customer accounts test
when opening an account to buy options, which of the following signatures are needed on the options new account form?
ROP signatures registered representative signature
Deposits of which TWO of the following by a customer could be indicators of potential money laundering? I Cash II Checks drawn on U.S. banks III Money orders IV Wire transfers from U.S. banks
cash money orders
prime brokers do all of the following except a. lend securities to institutional clients b. lend money to institutional clients c. execute all trades for institutional clients d. consolidate and maintain positions for institutional clients
execute all trades for institutional clients
the reorganization department of a brokerage firm would be responsible for handling the following
notifying customers of a takeover notifying customers if a bond is being called
Delivery of the privacy notice required under Regulation SP is required for: A. retail customers B. institutional customers C. retirement plan customers D. any of the above
retail customers
portfolio margining is:
risk based calculated using probability based loss percentages
a new customer tells a registered representative at a broker-dealer his name, address, social security number, and a few other personal details. at the same time he refuses to discus his other investments, financial situation, tax status, investment objectives, investment experience, time horizon, liquidity needs or risk tolerance. the rep calls the new customer to try to persuade the man to complete the new customer investment profile so the rep can make suitable recommendations but the customer refuse to do so. the next day the customer shows up at the reps office requesting to buy 100 shares of apple at the market. how should the rep handle this order?
tell the customer the rep will fill the order
your customer has been declared legally incompetent and his daughter has presented the proper legal papers appointing her as the guardian. which statement is true ?
trading instructions can be accepted only from the daughter
which statement is true about the % limit on rehypothecation of customers securities
140% of the debit balance is the maximum amount of customer securities that can be pledged to a bank by a broker
under reg t an extension request that is granted by finra typically gives a customer how many additional business days to pay for a securities purchase?
2 days
in an existing margin account, a customer wishes to buy 400 shares of abc stock at 20 per shares and 10 pdq nov 25 calls @4. the customer wishes to deposit fully paid common shares which have a current market value of 80 per share. how many shares of the stock must be deposited?
400x 20=8,000 need double to purchase securites 16,000/80= 200 shares
a brokerage firm offers the following 4 products to customers 1. a flat commission rate of 50 per equity trade that includes the services of a dedicated represenative 2. 15 commission per equity trade without a dedicated representative 3. 2,500 per year-based account that includes unlimited trading with the services of a dedicated representative 4. 1,000 per year fee based account that includes unlimited trading without a dedicated represenative the best choice for a customer that is new to investing who needs heavy guidance and who trades 1 or 2 times per month would be the:
50 per trade commission charge
which of the following is not personal information related to a customer account a. information received from a credit rating agency about that customer b. data mined from that customers activates on the member firms website c. aggregated information about activities in all customer accounts at that broker-dealer d. data mined from that customers activities on web sites linked to the member firms website
aggregated information about activities in all customer accounts at that broker-dealer
Without discretionary authority a representative needs all of the following pieces of information from the customer for every transaction to be made in the customers account, except: a. asset b. action c. authority d. amount
authority
under finra rules initial approval of new accounts must be performed in writing by the
branch office manager
If an execution report shows that an erroneous execution has occurred, the responsibility for the trade rests with the: A. customer B. registered representative C. brokerage firm executing the transaction D. stock exchange on which the trade occurred
brokerage firm executing the transaction
all of the following persons require additional documentation to open an account at FINRA member firm execpt an a. reg employee of another finra member firm b. unregistered employee of another finra member c. officer of another finra member firn d. clerical employee of another finra member
clerical employee of another finra member
all of the following statements are true about discretionary accounts except a. the POA continues until the customer revokes it in writing or the customer dies b. each discretionary order ticket must be approved by the principal prior to entry c. each order ticker must be marked as discretionary d. a POA must be obtained in writing from the customer before discretion can be exercised
each discretionary order ticket must be approved by the principal prior to entry
which of the following rules pertaining to UGMA or UTMA accounts is false a. each account may have only one custodian and one minor beneficiary b. each donor and child can only be the custodian or beneficiary of one account, Mutiple accounts are prohibited c. the donor can either be the custodian or appoint another to do this d. parents have no legal control over the custodial account unless appointed as the custodian
each donor and child can only be the custodian or beneficiary of one account, Mutiple accounts are prohibited
a registered representative is meeting with an elderly client and believes that this individual is evidencing diminished mental capacity. the father has an adult son to whom he has given durable power of attorney over the account. later that day, the son contacts the representative and tells him to cash out the account and send him the money. what should the representative do?
