SIE Mastery Exam
ABC Corp stock is trading at BID 75.32, ask 75.35 5 x 12. What is the spread? A) $0.03 B) $0.35 C) $0.30 D) $3.00
A) $0.03 The spread is the difference between the bid and ask. In this example it is three cents.
An investor holds a 4% corporate bond with a yield to maturity of 2.75%. How much will be received in interest on each of the scheduled interest payment dates? A) $20.00 B) $40.00 C) $27.50 D) $400.00
A) $20.00 With a 4% coupon (nominal or stated yield), this corporate bond will pay $40 annually (0.04 × $1,000 par). For corporate bonds, this is paid in semiannual interest payments, where each payment would be $20.
Anna, a manager for Great Plains Securities, resigns her position and surrenders her principal registrations in order to return to being a registered representative with no management duties. She will continue at the same firm and in the same office. How many days does the firm have to file Form U5? A) 30 days B) 10 days C) 60 days D) 45 days
A) 30 days This is an example of a partial termination. Anna is terminating her principal registration, but not her representative registrations. The form must be filed within 30 days.
Which of the following companies is in a cyclical industry? A) A heavy equipment maker B) A gold mining company C) A beverage bottler D) A petroleum refiner
A) A heavy equipment maker Heavy equipment is a cyclical industry, tending to move in tandem with the business cycle. Precious metals tend to be counter cyclical. Food and fuel are defensive industries.
Your customer, Maya Jenyer, is 27 years old and in the 20% federal income tax bracket. She is interested in opening a Roth IRA as a supplement to her retirement savings. Her intention is to place the entirety of her contribution into the Windmill Growth Fund, which offers a choice of share classes. Which share class would likely be best for this customer? A) B shares B) C shares C) I shares D) A shares
A) B shares B shares are also called back-end loads. The back-end load gets smaller over a holding period of five to seven years, eventually dropping to zero. B shares are good for small dollar investors with long time frames. A shares have front-end loads that can be reduced with larger investments, which is not best for this customer who is limited to the maximum amount allowed for an IRA contribution. C shares are level loads that are best for investors with short time frames but not good for a younger person saving for retirement. I shares are only available to institutional customers and are not tested.
Which of the following interest rates is set by the FRB? A) Discount rate B) Federal funds rate C) Prime rate D) Broker call loan rate
A) Discount rate The discount rate is the rate of interest the Federal Reserve Bank (FRB) charges member banks for short-term loans. The other rates are set by the bank making the loan.
Which of the following is a non financial consideration? A) Risk tolerance B) Last year's AGI C) Income D) Debt service
A) Risk tolerance Financial considerations are those that may be defined by a lump sum of money or a stream of payments (like income, debt payments, or adjusted gross income). Risk tolerance is not defined this way and is a nonfinancial consideration.
Regarding the third and fourth markets, which of the following is true? A) The fourth market is for institutional investors and eliminates the need for brokers to act as intermediaries. B) The third market allows institutions to trade directly with each other. C) The third market can be accessed through electronic communication networks (ECNs) only. D) The fourth market is for the trading of OTC issues only.
A) The fourth market is for institutional investors and eliminates the need for brokers to act as intermediaries. The third market, or Nasdaq Intermarket, is a trading market in which exchange-listed securities are traded in the OTC market. In the third market, brokers registered as OTC market makers are used to do the transactions. The fourth market is for institutional investors in which large blocks of stock, both listed and unlisted, trade in transactions unassisted by broker-dealers. These transactions take place through ECNs.
Under the Investment Company Act of 1940, an investment company may take all of the following forms except A) a limited partnership with partners as passive investors. B) an open-end investment company. C) a closed-end investment company. D) a unit investment trust.
A) a limited partnership with partners as passive investors. An investment company is not a limited partnership. Investment companies are organized as open-end companies (mutual funds), closed-end companies, unit investment trusts, or face-amount certificate companies.
An investor who is an affiliate of XYZ Corporation holds shares of restricted XYZ stock. These shares have: A) a six-month holding period and are subject to volume limits for as long as the investor is an affiliate. B) a 30-day holding period and are subject to volume limits for as long as the investor is an affiliate. C) no holding period, nor are they subject to any volume limitations currently or in the future. D) no holding period but are subject to volume limits for as long as the investor is an affiliate.
A) a six-month holding period and are subject to volume limits for as long as the investor is an affiliate. Rule 144 mandates that restricted shares held by an affiliate are subject to a six-month holding period and will be subject to volume restrictions (limits) for as long as the individual continues as an affiliate of the corporation.
