Q&As Final Exams 1 & 2 Series 24
A syndicate headed by BD is distributing a split offering of Steel Curtain common stock. Some of
the selling shareholders would like to purchase shares in the open market prior to the close of
the deal. Under Rule 102 of Regulation M, selling shareholders are prohibited from this activity. -
ANS-Investors who are selling stock through a distribution would have a motivation to inflate the
price of the stock, just prior to the distribution. The issuer and selling shareholders are
prohibited from buying shares in the open market prior to the closing of the new issue (defined
as the restricted period). (60727)
Money-market securities (with maturities of less than one year), U.S. Treasury securities, and
securities issued by foreign governments are NOT considered TRACE-eligible. -
ANS-Money-market securities (with maturities of less than one year), U.S. Treasury securities,
and securities issued by foreign governments are NOT considered TRACE-eligible. (71181)
The executive representative of a member firm is:
Designated by the member to vote and act for the firm in all matters concerning FINRA. -
ANS-The executive representative appointed by the member is authorized to act for the
member in all official business concerning the member and FINRA.
Each member firm that is a party to a transaction in a TRACE-eligible security must report the
transaction. - ANS-Both the buyer and seller must report the transaction to TRACE. For any
equity securities, only the executing firm would have a trade reporting requirement.
Short interest reports must be received by FINRA no later than:
The second business day after the reporting settlement date - ANS-A member firm is required to
file semimonthly reports of its short positions. The reports must be received by FINRA by the
second business day after the reporting settlement date.
One of the responsibilities of a clearing firm is to submit any written complaint it receives
regarding the introducing firm or its employees to both the introducing firm and the introducing
firm's DEA. - ANS-The carrying agreement between the two firms must direct and authorize the
clearing firm to take this action. (99414)
A testimonial may be used If the provider has the knowledge and experience to form a valid
opinion. - ANS-A testimonial may be used If the provider has the knowledge and experience to
form a valid opinion.
Agreements for both fully disclosed and omnibus accounts must be submitted to FINRA prior to
becoming effective. - ANS-The carrying firm is required to submit to FINRA for prior approval
,any agreement for the carrying of accounts, whether on an omnibus or fully disclosed basis,
before such agreement may become effective.
The carrying firm is also required to submit to FINRA for prior approval any material changes to
an approved carrying agreement before such changes may become effective. (82882)
Any information conveyed to a purchaser after the time of sale is not taken into account when
determining whether a prospectus included an untrue statement, or omitted to state a material
fact. (60809) - ANS-Any information conveyed to a purchaser after the time of sale is not taken
into account when determining whether a prospectus included an untrue statement, or omitted
to state a material fact. (60809)
When FINRA issues a notice to a member regarding a disqualification, the notice must state
that the member may file a written application requesting relief on behalf of itself, or a person
associated with the member, within 10 business days after service of the notice. - ANS-In
compliance with FINRA Rule 9522, if the member fails to file the application requesting relief
within 10 business days, the registration of the disqualified person will be revoked.
(99222)
A security may be signed by either a guardian, authorized third-party or for a corporate account
a designated officer and would be considered good delivery. A parent signature is not
automatically considered good delivery since the custodian of the account must sign for an
UGMA account. (31896) - ANS-A security may be signed by either a guardian, authorized
third-party or for a corporate account a designated officer and would be considered good
delivery. A parent signature is not automatically considered good delivery since the custodian of
the account must sign for an UGMA account. (31896)
A member firm receives a check from a customer made payable to an insurance company for a
deferred variable annuity. The firm may forward the check to the insurance company prior to the
application being approved. - ANS-A member firm is permitted to receive, and then forward a
check made payable to the insurance company if certain conditions are met. The firm must have
a written agreement with the insurance company that stipulates that the insurance company
agrees to segregate the funds until notified by the member firm that a principal has approved
the application for a deferred variable annuity. In addition, the agreement must also stipulate
that the customer's funds will be returned if the application is rejected. (82855)
A Real Estate Investment Trust (REIT) in its second taxable year must meet two ownership
tests. There must be at least 100 different shareholders and 5 or fewer individuals may not own
more than 50% of its common stock during the last half of its taxable year. (71002) - ANS-A
Real Estate Investment Trust (REIT) in its second taxable year must meet two ownership tests.
There must be at least 100 different shareholders and 5 or fewer individuals may not own more
than 50% of its common stock during the last half of its taxable year. (71002)
, Regarding annuity payments, a client is concerned about whether his payment will be delayed
due to an NYSE trading halt. What would you explain to the client?
