Chapter 10 SIE
After the last issue date, how long must institutional communications be kept on file for inspection? a. 3 years b. 5 years c. 8 years d. 10 years
A
All of the following are appropriate options that a broker/dealer can offer customers to allow them to opt out of Reg S-P Privacy Rules easily EXCEPT a. a link in e-mail b. a written letter c. a toll-free phone number d. a prepaid postcard addressed to the broker/dealer
B
Distributions from traditional IRAs may begin at what age? a. any age if there are enough funds in the account b. age 59 1/2 c. age 60 d. age 72
B
You buy 100 shares of XYZ at $30 a share in a new margin account. What is the industry's minimum deposit requirement?
C -minmjum is $2000 different than the 50% reg T requiremnt which would be 1500
With respect to the Securities Exchange Act of 1934, which of the following is false? a. the act gave the SEC the right to set margin requirements b. the act gave the SEC the right to enforce security laws c. all publicly held companies are required to file an annual report and distribute the report to shareholders d. stock exchanges are required to register with the SEC
A
A customer deposits $7,500 in currency in his account at a financial institution. The financial institution a. must file an SAR b. is not required to do anything c. must file a CTR d. cant accept the deposit
A
Regarding UGMA and UTMA, which of the following is FALSE? a. donor must be an adult b. gift is irrevocable c. donor can be the custodian d. account can hold margined securities
D
All of the following are essential facts about a customer that should be obtained when opening an account EXCEPT a. years of employement b. address c. name d. age
A
Regulation T of the securities Exchange Act of 1934 gave the power to establish margin requirement to a. Securities Exchange Commission b. Federal Reserve Board c. Issuing Corporation d. Broker/dealers
B
What is the timeframe for filing relevant Suspicious Activity Reports? a. within 90 days of the suspicious transaction b. within 30 days of initial discovery c. within 30 days of the suspicious transaction d. within 90 days of initial discovery
B
Which of the following practices is a registered rep permitted in accordance with FINRA conduct rules? a. indicate to a client that an investment is guaranted against loss b. share in profits in a customer's account c. lend client securities without written approval d. borrow money from a client when a firm has no written procedures allowing it
B
When a registered rep decides to place a mutual fund advertisement, which of the following is a requirement? a. it requires SEC approval in writing b. Written approval from a registered principal of the firm c. The advertisement must be kept on file for 1 year d. The initial advertisement must be filed with FINRA 1 month prior to use
B -kept for 3 yars
A customer wishes to pay her son's college tuition using funds from her brokerage account. Her account has a checking account feature. The member firm may withdraw the funds if the customer does which of the following? a. offers to make a loan b. requests over the phone a wire transfer of the funds to the college c. requests in writing a wire transfer of the funds to the college d. provides the member firm with a copy of the tuition bill
C
A security that may be purchased on a margin is known as a "marginable security". Which of the following may NOT be purchased on a margin? a. any listed NYSE stock b. any stock listed on the NASDAQ National Market System c. new issues d. over-the-counter stocks approved for margin
C
A broker/dealer would need to file a Currency Transaction Report for which of the following transactions? a. multiple transactions on the same business day by the same customer: one for $3000 and one for $5000 b. multiple transactions by the same customer: one for $5000 on 1 day, and one for $5000 2 days later c. single transaction involving $3000 in currency d. single transaction involving $11,000 in currency
D
A firm has a joint account for a married couple. Any request for disbursement from the account, made by either spouse, would require that a. the check can be sent to either owner with power of attorney on file b. the instructions of either owner must be followed explicitly c. any disbursement can be signed by either owner d. the check must be payable to both owners jointly
D
In order to comply with FinCEN's anti-money laundering initiative, broker/dealers are required to a. designate an AML compliance officer b. test the program internally with in-house staff c. have each employee fingerprinted d. have the AML program approved by FINRA
A
After recieving an initial privacy notice, subsequent privacy notices should be provided to customers a. quarterly b. semiannually c. annually d. every 3 years
C
A client requested that his registered rep call his brothre who is interested in investing. The client's brother is on the National Do-Not-Call registry. The registered rep should a. call the clients brother between 8 am and 9 pm b. honor the request and all the clients brother c. send his client's brother a fax d. tell the client he cant call his brother without the brother's written permission
D
Which of the following is completed prior to the first margin trade? a. margin interest disclosure b. customer loan agreement c. margin risk disclosure d. margin account agreement
D aka hypothecation agreement (including risk and interest charge disclosures) completed upon opening the account
What is a firm required to do when it receives a cash deposit in excess of $10000 from one customer in a single business day? a. file a Currency Transaction Report(CTR) b. freeze the account immediately c. file a Suspicious Activity Report(SAR) d. keep a record of the transaction on file for 3 years
A
According to FINRA rules, which of the following falls under the definition of an independently prepared reprint? a. copy of a newspaper display ad listing the broker/dealer's services b. copy of an investment company ranking prepared by the research department of the broker/dealer c. copy of magazine article on retirement planning issued by a publisher that is not affiliated with the member d. an excerpt from a monthly market letter prepared by the broker/dealer and previously approved by FINRA
C
Participation in seminars, radio, or TV interviews would be described as a. correspondence b. institutional communications c. public appearances d. sales presentation
C
The statute of limitations for fraudulent tactics to induce the purchase or sale of securities is a. 2 years from the violatoin b. 5 years from the violation c. 5 years from the violation or 2 years within discovery d. 2 years from the violation or within 5 years of discovery
C
Under which of the following circumstances is a broker/dealer allowed to share nonpublic info of consumers with nonaffiliated third parties? a. broker/dealer did not disclose the info-sharing agreement with nonaffiliated parties to the consumer b. broker/dealer did not establish safeguards to protect the consumer records c. the customer has not elected to opt out of the disclosure d. the consumer did not recieve the initial privacy notice
