Unit 17 Test Exam Questions With
Correct Marking Scheme
/.All of the following records must be kept for 6 years EXCEPT
A)
customer account records, like monthly statements
B)
blotters
C)
the general ledger
D)
communications with the public
Of the answer choices listed, it is important to recognize that communications with the
public must be maintained on file for 3 years by a member firm, and therefore, would not
fall under the 6-year record retention requirement.
Reference: 17.5.3.1 in the License Exam Manual.
/.Which of the following statements regarding FINRA member broker-dealer's websites
is TRUE?
A)
A hyperlink to FINRA's BrokerCheck is required.
B)
Only mention of being a FINRA member is required.
C)
Neither mention of FINRA membership nor a hyperlink to FINRA's BrokerCheck is
required.
D)
A hyperlink to FINRA's BrokerCheck is required as well as mention of the FINRA
membership.
While there is currently no requirement for a FINRA member broker-dealer to note or
mention membership on the broker-dealer's website, it is required that all FINRA
member firms provide a hyperlink to BrokerCheck. BrokerCheck is a free tool that is part
of FINRA's ongoing efforts to help investors make informed choices about brokers and
brokerage firms. BrokerCheck also provides information about formerly registered
brokers who, although no longer registered in the securities industry, may work in other
financial services industries.
/.All retail communications should be retained by the member firm for at least a period of
A)
,four years and for the first year be in a readily accessible location
B)
four years and be readily accessible for that period
C)
three years and for the first two years be in a readily accessible location
D)
three years and for the first six months be in a readily accessible location
Explanation
To comply with all record keeping requirements, communications should be retained for
at least a period of three years in a format and media that complies with regulations and
for the first two years be in a readily accessible location.
Reference: 17.5.3.1 in the License Exam Manual
/.If an individual fails a FINRA qualification exam three consecutive times, a fourth
attempt may NOT be made for:
A)
6 months.
B)
60 days.
C)
30 days.
D)
90 days.
If a qualification exam is failed three consecutive times, a fourth attempt may not be
made for 6 months.
/.A member firm is allowing a registered representative to operate from his residence.
Which of the following statements is TRUE?
I. Prior consent of the member firm's self-regulatory organization (SRO) is required.
II. Prior consent of the member firm's self-regulatory organization (SRO) is not required.
III. The residence may be advertised as an office of the member firm.
IV. The residence may not be advertised as an office of the member firm.
A)
I and III
B)
II and IV
C)
I and IV
D)
II and III
Explanation
Prior consent of the member firm's SRO is required when opening any office including
that maintained in a private residence. The home address and telephone number may
,be advertised in any normal manner such as on business cards, stationary,
newspapers, or websites.
Reference: 17.2.3.1.1 in the License Exam Manual
/.Which of the following observations may a registered representative make when giving
a sales presentation based on performance statements and charts?
A)
Yield over the last 5 years has fluctuated between 6% and 8%, indicating it will continue
at 6% or better.
B)
The portfolio's broad diversification will ensure the continuation of the 6% yield.
C)
The fund has consistently outperformed the market and should continue to do so.
D)
The fund has had a positive performance in the last few years.
Explanation
Predictions are strictly prohibited and conjecture about future trends or occurrences
must be labeled as such.
Reference: 17.5.4.1 in the License Exam Manual
/.All of the following must be included in a testimonial made on behalf of a member firm
and distributed to potential clients EXCEPT:
A)
length of time the testimonial covers.
B)
that the returns and investment performance cited in the testimonial may not be
duplicated.
C)
qualifications of the person giving the testimonial if a specialized or an expert opinion is
implied.
D)
whether compensation of more than $100 in cash or value was paid to the person giving
the testimonial.
When a member firm uses a testimonial, it must be accompanied by a statement that
this person's results do not necessarily represent those of other customers; a disclosure
regarding compensation paid; and the testimonial giver's qualifications if an expert
opinion is implied. There is no time-of-coverage requirement.
/.A customer contacts you through your social media homepage to complain about the
annual account fee imposed by your broker-dealer, particularly because her account
has lost value in the past year. You should
A)
do nothing as annual account fees would have been disclosed at the time of the
account opening
, B)
use the customer's contact information on the customer account form to contact her
directly and discuss
C)
reach out to the customer through the social media site to discuss
D)
forward the information to a principal immediately - Answer-✅D)
forward the information to a principal immediately
Explanation
Even through social media this must be recognized as a written complaint. A principal
should always be notified immediately when a written complaint is received. A record of
the complaint must be kept for at least 4 years.
Reference: 17.3.1 in the License Exam Manual
/.A registered representative who leaves the industry must requalify by examination to
return to the industry if he is unaffiliated with a broker/dealer for more than:
A)
3 years.
B)
5 years.
C)
10 years.
D)
2 years. - Answer-✅D)
2 years.
All securities licenses become null and void once an individual is unaffiliated for more
than 2 years.
/.If a registered representative is suspended by FINRA's Department of Enforcement,
his first appeal would be to:
A)
the SIPC.
B)
the National Adjudicatory Council.
C)
a federal court.
D)
the SEC. - Answer-✅B) the National Adjudicatory Council.
Explanation
A registered representative may appeal decisions of the DOE to FINRA's National
Adjudicatory Council. Appeals may then go to the SEC and finally to the federal
appellate court system.
