ANSWERS|LATEST !!!!2026|GRADED A+| (EXAM
Broker-Dealer that doesn't comply is subject to: - ANSWER -censure
-limits on activities
-suspension
-revocation of reg
-fine
FINRA - ANSWER regulates all matters related to investment banking, trading in the
OTC market, trading in the NYSE listed securities, and the conduct of FINRA member firms
and associated persons
FINRA Purpose - ANSWER -promote investment banking and securities business
-provide medium for communication among its members
-adopt, admin, and enforce rules designed to prevent fraud
-promote self-discipline among members
MSRB (MUNICIPAL SECURITIES REGULATORY BOARD) - ANSWER -regulates all
matters related to the underwriting and trading of state and municipal securities
-depends on other SROs for enforcement ability
Federal Reserve - ANSWER -12 regional Fed reserve banks and hundreds of national
and state banks that belong to the system
1
,-determines monetary policy and takes actions to implement policies including 1. acting as
an agent of treasury 2. regulating US money supply 3. setting reserve requirements 4.
supervising the printing of currency 5. clearing fund transfers
Securities Investor Protection Corporation (SIPC) - ANSWER -a nonprofit
corporation, created by Congress and subject to SEC and congressional oversight, that
insures customer accounts against the financial failure of a brokerage firm
-basic coverage under is no more than 500k per separate customer
Federal Deposit Insurance Corporation (FDIC) - ANSWER -the government agency
that insures customer deposits if a bank fails
-accounts covered up to 250k
Accredited Investor - ANSWER -has a net worth of 1 million or more, not including
net equity
-has had an annual income of 200k or more in each of the two most recent years
Carrying Firm - ANSWER -carries customer accounts and accepts funds and
securities from customers
-largest broker-dealers
fully disclosed firm - ANSWER -a firm that introduces into customers to a clearing
firm
prime account - ANSWER -type of account that allows a customer to select one
member firm to provide custody and other services while other firms-called executing
brokers-handle all trades placed
-key advantage is that it usually provides a client with the ability to trade with multiple
brokerage houses
2
, Municipal Advisor - ANSWER -provides advice with respect to municipal products or
the issuance of municipal securities, including advice with respect to structure, timing,
terms, and other similar matters
Transfer Agents - ANSWER -ensures securities are issued in the correct owners name
-cancels all old and issues new certificates
-maintain records of ownership
-handle problems related to lost, stolen or destroyed certificates
primary market - ANSWER market for selling financial assets that can only be
redeemed by the original holder
Third Market - ANSWER off-exchange market for securities listed on an organized
exchange
Fourth Market - ANSWER -market for institutional investors in which large blocks of
stock, both listed and unlisted trade in transactions unassisted by broker-dealers
Federal Reserve affects money supply through: - ANSWER -open-market operations
-changes in the discount rate
-changes in reserve requirements
Keynesian economics - ANSWER -active government involvement is vital
-government affects levels of spending and saving by taxes
-demand for goods drives employment and prices
monetarist theory - ANSWER -believe the money supply is the major determinant of
price levels
3
Broker-Dealer that doesn't comply is subject to: - ANSWER -censure
-limits on activities
-suspension
-revocation of reg
-fine
FINRA - ANSWER regulates all matters related to investment banking, trading in the
OTC market, trading in the NYSE listed securities, and the conduct of FINRA member firms
and associated persons
FINRA Purpose - ANSWER -promote investment banking and securities business
-provide medium for communication among its members
-adopt, admin, and enforce rules designed to prevent fraud
-promote self-discipline among members
MSRB (MUNICIPAL SECURITIES REGULATORY BOARD) - ANSWER -regulates all
matters related to the underwriting and trading of state and municipal securities
-depends on other SROs for enforcement ability
Federal Reserve - ANSWER -12 regional Fed reserve banks and hundreds of national
and state banks that belong to the system
1
,-determines monetary policy and takes actions to implement policies including 1. acting as
an agent of treasury 2. regulating US money supply 3. setting reserve requirements 4.
supervising the printing of currency 5. clearing fund transfers
Securities Investor Protection Corporation (SIPC) - ANSWER -a nonprofit
corporation, created by Congress and subject to SEC and congressional oversight, that
insures customer accounts against the financial failure of a brokerage firm
-basic coverage under is no more than 500k per separate customer
Federal Deposit Insurance Corporation (FDIC) - ANSWER -the government agency
that insures customer deposits if a bank fails
-accounts covered up to 250k
Accredited Investor - ANSWER -has a net worth of 1 million or more, not including
net equity
-has had an annual income of 200k or more in each of the two most recent years
Carrying Firm - ANSWER -carries customer accounts and accepts funds and
securities from customers
-largest broker-dealers
fully disclosed firm - ANSWER -a firm that introduces into customers to a clearing
firm
prime account - ANSWER -type of account that allows a customer to select one
member firm to provide custody and other services while other firms-called executing
brokers-handle all trades placed
-key advantage is that it usually provides a client with the ability to trade with multiple
brokerage houses
2
, Municipal Advisor - ANSWER -provides advice with respect to municipal products or
the issuance of municipal securities, including advice with respect to structure, timing,
terms, and other similar matters
Transfer Agents - ANSWER -ensures securities are issued in the correct owners name
-cancels all old and issues new certificates
-maintain records of ownership
-handle problems related to lost, stolen or destroyed certificates
primary market - ANSWER market for selling financial assets that can only be
redeemed by the original holder
Third Market - ANSWER off-exchange market for securities listed on an organized
exchange
Fourth Market - ANSWER -market for institutional investors in which large blocks of
stock, both listed and unlisted trade in transactions unassisted by broker-dealers
Federal Reserve affects money supply through: - ANSWER -open-market operations
-changes in the discount rate
-changes in reserve requirements
Keynesian economics - ANSWER -active government involvement is vital
-government affects levels of spending and saving by taxes
-demand for goods drives employment and prices
monetarist theory - ANSWER -believe the money supply is the major determinant of
price levels
3
