. This is a violation if the customers would have received a better price if they had traded with each other

• At what point does "correspondence" become retail communication?

A. When recipients exceed 25 retail investors If a communication is distributed to more than 25 retail investors within a 30 day period, it is considered retail communication and must be approved by a principal.

The two phases of an annuity are: A. accumulation phase and annuitization phase B. growth phase and income phase C. accumulation phase and growth phase D. annuitization phase and payout phase

A. accumulation phase and annuitization phase

Customer trade confirmations must be provided to customers: A. at or before the settlement date B. one business day after the trade date C. on the trade date D. before the settlement date

A. at or before the settlement date

The trust of indenture act of 1939 is concerned with and protects investors in which type of security: A. debt securities B. trusts C. indentures D. unit investment trusts

A. debt securities

Under Regulation FD (fair disclosure), what must an issue (or person representing the issuer) do when they intentionally reveal material non-public information to a holder of the security who might trade on the information? A. immediately disclose the information publicaly B. promptly report the breach to the SEC C. promptly disclose the information publicly D. immediately report the breach to the SEC

A. immediately disclose the information publicaly

In general, prices for long-term bonds fluctuate _____ short-term bonds. A. more than B. less than C. nearly identical to D. none of the listed choices. it varies greatly

A. more than

Gratuities to other may include which of the following: A. no gratuities in excess of $100 per person per year B. no more than a $100 gift from customers per account per person per year C. no gratuities in excess of $100 per gift per person per year D. no gratuities allowed

A. no gratuities in excess of $100 per person per year

Each office of supervisory jurisdiction (OSJ) must have at least one______. A. principal B. transfer agent C. emergency contact D. compliance officer

A. principal

• All of the following are true regarding money market securities EXCEPT

A. they are illiquid Money market securities are not illiquid, rather they are highly liquid. They are debt securities maturing in one year or less that pay a low rate of interest.

What is the primary purpose of keeping an error account? A. to organize and cover transaction errors occurring as a normal part of trading for quick resolution B. to more effectively coordinate databases of settlement agreements between clearing houses C. To organize a list of errors for presentation to the relevant dealer-brokers D. To confirm the details of the contract

A. to organize and cover transaction errors occurring as a normal part of trading for quick resolution

The continuing education firm element requirment for a broker dealer must be completed by

All registered representatives of the broker dealer on an annual basis

• If you leave a registered firm, how soon must the firm supply you with a copy of Form U5, Termination Notice for Securities Industry Registration?

B. 30 or fewer days These questions can be tricky, as many deadlines are loose ("reasonable time frame") and others are hard and fast like this one. According to FINRA, "If you leave your firm for any reason, the firm has up to 30 days to supply you with a copy of the Uniform Termination Notice for Securities Industry Registration, Form U5, which it files with FINRA. The Form U5 indicates the date you left the firm and a brief reason why you left. You should review this Form for accuracy. If the information supplied on the Form U5 is inaccurate or incomplete, you should notify your prior employer promptly. Also, your next FINRA member employer must obtain and review a copy of your most recent Form U5."

What kind of risk is reduced the most by a clearinghouse? A. Interest rate risk B. Counterparty risk C. Liquidity risk D. Price risk

B. Counterparty risk

An account is considered restricted if: A. Any of the answers listed B. The equity is less than thew Reg T amount, but greater than the minimum maintenance requirement C. Deposited certificates do not have the proper signature D. The equity in the account has fallen below the minimum maintenance requirement

B. The equity is less than thew Reg T amount, but greater than the minimum maintenance requirement

• Artistic expression aside, the term 'Painting the Tape' refers to which of the following:

B. When one party sells to another with the understanding that the stock will be repurchased later at the same price When one party sells to another with the understanding that the stock will be repurchased later at the same price, it is known as painting the tape. This practice is considered an unethical trading practice as it is intended to make the stock appear to have significantly more activity than it actually does.