C
How are a Roth IRA and a Roth 401(k) similar? a. contributions are made on a pre-tax basis b. there are no early distribution penalties c. qualified distributions are not subject to federal income taxes d. there are no maximum contribution limits
C contributions after tax , qualified excluded from federal income taxes
Under which of the following circumstances is a company NOT permitted to restrict or close an account? a. custodian of the UGMA account has died b. there are two executors on an estate account and only one is listed and signed the estate account application c. the client has sold a recently purchased security that has not yet settled d. the client has sold a recently purchased security that has settled, or the client only has 55% equity in the margin account
D - nothing wrong with margin account with equity at or above 50%, when it drops below there is a retrictions
Suitability judgements should be made based on a. info obtained from the client b. the registered reps (RR's) own observation of the client's lifestyle and spending habits c. the types of investments typically held by clients in a similar income bracket d. none of the above
A
Which of the following is TRUE regarding the review or approval of institutional communications? a. must be reviewed or approved by a registered principal b. must be reviewed or approved by FINRA prior to use c. must be reviewed or approved by the financial regulatory branch of each state government prior to use d. do not need to be reviewed or approved
A
Which of the following is true regarding an individual account? a. no one but the owner may give trade instructions unless the customer has provided advance written permisson b. the broker/dealer may receive trade instructions from the individual's husband c. family members may discuss the account with the broker/dealer at any time d. the owner's attorney may provide trade instructions on behalf of the owner
A
Which of the following joint accounts is designed specifically for married couples? a. Tenancy by the Entirety b. Transfer on Death c. Tenants in common d. Joint Tenants with Rights of Survivorship
A - contains the rights of survivorship; designed for married couples
All of the following are required on a New Account Form EXCEPT a. customer's business address b. customer's investment time horizon c. customer's social security number d. principal's signature
A - home address only required
An associated person may borrow money from a customer if a. customer offers to make the loan b. customer is the associated person's sister c. associated person discloses the loan to their member firm d. customer is a high net worth individual
B
Penny stock accounts must receive an account statement a. weekly b. monthly c. quarterly d. annually
B
In order to open a new corporate margin account, all of the following are needed EXCEPT a. a corporate resolution b. an affidavit of domicile c. a new account form d. a copy of the corporate charter
B - affidavit is used for a state ID of a person who died with a joint account
Which of the following may NOT be purchased on margin? a. closed-end investment company shares b. treasury bonds c. corporate bonds d. mutual funds
D
With respect of advisory fees, an investment advisor may not charge the client a fee that would a. result in a declining balance on an asset management account b. require a client to pay finance charges on an account balance being maintained c. be considered unreasonable by a prudent individual d. exceed the planned rate of return on the portfolio to be managed
C
A premature distribution from a Roth IRA made before the individual reaches age 59 1/2 is subject to a 10% penalty tax unless the distribution was for a. payments on an existing home to avoid foreclosure action b. living expenses while the account holder is unemployed c. legal fees arising from a divorce action d. a first time home purchase
D
Which of the following is NOT required of a representative when determining the suitability of an investment? a. ask client about investments currently owned b. ask client questions pertaining to investment objective and time frame, financial status, and risk tolerance c. document to process by utilizing a client questionnaire d. determine where the client worked 5 years ago
D
Who can make a fully deductible contribution to an IRA? a. anybody; all IRA contributions are fully deductible regardless of income level b. a highly paid individual covered by an employer-sponsered plan c. a person whose contributions are funded by investment income d. an individual not covered by an employer-sponsored plan
D
Your client is 78 years old and has recently shown signs of memory lapses when he meets with you. It has been about 3 months since you have spoken when you receive a significal amount of activity in the account, including the sale of securities and requests for funds to be removed. You are concerned about fraud in the account. What action can you take to address your concerns? a. you are a registered rep and can have your company simply back out of the trades b. nothing, without a power of attorney you cant reverse trade requests or money transfers out c. you can alert your principal officer and inform the principal you wish to be supervised while making transactions in the account d. while you cant transact without the proper trading authorit, you have an obligation to contact the client. Whether successful or not, you can place a hold on trading and funds transfers
D
The organization that provides custody services for securities certificates' safekeeping is known as the a. Securities and Exchange Commission b. Federal Reserve Board c. Financial Industry Regulatory Authority d. Depository Trust and Clearing Corporation
D (DTCC) for clearing and settling transactions but also provides custody services for securities certificates' safekeeping
Which of the following is NOT true regarding a nonqualified retirement plan? a. excess over cost basis is taxed b. it can discriminate in offering its benefits and selecting participants c. tax on accumulation is deferred d. it needs IRS approval
D - they do not meet the IRS requirements for favorable tax treatement of deductions and contributions, therefore, do not need IRS approval
In accordance with the Uniform Gifts to Minors Act, a donor may a. include the value of collectibles in the account b. only revoke gifts of cash c. give cash gifts up to $15000 annually d. give an unlimited amount of cash
D gift taxes may apply if exceeding a specified amount - gifts are irrevocable
Which of the following would likely increase a client's risk tolerance? a. job loss b. unexpected medical expenses c. retirement d. large inheritance
D the others typically reduce risk tolerance due to a reduction in income
