Customer Accounts

A customer's short margin account is properly margined and shows a credit balance of $40,000. Interest would be charged on a balance of: A. 0 B. $10,000 C. $20,000 D. $40,000

$0

A customer buys 100 shares of ABC stock at $10 as an initial transaction in a margin account. The customer must deposit: A. $1,000 B. $2,000 C. $2,500 D. $3,000

$1,000

A customer opens a long margin account with 1 position, consisting of 100 shares of ABC stock valued at $20 per share. There is no debit balance in the account. If the customer buys 100 shares of XYZ at $50 per share, the margin call will be: A. $1,000 B. $1,500 C. $2,000 D. $3,000

$1,500

Long Margin Account Market Value: $150,000 Debit Balance: $ 70,000 The "Buying Power" in this account is: A. $0 B. $5,000 C. $10,000 D. $20,000

$10,000

A customer buys 1,000 shares of XYZ at $60 in a margin account, regular way settlement. Two days after the trade, XYZ has dropped to $40. The minimum maintenance margin requirement is: A. $10,000 B. $12,000 C. $15,000 D. $18,000

$10,000 (25% of the current market value)

The minimum equity for an individual customer to open a portfolio margin account is: A. $2,000 B. $25,000 C. $50,000 D. $100,000

$100,000

A customer wishes to buy 100 shares of PDQ "when issued" stock at $25 as the initial transaction in a cash account. The customer must deposit: A. $1,250 B. $1,500 C. $2,000 D. $2,500

$2,000

A customer sells short 1,000 shares of ABC stock at $2 in a margin account. The customer must deposit: A. $1,000 B. $2,000 C. $2,500 D. $5,000

$2,500

A customer buys 100 shares of TYP at $35 as the initial transaction in a new margin account. Subsequently, TYP rises to $45 per share in the market. What is account's equity after the change in market value? A. $1,750 B. $2,500 C. $2,750 D. $3,000

$3,000

A customer sells short 100 shares of PDQ at $30 as the initial transaction in a new margin account. Subsequently, PDQ declines to $20 per share in the market. What is account's equity after the change in market value? A. $500 B. $2,000 C. $2,500 D. $3,000

$3,000

A customer has combined margin account that shows the following: Long: $20,000 of ABC stock Debit: $8,000 Short: $30,000 of XYZ stock Credit: $48,000 If no other activity occurs in the account, the account will show a current SMA balance of? A. 0 B. $5,000 C. $8,000 D. $10,000

$5,000

A customer shorts 1,000 shares of ABC stock @ $5 per share in a margin account. The customer must deposit: A. $2,000 B. $2,500 C. $4,000 D. $5,000

$5,000

A customer purchases $100,000 of corporate bonds at 40% in a margin account. The customer must deposit: A. $2,000 B. $7,000 C. $8,000 D. $20,000

$8,000

Long Margin Account Market Value: $200,000 Debit Balance: $80,000 If the debit balance in the account is reduced to $60,000, the market value where the account will be at minimum maintenance margin is? A. $60,000 B. $80,000 C. $100,000 D. $120,000

$80,000

If a customer sells securities and fails to deliver on settlement date, the position must be bought in how many business days later? A. 1 B. 5 C. 10 D. 90

10

The maximum amount of customer securities that can be rehypothecated by a broker is: A. 50 % of the debit balance B. 70 % of the debit balance C. 100% of the debit balance D. 140% of the debit balance

140% of the debit balance

Under Regulation T, an extension for payment may FIRST be requested, under extraordinary circumstances, on the: A. 2nd business day after trade date B. 3rd business day after trade date C. 4th business day after trade date D. 5th business day after trade date

4th business day after trade date

If a customer purchases "when, as, and if issued" stock in a margin account, the customer must deposit: A. 0% B. 25% C. 50% D. 100%

50%

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 customer's activities on the member firm's website C. Aggregated information about activities in all customer accounts at that broker-dealer D. Data mined from that customer's activities on web sites linked to the member firm's web site

Aggregated information about activities in all customer accounts at that broker-dealer

Under FINRA rules, fixed fee accounts should be reviewed for appropriateness for customers at a minimum: A. monthly B. quarterly C. semi-annually D. annually

Annually

An unmarried couple wishes to open a new account as "JTWROS." What should the registered representative do? A. Open the account without making any further inquiries B. Explain the risks involved with opening such an account C. Ask why they wish to open this type of account D. Refuse to open the account

Ask why they wish to open this type of account.