In a cash account, an investor must pay for a purchase by A) depositing the entire amount of the trade by the settlement day. B) depositing at least 50% of the purchase price by settlement. C) having the cash available in the account. D) having at least 50% of the trade in the account.
A) depositing the entire amount of the trade by the settlement day. In a cash account, 100% of the funds required to pay for a purchase must be deposited in the account by the settlement day. Funds are only required beforehand if the account is frozen.
You notice a new customer, Malcolm Wren, has a pattern of buying and selling stocks with holding periods of just a day or two. He seems unconcerned with losses. Additionally, between trades, he wires the money to and from a number of offshore accounts. After informing your supervisor, the most likely action for your company is to: A) file a SAR with FinCEN. B) inform the SEC. C) inform the customer about the irregular activity in the account. D) file a CTR with FinCEN.
A) file a SAR with FinCEN. Malcolm Wren's actions are rather suspicious and have the hallmarks of money laundering activity. Your firm should file a suspicious activity report (SAR) with the Financial Crimes Enforcement Center (FinCEN). A Currency Transaction Report would be used if the transactions involved currency (which they don't). You are not supposed to inform the subject of a SAR that one has been filed.
A breakpoint sale is defined as the sale of mutual fund shares in an amount: A) just below the dollar amount at which the sales charge is reduced. B) at or above the dollar amount at which the sales charge is reduced. C) required as the minimum investment in a fund as specified by the SEC. D) just below the public offering price of the fund.
A) just below the dollar amount at which the sales charge is reduced. A breakpoint sale refers to a sale made just below the point at which the investor would otherwise receive the reduced sales charge. The unethical practice may earn a higher commission for the salesperson, but it is not in the best interest of the customer.
For a new customer opening an account, assuming there are no physical or mental impairments, what age would trigger the registered representative to request that the name of a trusted contact person for the account be given? A) Age 55 B) Age 65 C) Age 18 D) Age 21
B) Age 65 When opening a new account or updating account information for a senior citizen, firms must make a reasonable effort to obtain the name and contact information of a trusted contact person.
Which of the following may be considered suspicious? A) Moving large sums of money between accounts with the same last names B) A customer unconcerned about losses C) A client expressing undue concern about substantial commissions being charged to the account D) Transactions that alone, or in the aggregate, involve at least $2,000
B) A customer unconcerned about losses It would not be unusual to transfer money between people with the same last name because they are presumably family members. However, substantial movement between accounts that are not related would be suspicious, as would customers not caring about losses. It might be because they are laundering money. Concern about substantial commissions is healthy. Transactions that alone, or in the aggregate, involve at least $5,000 in funds that appear to serve no business or lawful purpose would be considered suspicious.
The Achieving a Better Life Experience (ABLE) Act of 2014 enabled the establishment of ABLE accounts for certain individuals. Which of the following statements regarding ABLE accounts is false? A) Eligibility is limited to those where the onset of a significant disability occurred before the age of 26. B) Contributions to ABLE accounts are tax deductible. C) Income earned in an ABLE account is not taxed. D) Contributions can be made by any person, including the account beneficiary.
B) Contributions to ABLE accounts are tax deductible. ABLE accounts are tax-advantaged savings accounts for individuals with disabilities and their families. The act limits eligibility to individuals with significant disabilities where the age of onset of the disability occurred before turning age 26. Contributions to ABLE accounts can be made by any person, including the account beneficiary, but must be made using after-tax dollars and are not tax deductible. Income earned by the accounts is not taxed.
A customer has expressed interest in exchange-traded funds (ETFs) and wishes to discuss them with you. You could tell the customer all of the following except A) selling short and trading on margin are available transactions with ETFs. B) ETFs have a NAV, calculated at the end of the trading day, that serves as the trading price until the next NAV is calculated. C) real-time quotes are available for ETFs. D) a share of an ETF represents an entire portfolio, or a specific selection, of securities.
B) ETFs have a NAV, calculated at the end of the trading day, that serves as the trading price until the next NAV is calculated.' While a NAV can be calculated for an ETF, the price is set by the market and changes throughout the trading day.
A customer of a broker-dealer holding two penny stocks in her account, purchased on unsolicited trades, should expect to receive an account statement how frequently? A) Annually B) Monthly C) Only months when a penny stock transaction has occurred D) Quarterly
B) Monthly Regardless of activity in the account, if the account holds any penny stocks, broker-dealers must provide an account statement to the customer monthly.
