series 7 STC 1B exam

A registered representative holding limited discretionary authority over a customer's account may: a. Buy or sell securities in the account without consulting the customer b. Withdraw money from the account c. Receive a fee for using his discretion in trading the account d. Borrow assets from the customer's account

a. Buy or sell securities in the account without consulting the customer

Duplicate account statements would be required under which TWO of the following circumstances? I. The customer is an employee of FINRA II. The customer is an insider of an SEC reporting company III. The customer is an employee of another broker-dealer IV. The customer is a portfolio manager a. I and III b. I and IV c. II and III d. II and IV

a. I and III

The correct order for the transfer of an account from one firm to another is: I. The carrying firm validates the transfer instructions II. The customer is informed of any nontransferable securities III. The carrying firm sends the customer's securities to the receiving firm IV. The customer provides a written transfer request to the receiving firm a. IV, I, II, III b. IV, I, III, II c. I, IV, II, III d. I, IV, III, II

a. IV, I, II, III

A customer gives his registered representative the following instructions. Buy 100 shares of General Motors whenever you think the price is right. Under current regulations, the order: a. May be accepted and may be executed anytime that day b. Must be marked discretionary and approved by a branch manager c. May not be accepted d. Must be executed immediately

a. May be accepted and may be executed anytime that day

The number of custodians allowed for each minor under the Uniform Gifts to Minors Act may not be more than: a. One b. Two c. Four d. Five

a. One

Persons who meet the definition of an investment adviser, but are exempt from the registration requirements of the Investment Advisers Act of 1940, are: a. Subject to the antifraud provisions of the Act b. Only subject to the antifraud provisions of the Act if they maintain custody of client funds and securities c. Only subject to the antifraud provisions of the Act if they do not meet certain experience and financial requirements d. Not subject to the antifraud provisions of the Act

a. Subject to the antifraud provisions of the Act

An investor has taken the following gains and losses during the tax year: a $19,000 gain, and a $24,000 loss. What amount of ordinary income may the investor offset this year? a. 0 b. $2,000 c. $3,000 d. $5,000

b. $2,000

Which of the following statements is NOT TRUE regarding discretionary accounts? a. All discretionary orders must be marked discretionary b. A written power of attorney must be updated every three years c. Orders need not be verbally approved by the customer prior to execution d. Orders must not be excessive in terms of size or frequency

b. A written power of attorney must be updated every three years

When is the Regulatory Element of Continuing Education required to be completed by a registered representative? I. On the second anniversary of initial registration II. On the third anniversary of initial registration III. Every two years thereafter IV. Every three years thereafter a. I and III only b. I and IV only c. II and III only d. II and IV only

b. I and IV only

A Suspicious Activity Report (SAR) should be filed: a. Only in the event that the firm has actual knowledge that the client is laundering money b. If a transaction exceeds $5,000 and the firm suspects illegal activity c. Only for transactions of more than $10,000 d. Only for transactions with parties on the OFAC list

b. If a transaction exceeds $5,000 and the firm suspects illegal activity

A brokerage firm is holding $600,000 of securities for a customer. The securities are registered in the name of the customer. If the firm is being liquidated by SIPC, the customer would: a. Be insured for $500,000 of securities b. Receive the entire $600,000 of securities c. Be insured for $100,000 of securities d. Lose the entire $600,000

b. Receive the entire $600,000 of securities

Which of the following statements is TRUE concerning custodian accounts? a. A donor may give gifts of cash only b. A donor may give gifts of securities only c. A donor may give gifts of cash and securities d. An individual may not be both the custodian and donor

c. A donor may give gifts of cash and securities

The Securities Investor Protection Corporation (SIPC) does not insure a: a. Margin account b. Joint account c. Commodities account D. Custodian account

c. Commodities account

Which TWO of the following statements are TRUE when opening new customer accounts?I. A P.O. box may be shown as the customer's address on the new account form II. A street address must be reflected on the new account form III. Customer correspondence may be sent to a P.O. box IV. Customer correspondence may not be sent to a P.O. box a. I and III b. I and IV c. II and III d. II and IV

c. II and III

A registered representative purchased two tickets to a concert for which he paid $175 per ticket. If the face value of the tickets is $95 per ticket, the RR may: a. Give both tickets to a customer b. Give one ticket to a customer c. Not give any tickets to a customer d. Give two tickets to two different customers

c. Not give any tickets to a customer

If a client's account is inactive, how often does a statement need to be mailed? a. Weekly b. Monthly c. Quarterly d. Prior to the completion of the next transaction

c. Quarterly

A brokerage firm is holding $850,000 of securities for a customer. The securities are registered in the name of the customer. If the firm was being liquidated by SIPC, the customer would: a. Be insured for $250,000 of securities b. Receive $500,000 of securities c. Receive the entire value of the securities d. Lose the entire value of the securities

c. Receive the entire value of the securities

Which of the following transactions may NOT be accomplished in a cash account? a. Covered call or put writing b. The sale of preferred stock c. Selling short d. The purchase of options

c. Selling short

Which of the following choices is a benefit of an account that is designated Transfer on Death (TOD)? a. The ability for joint owners to each trade the account b. The avoidance of estate taxes c. The avoidance of probate costs d. The opportunity for proportional ownership

c. The avoidance of probate costs

Which of the following statements is TRUE regarding numbered accounts? a. An account may never be identified by a number b. Only a cash account may be identified by a number, provided the customer's name is on file c. Only a margin account may be identified by a number, provided the customer's name is on file d. Any type of account may be identified by a number, provided the customer's name is on file

d. Any type of account may be identified by a number, provided the customer's name is on file

What information can be found on a customer's confirmation? I. Whether the firm acted as principal II. Whether the firm acted as the customer's agent III. Whether the firm acted for a third party IV. Whether the firm is a bona fide market maker in the security a. I and II only b. I and IV only c. II and III only d. I, II, III, and IV

d. I, II, III, and IV

Which of the following employees of a broker-dealer must provide written notification to her employer in order to open a securities account at another firm? I. A registered representative II. A principal III. A secretary IV. A janitor a. I and II only b. III and IV only c. I, II, and III only d. I, II, III, and IV

d. I, II, III, and IV

Which TWO of the following organizations are NOT SROs: I. The MSRB II. SIPC III. FINRA IV. The SEC a. I and III b. I and IV c. II and III d. II and IV

d. II and IV

Which of the following statements is NOT TRUE of discretionary accounts? a. Accounts must be approved by a principal b. Orders must be reviewed on the day they are entered c. Written power of attorney signed by the customer must be kept on file by the firm d. Orders must be confirmed with the customer before being entered

d. Orders must be confirmed with the customer before being entered

A husband and wife have a joint account. If the husband instructed his RR to sell securities and send a check, the check could be made payable to: a. The husband only b. The wife only c. Either the husband or the wife d. The husband and wife jointly

d. The husband and wife jointly