Section 1 Missed

Which of the following communications are subject to principal approval before first use? A) Form letter sent to 10 prospective retail customers every week B) Mutual fund summary prospectus C) Letter to an insurance company recommending a specific security for investment D) Quarter-page advertisement in your local newspaper announcing the opening of a second local branch office

A) Form letter sent to 10 prospective retail customers every week 10 x 4 = 40 > 25 = retail communication

During the cooling off period of a securities registration, the underwriters will generally distribute a preliminary prospectus. This document: I. may contain incomplete information. II. will not contain the effective date. III. may be used to solicit indications of interest, as long as payment of post-dated checks only is accepted. IV. may be accompanied by a special report on the security, prepared for the occasion by the underwriter's research department. A) I & II B) III & IV C) I & IV D) II & III

A) I & II

Which of the following securities documents are NOT prepared by a broker-dealer? I. a research report on a new company II. a prospectus III. an ad for a company's stock IV. a preliminary prospectus A) II & IV B) I & IV C) I & III D) II &III

A) II & IV prospectus and preliminary prospectus prepared by issuer (underwriter)

All of the following communications may be filed with FINRA by an established firm within 10 business days after use EXCEPT A) literature on an investment company that includes a ranking prepared by the member firm B) a research report that includes performance data on a mutual fund that is provided to retail investors of the firm C) a form letter sent to all the firm's clients about a new mutual fund family the firm will now be offering D) literature on an investment company that uses a bond volatility rating

A) literature on an investment company that includes a ranking prepared by the member firm ranking literature prepared by member firm must be pre-approved

If an individual purchases open-end investment company shares without first receiving a prospectus, the registered representative is in violation of the Act of: A) 1970 B) 1933 C) 1934 D) 1940

B) 1933

A registered representative is hosting a seminar to solicit sales of a specific mutual fund. He has highlighted features of the fund in the prospectuses he will hand out and has prepared summary sheets of the prospectus for distribution. Regarding this situation, which of the following statements are TRUE? I. It is acceptable to highlight the key points in the prospectus. II. A prospectus may not be highlighted. III. Distributing summary sheets of a prospectus is acceptable. IV. The representative may not distribute summary sheets of the prospectus. A) II & III B) II & IV C) I & IV D) I & III

B) II & IV

If a registered representative wishes to distribute a copy of a national magazine article about the GAON Mutual Fund, which of the following statements is CORRECT? I. Because this material is already in the public domain, it is excluded from the rules on communication with the public. II. This material meets the definition of an independently prepared reprint. III. The article may be used without prior approval of a principal of the member firm. IV. The article may not be sent without prior or concurrent delivery of the GAON Fund prospectus. A) II & III B) II & IV C) I & III D) I & IV

B) II & IV IPR must be approved by principal before use

Which of the following are NOT considered public communications of a broker-dealer and therefore not filed by the broker-dealer with FINRA? A) research reports B) prospectuses C) telephone directory advertisements D) market letters

B) prospectuses prospectuses aren't prepared by BD, prepared by issuer (underwriter)

To which securities market does the Securities Act of 1933 apply? A) The OTC market. B) The new issue market. C) Securities traded between accredited investors. D) Listed securities sold on an exchange.

B) the new issue market

Institutional communications include all of the following EXCEPT I. informational material on a new mutual fund offered by a registered investment company intended for use by registered sales personnel only II. television appearances by an officer of a member firm III. a recommendation report prepared for an insurance company IV. a research report specifically prepared for a Section 457 plan with 100 participants A) I & III B) II & III C) I & II D) II & IV

C) I & II insurance company and 457 plan = institutional investors

Which of the following trades would take place in the primary market? I. A corporate IPO. II. The specialist in GE sells 10,000 shares on the floor of the NYSE. III. The sale of $50 million State of Georgia GO bonds through a selling syndicate. IV. The sale of $50 million State of Illinois GO bonds from the portfolio of the ZYX Insurance Company to the CBA Municipal Bond Fund. A) I & II B) III & IV C) I & III D) II & IV

C) I & III IV - institution-to-institution sales on secondary market

Which of the following constitute a public appearance? I. Interactive electronic forum. II. Radio advertisement. III. Television commercial. IV. Television interview. A) I & III B) II & III C) I & IV D) II & IV

C) I & IV advertisements do not count as public appearances because they are not interactive

Retail communications apply to all of the following EXCEPT A) billboard B) website C) a public appearance D) an email sent to 30 existing customers

C) a public appearance

An announcement of a new issue of a security that gives the name of the issuer, the price and the name of the underwriter is called a(n): A) red herring. B) prospectus. C) tombstone. D) offering memorandum.

C) tombstone

Which of the following is accurate with regard to using a summary prospectus for the sale of a mutual fund? I. A statutory prospectus must precede or accompany delivery of the summary prospectus. II. A statutory prospectus may be delivered after the summary prospectus. III. Electronic delivery of the statutory prospectus is allowed after the sale. IV. A paper prospectus must be delivered within 3 days of the sale. A) II & IV B) I & III C) III & IV D) II & III

D) II & III

An investment company offering securities registered under the Act of 1933 may make which of the following statements? I. "the SEC has passed on the merits of these securities as an investment" II. "the SEC has released our securities for sale to the public" III. "the SEC has passed on the accuracy of the information in our prospecuts" IV. "the SEC has declared this prospectus effective" A) I & III B) I & IV C) II & III D) II & IV

D) II & IV SEC does not guarantee accuracy

All of the following would be subject to the Conduct Rules regarding public appearances EXCEPT: A) a presentation at a high school about mutual funds. B) an Internet chat room. C) a seminar discussing the products your firm has available for sale. D) a radio spot saying that your offices have moved.

D) a radio spot saying that your offices have moved not a public appearance because it is not interactive

Your firm is doing interviews of the top candidates from among those who responded to a recruiting advertisement. Advertising rules require that: A) at least two positions be offered to successful candidates, so that they may make a choice. B) rules do not cover recruitment advertisements or interviews. C) the successful candidate be promised that she will hold the position for at least one year after being hired. D) both the job opportunity and the industry itself be represented honestly.

D) both the job opportunity and the industry itself be represented honestly

A generic advertisement A) is filed with FINRA B) must mention the name of the investment being advertised C) may describe performance as long as it is made clear that past results are no assurance of the future D) must include the name of the broker-dealer placing the advertisement

D) must include the name of the broker-dealer placing the advertisement generic ad (no-name) = no mention of security being advertised