Series 24 - Customer and Margin Accounts || with Errorless
Solutions 100%.
What is the difference between limited and full discretion with regard to an account where the
representative has trading authority? correct answers Limited: the ability to buy and sell
securities.
Full: same as limited, but includes the ability to extract funds.
What additional authorizations and forms are required for full discretion for a representative as
compared to limited discretion? correct answers Written authorization from client.
Written acceptance by a registered principal (Series 24).
Full power of attorney (POA).
Must trades in an account with full discretion be reviewed and approved? If so, what is the
primary focus? correct answers Trades must be reviewed/approved promptly (not in advance) by
a principal to determine whether trading is excessive (churning) or meets a client's investment
objective.
What is a not held order? correct answers Orders that allow for time and/or price discretion, but
specify whether to buy or sell, a certain quantity, and a specific security. Written authorization is
NOT required.
Only valid for the trading day. For a longer time frame, written authorization is required.
What are the three sections of a margin agreement? correct answers Credit section - discloses the
terms of the loan. 30-day advance notice is required if B/D changes loan terms, but NOT for
changes to in-house maintenance requirements.
Hypothecation (pledge) section - stock may be hypothecated (pledged) as collateral by the B/D.
Loan consent section (not mandatory) - Lenders retain ownership rights (except voting).
A client who signed the hypothecation agreement has a $12,000 debit balance. What amount of
stock may be hypothecated (pledged) as collateral by the B/D? correct answers 140% of debit
balance, or $16,800.
To what securities do penny stock regulations apply? correct answers Apply to securities traded
on the OTCBB/OTC Pink Markets and have a bid price below $5.00.
What is required before a client can begin trading penny stocks? correct answers Client must be
approved for penny stock trading and receive a risk disclosure statement.
Who is considered an established client under penny stock regulations? correct answers
Established clients are those who have been with the firm for more than one year or made three
separate purchase of different penny stocks.
Under the Telephone Consumer Protection Act, during what times can calls be made? correct
answers 8:00 a.m. to 9:00 p.m. local time
Solutions 100%.
What is the difference between limited and full discretion with regard to an account where the
representative has trading authority? correct answers Limited: the ability to buy and sell
securities.
Full: same as limited, but includes the ability to extract funds.
What additional authorizations and forms are required for full discretion for a representative as
compared to limited discretion? correct answers Written authorization from client.
Written acceptance by a registered principal (Series 24).
Full power of attorney (POA).
Must trades in an account with full discretion be reviewed and approved? If so, what is the
primary focus? correct answers Trades must be reviewed/approved promptly (not in advance) by
a principal to determine whether trading is excessive (churning) or meets a client's investment
objective.
What is a not held order? correct answers Orders that allow for time and/or price discretion, but
specify whether to buy or sell, a certain quantity, and a specific security. Written authorization is
NOT required.
Only valid for the trading day. For a longer time frame, written authorization is required.
What are the three sections of a margin agreement? correct answers Credit section - discloses the
terms of the loan. 30-day advance notice is required if B/D changes loan terms, but NOT for
changes to in-house maintenance requirements.
Hypothecation (pledge) section - stock may be hypothecated (pledged) as collateral by the B/D.
Loan consent section (not mandatory) - Lenders retain ownership rights (except voting).
A client who signed the hypothecation agreement has a $12,000 debit balance. What amount of
stock may be hypothecated (pledged) as collateral by the B/D? correct answers 140% of debit
balance, or $16,800.
To what securities do penny stock regulations apply? correct answers Apply to securities traded
on the OTCBB/OTC Pink Markets and have a bid price below $5.00.
What is required before a client can begin trading penny stocks? correct answers Client must be
approved for penny stock trading and receive a risk disclosure statement.
Who is considered an established client under penny stock regulations? correct answers
Established clients are those who have been with the firm for more than one year or made three
separate purchase of different penny stocks.
Under the Telephone Consumer Protection Act, during what times can calls be made? correct
answers 8:00 a.m. to 9:00 p.m. local time