Which of the following would definitely be a DTC eligible security? A. a corporate bond B. a stock that trades on the NYSE C. a stock that is quoted on OTC link D. a stock that is quoted on the OTCBB

B. a stock that trades on the NYSE

All of the following are true regarding clearinghouses EXCEPT? A. clearinghouses offer continuous net settlement B. clearinghouses are registered broker-dealers C. clearinghouses reduce counterpart risk D. the biggest clearinghouse in the US is the NSCC

B. clearinghouses are registered broker-dealers

The four key dates for dividends in this order: A. declaration, ex-divident, payment, record date B. declaration, ex-divident, record, payment date C. ex-dividend, record, declaration, payment date D. ex-dividend, declaration, payment, record date

B. declaration, ex-divident, record, payment date

• Upon the death of a customer who has his or her securities registered as transfer-on-death (TOD), the securities pass:

B. directly to the beneficiary without probate Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity (your "TOD beneficiary") upon your death without having to go through probate. By setting up your account or having your securities registered this way, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated. However, TOD beneficiaries must take steps to re-register the securities in their names.

Regulation S-P helps protect clients from: A. money-laundering B. having their private information misused C. abusive commissions and sales charge D. recommendation to purchase high risk securities such as S&P 500 index derivatives

B. having their private information misused

Your best client places a buy limit order with you for 500 shares of XOM at $60. XOM declares a stock dividends. What happens to this order on the ex-date? A. it becomes a buy limit order for 400 shares at $72 B. it becomes a buy limit order for 600 shares at $50 C. it becomes a buy limit order for 600 shares at $48 D. it becomes a buy limit order for 400 shares at $75

B. it becomes a buy limit order for 600 shares at $50

In cases where a corporation has an anti-provision, if they raise money through an additional offering of common stock, they must offer ______ to existing stockholders. A. priority selection B. preemptive rights C. class A shares D. indemnification

B. preemptive rights

The FINRA conduct rules consider an email to be correspondence if it meets all of the following conditions except: A. it was sent to less than 25 prospective retail customers B. the email was sent to all customers within a 30-day period C. all of these conditions would be considered correspondence D. the email was sent to a single customer

B. the email was sent to all customers within a 30-day period

Which of the following types of securities has the potential to pay dividends except: A. preferred stock B. warrants C. common stock D. ADRs

B. warrants

At what point does "correspondence" become retail communication? A. when it triggers a sale B. when recipients exceed 25 retail investors C. when the recipient is a prospect and not a client D. when performance information is quoted

B. when recipients exceed 25 retail investors

When should Form BD be updated? A. quarterly B. whenever the information on the form becomes inaccurate C. annually D. when the minimum net capital requirement for the firm changes

B. whenever the information on the form becomes inaccurate

All of the following are categories of common stock except: A. Treasury stock B. Outstanding stock C. Reissued stock D. Authorized stock

C. Reissued stock

Which of the following would be considered a violation of FINRA's prohibition of outside business activities? A. the registered representative invests $5,000 in a direct participation program B. the registered representative invests $25,000 in a limited partnership outside of his state of residence C. Without notifying his employee in advance, the registered representation earns $200 house sitting his neighbor's house whenever his neighbor goes out of town for long business trips D. All of these are considered violations

C

Which of the following are the maximum criminal penalties associated with insider trading? A. all of these choices B. maximum of 10 years in prison C. maximum institutional fine fo $10 million D. maximum personal fine of $5 million

D. maximum personal fine of $5 million

Which of the following scenarios describes trade shedding? A. A registered representative breaks a larger order into smaller multiple orders in order to fill the order faster B. A registered representative trades excessively in a customer's account in order to increase his commission C. A registered representative breaks a larger order into smaller multiple orders in order to increase his commission D. Several registered representatives at the same broker-dealer buy and sell the same security to create trading activity around the security to convince their customers to buy the security

C. A registered representative breaks a larger order into smaller multiple orders in order to increase his commission

• A member firm must preserve records of customer complaints for at least _____ years from the date of the complaint.

