FINRA EXAM NEWEST 2026/2027 ACTUAL EXAM | COMPLETE
TEST BANK WITH QUESTIONS & VERIFIED CORRECT ANSWERS |
GRADED A+ PDF
Level 3 options additional disclosure requirement - ANSWER since Level 3 permits uncovered writing,
the client is subject to maximum risk exposure. As a result, he will receive an additional document
that's referred to as the Special Statement for Uncovered Writers.
Account statements for options customers stay on file for what time period? - ANSWER copies of
account statements for options customers must be kept at both the branch office that supervises the
account and the principal supervisory office that has jurisdiction over that branch for the most recent
six-month period
VIX options trade what time period? - ANSWER VIX options trades from 9:30 a.m. to 4:15 p.m. ET
(8:30 a.m. to 3:15 p.m. CT). (38850)
Under Reg SHO, a firm's Easy to Borrow (ETB) list must be updated - ANSWER at least every 24 hours
A "collar" consists of - ANSWER A collar consists of a long stock position, the purchase of a put option
with a strike price that's below the current market price of the stock, and the sale of a call option
with a strike price that's above the current market price of the stock. In other words, both the call
and the put options are out-of-the-money when the position is established. The objective of a collar
is to lock in a selling price. If the market price of the stock declines, the put option is exercised by the
investor. Alternatively, if the stock rises above the strike price of the call, the writer may receive an
assignment notice to sell the stock. (38768)
Painting the Tape consists of - ANSWER Painting the Tape is a technique whereby individuals acting in
concert repeatedly sell a security to one another without actually changing ownership of the
securities. This is intended to give an impression of increased trading volume. The regulators
consider this to be a type of manipulation.
Marking the Close consists of - ANSWER Entering large trades at the end of the day specifically to
affect the closing price is known as marking the close.
Tender offers are held open for (days) - ANSWER at least 20 business days from the time they're
announced to the security holders. If the person who makes the offer increases or decreases the
percentage of the class of securities being sought, the consideration being offered, or the dealer's
,soliciting fee, the offer must remain open for at least 10 business days from the date that notice of
the change is given to security holders.
When must a branch manager acknowledge a complaint? (days) - ANSWER Under industry rules, a
member firm must acknowledge receipt of a customer complaint within 15 business days of receipt.
Thereafter, the member must respond to the complaint within a reasonable period. (39166)
During a firm transfer which firm is responsible for notifying the OCC? - ANSWER Both
Information required to be kept in customer's option file (7) - ANSWER Date which the ODD was
mailed, customer's financial data, dates of verification of the account info in the options agreement,
name of representative who handles the account, name of ROP who approved the account, date of
options approval, types of transactions that the account is approved for.
For representatives who violate rules of an exchange, the exchange may do which of the following:
Fine, censure, suspend, expel? - ANSWER The exchange has the authority to expel, fine, suspend,
and/or censure a rep who violates its rules
cash account option selling requirement - ANSWER A call may be written in the cash account if it's
covered by stock or by an escrow receipt from a bank. Spreads must be transacted in a margin
account. A spread may be covered for purposes of margin, but despite the fact that cash margin may
not be required, the spread must still be established in a margin account. (38804)
Credit value in Margin Account - ANSWER In a short margin account, the credit balance represents
the amount of the initial short sale plus the amount deposited to satisfy Regulation T. This amount
remains the same despite the fact that the short market value and equity value will fluctuate.(21482)
Diagonal Spread - ANSWER If the options have different expirations and different strike prices, the
position is considered a diagonal spread.
Vertical Spread - ANSWER If the options have the same expiration, but different strike prices, the
position is considered a vertical, price, or dollar spread
Horizontal Spread / Calendar Spread - ANSWER If the options have different expirations, but the
same strike prices, the position is considered a horizontal, time, or calendar spread
, Rule 144 notification to SEC is NOT required when - ANSWER within 3 month period allows for the
sale of 1% of the outstanding stock or the average volume of trading for the past four weeks,
whichever is higher the sale doesn't exceed 5,000 shares, the dollar amount doesn't exceed $50,000.
(39241)
A combination - ANSWER a buy and a put of same security, same expiration
Tender offers notification - ANSWER no later than 10 business days from the date that the tender
offer is made. Along with a notice of the tender offer, the subject company must also either (a)
recommend that shareholders accept or decline the tender offer, (b) express that it has no opinion
and remains neutral, or (c) is unable to take a position on the tender offer. (39240)
Options positions can be transferred EXCEPT (time) - ANSWER except during the week prior to
expiration of a position in the account.
Straddle VS Combination - ANSWER If an investor sells a put and a call on the same underlying stock,
and both options have the same expiration date and exercise price, the position is referred to as a
straddle. However, if there's a difference in the expiration dates and/or the exercise prices, the
position is referred to as a combination.
Options customer account statements must be held in OSJ for - ANSWER 6 months
Daily OCC report to firm includes - ANSWER net premiums due, margin due, transactions made by
firm
Trading Rotation - ANSWER at the start of the day and may be used during the day. The purpose is to
create a fair and orderly market. A trading rotation is defined as a period on an options exchange
where bids and offers and possible trades are made in each series of options.
Reg T stocks paid within (#days) - ANSWER According to Regulation T, securities must be paid for
within 2 business days of the standard (regular-way) settlement date. Since regular-way settlement is
two business days, payment is required within four business days from the trade date. Although
option transactions settle next day, the customer has four business days to pay for a purchase.
