Series 7, Chapter 3

An 75-year old individual has contributed $40,000 to a qualified plan that currently has a value of $100,000. If she decides to take a lump-sum distribution of the total value, she is taxed on:

$100,000

A person has had a brokerage account with an online securities trading firm, but is subsequently hired by a broker-dealer. How long do they have to get written approval from the employing broker?

30 days

A customer has recently closed her account. How long is her broker-dealer required to keep records related to her account?

6 Years

An individual may roll over a lump-sum distribution from a corporate pension plan to an IRA without tax consequences if it is done within:

60 Days

An individual has made pretax and post-tax contributions to an IRA. What are the tax consequences of withdrawals made by the participant after age 59 1/2?

Earnings and pretax contributions are taxable; the post-tax contributions are a return of capital

A Form 4 must be filed:

Form 4 must be filed within two business days of the date on which an insider changes his ownership position (i.e., buys or sells).

An individual transferring an IRA from one trustee to another:

Is not subject to taxes or penalties A transfer of funds from one trustee to another is not considered a distribution or a rollover. There is neither a limit to the number of transfers that an individual may do, nor are there any taxes or penalties. This differs from receiving a distribution from a retirement plan. The distribution must be rolled over into another qualified plan, within 60 days of receiving the money, in order to avoid taxes and penalties. Rollovers may be done only once each year.

An employee of a brokerage firm has decided to open an account with an investment company to purchase various mutual funds under the company's complex of funds. The employee:

May open the account without notifying either firm Written notification is not required when opening an account with another member firm if the transactions will be limited to redeemable investment company shares, variable contracts, or unit investment trusts.

A broker-dealer's privacy notice must include all the following information, EXCEPT the: Type of personal information that the firm collects Names of any other financial institutions with which the firm is affiliated Fact that clients may opt out of having their information shared with non-affiliates Types of third parties to which the firm may disclose information

Names of any other financial institutions with which the firm is affiliated

Before accepting a delivery versus payment (DVP) order from a customer, a broker-dealer must: Notify FINRA Obtain the name of the customer's agent from the customer Receive approval of the trade from the contrabroker Notify the appropriate banking regulator

Obtain the name of the customer's agent from the customer Prior to accepting a DVP (Delivery versus Payment) or RVP (Receipt versus Payment) order from a customer, a broker-dealer must receive the name of the customer's agent and the customer's account number. The order ticket must be marked DVP or RVP.

Which of the following terms is associated with the process of a customer instructing his bank to deliver securities against payment by the clearing firm?

Receipt versus Payment DVP (Delivery versus Payment) and COD (Cash on Delivery) are general acronyms used to describe a relationship in which a customer uses a bank to settle trades with executing firms. The firm delivers securities against the bank payment and pays against the bank delivery of securities. When discussing a given transaction, a DVP occurs when the dealer delivers securities to the bank in return for a cash payment from the bank. An RVP (Receipt versus Payment) occurs when the dealer receives securities from the bank and makes a cash payment to the bank. It is important to remember that customers (usually institutions) set up brokerage accounts and place orders at these firms. However, trades settle through custodian banks designated by the customers. The broker-dealer will contact the bank, which will send payment or receive securities on behalf of the customers. The broker-dealer will not hold the customer funds or securities.

Which of the following choices is information that does not need to be included in the written supervisory procedures (WSP) manual? Titles Residential address and phone number Registration status Supervisory responsibilities

Residential address and phone number

A registered representative discovers that one of her customers is on the Office of Foreign Assets Control (OFAC) list. The RR or another person at her firm must notify:

Treasury Department

A Form 3 must be filed:

Within 10 days of becoming a director