C. Four A member firm must preserve records of customer complaints for at least four years from the date of the complaint. FINRA extended the preservation time period from three years to four years effective on December 5, 2011 through FINRA Rule 4513. The records may be kept at the office of supervisory jurisdiction (OSJ) that supervises the particular office out of which the complaint came. If the OSJ does not wish to keep the records on site, it may keep the records in a place that allows the records to become promptly available to FINRA upon request.

• Which of the following are advantages to the investor of having capital gains and dividends automatically reinvested into his/her mutual fund account? I. avoiding taxation on the gains II. avoiding market timing considerations by dollar cost averaging III. purchasing new shares at POP IV. purchasing new shares at NAV

C. II and IV Automatic reinvestment does not allow the investor to avoid or defer paying taxes on the gains, but does permit the investor to purchase additional shares at NAV, without sales charges. Another advantage is avoiding market timing considerations by dollar cost averaging.

• Which of the following scenarios would support the claim that John is bullish and Jill is bearish on Bank of America stock trading at $50 a share on March 1?

C. John sells Jill a put with a strike price of $25. If you think a stock price is going to rise, you are bullish. If you think a stock price will fall, you are bearish. Bulls buy calls and sell puts. Bears buy puts and sell calls. If John believes the stock will go up in price, he would be happy to sell Jill the right to sell her BofA stock at $25 when he expects it to trade at a much higher price. Jill would never buy a stock straight out if she thought it was going to go down in price. In addition, Jill would not buy the right to purchase a stock at a price higher than it is currently trading if she believed the stock was headed down in price. Likewise, John would not buy a right to purchase a stock at a price lower than it is trading if he thought the stock would go up. The only logical answer is that John would sell Jill a put with a strike price of $25.

• American Depositary Receipts (ADRs) are:

C. Receipts issued for foreign stock American Depositary Receipts (ADRs) are receipts issued for foreign stock. The actual stocks are deposited in foreign branches of American banks and the receipts are traded in the U.S.

• An ACAT Form is first sent from the _____________________ to the ____________________?

C. Seller, buyer A customer must fill out an automated customer account transfer form (ACAT form) when he/she wants to transfer his/her securities from his/her current member (the carrying member) to another member (the receiving member). The form must be signed, or electronically signed, by the customer. After the form has been filled out, the receiving member must immediately send the form to the carrying member. The carrying member must validate and return the form to the receiving member within one business day. After validating the form, the carrying member must transfer the account assets within three business days.

"Breakpoint" sales, prohibits an associated person from doing which of the following? A. Encouraging a customer to increase his/her order size in order to reach a breakpoint B. Utilizing breakpoints in sales charge in their own personal account C. Selling investment shares in dollar amounts just below the point at which a sales charge is reduced D. Accepting a customer's order in which such customer falls short within $10,000 of reaching the next available breakpoint

C. Selling investment shares in dollar amounts just below the point at which a sales charge is reduced D. Accepting a customer's order in which such

The cost basis on gifted shares of stock that have appreciated in value form the initial purchase is: A. The fair market value 30 days after the date of gift B. An average between the fair market value on the date of gift and the giftor's original cost basis C. The gift's original cost basis D. The fair market value on the date of the gift

C. The gift's original cost basis

• All of the following is required to occur during a quarterly physical count of securities EXCEPT: A. Record on the books and records all unresolved differences B. Physically examine and count all securities held C. Verify all securities that have been in transfer status for longer than 15 days D. Account for all securities that are labeled failed to receive or deliver

C. Verify all securities that have been in transfer status for longer than 15 days During a box count, the following activities must be completed: - Physically examine and count all securities held - Account for all securities that are in the firm's control but not possession (such as securities labeled failed to receive or deliver) - Verify all securities that have been in the firm's control but not possession (such as securities in transfer status) for longer than 30 days - Compare the results of the count and verification with the firm's own records and record on the books and records all unresolved differences. Therefore, securities that have been in transfer status for longer than 15 days would not necessarily be subject to verification unless they had been in such status for longer than 30 days.