(33228)
Reg T options paid within (#days) - ANSWER Four Days
TEST BANK WITH QUESTIONS & VERIFIED CORRECT ANSWERS |
GRADED A+ PDF
Level 3 options additional disclosure requirement - ANSWER since Level 3 permits uncovered writing,
the client is subject to maximum risk exposure. As a result, he will receive an additional document
that's referred to as the Special Statement for Uncovered Writers.
Account statements for options customers stay on file for what time period? - ANSWER copies of
account statements for options customers must be kept at both the branch office that supervises the
account and the principal supervisory office that has jurisdiction over that branch for the most recent
six-month period
VIX options trade what time period? - ANSWER VIX options trades from 9:30 a.m. to 4:15 p.m. ET
(8:30 a.m. to 3:15 p.m. CT). (38850)
Under Reg SHO, a firm's Easy to Borrow (ETB) list must be updated - ANSWER at least every 24 hours
A "collar" consists of - ANSWER A collar consists of a long stock position, the purchase of a put option
with a strike price that's below the current market price of the stock, and the sale of a call option
with a strike price that's above the current market price of the stock. In other words, both the call
and the put options are out-of-the-money when the position is established. The objective of a collar
is to lock in a selling price. If the market price of the stock declines, the put option is exercised by the
investor. Alternatively, if the stock rises above the strike price of the call, the writer may receive an
assignment notice to sell the stock. (38768)
Painting the Tape consists of - ANSWER Painting the Tape is a technique whereby individuals acting in
concert repeatedly sell a security to one another without actually changing ownership of the
securities. This is intended to give an impression of increased trading volume. The regulators
consider this to be a type of manipulation.
Marking the Close consists of - ANSWER Entering large trades at the end of the day specifically to
affect the closing price is known as marking the close.
Tender offers are held open for (days) - ANSWER at least 20 business days from the time they're
announced to the security holders. If the person who makes the offer increases or decreases the
percentage of the class of securities being sought, the consideration being offered, or the dealer's
,soliciting fee, the offer must remain open for at least 10 business days from the date that notice of
the change is given to security holders.
When must a branch manager acknowledge a complaint? (days) - ANSWER Under industry rules, a
member firm must acknowledge receipt of a customer complaint within 15 business days of receipt.
Thereafter, the member must respond to the complaint within a reasonable period. (39166)
During a firm transfer which firm is responsible for notifying the OCC? - ANSWER Both
Information required to be kept in customer's option file (7) - ANSWER Date which the ODD was
mailed, customer's financial data, dates of verification of the account info in the options agreement,
name of representative who handles the account, name of ROP who approved the account, date of
options approval, types of transactions that the account is approved for.
For representatives who violate rules of an exchange, the exchange may do which of the following:
Fine, censure, suspend, expel? - ANSWER The exchange has the authority to expel, fine, suspend,
and/or censure a rep who violates its rules
cash account option selling requirement - ANSWER A call may be written in the cash account if it's
covered by stock or by an escrow receipt from a bank. Spreads must be transacted in a margin
account. A spread may be covered for purposes of margin, but despite the fact that cash margin may
not be required, the spread must still be established in a margin account. (38804)
Credit value in Margin Account - ANSWER In a short margin account, the credit balance represents
the amount of the initial short sale plus the amount deposited to satisfy Regulation T. This amount
remains the same despite the fact that the short market value and equity value will fluctuate.(21482)
Diagonal Spread - ANSWER If the options have different expirations and different strike prices, the
position is considered a diagonal spread.
Vertical Spread - ANSWER If the options have the same expiration, but different strike prices, the
position is considered a vertical, price, or dollar spread
Horizontal Spread / Calendar Spread - ANSWER If the options have different expirations, but the
same strike prices, the position is considered a horizontal, time, or calendar spread
, Rule 144 notification to SEC is NOT required when - ANSWER within 3 month period allows for the
sale of 1% of the outstanding stock or the average volume of trading for the past four weeks,
whichever is higher the sale doesn't exceed 5,000 shares, the dollar amount doesn't exceed $50,000.
(39241)
A combination - ANSWER a buy and a put of same security, same expiration
Tender offers notification - ANSWER no later than 10 business days from the date that the tender
offer is made. Along with a notice of the tender offer, the subject company must also either (a)
recommend that shareholders accept or decline the tender offer, (b) express that it has no opinion
and remains neutral, or (c) is unable to take a position on the tender offer. (39240)
Options positions can be transferred EXCEPT (time) - ANSWER except during the week prior to
expiration of a position in the account.
Straddle VS Combination - ANSWER If an investor sells a put and a call on the same underlying stock,
and both options have the same expiration date and exercise price, the position is referred to as a
straddle. However, if there's a difference in the expiration dates and/or the exercise prices, the
position is referred to as a combination.
Options customer account statements must be held in OSJ for - ANSWER 6 months
Daily OCC report to firm includes - ANSWER net premiums due, margin due, transactions made by
firm
Trading Rotation - ANSWER at the start of the day and may be used during the day. The purpose is to
create a fair and orderly market. A trading rotation is defined as a period on an options exchange
where bids and offers and possible trades are made in each series of options.
Reg T stocks paid within (#days) - ANSWER According to Regulation T, securities must be paid for
within 2 business days of the standard (regular-way) settlement date. Since regular-way settlement is
two business days, payment is required within four business days from the trade date. Although
option transactions settle next day, the customer has four business days to pay for a purchase.
(33228)
Reg T options paid within (#days) - ANSWER Four Days
