Securities Industry Essentials Exam
Questions and Answers16
Broker-Dealer that doesn't comply is subject to: - ANSWERS--censure
-limits on activities
-suspension
-revocation of reg
-fine
FINRA - ANSWERS-regulates all matters related to investment banking, trading in the OTC
market, trading in the NYSE listed securities, and the conduct of FINRA member firms and
associated persons
FINRA Purpose - ANSWERS--promote investment banking and securities business
-provide medium for communication among its members
-adopt, admin, and enforce rules designed to prevent fraud
-promote self-discipline among members
MSRB (MUNICIPAL SECURITIES REGULATORY BOARD) - ANSWERS--regulates all matters related
to the underwriting and trading of state and municipal securities
-depends on other SROs for enforcement ability
Federal Reserve - ANSWERS--12 regional Fed reserve banks and hundreds of national and state
banks that belong to the system
-determines monetary policy and takes actions to implement policies including 1. acting as an
agent of treasury 2. regulating US money supply 3. setting reserve requirements 4. supervising
the printing of currency 5. clearing fund transfers
, Securities Investor Protection Corporation (SIPC) - ANSWERS--a nonprofit corporation, created
by Congress and subject to SEC and congressional oversight, that insures customer accounts
against the financial failure of a brokerage firm
-basic coverage under is no more than 500k per separate customer
Federal Deposit Insurance Corporation (FDIC) - ANSWERS--the government agency that insures
customer deposits if a bank fails
-accounts covered up to 250k
Accredited Investor - ANSWERS--has a net worth of 1 million or more, not including net equity
-has had an annual income of 200k or more in each of the two most recent years
Carrying Firm - ANSWERS--carries customer accounts and accepts funds and securities from
customers
-largest broker-dealers
fully disclosed firm - ANSWERS--a firm that introduces into customers to a clearing firm
prime account - ANSWERS--type of account that allows a customer to select one member firm
to provide custody and other services while other firms-called executing brokers-handle all
trades placed
-key advantage is that it usually provides a client with the ability to trade with multiple
brokerage houses
Municipal Advisor - ANSWERS--provides advice with respect to municipal products or the
issuance of municipal securities, including advice with respect to structure, timing, terms, and
other similar matters
Questions and Answers16
Broker-Dealer that doesn't comply is subject to: - ANSWERS--censure
-limits on activities
-suspension
-revocation of reg
-fine
FINRA - ANSWERS-regulates all matters related to investment banking, trading in the OTC
market, trading in the NYSE listed securities, and the conduct of FINRA member firms and
associated persons
FINRA Purpose - ANSWERS--promote investment banking and securities business
-provide medium for communication among its members
-adopt, admin, and enforce rules designed to prevent fraud
-promote self-discipline among members
MSRB (MUNICIPAL SECURITIES REGULATORY BOARD) - ANSWERS--regulates all matters related
to the underwriting and trading of state and municipal securities
-depends on other SROs for enforcement ability
Federal Reserve - ANSWERS--12 regional Fed reserve banks and hundreds of national and state
banks that belong to the system
-determines monetary policy and takes actions to implement policies including 1. acting as an
agent of treasury 2. regulating US money supply 3. setting reserve requirements 4. supervising
the printing of currency 5. clearing fund transfers
, Securities Investor Protection Corporation (SIPC) - ANSWERS--a nonprofit corporation, created
by Congress and subject to SEC and congressional oversight, that insures customer accounts
against the financial failure of a brokerage firm
-basic coverage under is no more than 500k per separate customer
Federal Deposit Insurance Corporation (FDIC) - ANSWERS--the government agency that insures
customer deposits if a bank fails
-accounts covered up to 250k
Accredited Investor - ANSWERS--has a net worth of 1 million or more, not including net equity
-has had an annual income of 200k or more in each of the two most recent years
Carrying Firm - ANSWERS--carries customer accounts and accepts funds and securities from
customers
-largest broker-dealers
fully disclosed firm - ANSWERS--a firm that introduces into customers to a clearing firm
prime account - ANSWERS--type of account that allows a customer to select one member firm
to provide custody and other services while other firms-called executing brokers-handle all
trades placed
-key advantage is that it usually provides a client with the ability to trade with multiple
brokerage houses
Municipal Advisor - ANSWERS--provides advice with respect to municipal products or the
issuance of municipal securities, including advice with respect to structure, timing, terms, and
other similar matters