He has nothing to worry about and he will still be receiving his payment at its usual time -
ANS-Regarding annuity payments, a client is concerned about whether his payment will be
delayed due to an NYSE trading halt. What would you explain to the client?
He has nothing to worry about and he will still be receiving his payment at its usual time
If a customer accepts the recommendation of a BD to purchase a security, and the BD supplies
the stock by selling it short to the customer, the BD is required to make a covering purchase
promptly in order to effect delivery to the customer. (98727) - ANS-If a customer accepts the
recommendation of a BD to purchase a security, and the BD supplies the stock by selling it short
to the customer, the BD is required to make a covering purchase promptly in order to effect
delivery to the customer. (98727)
According to Sarbanes-Oxley, the annual reports filed with the SEC by publicly traded
companies are required to contain all of the following provisions, EXCEPT:
A statement that the firm has filed the required SEC forms when it has raised capital in the
public markets. - ANS-A firm issuer is always required to file the appropriate SEC forms when
raising capital in the public markets. (99245)
Under portfolio margining rules, maintenance calls are due within three business days. Most
firms employ more stringent house rules when dealing with portfolio margin customers. (98696)
- ANS-Under portfolio margining rules, maintenance calls are due within three business days.
Most firms employ more stringent house rules when dealing with portfolio margin customers.
(98696)
Restricted stock may be sold if it was paid for in full and has been held for 6 months. - ANS-The
BD handling the sale under Rule 144 may do so through a broker's transaction that *DOES NOT
INVOLVE* a solicitation or a principal basis. The issuer of the securities must be current with its
SEC reporting requirements. (71021)
The Nasdaq Market Center Execution System is sometimes referred to as the Single Book. This
system was formed through the integration of Nasdaq's three separate execution platforms into
a single platform that allows for trading all Nasdaq, NYSE, and AMEX securities. (71093) -
ANS-The Nasdaq Market Center Execution System is sometimes referred to as the Single
Book. This system was formed through the integration of Nasdaq's three separate execution
platforms into a single platform that allows for trading all Nasdaq, NYSE, and AMEX securities.
(71093)
Investors must generally pass a 3-part test to be considered a QIB.
A syndicate headed by BD is distributing a split offering of Steel Curtain common stock. Some of
the selling shareholders would like to purchase shares in the open market prior to the close of
the deal. Under Rule 102 of Regulation M, selling shareholders are prohibited from this activity. -
ANS-Investors who are selling stock through a distribution would have a motivation to inflate the
price of the stock, just prior to the distribution. The issuer and selling shareholders are
prohibited from buying shares in the open market prior to the closing of the new issue (defined
as the restricted period). (60727)
Money-market securities (with maturities of less than one year), U.S. Treasury securities, and
securities issued by foreign governments are NOT considered TRACE-eligible. -
ANS-Money-market securities (with maturities of less than one year), U.S. Treasury securities,
and securities issued by foreign governments are NOT considered TRACE-eligible. (71181)
The executive representative of a member firm is:
Designated by the member to vote and act for the firm in all matters concerning FINRA. -
ANS-The executive representative appointed by the member is authorized to act for the
member in all official business concerning the member and FINRA.
Each member firm that is a party to a transaction in a TRACE-eligible security must report the
transaction. - ANS-Both the buyer and seller must report the transaction to TRACE. For any
equity securities, only the executing firm would have a trade reporting requirement.
Short interest reports must be received by FINRA no later than:
The second business day after the reporting settlement date - ANS-A member firm is required to
file semimonthly reports of its short positions. The reports must be received by FINRA by the
second business day after the reporting settlement date.
One of the responsibilities of a clearing firm is to submit any written complaint it receives
regarding the introducing firm or its employees to both the introducing firm and the introducing
firm's DEA. - ANS-The carrying agreement between the two firms must direct and authorize the
clearing firm to take this action. (99414)
A testimonial may be used If the provider has the knowledge and experience to form a valid
opinion. - ANS-A testimonial may be used If the provider has the knowledge and experience to
form a valid opinion.
Agreements for both fully disclosed and omnibus accounts must be submitted to FINRA prior to
becoming effective. - ANS-The carrying firm is required to submit to FINRA for prior approval
,any agreement for the carrying of accounts, whether on an omnibus or fully disclosed basis,
before such agreement may become effective.