Which of the following statements describing Section 529 plans is true? A) Most state college savings plans require either the owner or the beneficiary of the plan to be a state resident. B) The maximum contribution varies from state to state. C) They can only be opened for children under age 18. D) The fees associated with them are similar from state to state.
B) The maximum contribution varies from state to state. The features of Section 529 plans, including their contribution limits and fees, vary widely from state to state. Section 529 plans have no age limits as to participation; they are open to both children and adults who plan to attend college or graduate school. For college savings plans, there is no state residency requirement for owners or beneficiaries of Section 529 plans.
Which of the following is correct concerning an uncovered call writer? A) The premium is the maximum loss and the gain potential is unlimited. B) The premium is the maximum gain and the loss potential is unlimited. C) Both gains and losses are unlimited since the position is uncovered. D) Both gains and losses are limited to the premium received from the sale of the option.
B) The premium is the maximum gain and the loss potential is unlimited. Uncovered call writers have a maximum profit potential of the premium received if the option expires worthless. The loss potential is unlimited since the writer does not have the stock required to make delivery and would be forced to buy the shares in the open market.
The residents of the city of Sandy Place, California, recently voted in favor of issuing a bond. The proceeds of the bond will be used to build a baseball stadium for the local minor league baseball team. Though the bond's costs are expected to be covered by the ticket revenue from the stadium, the bond contains a provision that requires the city to pay the bond's interest payments as well as pay the principal at maturity if the ticket sales are insufficient. This bond is an example of: A) a senior debenture. B) a general obligation municipal bond. C) a mortgage bond. D) a revenue municipal bond.
B) a general obligation municipal bond. This is a type of municipal bond called a double-barrel bond. Though revenue from ticket sales will be used to pay for the bond, ultimately, the cost of the bond may fall back on the taxpayer. That makes this a GO and is why, unlike a revenue bond, the issue had to be approved by the residents of Sandy Place in a vote.
A member firm broker-dealer is found to be in violation of a Securities and Exchange Commission (SEC) federal regulation and could be subject to all of the following except: A) monetary fines. B) jail sentences for directors and officers. C) limits on activities the firm may participate in. D) revocation of the firm's registration.
B) jail sentences for directors and officers. A broker-dealer found to be noncompliant with an SEC rule or regulation may be subject to the following: censure; limits on activities, functions, or operations; suspension of its registration (or one of its associated person's license to do business); revocation of its registration; or monetary fines. Jail sentences can only be assessed in a criminal prosecution.
A registered representative is permitted to work from a home residence conducting normal business activities. Regarding the arrangement, all of the following statements are true except: A) approval of the member firm's self-regulatory organization (SRO) is required. B) the address and telephone number of this location may not be advertised. C) the location would be subject to a premise visit and review by a principal of the firm. D) taking customer orders for the purchase and sale of securities would be permitted at this location.
B) the address and telephone number of this location may not be advertised. Once approved by the member firm's SRO, all normal business activities would be permitted, and the location address and telephone number could be advertised. As with all firm locations, it would be subject to visits and review by a principal and the firm's SRO.
All of the following statements about a bond selling above par value are true except A) the nominal yield always stays the same. B) the nominal yield is lower than the current yield. C) the yield to maturity is lower than the nominal yield. D) the current yield is higher than the yield to maturity.
B) the nominal yield is lower than the current yield. Nominal (i.e., coupon) yield is fixed and stays the same with all bonds. A bond selling above par is selling at a premium, so the yield to maturity is lower than the current yield—which, in turn, is lower than the nominal yield.
Your customer is interested in Sierra Verde Coffee Company stock, which is currently trading at $22 a share. She would like to buy 400 shares, but not for more than $20 a share. Which order best meets her request? A) Sell limit at $20 B) Buy stop at $20 C) Buy limit at $20 D) Sell stop at $20
C) Buy limit at $20 The buy limit is the best order to fulfill her request to buy the shares for no more than $20 a share. A sell order would sell shares, not buy. The buy stop order cannot be entered when the stock is already above the stop price.
M1 is a measure of which of the following? A) Consumer savings deposits B)nLiquid securities C) Cash and funds in demand deposit accounts D) Large time deposits
C) Cash and funds in demand deposit accounts M1 is the measure of cash and demand deposits, those funds most readily available to spend. M2 includes M1 plus consumer savings deposits. M3 includes M2 plus large time deposits like jumbo CDs. Liquid securities are those that are easily sold but are not part of these measures.