If a customer wishes to open an account for a minor without additional documentation, the account must be opened as a: A. guardian account B. cash account C. margin account D. conservator account

Cash Account

The requirement for independent verification of a customer's identity when opening an account can be satisfied by examining a copy of the customer's: A. birth certificate B. driver's license C. employer ID D. latest federal tax return

Driver's license

"Restriction" in a margin account: I is defined by the Federal Reserve Board II is defined by the Financial Industry Regulatory Authority III occurs if the account falls below initial Regulation T margin IV occurs if the account falls below minimum maintenance margin A. I and III B. I and IV C. II and III D. II and IV

I and III

Which statements are TRUE about marking securities positions to market? I Long securities positions are marked to market daily II Long securities positions are marked to market weekly III Short securities positions are marked to market daily IV Short securities positions are marked to market weekly A. I and III B. I and IV C. II and III D. II and IV

I and III

A customer has excess equity in a long margin account. Which statements are TRUE? I The customer may borrow cash in an amount that is no greater than the excess equity II The customer may borrow cash in an amount that is no greater than twice the excess equity amount III The customer may buy marginable securities without depositing cash in an amount that is no greater than the excess equity IV The customer may buy marginable securities without depositing cash in an amount that is no greater than twice the excess equity A. I and III B. I and IV C. II and III D. II and IV

I and IV

In order to open a new account for a customer, the customer's name, date of birth, address and tax identification number must be: I obtained prior to account opening II obtained within a reasonable time before or after account opening III independently verified prior to account opening IV independently verified within a reasonable time before or after account opening A. I and III B. I and IV C. II and III D. II and IV

I and IV

When opening an options account which of the following statements are TRUE? I The Options Disclosure Document must be sent at, or prior to, opening the account II The Options Disclosure Document must be sent to the customer at account opening, and must be signed and returned within 15 days III The Options Agreement must be sent at, or prior to, opening the account IV The Options Agreement must be sent to the customer at account opening, and must be signed and returned within 15 days A. I and III B. I and IV C. II and III D. II and IV

I and IV

Which of the following securities are marginable? I Exchange listed common stock II Pink Sheet listed common stock III Limited partnership units IV U.S. Government bonds A. I only B. I and IV C. II and III D. I, II, III, IV

I and IV

Which of the following transactions can be performed in a cash account? I Long sale of stock II Short sale of stock III Sale of a naked call IV Sale of a cash covered put A. I and II B. III and IV C. II and III D. I and IV

I and IV

Which of the following conditions must be met to send a confirmation solely to a person holding a power of attorney in a customer account? I The customer must request the sending of the confirmation in writing II The person holding the power of attorney must request the sending of the duplicate confirmation in writing III The registered representative must believe that the action is prudent IV The manager must approve of the action in writing A. I only B. II only C. I and III D. I, II, III, IV

I only

Which of the following are provisions of Regulation T? I Payment is required promptly but no later than 4 business days after trade date II Minimum maintenance margin requirement is $2,000 per account III Retention requirement is 50% in restricted accounts IV Initial margin requirement is 50% on stocks A. I and IV only B. II and III only C. I, III, IV D. I, II, III, IV

I, III, IV

A durable power of attorney signed by a customer: I remains in force upon the death of the customer II is terminated upon the death of the customer III remains in force upon the mental incapacitation of the customer IV is terminated upon the mental incapacitation of the customer A. I and III B. I and IV C. II and III D. II and IV

II and III

Under MSRB rules, to make a suitable recommendation, the registered representative must have sufficient knowledge of the customer. Regarding recommendations to a customer, which of the following statements are TRUE? I If the customer refuses to disclose sufficient financial information, recommendations are still allowed II If the customer refuses to disclose sufficient financial information, recommendations are not permitted III If the customer insists upon executing an unsuitable trade, the registered representative should execute the trade, denote his exception to the trade in his book, and mark the order ticket as "unsolicited" IV If the customer insists upon executing an unsuitable trade, the registered representative must submit the issue to industry arbitration A. I and III B. I and IV C. II and III D. II and IV

II and III

Which of the following statements are TRUE about initial and minimum maintenance margins for stock positions in a long margin account? I FINRA sets the 50% initial margin requirement II The FRB sets the 50% initial margin requirement III FINRA sets 25% minimum maintenance requirement IV The FRB sets the 25% minimum maintenance requirement A. I and III B. I and IV C. II and III D. II and IV