The trade reporting and compliance engine (TRACE) developed can best be described as a system that: A. tracks late trades by members in OTC equity securities B. facilitates transfers of securities and payments between broker members C. accommodates reporting of transactions in debt securities D. only reports trades in money market instruments

C. accommodates reporting of transactions in debt securities

Someone has two separate bank accounts, one at Bank A and one at Bank B. At some point in the future, after this person has established good credit at Bank A, they leave both accounts empty. Now, this person writes a check for $10,000 on their account at Bank B and presents it to Bank A. Because they have good credit at Bank A, they are able draw funds on that check before it clears - a process which usually takes a couple of days. This series of activities is known as what? A. check hopping B. check forging C. check kiting D. check riding

C. check kiting

All of the following are acceptable reasons for a security to be subject to reclamation except: A. the certificate was rejected by the transfer agent B. the signature on the certificate was not guaranteed C. corporation defaulted on the security at T+1 D. the certificate was counterfeit

C. corporation defaulted on the security at T+1

FINRA prohibits members or associated persons from excessively trading in a customer's account, or "churning". For purposes of this rule, excessive activity is measure by: A. more than 10 trades per week B. more than 100 trades per month C. excessive trading activity may only be measure related to the objectives and financial situation of the customer D. more than 3 trades per day

C. excessive trading activity may only be measure related to the objectives and financial situation of the customer

• Which of the following are the maximum criminal penalties associated with insider trading?

C. maximum personal fine of $5 million Individuals who willfully violate the U.S. Securities Exchange Act of 1934 through insider trading could face penalties of up to 20 years in prison and fines of 5 million dollars. Companies may be fined up to $25 million.

It is violation of FINRA Rule 2342 for a registered representative to engage in "breakpoint" sales. Which of the following definitions describes such a sale: A. a sale broken between two or more investment company's funds B. sales made for the sole purpose of qualifying for a sales contest C. sales below the point in which the sales charge is reduced on quantity transactions so as to share in the higher sale charges D. sales above the point in which the sales charge is increased on quantity transactions

C. sales below the point in which the sales charge is reduced on quantity transactions so as to share in the higher sale charges

Upon the death of minor child beneficiary of a UGMA account, the assets pass to: A. the parents B. the donor C. the estate of the minor child D. the custodian

C. the estate of the minor child

The responsibility for maintaining a file of customer complaints falls upon: A. an individual registered representatives B. the SEC C. the firm's principal or principals D. each office of supervisory jurisdiction

C. the firm's principal or principals

Terry Johnson just discovered that his broker-dealer put a 90 day freeze on his account because he bought and sold common stock before paying for the shares in a cash account. This means that he: A. cannot purchase securities until the freeze is lifted B. cannot purchase securities for 10 business days C. can purchase securities and pay for them by the settlement day D. can purchase securities provided he pays for them on the date of the trade

D

Upon the death of a customer who has his or her securities registered as transfer-on-death (TOD), the securities pass: A. through the probate court B. through the customer's will C. directly to the beneficiary after probate D. directly to the beneficiary without probate

D

Under Rule 144, which of the following persons would currently be subject to holding period limits on a re-sale? A. A CEO who purchases 10,000 shares of restricted securities two years ago of the company that he runs B. Person who is not an affiliate purchases 10,000 shares in a private placement 1 year ago C. A CEO who holds 10,000 shares of publicly traded company he runs D. A person who is not an affiliate purchases 10,000 shares of a company's stock 2 months ago from an affiliate of a company

D. A person who is not an affiliate purchases 10,000 shares of a company's stock 2 months ago from an affiliate of a company

• What is the main difference between ADRs and GDRs?

D. ADRs trade in US markets whereas GDRs trade on foreign exchanges outside the issuer's home country ADRs (American Depository Receipts) represent ownership in shares of foreign stock that trade in U.S. markets. ADRs allow investors to purchase foreign investments without having to transact business in another country. Investors benefit from the simplicity of purchasing ADRs because ADRs trade in the U.S. market in U.S. dollars, with all dividends being converted to U.S. dollars. GDRs (Global Depository Receipts) are similar to ADRs, but trade on foreign exchanges outside of the issuer's home country.