Which of the following mutual fund share classes has no back-end load, lower operating expenses, and low or no 12b-1 fees? A) Class C upon conversion to Class B B) Class C C) Class A D) Class B
C) Class A Class A shares, also known as front-end load shares, have an up-front sales charge that is usually subject to breakpoints. They have no back-end load and are sold with low or no 12b-1 fees and lower operating expenses.
Regarding delivery for listed option contracts when exercised, which of the following is true? A) Equity and index options are settled in U.S. dollars. B) Currency and equity options are settled in the underlying security. C) Currency and index options are cash settled in U.S. dollars. D) Equity options are cash settled in U.S. dollars.
C) Currency and index options are cash settled in U.S. dollars. When exercised, equity options are settled in the underlying security. This means that the underlying shares must be delivered by the short party assigned. However, when currency and index options are exercised, they are settled in cash. This means that U.S. dollars must be delivered by the short party assigned.
Representative Gary Willikers recently passed his licensing exams and was hired by Seacoast Securities, Inc., a broker-dealer member firm. He was recommended to the position by his Uncle George, who has worked for the firm for over a decade. Gary would like to send out a mail advertisement to help generate new customers. In order to do this, Gary will need approval from a principal of the firm, and the communication must be filed with: A) FINRA at least 10 days before use. B) the SEC within 10 days of use. C) FINRA within 10 days of use. D) FINRA at least 30 days before use.
C) FINRA within 10 days of use. New member firms (not new representatives) must file a copy of all public communication at least 10 days before use. Seacoast is an established firm and is required to file within 10 days of use. This is a FINRA rule, and all such filings go to FINRA, not the SEC.
Regarding a member firm's fingerprint records for employees, which of the following statements is not true? A) Fingerprint records need not be kept for employees deemed to be performing clerical functions only. B) Fingerprint records are required for all those physically handling cash or securities, whether the position is deemed clerical or not. C) Fingerprint records must be submitted to the Securities and Exchange Commission for processing. D) Fingerprint records are required for all associated persons involved in the sales of securities.
C) Fingerprint records must be submitted to the Securities and Exchange Commission for processing. Fingerprint cards (records) are submitted to the U.S. Attorney General (or designee) for identification and processing
If the U.S economy were to enter a deflationary period, which of the following would likely occur? A) Employment would rise. B) Gold prices would increase. C) Fixed-income payments become more valuable. D) Interest rates would increase.
C) Fixed-income payments become more valuable. Deflation is a prolonged period of falling prices. Falling prices would make fixed-income payments more valuable as bond investors could buy more goods and services with their coupon payments. Essentially, purchasing-power risk is reversed in a deflationary period. Interest rates and gold prices would likely fall during a deflationary period.
Variable annuities include which of the following attributes? A) Intraday liquidity B) Unlimited pretax contributions C) Guaranteed life income D) Tax-free growth
C) Guaranteed life income Variable annuities will pay an income for the life of the annuitant if annuitized. Annuities are generally illiquid investments that grow tax deferred. The tax-deferred growth will be taxed on withdrawal, so it is not tax free. Qualified variable contracts are funded with pretax contributions, but these are limited to annual maximums similar to those found in 401(k) plans.
DRG Pharmaceuticals, Inc. common stock is currently trading at $52 a share. A put with a strike price of $50 a share would be described as which of the following? A) Trading at the money B) Having $2 of intrinsic value C) Having no intrinsic value D) Trading in the money
C) Having no intrinsic value A put is out of the money when the price of the stock exceeds the strike price. An out-of-the-money option has no intrinsic value.
Juan owns 1,000 shares of the big box retailer Buystuff, Inc. (Ticker: BSTF). He has owned the shares for 10 years and they have appreciated nicely. If Juan desires to generate income from the BSTF position, he could do which of the following? A) Buy 10 BSTF calls B) Buy 10 BSTF puts C) Sell 10 BSTF calls D) Sell 10 BSTF puts
C) Sell 10 BSTF calls In order to generate an income with option, you must sell (write) the contract. Cash would be used to cover a short put, but against a long stock, you would sell (write) calls. This would be a covered call as the customer owns 1,000 shares and the 10 contracts would be for 1,000 shares (100 shares per contract).