II and III

Who sets Regulation T initial margin requirements and minimum maintenance margin requirements? I Regulation T initial margins are set by the Financial Industry Regulatory Authority II Regulation T initial margins are set by the Federal Reserve Board III Minimum maintenance margins are set by the Financial Industry Regulatory Authority IV Minimum maintenance margins are set by the Federal Reserve Board A. I and III B. I and IV C. II and III D. II and IV

II and III

A customer's long margin account shows the following: Market Value: $100,000 Debit Balance: $60,000 SMA: $5,000 If the customer wishes to eliminate the restriction in the account, he can do which of the following? I Deposit $10,000 of fully paid marginable securities II Deposit $20,000 of fully paid marginable securities III Deposit $5,000 of cash IV Deposit $10,000 of cash A. I or III B. I or IV C. II or III D. II or IV

II and IV

Which statements are TRUE about meeting a Regulation T call for initial margin? I 50% of the call amount must be deposited in cash II 100% of the call amount must be deposited in cash III 100% of the call amount must be deposited in fully paid securities IV 200% of the call amount must be deposited in fully paid securities A. I and III B. I and IV C. II and III D. II and IV

II and IV

Approval of new accounts for FINRA member firms can be performed by the: I Registered Representative II Branch Office Manager III Financial and Operations Principal A. II only B. II and III C. I and III D. I, II, III

II only

A corporation declares and pays a 20% stock dividend. Which statements are TRUE about margin accounts holding this stock position? I Market value will increase II Debit balance will decrease III Market value stays the same IV Debit balance stays the same A. I and II B. I and IV C. II and III D. III and IV

III and IV

A corporation is making a combined primary offering of newly issued shares and secondary offering of shares held by officers, where both issues are offered through a single prospectus. Which statement is TRUE about margin rules on this offering? A. Neither the primary nor secondary offering can be purchased on margin B. Only the primary offering can be purchased on margin C. Only the secondary offering can be purchased on margin D. Both primary and secondary offerings can be purchased on margin

Neither the primary nor secondary offering can be purchased on margin

All of the following transactions are permitted in a custodian account EXCEPT the: A. purchase of a common stock fund B. purchase of mutual fund shares C. sale of pre-emptive rights D. purchase of common stock on margin

Purchase of common stock on margin

A customer places an order to buy 100 shares of ABC at the market. The execution report shows the trade occurring at $45.63. The firm sends out a confirmation which states that the trade occurred at $45.38. Which statement is TRUE? A. The customer will pay $4,538 plus any applicable commissions B. The customer will pay $4,563 plus any applicable commissions C. The customer can DK the trade D. The customer will pay $4,538 and can submit a claim to arbitration for an additional $25.00.

The customer will pay $4,563 plus any applicable commissions

A registered representative takes an order from a customer to buy 100 shares of EFFE stock at $40 and writes the order ticket for processing. The registered representative fails to include the customer account number on the ticket. Which statement is TRUE? A. The order will be processed for the firm's proprietary trading account B. The order will be returned to the representative for entry of the account number C. The order will be referred to the member firm's compliance department for resolution D. The order will be canceled without any further action taken

The order will be returned to the representative for entry of the account number.

A customer asks her representative for a quote on XYZ stock, which the representative informs the customer is currently $31.00 Bid - $32.10 Ask. The customer tells the representative to buy 1,000 shares at $32.10. The representative places a marketable limit order to buy. When the trade is confirmed with the representative, it shows execution at $33.10. The representative contacts the firm's operations department about this, and after making an inquiry to the exchange, the operations department determines that the exchange quotation of $32.10 was erroneous. Which statement is TRUE? A. The customer must buy 1,000 shares at $33.10 for a total fill price of $33,100 B. The customer must buy 970 shares at $33.10 for a total fill price of $32,107, so the customer will not pay more than he originally intended C. The customer must buy 1,000 shares at $32.10 for a total fill price of $32,100 D. The transaction can be canceled at the discretion of the customer

The transaction can be canceled at the discretion of the customer.

All of the following information is needed to open a new cash account for a customer EXCEPT: A. the citizenship of the customer B. whether the customer is an officer or director of a publicly held company C. whether the customer owns the stock of another publicly traded broker-dealer D. whether the customer is an employee of another broker-dealer

Whether the customer owns the stock of another publicly traded broker-dealer