Exam 10 series 24 correct answers 100%
If there is a deficiency in a portfolio margin account, the customer has how many business days to meet
the margin call? - correct answer ✔✔The portfolio margin rules of FINRA require that margin calls be
met in 3 business days.
Note that this contrasts with Regulation T, which requires that margin calls be met "promptly," but no
later than 5 business days after the call date.
A customer shorts stock prior to the ex-date. Who will receive the dividend from the issuer? - correct
answer ✔✔The buyer of the shares
Note that the lender of the shares will receive a "payment in lieu of the dividend" from the borrower of
the shares, but the question asks who will receive the dividend payment from the issuer.)
An employee of FINRA wishes to open an account at a member firm. This action is: - correct answer
✔✔permitted only if the employee discloses this to FINRA and authorizes that duplicate statements be
sent to FINRA
A carrying firm that is engaged in market making makes a market in 50 stocks valued at more than $5
bid. The firm's minimum net capital requirement is: - correct answer ✔✔250,000 because its a clearing
broker
As a general rule, representatives cannot borrow money from, nor can they lend money to, customers.
However, an exception is given if the customer is an immediate family member (and FINRA defines
cousins in this rule as immediate family!). But - correct answer ✔✔FINRA states that, first, the firm must
have written policies and procedures allowing borrowing and lending by representatives and their
customers.
An adverse ruling in a complaint regarding Nasdaq System practices being handled under the Code of
Arbitration may or may not be appealed? - correct answer ✔✔May not be appealed
, The Federal Reserve regulation that governs lending on securities to U.S. persons by non US lenders: -
correct answer ✔✔Regulation X
Regulation X is the Federal Reserve's attempt to nail individuals who try to get around the provisions of
Regulation T and Regulation U by placing the requirement for compliance on the borrower instead of the
lender. What led to this rule is that people in the U.S. were obtaining loans on securities from foreign
lenders who were not subject to Federal Reserve rules. By placing the compliance obligation on the
borrower, as long as the borrower is a U.S. person, Regulation X requires that the provisions of
Regulation T and Regulation U be followed.
The Code of Procedure is used to resolve complaints:
Example: - correct answer ✔✔regarding rule violations.
determine the penalty to be applied to a member firm that has failed to report transactions in eligible
securities to TRACE
Regulation on credit on securities extended by anyone else, such as banks and insurance companies -
correct answer ✔✔Regulation U
Soft dollar remuneration occurs when - correct answer ✔✔an institution directs its portfolio trades to a
broker in return for research (or other services that benefit the institution's customers)
Predispute arbitration agreements between member firms and their customers are: - correct answer
✔✔permitted only if the firm provides the customer with a copy of the agreement within 30 days of
signing and gets written customer acknowledgment of receipt
Broker-Dealer "A" sells variable annuities for which Broker-Dealer "B" is the underwriter. This
arrangement is acceptable only if: - correct answer ✔✔To sell a variable annuity, a FINRA member firm
must sign a selling group agreement with the fund underwriter, who must also be a FINRA member. Part
of the agreement must be that if the customer redeems within 7 business days of original purchase, the
selling group member forfeits all sales charges earned.
If there is a deficiency in a portfolio margin account, the customer has how many business days to meet
the margin call? - correct answer ✔✔The portfolio margin rules of FINRA require that margin calls be
met in 3 business days.
Note that this contrasts with Regulation T, which requires that margin calls be met "promptly," but no
later than 5 business days after the call date.
A customer shorts stock prior to the ex-date. Who will receive the dividend from the issuer? - correct
answer ✔✔The buyer of the shares
Note that the lender of the shares will receive a "payment in lieu of the dividend" from the borrower of
the shares, but the question asks who will receive the dividend payment from the issuer.)
An employee of FINRA wishes to open an account at a member firm. This action is: - correct answer
✔✔permitted only if the employee discloses this to FINRA and authorizes that duplicate statements be
sent to FINRA
A carrying firm that is engaged in market making makes a market in 50 stocks valued at more than $5
bid. The firm's minimum net capital requirement is: - correct answer ✔✔250,000 because its a clearing
broker
As a general rule, representatives cannot borrow money from, nor can they lend money to, customers.
However, an exception is given if the customer is an immediate family member (and FINRA defines
cousins in this rule as immediate family!). But - correct answer ✔✔FINRA states that, first, the firm must
have written policies and procedures allowing borrowing and lending by representatives and their
customers.
An adverse ruling in a complaint regarding Nasdaq System practices being handled under the Code of
Arbitration may or may not be appealed? - correct answer ✔✔May not be appealed
, The Federal Reserve regulation that governs lending on securities to U.S. persons by non US lenders: -
correct answer ✔✔Regulation X
Regulation X is the Federal Reserve's attempt to nail individuals who try to get around the provisions of
Regulation T and Regulation U by placing the requirement for compliance on the borrower instead of the
lender. What led to this rule is that people in the U.S. were obtaining loans on securities from foreign
lenders who were not subject to Federal Reserve rules. By placing the compliance obligation on the
borrower, as long as the borrower is a U.S. person, Regulation X requires that the provisions of
Regulation T and Regulation U be followed.
The Code of Procedure is used to resolve complaints:
Example: - correct answer ✔✔regarding rule violations.
determine the penalty to be applied to a member firm that has failed to report transactions in eligible
securities to TRACE
Regulation on credit on securities extended by anyone else, such as banks and insurance companies -
correct answer ✔✔Regulation U
Soft dollar remuneration occurs when - correct answer ✔✔an institution directs its portfolio trades to a
broker in return for research (or other services that benefit the institution's customers)
Predispute arbitration agreements between member firms and their customers are: - correct answer
✔✔permitted only if the firm provides the customer with a copy of the agreement within 30 days of
signing and gets written customer acknowledgment of receipt
Broker-Dealer "A" sells variable annuities for which Broker-Dealer "B" is the underwriter. This
arrangement is acceptable only if: - correct answer ✔✔To sell a variable annuity, a FINRA member firm
must sign a selling group agreement with the fund underwriter, who must also be a FINRA member. Part
of the agreement must be that if the customer redeems within 7 business days of original purchase, the
selling group member forfeits all sales charges earned.