The carrying firm is also required to submit to FINRA for prior approval any material changes to
an approved carrying agreement before such changes may become effective. (82882)
Any information conveyed to a purchaser after the time of sale is not taken into account when
determining whether a prospectus included an untrue statement, or omitted to state a material
fact. (60809) - ANS-Any information conveyed to a purchaser after the time of sale is not taken
into account when determining whether a prospectus included an untrue statement, or omitted
to state a material fact. (60809)
When FINRA issues a notice to a member regarding a disqualification, the notice must state
that the member may file a written application requesting relief on behalf of itself, or a person
associated with the member, within 10 business days after service of the notice. - ANS-In
compliance with FINRA Rule 9522, if the member fails to file the application requesting relief
within 10 business days, the registration of the disqualified person will be revoked.
(99222)
A security may be signed by either a guardian, authorized third-party or for a corporate account
a designated officer and would be considered good delivery. A parent signature is not
automatically considered good delivery since the custodian of the account must sign for an
UGMA account. (31896) - ANS-A security may be signed by either a guardian, authorized
third-party or for a corporate account a designated officer and would be considered good
delivery. A parent signature is not automatically considered good delivery since the custodian of
the account must sign for an UGMA account. (31896)
A member firm receives a check from a customer made payable to an insurance company for a
deferred variable annuity. The firm may forward the check to the insurance company prior to the
application being approved. - ANS-A member firm is permitted to receive, and then forward a
check made payable to the insurance company if certain conditions are met. The firm must have
a written agreement with the insurance company that stipulates that the insurance company
agrees to segregate the funds until notified by the member firm that a principal has approved
the application for a deferred variable annuity. In addition, the agreement must also stipulate
that the customer's funds will be returned if the application is rejected. (82855)
A Real Estate Investment Trust (REIT) in its second taxable year must meet two ownership
tests. There must be at least 100 different shareholders and 5 or fewer individuals may not own
more than 50% of its common stock during the last half of its taxable year. (71002) - ANS-A
Real Estate Investment Trust (REIT) in its second taxable year must meet two ownership tests.
There must be at least 100 different shareholders and 5 or fewer individuals may not own more
than 50% of its common stock during the last half of its taxable year. (71002)
, Regarding annuity payments, a client is concerned about whether his payment will be delayed
due to an NYSE trading halt. What would you explain to the client?
He has nothing to worry about and he will still be receiving his payment at its usual time -
ANS-Regarding annuity payments, a client is concerned about whether his payment will be
delayed due to an NYSE trading halt. What would you explain to the client?
He has nothing to worry about and he will still be receiving his payment at its usual time
If a customer accepts the recommendation of a BD to purchase a security, and the BD supplies
the stock by selling it short to the customer, the BD is required to make a covering purchase
promptly in order to effect delivery to the customer. (98727) - ANS-If a customer accepts the
recommendation of a BD to purchase a security, and the BD supplies the stock by selling it short
to the customer, the BD is required to make a covering purchase promptly in order to effect
delivery to the customer. (98727)
According to Sarbanes-Oxley, the annual reports filed with the SEC by publicly traded
companies are required to contain all of the following provisions, EXCEPT:
A statement that the firm has filed the required SEC forms when it has raised capital in the
public markets. - ANS-A firm issuer is always required to file the appropriate SEC forms when
raising capital in the public markets. (99245)
Under portfolio margining rules, maintenance calls are due within three business days. Most
firms employ more stringent house rules when dealing with portfolio margin customers. (98696)
- ANS-Under portfolio margining rules, maintenance calls are due within three business days.
Most firms employ more stringent house rules when dealing with portfolio margin customers.
(98696)
Restricted stock may be sold if it was paid for in full and has been held for 6 months. - ANS-The
BD handling the sale under Rule 144 may do so through a broker's transaction that *DOES NOT
INVOLVE* a solicitation or a principal basis. The issuer of the securities must be current with its
SEC reporting requirements. (71021)
The Nasdaq Market Center Execution System is sometimes referred to as the Single Book. This
system was formed through the integration of Nasdaq's three separate execution platforms into
a single platform that allows for trading all Nasdaq, NYSE, and AMEX securities. (71093) -
ANS-The Nasdaq Market Center Execution System is sometimes referred to as the Single
Book. This system was formed through the integration of Nasdaq's three separate execution
platforms into a single platform that allows for trading all Nasdaq, NYSE, and AMEX securities.
(71093)
Investors must generally pass a 3-part test to be considered a QIB.
