Practice Exam

Sally, a registered representative, is going to prospect by making cold calls and has a written script to keep her on track and remind her to ask all of the right questions. Which of the following is TRUE? A. Cold calling scripts are a form of generic advertising. B. The cold calling script is subject to approval of a principal promptly after use. C. Cold calling scripts must be maintained by the broker-dealer for a period of three years. D. All cold calls must be monitored by a principal.

A.? Cold calling scripts are a form of generic advertising.

Which of the following withdrawal plans would be appropriate for a retiree who wants income from his mutual fund but is concerned about inflation and running out of money? I. Fixed-dollar plan II. Fixed-percentage plan III. Fixed-time plan A. I & II B. II & III C. I only D. II only

B. II & III

Which of the following statements about Regulation T payment and regular way settlement are TRUE? I. Regulation T payment is mandated by the Federal Reserve II. Regulation T payment is requested III. Regular way settlement is mandated by the Federal Reserve IV. Regular way settlement is requested of the customer by the broker-dealer. A. I & IV B. II & III C. I & III D. II & IV

B. II & III ?

An investor is making payments to fund a combination annuity. His premiums will be divided among which of the following? I. The insurance company's guaranteed account II. The insurance company's general account III. The distributor's investment account. IV. The insurance company's separate account. A. I & III B. II & IV C. I & IV D. II & III

B. II & IV

Joe, a registered representative for ABC broker-dealer, read a great article on investing in the local newspaper and would like to make a copy of it to send to 10 prospects. How will this be treated under FINRA rules regarding communications with the public? A. To qualify as an independently prepared reprint, the publisher may be an affiliate of ABC as long as fully disclosed to the recipient. B. It is okay to send if nothing has been altered. C. Joe may send the article subject to prior principal approval. D. The article is defined as a correspondence and may be pre- or post-reviewed by a principal

B. It is okay to send if nothing has been altered.

All of the following statements regarding the Code of Arbitration procedure are correct EXCEPT: A. a member failing to abide by the arbitrator's decision will be subject to disciplinary action. B. claims involving customers require that the arbitration panel always be divided equally between industry and nonindustry arbitrators. C. arbitration is the procedure used to settle disputes between member firms. D. arbitration may be used to settle between FINRA member firms and customers.

C. ?

The Conduct Rules prohibit members from I. lending a client's securities without prior authorization from the client II. inducing a client to purchase shares of a mutual fund before the ex-date by implying the client will profit from a pending dividend III. receiving discounts on investment company transactions from another FINRA member firm. IV. exercising discretionary authority over cash accounts. A. III & IV B. I & III C. I & II D. II & IV

C. I & II

Open-end investment companies under the Investment Company Act of 1940 are required to redeem shares A. at an amount equal to the most recently computed NAV B. within 45 days of purchase, refunding the original purchase price in full to the purchaser C. at an amount equal to the next calculated NAV D. within two days after the tender of the shares to the company or its designated agent

C. at an amount equal to the next calculated NAV

One of your clients owns shares of the ABC Mutual Fund with a total value at the current NAV of $200,000. ABC has a sales charge of 5% that reduces to 4% at $250,000 and 3% at $500,000. If ABC offers rights of accumulation, what sales charge will be levied on an additional investment of $100,000? A. 4.5% on $100,000 B. 5% on $100,000 C. 5% on $50,000 and 4% on $50,000. D. 4% on $100,000

D. 4% on $100,000 ?

Under the USA Patriot Act of 2001, financial institutions and their personnel are required to take steps to recognize and prevent money laundering. Which of the following activities might lead a registered representative with a member firm to suspect a client might be engaging in illegal practices? A. The client seems overly concerned about losses in his account. B. The customer has a brokerage account with your firm and an IRA account with another broker-dealer. C. There are frequent complaints from the client about high commissions. D. The client refuses to engage in a transaction after learning that a currency transaction report (CTR) must be completed.

D. The client refuses to engage in a transaction after learning that a currency transaction report (CTR) must be completed.