What does the BID represent? A) The lowest amount that someone can sell the stock at B) The highest amount that someone may buy the security for C) The highest amount that someone can sell the security D) The lowest amount some may buy the security for
C) The highest amount that someone can sell the security The BID is the best price that someone can sell the security for at the time of quote.
A corporate stock transaction occurs regular way on Monday, August 3. Ownership of the securities is recognized as changing hands between buyer and seller on: A) Tuesday, August 4. B) Thursday, August 6. C) Wednesday, August 5. D) the trade date.
C) Wednesday, August 5. When a regular way transaction occurs for corporate securities, ownership is recognized as changing hands on the settlement date. For corporate securities, settlement date is the trade date plus two business days (T+2).
NuBuckle, Inc., is an established accessory maker that is listed on several major exchanges. If your client owns 200 shares of NuBuckle common shares, they have all of the following rights except: A) a right to inspect the books. B) a right to vote for who will serve on the board. C) a right to a dividend. D) a right to transfer their shares as they see fit.
C) a right to a dividend. Shareholders of common stock have the privilege of receiving dividends if so declared by the board. The payment of a dividend is not a legal obligation of the corporation, so not a right. The right to inspect the books, vote on board members, and freely transfer shares are all rights granted to shareholders.
A registered representative is required to participate in an annual training plan prepared by the broker-dealer, which takes into account—among other things—recent regulatory developments, the scope of the broker-dealer's business activities, and its supervisory needs to comply with FINRA's: A) arbitration rules. B) regulatory element requirement. C) firm element requirement. D) Uniform Practice Code.
C) firm element requirement. FINRA's firm element requirements mandate that member firms prepare annual training programs that take into account such factors as recent regulatory developments, the scope of the member's business activities, the performance of its personnel in FINRA's regulatory element training, and its supervisory needs. This annual in-house training must be given to all registered persons who have direct contact with the public.
An existing shareholder receives 1,000 stock rights from the issuer, allowing the holder to do all of the following except A) exercise the rights to purchase more shares. B) sell the rights and profit from any increased market value. C) hold the rights indefinitely for future use. D) allow the rights to expire unexercised or unsold.
C) hold the rights indefinitely for future use. Holders of rights can do any of three things with them: exercise them, sell them in the open market, or allow them to expire unused or sold. Holding them indefinitely is not possible because all rights have a stated subscription period, generally short term (30-45 days), after which they expire.
Your broker-dealer is a fully disclosed firm. This means that it A) acts as its own back office, performing all functions such as sending out customer statements. B) accepts customer funds to be held at the broker-dealer. C) introduces its business to a clearing agent. D) holds customer securities at the broker-dealer.
C) introduces its business to a clearing agent. Fully disclosed firms introduce their business to clearing firms. Thus, a fully disclosed firm is also known as an introducing broker-dealer. Introducing broker-dealers cannot hold customer funds or securities, nor can they perform as their own back office, or clear, process, and settle transactions. All of these functions would be performed by the carrying (clearing) firm.
Max Larsson purchased stock of a company in the business of manufacturing yachts. Two years ago, his securities had lost most of their value immediately following a newly enacted luxury tax on purchases of more than $300,000. The investment most likely suffered a loss due to: A) interest rate risk. B) political risk. C) legislative risk. D) business risk.
C) legislative risk. The investment in the yacht-building business suffered a loss as a result of legislative risk. In other words, the rules of the game (i.e., tax treatment) changed after Larsson purchased the security. Legislative risk is from a change in the law. Political risk rises from a change in the leadership of a nation.
Which of the following is not information required for Form U4? A) Felony conviction B) Work history C) Home address D) Education
D) Education Form U4 does not inquire about a person's education, though the work history would include any time spent as a full-time student. The current residence is required as is a 10-year work history. A felony conviction within the prior 10 years must be disclosed.
Your customers, Frank and Gracia Chen, are considering investing in a private placement to add to their portfolio. They mention they are accredited investors. If accurate, they have a net worth of at least: A) $1 million or had an annual income of at least $200,000 in the past year. B) $1 million or had an annual income greater than $200,000 in each of the two most recent years. C) $5 million or had an annual income of at least $100,000 in each of the five most recent years. D) $1 million or had an annual income greater than $300,000 in each of the two most recent years.
D) $1 million or had an annual income greater than $300,000 in each of the two most recent years. An accredited investor is defined as someone having a net worth greater than $1 million or an annual income greater than $200,000 in each of the two most recent years. If a joint purchase, the income requirement rises to $300,000.
