UNIT 4. SYKES

Content published on social media that allows for others to comment, reuse, or "like" is considered to be A)interactive content B)unethical content C)static content D)advertising

A

One of the risks of investing on margin is that a severe decline in the market price of one of the securities in the account can trigger a call for additional funds. If this happens and the investor does not supply the money when demanded, the broker-dealer can A)liquidate its choice of securities in the account to bring the account back to the needed level B)liquidate only the security that has caused the decline C)grant the client an extension of time to procure the needed funds D)make a short-term loan to the client to prevent the liquidation of securities in the account

A

Trade confirmations sent by broker-dealers to their customers must always include A)the amount of markup or markdown charged B)the current market price of the security traded C)the amount of commission charged D)the tax identification number of the customer

C

A working group convened by NASAA has developed a model fee disclosure schedule to help investors better understand the costs involved in doing business with their broker-dealer. The template has broker-dealers disclosing which of the following fees? A)Markups and markdowns B)Account closing fees C)Advisory fees D)Commissions

B

A broker-dealer publishes a list of securities it approves for inclusion in IRAs. This means A)the broker-dealer has consulted with the regulatory bodies and has received approval from them to recommend these securities for IRAs B)the broker-dealer has evaluated these securities and believes they would be suitable for inclusion for retirement planning C)an agent for the broker-dealer can place these in clients' IRAs knowing that the suitability requirements have been met D)the broker-dealer has committed an unethical business practice because use of the word approved is prohibited

B

It would not be considered an unethical business practice under NASAA's policies for an investment adviser to charge fees I.as well as commissions II.based on an hourly rate III.based on a percentage of the change in value of funds from quarter to quarter IV.based on a percentage of the aggregate value of funds under management A)II and III B)I, II and IV C)I and IV D)III and IV

B

One way in which an investment adviser acting in the capacity of an agent in a transaction with a client differs from a broker-dealer performing the same task is that the investment adviser A)shall notify the Administrator of its capacity in the proposed transaction B)shall obtain client consent before completion of the transaction C)shall disclose the agency capacity before the transaction D)may not charge a commission on the transaction

B

Unless qualifying for an exemption, which of the following advisory fee structures is NOT allowed under the USA? A)Fees based on a fixed dollar schedule tied to the value of funds under management B)Fees based on a percentage of the change in value of funds from quarter to quarter C)Fees based on an hourly rate D)Fees based on a percentage of the aggregate value of funds under management

B

According to the U.S.A PATRIOT Act, account identification and verification procedures should be applied to which of the following? I.New individual accounts. II.New business accounts. III.Existing individual accounts. IV.Existing business accounts. A)I and IV. B)II and IV. C)I and II. D)III and IV.

C

One of the concerns about social media is the opportunity for affinity fraud. This occurs when A)fraudulent offers are directed to investors in the same or neighboring zip codes B)people who have been defrauded are repeatedly subjected to offers C)fraudulent offers are aimed at groups of people who share a similar interest D)individuals who have been convicted of fraud continue to target prospects

C

Under industry rules, customers who wish to trade options must receive a copy of the Options Disclosure Document (ODD): A)at or before the mailing of the confirmation representing the first options trade. B)at or before the mailing of the next monthly statement. C)at or before account approval. D)within 15 days of account approval.

C

Western Securities, Inc. (WSI) is a broker-dealer that also offers portfolio management. One of WSI's portfolio managers notices an article on asset allocation that harmonizes with WSI's investment philosophy. If WSI should post a link to this article on its website, it would probably be considered A)entanglement B)estrangement C)adoption D)fulfillment

C

When opening an account at a broker-dealer, if the most recent copy of the firm's fee schedule is not available, NASAA recommends that the client A)goes ahead with the account opening but refrains from trading until its receipt B)promptly notifies the Administrator of the firm's failure to comply C)does not place any assets in the account until it is provided D)selects another broker-dealer and opens the account there

C

All of the following actions must be completed by the time customers enter their first option trade EXCEPT A)delivery of the options disclosure document (ODD). B)completion of the new account form. C)approval by a designated options supervisor. D)receipt of a completed options agreement.

D

An agent is so confident that the shares of KAPCO Industries are underpriced that he tells his clients that he will repurchase any shares at their original cost plus 5% if the stock hasn't outperformed the market over the next 6 months. This is considered A)a sincere effort to assist clients in reaching their goals B)a prohibited action to all clients other than accredited investors C)allowable only if the agent deposits cash sufficient to cover the guarantee in an escrow account D)a performance guarantee and is a prohibited action

D

Which of the following investment adviser compensation arrangements is (are) permitted under the Uniform Securities Act? I.The value of a client's account at the start of the year is subtracted from the value at the end of the year. The investment adviser's compensation is 5% of the difference. II.The investment adviser charges an annual fee of $2,000, but the agreement calls for a waiver of the fee if the client's portfolio value has not increased by at least $20,000. III.The investment adviser charges a fee of 1% of the average value of the account portfolio during the year. IV.The investment adviser charges a flat fee of $1,000 if the client's portfolio assets are $100,000 or more or $2,000 if the client's assets increase to $200,000 or more. A)III only B)I and IV C)I and II D)III and IV

D