Correct Marking Scheme
/.All of the following records must be kept for 6 years EXCEPT
A)
customer account records, like monthly statements
B)
blotters
C)
the general ledger
D)
communications with the public
Of the answer choices listed, it is important to recognize that communications with the
public must be maintained on file for 3 years by a member firm, and therefore, would not
fall under the 6-year record retention requirement.
Reference: 17.5.3.1 in the License Exam Manual.
/.Which of the following statements regarding FINRA member broker-dealer's websites
is TRUE?
A)
A hyperlink to FINRA's BrokerCheck is required.
B)
Only mention of being a FINRA member is required.
C)
Neither mention of FINRA membership nor a hyperlink to FINRA's BrokerCheck is
required.
D)
A hyperlink to FINRA's BrokerCheck is required as well as mention of the FINRA
membership.
While there is currently no requirement for a FINRA member broker-dealer to note or
mention membership on the broker-dealer's website, it is required that all FINRA
member firms provide a hyperlink to BrokerCheck. BrokerCheck is a free tool that is part
of FINRA's ongoing efforts to help investors make informed choices about brokers and
brokerage firms. BrokerCheck also provides information about formerly registered
brokers who, although no longer registered in the securities industry, may work in other
financial services industries.
/.All retail communications should be retained by the member firm for at least a period of
A)
,four years and for the first year be in a readily accessible location
B)
four years and be readily accessible for that period
C)
three years and for the first two years be in a readily accessible location
D)
three years and for the first six months be in a readily accessible location
Explanation
To comply with all record keeping requirements, communications should be retained for
at least a period of three years in a format and media that complies with regulations and
for the first two years be in a readily accessible location.
Reference: 17.5.3.1 in the License Exam Manual
/.If an individual fails a FINRA qualification exam three consecutive times, a fourth
attempt may NOT be made for:
A)
6 months.
B)
60 days.
C)
30 days.
D)
90 days.
If a qualification exam is failed three consecutive times, a fourth attempt may not be
made for 6 months.
/.A member firm is allowing a registered representative to operate from his residence.
Which of the following statements is TRUE?
I. Prior consent of the member firm's self-regulatory organization (SRO) is required.
II. Prior consent of the member firm's self-regulatory organization (SRO) is not required.
III. The residence may be advertised as an office of the member firm.
IV. The residence may not be advertised as an office of the member firm.
A)
I and III
B)
II and IV
C)
I and IV
D)
II and III
Explanation
Prior consent of the member firm's SRO is required when opening any office including
that maintained in a private residence. The home address and telephone number may
,be advertised in any normal manner such as on business cards, stationary,
newspapers, or websites.
Reference: 17.2.3.1.1 in the License Exam Manual
/.Which of the following observations may a registered representative make when giving
a sales presentation based on performance statements and charts?
A)
Yield over the last 5 years has fluctuated between 6% and 8%, indicating it will continue
at 6% or better.
B)
The portfolio's broad diversification will ensure the continuation of the 6% yield.
C)
The fund has consistently outperformed the market and should continue to do so.
D)
The fund has had a positive performance in the last few years.
Explanation
Predictions are strictly prohibited and conjecture about future trends or occurrences
must be labeled as such.
Reference: 17.5.4.1 in the License Exam Manual
/.All of the following must be included in a testimonial made on behalf of a member firm
and distributed to potential clients EXCEPT:
A)
length of time the testimonial covers.
B)
that the returns and investment performance cited in the testimonial may not be
duplicated.
C)
qualifications of the person giving the testimonial if a specialized or an expert opinion is
implied.
D)
whether compensation of more than $100 in cash or value was paid to the person giving
the testimonial.
When a member firm uses a testimonial, it must be accompanied by a statement that
this person's results do not necessarily represent those of other customers; a disclosure
regarding compensation paid; and the testimonial giver's qualifications if an expert
opinion is implied. There is no time-of-coverage requirement.
/.A customer contacts you through your social media homepage to complain about the
annual account fee imposed by your broker-dealer, particularly because her account
has lost value in the past year. You should
A)
do nothing as annual account fees would have been disclosed at the time of the
account opening
, B)
use the customer's contact information on the customer account form to contact her
directly and discuss
C)
reach out to the customer through the social media site to discuss
D)
forward the information to a principal immediately - Answer-✅D)
forward the information to a principal immediately
Explanation
Even through social media this must be recognized as a written complaint. A principal
should always be notified immediately when a written complaint is received. A record of
the complaint must be kept for at least 4 years.
Reference: 17.3.1 in the License Exam Manual
/.A registered representative who leaves the industry must requalify by examination to
return to the industry if he is unaffiliated with a broker/dealer for more than:
A)
3 years.
B)
5 years.
C)
10 years.
D)
2 years. - Answer-✅D)
2 years.
All securities licenses become null and void once an individual is unaffiliated for more
than 2 years.
/.If a registered representative is suspended by FINRA's Department of Enforcement,
his first appeal would be to:
A)
the SIPC.
B)
the National Adjudicatory Council.
C)
a federal court.
D)
the SEC. - Answer-✅B) the National Adjudicatory Council.
Explanation
A registered representative may appeal decisions of the DOE to FINRA's National
Adjudicatory Council. Appeals may then go to the SEC and finally to the federal
appellate court system.