Your customer purchased 100 shares of Cuesta Verde Homes at $15 per share in a margin account. How much must the customer deposit by settlement day to pay for the trade? A) $2,500 B) $750 C) $2,000 D) $1,500
D) $1,500 The minimum initial deposit under FINRA rules is 100% or $2,000, whichever is less. Reg T requires 50%. The higher requirement of the two is the FINRA requirement of $1,500 (100% of the trade if the trade is less than $2,000).
If a real estate investment trust (REIT) distributes 85% of its net investment income to shareholders, on how much of its net investment income must the trust pay taxes? A) 85% B) Only on that portion not taxable to the shareholders C) 15% D) 100%
D) 100% To qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, a REIT must pass at least 90% of its net investment income on to the shareholder. In this case, it is distributing only 85% and must therefore pay taxes on all of its net investment income.
The regulatory element of a representative's continuing education will need to be completed within 120 days of certain anniversaries of their licensing. Which of the following is not an anniversary where a representative would be required to complete the regulatory element of their continuing education? A) 2nd anniversary B) 5th anniversary C) 11th anniversary D) 3rd anniversary
D) 3rd anniversary The regulatory element must be completed at the second anniversary and every three years thereafter (2nd, 5th, 8th, 11th, 14th, etc.).
Which of the following offering types would be used for a deal that will be sold exclusively to residents of one state? A) A Reg S offering B) A Reg A offering C) A Rule 144 offering D) A Rule 147 offering
D) A Rule 147 offering Intrastate offerings are done under a Rule 147 exemption. Reg S offerings are used for offshore transactions and Reg A offerings may be offered nationally.
Regarding stock rights and stock warrants, which of the following is true? A) Warrants have a short-term subscription length (expiry). B) Rights are exercised to purchase shares at a premium above the security's price when issued. C) Rights cannot be sold in the open market and are only exercised once received. D) Warrants are sometimes bundled with other securities.
D) Warrants are sometimes bundled with other securities. Rights are short term, given to existing shareholders, and allow the holder to purchase shares below current market value (not at a premium). By contrast, warrants are long term, can be bundled with other securities, and allow the owner to purchase shares at a price that is above the current market value at the time the warrants were issued.
An investor holds a bond where the issuer is scheduled to repay the borrowed principal at intervals over a number of years. This investor is holding: A) a balloon bond. B) a term bond. C) a series bond. D) a serial bond.
D) a serial bond. Bond maturities come in different types: term, serial, and balloon (there is no series maturity bond). A serial maturity is one where the issuer is scheduled to repay portions of the principal at intervals over a period of years until the entire balance has been repaid.
Regular way settlement for the purchase of an equity option occurs: A) three business days after the trade date. B) the same business day as the trade date. C) two business days after the trade date. D) one business day after the trade date.
D) one business day after the trade date. An equity option trade settles the next business day (T+1).
Local government investment pools (LGIPs) are established by: A) the federal government to provide municipalities a place to invest funds long term. B) states to provide municipalities a place to invest funds long term. C) local municipalities to allow states a place to invest funds short term. D) states to provide municipalities a place to invest funds short term.
D) states to provide municipalities a place to invest funds short term. LGIPs are established by states to provide other government entities, such as cities, counties, school districts, or other state agencies, with a short-term investment vehicle to invest funds.
A customer submits a written complaint disputing monetary charges assessed against an account held at a member broker-dealer. Resolution of this complaint will take place by: A) the Conduct Rules. B) the Code of Procedure (COP). C) the Uniform Practice Code (UPC). D) the Code of Arbitration (COA).
D) the Code of Arbitration (COA). The Code of Arbitration (COA) governs the resolution of disagreements and claims between members, registered representatives, and the public; it addresses monetary claims. Written complaints may come in any form, including instant messages, tweets, texts, and emails.
Which of the following persons would be allowed to purchase shares of an initial public offering (IPO)? A) The grandparent of a member broker-dealer employee B) The father of a member broker-dealer employee C) An attorney acting on behalf of the managing underwriter D) Someone owning 15% of a member broker-dealer
Those restricted from making purchases of an IPO at the public offering price include member firm employees and their immediate family members, as well as fiduciaries acting on behalf of the underwriters or issuer. While immediate family members include parents, in-laws, spouses, siblings, children, or any other individual to whom the person provides material support, aunts and uncles, as well as grandparents, are not considered immediate family members.