Under the Securities Act of 1933, sales literature must not: A. Be confusing B. Compare itself against other investments C. Include returns. D. Be misleading

D. Be misleading

• Which of the following are advantages of holding common stock? I. Limited liability II. Ease of transfer III. Guaranteed dividends IV. The ability to convert into preferred shares

D. I and II Owners of common stock are limited in their liability to the amount they invest in the stock, and enjoy ease of transfer due to organized and regulated secondary markets. Dividends are not guaranteed, but must be approved by a company's board of directors.

• A stockholder who receives rights may: I. Exercise the rights to buy stock, usually for less than the market price II. Sell the rights for their own market value III. Let them expire IV. Trade them for shares of stock

D. I, II, III Rights holders may do any of the first three choices listed. They may not trade them for shares of stock.

• Which of the following are true regarding mortgage-backed securities issued by a government agency? I. They are composed of individual mortgages that have been pooled to create equity securities. II. Prepayment risk is inherent in the product.

D. II only Mortgage-backed securities issued by government agencies are comprised of individual mortgages that have been pooled to create debt securities, not equity securities, so Statement I is false. Such securities do carry prepayment risk, which is the risk that homeowners refinance when rates drop, so Statement II is true.

Which of the following scenarios would support the claim that John is bullish and Jill is bearish on Bank of America stock trading at $50 a share on March 1st? A. John sells a call with a strike price of $40 B. Jill buys a call from John with a strike price of $60 C. Jill buys a round lot of Bank of America stock on March 1 D. John sells Jill a put with a strike price of $25

D. John sells Jill a put with a strike price of $25

KYC regulations stand for ________ regulations and were instituted to help financial institution combat _______ for terrorist and non-terrorist activities. A. Know your client; recruiting B Know your client; money laundering C. Know your customer; recruiting D. Know your customer; money laundering

D. Know your customer; money laundering

• Which of the following best fits the definition of churning?

D. Recommending or making trades in a client's account in order to generate commissions. Churning, also referred to as excessive trading, involves a professional recommending or making trades in a client's account for the sole purpose of generating commission revenue and is an ethical violation. A professional must be able to document that recommendations and trades are aimed at furthering their clients' investment objectives.

What is primarily guaranteed by the Medallion Signature Guarantee Program? A. Bank Deposits B. Legal Documents C. T-Bills D. Securities

D. Securities

• Which of the following would be considered a violation of FINRA's prohibition of outside business activities?

D. Without notifying his employer in advance, the registered representative earns $200 house-sitting his neighbor's house whenever his neighbor goes out of town for long business trips Investments in limited partnerships and DPPs are permitted by FINRA without notification of the representative's firm.

regualtion D says which of the following would not be considered

Doctors ???

A third market refers to:

Exchange-listed securities sold on the OTC

Which of the following are advantages of holding common stock? l. limited liability ll. ease of transfer lll. guaranteed dividends lV. the ability to convert into preferred shares

l & ll

all of the following are exempt from registration under the securities act of 1933 except

Securities issued by an internet company

Why is selling away a violation of FINRA rules?

Selling away gives a member firm no opportunity to supervise the transaction

The escheatment is governed by?

State Law

which of the following is not a violation of FINRA rules on interpositioning

a broker dealer uses another broker dealer to effect a trade that cuases the privce to be decreased .50

who must maintain a firms file of customer complaints

a firms principal or principals

rule 5130 prohibits which of the following

all of the above

What does SEC regulation FD Fair Disclosure) Require?

it requires a publicly traded company to promptly diaclose material information to all shareholders if they unintentionally disclose it to someone outside the company

The price of a company's stock is going up steadily. Investors who hold which of the following positions on that stock are happy? I. long calls II. short calls lll. long puts lV. short puts

l & lV