go to the principal with the request and have the principal handle the situation
under REG s-p, when does a firm need to provide a privacy notice to a customer?
if the firm wishes to disclose information about the consumer
under specific authorization is given, all of the following accounts cannot be opened as margin accounts except a a. trust account b. custodial account c. guardian account d. joint tenants account
joint tenants account
which of the following agreements permits the broker dealer to lend the customers securities to other customers wishing to execute short sales?
loan consent agreement
which two of the following positions would receive the greatest benefit of reduced margin requirements from portfolio margining?
long stock/long put short stock/short call
which brokerage firm department would be responsible for keeping customer account records?
margin department
which of the following would least likely to be considered suitability information for a customer opening a new account at a brokerage firm a. occupation b. investment experience c. financial situation d. estimated annual income
occupation
which of the following statements are true regarding joint accounts?
orders can be given by either party checks can only be made out to all parties together
when an account is frozen, which statement is true?
payment in advance is required for purchases occuring in the next 90 days
when completing a new account form, you discover that the customer is an accounting supervisor at another broker dealer. under finra rules, which procedures are required? a. prior to opening the account approval of the employing member must be obtained b. each transaction must be approved by the employing member firm prior to execution c. duplicate confirmations and statements must be sent to the employing member firm on request d. annual account summaries of all activity must be sent to the employer
prior to opening the account approval of the employing member must be obtained duplicate confirmations and statements must be sent to the employing member firm on request
a custodial account is established under UTMA in a state with a transfer age of 21. legal age in the state is 18, at age 19m the beneficiary leaves college to go into business setting up a software company. the beneficiary wishes to use the assets in the utma account as seed money for the business which statement is true?
the beneficiary can use the account assets only with the approval of the custodian
which statement is true when a short sale is effected for a client?
the broker dealer can require the short seller to provide the stock to the lender at any time
which statement is true regarding a cash dividend received in a restricted margin account?
the customer may remove 100% of the dividend within 30 days
a customer sells short 200 shares of abc at 30 in an initial transaction in a margin account. the stock falls to 20. which of the following statements are true?
the initial regulation t margin requirement is 3,000 the customer may borrow 3,000 cash from the account
in order to recommend a structured product to a customer which of the following statements are true? a. the member firm must perform a reasonable basis suitability determination means that the structured product can be recommended to all the firms customers b. completion of the reasonable basis suitability determination means that the structured product can be recommended to all the firms customers c. the member firm must perform a customer specific suitability determination prior to recommending a structured product to a customer d. the registered representative is prohibited from offering the product unless the registered representative obtains an advanced cfa certification
the member firm must perform a reasonable basis suitability determination means that the structured product can be recommended to all the firms customers the member firm must perform a customer specific suitability determination prior to recommending a structured product to a customer
a client has an options account that is qualified to buy options and sell covered calls. the client calls his representative, telling him that he wants to sell naked calls in the account. in order to do this, all of the following procedures are required except a. the registered representatives must perform a new suitability determination to determine that naked options writing is appropriate for this client b. the special statement for uncovered option writers must be provided before executing the transaction c. the options disclosure document must be provided before executing the transaction d. the ROP must approve the account for naked option writing
the options disclosure document must be provided before executing the transaction
which statement is true about a registered representative who wants to be appointed a trustee for a trust account being established by a client for the clients children?
the registered representative can act as the trustee only with approval of the firms compliance department
a client wishes to open an individual account that provides for 50% of the account assets to go to the surviving spouse upon death, with the remaining 50% going to other heirs. the client should be advised to use a
transfer on death (TOD) account
portfolio margining:
uses standardized stress-testing of probable price declines or increases to compute margins is mainly used by hedge funds and institutional investors seeking to increase leverage
all of the following statements about the conduct of customer accounts are true except a. securities in a custodial account cannot be held in street name b. fiduciary accounts cannot be opened as margin accounts unless specifically authorized in the trust document c. numbered accounts are permitted only if a written statement is obtained from the customer attesting to ownership d. verbal trading authorizations (granting price discretion) are valid until revoked in writing
verbal trading authorizations (granting price discretion) are valid until revoked in writing
a registered rep quits her job at broker dealer (bd) a and associates with bd B. the reg rep would like to maintain her existing brokerage account with BD A. which statement is true about this?
written consent of BD b only is required
